Limits on Agencies’ Ability to Reject All Bids
by Bernard S. Kamine
A graduate of Harvard Law School, Mr. Kamine has been helping contractors, owners and sureties avoid and resolve construction project disputes since 1974. He has been listed as a construction lawyer in Best Lawyers of America since 2007 (best construction lawyer in Los Angeles, 2015), and Southern California Super Lawyers since 2008, and is the author of Public Works Construction Manual – A Legal Guide for California (BNi Building News, 1996), which is cited as a secondary source in Judicial Council of California Civil Jury Instructions (2014 ed.), CACI Nos. 4500, 4501, 4502, 4521, 4522 and 4543.
Every invitation for bids that promises to award the contract to the lowest responsible bidder qualifies that promise with a sentence like this: "The agency reserves the right to reject any or all bids." As a general rule, the public agency has the discretion to reject all of the bids. However, the agency cannot abuse that discretion. Such an abuse of discretion can arise not only from an arbitrary or capricious rejection of bids, but also from a bid rejection (1) that is not required by cogent and compelling reasons or (2) that impairs the public interest by damaging the integrity of the competitive bidding system.