Disgruntled Bidder Cannot Recover Lost Profits Against Municipality
Kegler Brown Construction Newsletter July 1, 2006
Traditionally most experienced construction law practitioners in Ohio have believed that injunctive relief was the only remedy available to unhappy bidders who believe the statutory process has not been properly followed. However, a Court of Appeals in the Cementech case ruled that the rejected bidder could recover lost profits believing that only this extreme remedy would deter government's violation of competitive bidding laws.
On June 28, 2006, the Ohio Supreme Court reversed this decision and found that "a rejected bidder is limited to injunctive relief." Cementech v. Fairlawn, 109 Ohio St.3d 475. The Supreme Court reasoned that to award damages "punishes the very persons competitive bidding is intended to protect – the taxpayers." It stated that injunctive relief and "the resulting delays" were a sufficient deterrent to government's violation of competitive bidding laws.