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HomeMy WebLinkAbout16 - Fire Station No. 6 Apparatus Bay Replacement - CorrespondenceWATT TIEDER WATT, TIEDER, HUFFAR & FITZGERALD, L.L.P. June 9, 2017 VIA EMAIL AND FEDEX OVERNIGHT DELIVERY Mr. Fong Tse City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 FTSE(a),newportbeachca.gov RECEIVED AFTER AGENDA PRINTED ITEM NO. 16/JUNE 13, 2017 2040 Main Street, Suite 300 Irvine, California 92614 Telephone: 949-852-6700 Facsimile: 949-261-0771 www.watttieder.com Re: Metro Builder & Engineers Group, Ltd.'s Response to Bid Protest Submitted by Archio Design Build on Fire Station No.6 Apparatus Bay Replacement Project, Contract No. 6422 Dear Mr. Tse: This firm represents Metro Builders & Engineers Group, Ltd. ("Metro Builders") with respect to the above -referenced matter. This correspondence shall constitute Metro Builders' response to Archio Design Build's ("Archio's") protest of the low bid submitted by Metro Builders to the City of Newport Beach ("City") for the Fire Station No. 6 Apparatus Bay Replacement project (the "Project"). In the bid protest, Archio contends Metro Builders' bid was non-responsive because: (1) Metro Builders bid bond was signed by SureTec Insurance Company's attorney-in-fact Jase Hamilton on May 19, 2017, (2) Mr. Hamilton's signature as SureTec's attorney-in-fact was notarized on May 19, 2017, but (3) SureTec's power of attorney expired on May 18, 2017. Archio further claims that Metro Builders' bid is defective because Metro Builders bid bond provided only one corporate officer signature and no corporate seal was applied. The above rendered the bid bond invalid and unenforceable. As discussed below, Archio's bid protest is entirely without merit and is an abusive effort to interfere with the City's proper decision to award the Project to Metro Builders. As evidenced by SureTec's authenticity letter dated May 30, 2017, Jase Hamilton is authorized as an attorney-in-fact of SureTec. Mr. Hamilton's authority to sign for and bind SureTec did not expire on May 18, 2017 but rather remains in effect to date. Moreover, the bid bond did not expire on May 18, 2017, but remains valid and enforceable pursuant to the attestation of SureTec and relevant case law. The clerical error in the date of the power of attorney is an immaterial defect which does not absolve the surety of its obligations under the bond and which may be waived by the City. Mr. Fouad Houalla would be the only corporate Mr. Fong Tse June 9, 2017 Page 2 signature needed on all documents of the bid bond as set forth in Metro Builders' 2016 Board of Director's and Shareholder's meeting minutes establishing him as the sole corporate officer. Metro Builders corporate seal was placed on the bid documents, embossed on all necessary documents of the bid, including the bid bond. Finally, new powers of attorney with an expiration date of December 31, 2019 were sent on April 5, 2017. Based on the foregoing, and the well- established California cases which establish that deviations in bids can and should be waived if such deviations are minor and inconsequential, the City should proceed with awarding the contract to Metro Builders. In summary, nothing within Archio's bid protest email constitutes a viable basis for the City to reject Metro Builders' low bid. Metro Builder has complied with the City's Request for Proposals ("RFP"), project specifications, and applicable California law. Metro Builders remains ready, willing, able, and expects to perform the Project in a manner that is consistent with its bid, the Project specifications, and California law. I. METRO BUILDERS' BID BOND REMAINS ENFORCEABLE AND IN FULL EFFECT In the email Archio's agent argues that the apparent expiration of SureTec's power of attorney renders Metro Builders' bid bond unenforceable. This unsupported conclusion is incorrect in light of SureTec's affirmation and attestation of the Mr. Hamilton's power of attorney and the consequent enforceability of the bid bond, as well as controlling case law. On its face, the bid bond contains an execution and notarization date of May 19, 2017 with Mr. Hamilton's power of attorney expiration date of May 18, 2017. Despite this facial defect, however, on May 30, 2017 SureTec confirmed Mr. Hamilton's continuing power of attorney authority and its intent and agreement to be bound by the terms of the bid bond. On April 5, 2017, SureTec also sent new powers of attorney with an expiration date of December 31, 2019. A surety may acknowledge its liability and ratification of a bond in retrospect, despite the alleged invalidity of the signature of its agent. Kadota Fig Ass'n of Producers v. Case -Swayne Co., 73 Cal. App. 2d 815 (1946). In Kadota, the surety filed