Detroit City Council Approves Upper Rouge CSO Tunnel, DWSD Contract PC-764

The Detroit Free Press reports -- "The Detroit City Council approved today on a 6-0 vote a $314 million portion of a $1 billion tunnel system to store sewage and storm runoff during heavy rain with the city up against a Sept. 28 deadline to act or face the loss of low-interest loans [as outlined in a September 24 letter from the MDEQ] that could have cost ratepayers an extra $100 million in interest on construction bonds and put the city in violation of its water pollution permit."

Click here for the rest of the story. Read Here for more information about the Upper Rouge CSO Tunnel project. Click here for a copy of the City's NPDES pollution permit.

Sixth Circuit Affirms "Disappointed Bidder" Rule, Upholds Dismissal of Bid Protest

On May 22, 2008, the 6th Circuit Court of Appeals upheld the grant of summary disposition in favor of the City of Detroit, and against the low bidder on a DWSD project, and affirmed the "disappointed bidder" rule in Michigan.

"We reviewed the law surrounding standing and disappointed bidders in Club Italia Soccer & Sports Org., Inc. v. Charter Twp. of Shelby, 470 F.3d 286 (6th Cir. 2006). Club Italia held that absent a statutory exception, "a disappointed bidder does not have standing before this court." Id. at 293. Cases prior to Club Italia consistently refused to allow disappointed bidders to bring claims for violations of the bidding procedures. [citations omitted] A bidder who, in addition to seeing his bid rejected, is disqualified from bidding on future projects may have standing, [citations omitted] but EBI cannot obtain standing this way because EBI was not disqualified from bidding on future projects.

* * *

"United of Omaha [v. Solomon, 960 F.2d 31, 34 (6th Cir. 1992)] is particularly fatal to EBI's claims because it held that a disappointed bidder must show that "it was actually awarded the contract at any procedural stage or that local rules limited the discretion of state officials as to whom the contract should be awarded." United of Omaha, 960 F.2d at 34. EBI cannot meet this test because it was never awarded the contract and because [Detroit Mayor] Kilpatrick has unlimited discretion in awarding contracts in order to comply with the EPA consent decree. Like the bidder in United of Omaha, EBI was "obviously disadvantaged" by the government's actions, id. at 35, but it nevertheless "retained only a unilateral hope of being awarded the contract, not a right to it." Ibid. A "unilateral hope" does not create standing."

See, EBI-Detroit, Inc. v. City of Detroit, 2008 U.S. App. LEXIS 11043, *18-21 (6th Cir. Mich. 2008). The trial court's ruling was reported in an earlier post.

[Update: The official cite for this case is EBI-Detroit, Inc. v. City of Detroit, 279 Fed. Appx. 340 (6th Cir. 2008) ]

DWSD Receives $316 Million Low Bid for Upper Rouge CSO Tunnel (South) Project

Earlier today, the City of Detroit Water and Sewerage Department (DWSD) received bids from two contracting teams for the Upper Rouge CSO (South) Tunnel, Contract PC-764.

A low bid of $316,170,200 was submitted by Kenny Construction/Obayashi, JV. The second bidder was Traylor Brothers/Jay Dee, JV at $352,416,600.

The North Tunnel will be bid later this year.

Read Here for more information about the Upper Rouge CSO Tunnel project.

"Disappointed Bidder" Rule Proves Fatal (Again) in DWSD Bid Protest

On July 10, 2007, for the second time in less than 6 months, the U.S. District Court for the Eastern District of Michigan has dismissed a bid protest of a DWSD contract on grounds that the low bidder lacked legal standing to challenge the award. As he did earlier this year, Judge John Feikens made short work of the contractor's claims:

Plaintiffs do not have standing to bring this matter before this Court. Plaintiffs argue that they are Detroit taxpayers and DWSD fee-paying customers and as such have standing to legally challenge the DWSD award in this matter, regardless of whether they have bid on the PC-755 contract or not. I previously wrote that retail water customers of DWSD or rate payers do not have standing to join in disputes involving the awarding of public contracts.

* * *

Allowing Plaintiffs to have standing in this matter would essentially permit any individual in the region to become a party to any case regarding a contract awarded by DWSD, and would have the further consequence of allowing any disappointed bidder to circumvent the disappointed bidder doctrine merely because they also are retail customers of the DWSD.

Walbridge Aldinger Co. v. City of Detroit, 495 F. Supp. 2d 642, 645 ( E.D. Mich. 2007)

Bid Protests: Federal Court Dismisses Protest by "Disappointed Bidder"

The U.S. District Court for the Eastern District of Michigan recently dismissed a challenge by the low bidder on a Detroit Water and Sewerage Department (DWSD) contract and affirmed long- standing Michigan law concerning "disappointed bidders."

The Court dismissed a challenge by the low bidder for a contract that was awarded to the third bidder finding that the disappointed (low) bidder lacked the necessary legal standing. EBI-Detroit, Inc v City of Detroit, 476 F. Supp. 2d 651; 2007 U.S. Dist. LEXIS 12102 (E.D. Mich 2007).

In granting summary disposition for the City of Detroit, Judge John Feikens noted:

"The Michigan Supreme Court has long found a lack of standing to bring claims by disappointed bidders. In 1896, that court took up the question of "whether the lowest bidder, under a contract proposed to be let by a municipal corporation, whose bid has been rejected, has a right of action at law to recover profits which he might have made had his bid been accepted," and said bidders generally did not have such a right under law. Talbot Pav. Co. v. Detroit, 109 Mich. 657, 660, 67 N.W. 979 (Mich. 1896), cited for this proposition by Detroit v. Wayne Circuit Judges, 128 Mich. 438, 87 N.W. 376 (Mich. 1901). Federal courts have noted that a property interest in a publicly bid contract is demonstrated in one of two ways: either the bidder can show it was actually awarded the contract and then deprived of it, or the bidder can show that the governmental body limit the discretion to reject low bidders. E.g. Leo J. Brielmaier Co. v. Newport Hous. Auth., Case No. 98-5245, 1999 U.S. App. LEXIS 7496, 15-16 (6th Cir., 1999). The court in Brielmaier specifically noted that if a body has discretion to reject bidders by finding them non-responsible, then a finding that the bidder is not responsible will generally not be sufficient to show standing. Id. The court in Brielmaier also addressed disappointed bidder standing for defamation claims when declared not responsible, and noted a disappointed bidder had no legally-cognizable interest absent a resulting prohibition in bidding for future government contracts. Id."

"Since Plaintiff cannot establish either an award of the contract, a lack of discretion to determine responsible bidders, or even a prohibition on future contract possibilities, it fails to show standing. Thus, its claim must be dismissed in its entirety."

Note: Under federal law, bid protests against the award of public contracts is governed by statute and the Federal Acquisition Regulations.