Baker v. State

• Decision Date: 09 October 1985
• Docket Number: No. 85-11,85-11
• Citation: 218 Mont. 235,707 P.2d 20
• Parties: John R. BAKER, d/b/a J.R. Baker Construction, Plaintiff and Appellant, v. STATE of Montana, Montana State Board of Examiners, Governor Ted Schwinden, Secretary of State Jim Waltermire, and Attorney General Michael T. Greely, as members thereof, and Morris Brusett, Director of the Department of Administration, Defendants and Respondents.
• Court: Montana Supreme Court

Page 20

707 P.2d 20

218 Mont. 235

John R. BAKER, d/b/a J.R. Baker Construction, Plaintiff and Appellant, v. STATE of Montana, Montana State Board of Examiners, Governor Ted Schwinden, Secretary of State Jim Waltermire, and Attorney General Michael T. Greely, as members thereof, and Morris Brusett, Director of the Department of Administration, Defendants and Respondents.

No. 85-11.

Supreme Court of Montana.

Submitted on Briefs April 4, 1985.

Decided Oct. 9, 1985.

Larry W. Moran, Bozeman, for plaintiff and appellant.

Allen Chronister, Asst. Atty. Gen., Helena, for defendants and respondents.

HARRISON, Justice.

This is an appeal from an order entered in the District Court of the First Judicial District, in and for the County of Lewis and Clark, dismissing the appellant's complaint for failure to state a claim. The suit was dismissed on the ground that plaintiff lacked standing to sue. This appeal raises important questions concerning standing, and the statutes regulating acceptance of bids and award of public works contracts.

The transaction involved resulted from the issuance by the State of Montana, Division of Architecture and Engineering of an invitation for bids for the construction of the National Guard Armory in Harlowton, Montana. Bids were received on January 18, 1984. J.R. Baker Construction, hereinafter Baker, submitted a bid for $420,740 and Edsall Construction Company, hereinafter Edsall, submitted a bid for $420,300, a difference of $440. Baker protested Edsall's bid on the allegation that Edsall was working beyond the contract time on another public works project and was therefore ineligible to bid on a public project by virtue of section 18-2-311, MCA and section 37-71-203, MCA. A hearing was held before the Board of Examiners on March 13, 1984. The Board of Examiners denied the protest and awarded the bid to Edsall as the low bidder.

In District Court Baker sought to have the action of the State in granting the bid to Edsall declared illegal as a violation of section 18-2-311, MCA and section 37-71-203, MCA. Baker further requested that the District Court determine that Baker was the lowest responsible bidder and was entitled to the award of the contract. Baker sought recovery for lost profits, bidding costs, litigation costs and attorney's fees. Defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted. The District Court granted the motion. It is from that order that Baker appeals.

The decisive issue in this appeal is whether Baker lacked standing to bring this action.

The statute governing the award of construction contracts provides:

"(1) For the construction of a building costing more than $25,000, the department of administration shall:

"...

"(c) ... under the supervision and with the approval of the board of examiners, solicit, accept, and reject bids and award all contracts to the lowest qualified bidder considering conformity with specifications and terms and reasonableness of bid amount." Section 18-2-103(c), MCA. (Emphasis added.)

The statutes further state that:

"... A public contractor, as defined in 37-71-101, who has been awarded a contract by the state of Montana or any board, commission, or department thereof or by any board of county commissioners or by any city or town council or agency thereof for the construction or reconstruction of a public work and is working beyond the contract time (including any authorized time extensions) shall not submit any additional bids or proposals or enter into any additional contract with any public agency of the state of Montana, county, or city thereof until he has completely executed the contract upon which he is working beyond contract time and all supplemental agreements thereto.

"... A public contractor shall not be considered to be working beyond contract time if the delay is caused by an accident or casualty produced by physical cause which is not preventable by human foresight, i.e., any of the misadventures termed an 'act of God.' " Sections 18-2-311 and 18-2-312, MCA.

Section 37-71-203, MCA provides:

"... All bids and proposals for the construction of any public contract project subject to the provisions of this chapter shall contain a statement showing that the bidder or contractor is duly and regularly licensed hereunder and is not presently working beyond the contract time, including authorized time extensions, on any previously awarded public contract project. The number and class of such license then held by such public contractor shall appear upon such bid or proposal, and no contract shall be awarded to any contractor unless he is the holder of a license in the class within which the value of the project shall fall as herein provided and unless the public contractor has completely executed any previous contract upon which he has worked beyond contract time."

Baker asserts that government agencies must abide by the bidding statutes and where a violation of a statute or regulationgives an advantage to one bidder the courts should allow the aggrieved bidder a right of recovery. Baker further maintains that by inviting offers, and representing that they will be considered pursuant to the competitive bidding statutes, an implied contract exists between the government and the bidders that the government will consider bids fairly and honestly within the statutory procedures.

Baker cannot base his plea for relief on contract theory. It is a well founded principle of contract law that a contract does not exist prior to the acceptance of a bid by an agency "[A]n ordinary advertisement for bids or tenders is not itself an offer but the bid or tender is an offer which creates no right until accepted. Even though the charter of a municipality expressly requires that a contract shall be awarded to the lowest responsible bidder, a contract is not formed until the lowest bid is in fact accepted." 1 Williston on Contracts, § 31 (3rd Ed.1957).

Courts from our sister jurisdictions have likewise held:

"... in Alaska, as elsewhere, an agency's solicitation of bids is not an offer, but rather a request for offers; no contractual rights based on the content of a bid arise prior to its acceptance by the agency. Beirne v. Alaska State Housing Authority, 454 P.2d 262, 264 (Alaska 1969)." King v. Alaska State Housing Authority (Alaska 1981) 633 P.2d 256 at 261.

See also Gulf Oil Corp. v. Clark Cty. (1978), 94 Nev. 116, 575 P.2d 1332.

This authority is most persuasive when read in conjunction with the language of this state's bidding statutes. The department was under a statutory obligation to accept the lowest responsible bidder. The Department's solicitation of bids was not an offer. Nor was Baker's response to the solicitation an offer. Because the Department rejected Baker's bid, no contract ever came into existence. As a result, recovery based upon contract theory cannot be had.

The policy behind the bidding statute also precludes any finding of standing for Baker to bring the action. The statute's primary function is to benefit the citizens. This premise is stated in 72 C.J.S.,...