a bond on August 3, 1945 which was signed by a judge delegated by the agent to execute the bond on the agent's behalf. Id. There was an issue regarding the validity of the signature. Id. Three days later, on August 6, 1945, the surety filed and served its duly executed and acknowledged written ratification of the bond. Id. at 821. The court held that the ratification related back to the date upon which the bond was originally entered into, and upon which date it purports to have been executed and the bond was found to be effective from that time. Id. Similarly here, Mr. Hamilton lacked apparent authority to bind SureTec on Metro Builders' bid bond per the expiration date of May 18, 2017 on the face of the bond. Nonetheless, SureTec has, a mere eleven (11) days later, acknowledged Mr. Hamilton's continuing authority, submitted new powers of attorney and ratified the force and effect of the bond. SureTec's subsequent ratification will relate back to the date upon which the bond was originally executed — May 19, 2017. Mr. Fong Tse June 9, 2017 Page 3 SureTec is not attempting to avoid its obligations under the bond or disputing Mr. Hamilton's authority. See People v. Surety Insurance Company, 136 Cal. App. 3d 556 (1982) (surety was not liable on bail bond negotiated and written in the name of its former attorney-in- fact whose power of attorney had been revoked.). Even if SureTec was disputing the validity of the bid bond, it would nonetheless still be bound by the bond terms if Metro Builders subjectively believed Mr. Hamilton had such authority and his authority was objectively reasonable. See Great American Ins. Co. v. General Builders, Inc., 113 Nev. 346 (1997) (Surety contract formed and surety bound by same despite power of attorney's lack of actual authority). Overall, Archio can set forth no case law to dispute a finding of enforceability of the bid bond. Archio's conclusion that the alleged defect in Metro Builders' bid bond rendered the bond invalid and unenforceable as a matter of law is simply unsupported. II. THE CLERICAL ERROR IN METRO BUILDERS' BID BOND IS IMMATERIAL AND CAN BE WAIVED The error in the date of Mr. Hamilton's power of attorney authority would be deemed immaterial in a court of law. Immaterial defects such as these may be waived by the City. In Menefee v. County of Fresno 163 Cal. App. 3d 1175 (1985) the court held that even a missing signature on the bid itself (which was specifically required on the bid form) did not render the bid "invalid" since a signature was not required by another source, such as in the county regulations controlling the bidding process. Id. at 1179-80. Since there was no regulation or ordinance requiring a signature on the bid form, the court held that the bid could not be deemed irregular. Id. at 1180. Even if there were such a regulation or ordinance, the court held that the subject public agency had "discretion to waive details of the bid specifications if it determines that such a waiver will not make the bidding process unfair, i.e., if the deviation from the specifications is inconsequential." Id. (citing 47 Ops.Cal.Atty.Gen. 129 (1966)). Indeed, such a minor detail is arguably inconsequential and, according to the court in Valley Crest Landscape v. Davis, 41 Cal. App. 4th 1432 (1996), could be waived: "... [I]t is further well established that a bid which substantially conforms to a call for bids may, though it is not strictly responsive, be accepted if the variance cannot have affected the amount of the bid or given the bidder an advantage or benefit not allowed other bidders or, in other words, if the variance is inconsequential." Id. (citing Konica Business Machines U.S.A., Inc. v. Regents of University of California 206 Cal. App. 3d 449, 454 (1988))(emphasis in the original). Pursuant to California law, even if the City determines that the power of attorney date rendered Metro Builders bid bond non-responsive, the City should waive such a minor and inconsequential irregularity and allow Metro Builders to remain as the lowest, responsible bidder. Mr. Fong Tse June 9, 2017 Page 4 It is well established that a contractor's bid which substantially conforms to an invitation for bids may, though it is not strictly responsive, be accepted if the claimed errors do not affect the amount of the bid or give the bidder an advantage that others bidders do not have. See Ghilotti Construction Co. v. City of Richmond, 45 Cal. App. 4th 897, 904-905 (1996) (citing 47 Ops.Cal.Atty.Gen. 129, 130 (1966). Bid protests must be evaluated from a practical point of view with an emphasis on the particular facts of the case to determine if an alleged deviation warrants imposition of a drastic penalty. Ghilotti, 45 Cal. App. 4th at 908. In addition, the