Before rejecting the lowest bid for a public project, many government agencies run background checks on the bidders. It’s critical to be fair and even-handed about those checks, making sure you don’t cherry-pick negative information.
Recent case: Lanier Construction, a minority-owned firm, was the lowest bidder on a public works project for the city of Clinton. The next lowest bidder was not minority-owned. Before making its final choice, the city ran background checks on the bidders, which included speaking to past clients. Four out of five Lanier clients said their projects ran late. Three said they wouldn’t rehire the firm.
The city rejected Lanier’s bid, choosing the second-lowest bidder instead. Its past clients didn’t report such extensive late deliveries. In fact, only one said the project was late, and that client explained that the weather was to blame for the delay.
Lanier Construction sued, alleging that, despite its low bid, it hadn’t been selected because of race discrimination. The city countered that it had merely conducted a reasonable and fair background and client check that revealed that Lanier didn’t deliver on time.
The court tossed out Lanier’s lawsuit. It reasoned that investigating whether a bidder could deliver on time and on budget was legitimate. Plus, there was no evidence that the city left out positive information in order to skew the results. To the contrary, the city reviewed five recent projects from both firms. No one hid any positive Lanier references.
The court said the process was fair and equitable—and that the city was free to conclude that it shouldn’t accept Lanier’s bid on a project that needed to be completed on time and on budget. (Lanier Construction v. City of Clinton, No. 4:11-CV-36, ED NC, 2013)
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