HomeMy WebLinkAboutAGENDA REPORT 1999 0908 CC SPC ITEM 04CITEM 4- c. Ono
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MOORPARK CITY COUNCIL Of /.Plnhar P), M N
AGENDA REPORT AC1I0 - -N 4ri.? ?d
TO: Honorable City Council
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FROM: Deborah S. Traffenstedt, City Clerk
DATE: September 7, 1999 (CC Meeting 9/8/99)
SUBJECT: Consider Amicus Support in Kajima /Ray Wilson v. Los
Angeles County Metropolitan Transportation Authority
BACKGROUND AND DISCUSSION
The City Attorney has forwarded a request for amicus support for
the California Supreme Court Case of Kajima /Ray Wilson v. Los
Angeles County Metropolitan Transportation Authority, and has
indicated that this case involves issues that are of importance to
the City of Moorpark. Cities that agree to join in the amicus are
requested to return their authorizations by September 15, 1999.
The Second District's decision in Kajima /Ray Wilson introduced a
level of uncertainty into the competitive bidding process by
opening the door to a possible action for lost profits and
overhead. Prior to this case, a disappointed bidder on a public
works project or public procurement contract was limited to an
award of bid preparation costs in the event of a successful legal
challenge. By creating an additional incentive for disappointed
bidders to challenge the rejection of their bids, the Second
District's opinion may increase the cost of public works projects
and procurement contracts throughout the state.
The attached supporting information states that the Second
District's opinion will increase costs in three ways: 1) Public
agencies will be very reluctant to exercise their authority to
waive inconsequential defects and accept a lower bid for a project
or contract; 2) In cases where multiple low bids contain minor
defects, public agencies will be under increased pressure to reject
all bids and rebid the project or contract, thus causing delays and
increased administrative costs; and 3) Public agencies which are
found to have incorrectly determined the lowest responsive and
responsible bidder may be forced to pay the disappointed bidder's
anticipated lost profits and overhead in addition to paying the
contractor who actually builds the project or the vendor who
actually provides the supplies.
STAFF RECOMMENDATION
Direct the City Attorney to sign the representation form
authorizing the City of Moorpark to be added to the amicus brief.
Attachment: Letter dated July 15, 1999
0000-15
Office of the City Attorney
July 15, 1999
TO: ALL CALIFORNIA CITY ATTORNEYS
RE: AMICUS BRIEF IN KAJIMA/RAY WILSON v LOS ANGELES COUNTY
METROPOLITAN TRANSPOR TA TION A UTHORITY (199 8) 69 Cal.AppAth 1458
CALIFORNIA SUPREME COURT NO. S077461
(REVIEW GRANTED: MAY 26, 1999)
ISSUE PRESENTED: Does the wrongful rejection of the bid of the lowest responsible
bidder by a public agency render the public agency liable for the contractor's anticipated
profits and overhead costs on the project?
I am writing to request your City's participation as amicus curiae in a brief this office is
preparing in support of the Los Angeles County Metropolitan Transportation Authority (hereafter
"MTA ") in the above - referenced matter. The Legal Advocacy Committee of the League of
California Cities is urging that cities participate as amicus parties. Of course, there is no cost to
your city to join in the brief.
BRIEF DESCRIPTION OF THE CASE
The MTA solicited bids for a contract to build a public project known as
"Hollywood/Highland Station and Tunnels" as part of the Los Angeles subway system. The bid
documents set a minimum Disadvantaged Business Enterprise ( "DBE ") goal of 30 percent of the
total amount bid. The three lowest bids came from Kajima/Ray Wilson at $68,912,089; Tutor -
Saliba at $69,887,867 and Kiewet -Shea at $72,970,345. Ultimately, the contract was awarded to
Tutor - Saliba.
MTA selected Tutor - Saliba over Kajima/Ray Wilson on the grounds that the Tutor - Saliba
DBE credits, at 30.88 percent, exceeded the goal, while those of Kajima/Ray Wilson, at 29.51
percent, fell short. Kajima/Ray Wilson was deemed to not meet the DBE goal because the DBE
credits attributable to the participation of one its subcontractors were miscalculated by MTA. In
1947 Center Street, First Floor, Berkeley, CA 94704 Tel: 510.644.6380 TDD: 510.644.6915 Fax: 510.644.8641 `� .!
E -mail: attorney @ci.berkeley.ca.us UU00 ��i
All California City Attorneys
Amicus Brief. Kaiima/Rav Wilson v Los Angeles County Metropolitan Transportation
Authority
July 8, 1999
Page 3
public agencies will be very reluctant to exercise their authority to waive inconsequential defects
and accept a lower bid for a project or contract. Second, in cases where multiple low bids
contain minor defects, public agencies will be under increased pressure to reject all bids and
rebid the project or contract, thus causing delays and increased administrative costs. Third,
public agencies which are found to have incorrectly determined the lowest responsive and
responsible bidder may be forced to pay the disappointed bidder's anticipated lost profits and
overhead in addition to paying the contractor who actually builds the project or the vendor who
actually provides the supplies.
ISSUES UPON WHICH AMICUS ASSISTANCE WILL BE HELPFUL
The brief which this office proposes to file will address the following issues:
1) A rule which allows disappointed bidders to seek an award of lost profits and
overhead is contrary to the public policies which support the purposes of
competitive bidding; and
2) the prevailing rule which limits disappointed bidders to an award of bid
preparation costs fairly allocates the risks and burdens of public contracting in
light of the strict competitive bidding requirements which apply to virtually all
public agencies in California.
3) A rule which allows disappointed bidders to seek an award of lost profits and
overhead will have a detrimental effect on the ability of public agencies to
perform their public works and procurement functions.
WHY THESE ISSUES ARE OF MAJOR SIGNIFICANCE
TO CALIFORNIA CITIES
The impact of the Kajima /Ray Wilson decision, if allowed to stand, would not be limited
solely to contract awards which are subject to judicial challenge, but would impact the awarding
body in any circumstances where the lowest bid is to be rejected or where the lowest bid will be
accepted despite inconsequential defects. Any decision other than rejecting all bids, such as
waiving inconsequential defects in the low bid, would set the stage for possible legal challenge
by one or more bidders. Even if no lawsuit was filed, the awarding body would face substantial
pressure from multiple bidders, all of whom would have the incentive to pursue the matter
through a bid protest.
0000IL7
All California City Attorneys
Amicus Brief: Kaiima/Ray Wilson v Los Angeles Counjy Metropolitan Transportation
Authority
July 8, 1999
Page 5
your city's support in this matter.
Very truly yours,
MANUELA ALBUQUERQUE
r Attorney
6 4 r /I /////
H. ALONZI
Deputy City Attorney
CHA:pab
Enclosure
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