bid protest must be analyzed while considering the public interest: It certainly would amount to a disservice to the public if a losing bidder were to be permitted to comb through the bid proposal or license application of the low bidder after the fact, and cancel the low bid on minor technicalities, with the hope of securing acceptance of his, a higher bid. Such construction would be adverse to the best interests of the public and contrary to public policy. Id. at 908-909; see also, Dougherty v. Folk, 46 N.E2d 307, 311 (1941) (it is inconceivable that inconsequential departures will not appear on bid forms; these minor deviations are not actionable). The courts in Ghilotti and Dougherty both ruled that minor deviations are not sufficient grounds to reject a contractor's bid. Provisions allowing public agencies to waive deviations in the bid are included to address the often complicated and confusing process of bid proposals. Bid proposals are submitted under extremely demanding time constraints, and California courts permit government agencies to waive minor clerical errors or deviations. Archio has failed to identify any material deviation in Metro Builders' bid. In fact, Metro Builders' bid complied with the bid solicitation, specifications and governing California legal requirements. The alleged deviations cited by Archio are inconsequential in that they were not in violation of any laws, ordinances, or regulations, they had no effect on the amount on the bid and did not provide Metro Builders with any unfair competitive advantages over other bidders. III. METRO BUILDERS GAINED NO "UNFAIR ADVANTAGE" OVER OTHER BIDDERS Archio cannot establish that Metro Builders received any kind of unfair advantage from this clerical error. The other bidders were held to the same requirements and standards of having to issue an enforceable bid bond. Given that SureTec has confirmed, and the case law herein supports, that the error did not render the bid bond invalid, Metro Builders' bond is no different than the other bidder's bonds. Metro Builders was the low bidder on the bond and Metro Builders has not obtained an unfair advantage. A proper measure of whether the agency's waiver resulted in an "unfair advantage" is whether the contractor would have been liable on the bid bond if they had attempted to back out Mr. Fong Tse June 9, 2017 Page 5 of their bid after it had been accepted by the owner. Menefee v. County of Fresno 163 Cal. App. 3d 1179, 1181 (1985). If the bidder could use the absence of an executing signature on its bid to avoid a contract, it had an unfair advantage. On the other hand, if the bidder could not use the absence of a signature to avoid its bid, it did not gain any advantage from the defect, and, therefore, waiver should be permitted. Id. at 1181. Here, Archio fails to present any evidence that Metro Builders gained an "unfair advantage" by the clerical error on the bid bond incorrectly asserting the power of attorney expired. As stated above, Metro Builders was bound by the same requirements as the other bidders. Further, there is no evidence to suggest that Metro Builders could use this immaterial defect as the basis to: (1) retract its bid (after being accepted by the City as the lowest bidder); and (2) avoid forfeiture of any bid bond. Without this type of showing, Archio has failed to establish that Metro Builders somehow gained an unfair advantage over the other bidders. IV. CONCLUSION For the reasons explained herein, Archio's protest has no merit. Metro Builders' bid was responsive, and the contract should be awarded to Metro Builders. In fact, a contract awarded to anyone other than Metro Builders would be illegal and void. See Monterey Mechanical Co. v. Sacramento Regional County Sanitation District, 44 Cal. App. 4th 1391 (1996). Metro Builders is a sophisticated contractor with experience in the construction industry, and in bidding projects of this nature. Metro Builders has assembled a highly qualified team for this Project, and looks forward to working with the City and delivering a quality Project. Thank you for your consideration. If you have any questions regarding the above information, or require additional information from Metro Builders, please do not hesitate to contact me at (949) 852-6700. Sincerely, /s-/ A vnvw day L. M a v't t t34 Amanda L. Marutzky, Esq. cc: Fouad Houalla Metro Builders & Engineers Group, Ltd. 2610 Avon Street Newport Beach, CA 92663 fouadgmetrobuilders. com Mr. Fong Tse June 9, 2017 Page 6 Shelly Irvine Metro Builders & Engineers Group, Ltd. 2610 Avon Street Newport Beach, CA 92663 shelly@metrobuilders.com James Schabarum, Principal Cavignac & Associates 450 B Street, 18th Floor San Diego, CA 92101 j schabarumkcavi gnac. com