Landmark School Bidding Case Continues
Kegler Brown Construction Newsletter August 1, 2002
In what ultimately became a highly publicized case, the Ohio School Facilities Commission ("OSFC") and a local school district accepted the recommendation of its construction manager and found the low bidder Monarch Construction non-responsible on that particular project. The contract was awarded instead to the second low bidder as the "lowest, responsible" bidder, who commenced work.
Monarch Construction sued and received an injunction stopping the work and ultimately there was a prolonged trial on the merits in the Franklin County Common Pleas Court. The trial court in a lengthy decision found numerous flaws in the responsibility investigation process and found that there should not have been an award to the second low bidder. In addition, the trial court declared that the Executive Director of OSFC who had authorized billions of dollars of construction work did not have valid signature authority to bind the OSFC and therefore threw open to question the validity of all OSFC contracts executed in recent years.
Subsequently, the Executive Director of the OSFC resigned and the voting members of the OSFC have met frequently to ratify all existing and new contracts. Hopefully, this action will cure any nervousness in the Ohio construction industry concerning the enforceability of these contracts and the viability of the State's ambitious building program.
The State sought a stay of the trial court's order and the Franklin County Court of Appeals by a 2-1 vote granted a stay of the decision meaning that construction could continue with the second low bidder pending resolution of the case on the merits.
While there are many interesting and novel issues to be decided on appeal in this case, perhaps the most important issue for public owners and construction companies will be whether there will be a "chilling effect" on future responsibility investigations where owners and their designees may be afraid to make tough judgment calls about "responsibility" and instead simply just go with the low bidder regardless, in an effort to avoid being "second-guessed" later in court.
Such an approach would likely not bode well for quality and timely construction at a fair price.