Louisiana’s New A+B Bidding Method “Pilot Program”

Public Bid Law severely curtails the discretion of the public entity, thereby ensuring a level playing field for all bidders and a fair and equitable means by which competing bids might be evaluated to determine the lowest responsible and responsive bidder.[1]

Effective August 1, 2019, the Louisiana legislature introduced a pilot program authorizing a significant change to Louisiana’s public bidding process called “A+B Bidding.”  With the introduction of this new bidding method on public projects, are the traditional built-in discretionary bidding limitations about to come to an end?  Has the legislature at least opened the door to public authority bid award manipulation?  Or, does the statute set forth enough restrictions to keep objective public bid award intact?  Only time, implementation, and perhaps a few bid protests will tell!

 

So, what do you need to know?

Act No. 261, signed into law by Governor John Bel Edwards on June 11, 2019, enacted La. R. S. 38:2211.2. This new addition to the public bid law authorizes a pilot program for local governmental and political subdivisions[2] to use a new bidding method – – known as the “A+B Bidding” method – – for public works contracts under certain conditions. La. R. S. 38:2211.2 is effective as of August 1, 2019, which means we may soon be seeing changes in the way the public awarding process operates on at least some public works projects.

The A+B bidding method may reshape public bid law as we know it. Under this new method, cost alone is no longer the sole determining factor (responsibility aside) in awarding a public work contract. Instead, the governmental or political subdivision may use the A+B method, in which each submitted bid has two separate components. Component “A” is the dollar amount for all work to be performed under the contract. Component “B” is the bidder’s estimated total number of calendar days required to complete the project.

There seems to be a method to all this public new bid method. Under the A+B method, bid days are multiplied by a “user cost,” which is furnished by the project owner. The bid days, or component “B”, are then added to component “A” to obtain the total bid price. The award to the lowest responsive bidder is based on a combination of the bid for the contract items and the associated cost of time.

Sound a little shaky at this point?  Yes.  However, the statute does have some – – potential – – built-in protections:  that is, the bidding documents shall specify how the bid will be awarded.  Whether the low bid will be determined based on the lowest bid cost, or the lowest combination of bid cost plus construction time must be set forth in the bidding documents. But now comes the tricky part.  The statute says that if construction time is utilized as a factor to determine the lowest responsive bidder, then its value and use in determining the “lowest responsive bidder shall be specified by the owner in the bidding documents.”  This will only be a sufficient check on the public owner if it is required to include in the bidding documents the multiplier “user cost” to be used by the owner to translate the days to costs. If this is required, the owner’s award method is locked-in on the front-end and the bidders on the project can use the identified method to double check the accuracy of the award. But read as a whole, the statute is not that clear.  Instead, earlier in the same paragraph, the statute says that the bidding documents “may” include the method to determine the lowest responsive bidder.  As a result of this potential ambiguity, a savvy public owner may be able to skirt-around the statute’s safeguards opening up a “Pandora’s box” to the favoritism and corruption that the public bid laws were established to prevent.”[3]

As stated earlier, the statute creates a pilot program.  That program is limited to fifteen projects.  To qualify, at least 60 days prior to the including the A+B method into the bid process, the public owner must provide the House and Senate transportation, highways, and public works committees with written notice of the proposed project (name and project description) and the reason(s) that using this method is beneficial to the owner and in the public interest.  If the project is approved, after receiving the responsive bids, the owner must submit (to the same committees) the name and address of the lowest responsive bidder awarded the contract, and the bid values of the A+B components.  After project completion, the owner must submit a report including the final project cost and an evaluation of whether or not contract times were reduced, costs were acceptable, and quality was maintained.

It will be interesting to see the repercussions from this new bidding method – – good, bad, or ugly. If utilized appropriately, this new method could benefit all parties on public works projects. If implemented without the necessary safeguards, the public bid law’s discretionary limitations will most likely be compromised.

Again, only time – – and experience – – will tell.

[1]   Barriere Constr. Co. v. Par. of Tangipahoa, 2018-0279 (La. App. 1 Cir. 9/24/18), 259 So. 3d 458.

[2]   As defined in La. Const. Art. VI, Sec. 44(1) and (2).

[3]   V. C. Nora, Jr. Bldg. & Remodeling, Inc. v. State Through Dep’t of Transp. & Dev., 635 So. 2d 466, 472 (La. Ct. App. 1994), abrogated by Colvin v. Louisiana Patient’s Comp. Fund Oversight Bd., 2006-1104 (La. 1/17/07), 947 So. 2d 15.