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24790 - Ray Bell Construction Company, Inc. v. The School District of Greenville County

Davis Adv. Sh. No. 19
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court

Ray Bell Construction

Company, Inc., Petitioner

v.

The School District of

Greenville County and

M.B. Kahn Construction

Company, Inc., Respondents

ON WRIT OF CERTIORARI TO THE COURT OF

APPEALS

Appeal From Greenville County

Marc H. Westbrook, Judge

Opinion No. 24790

Heard March 5, 1998 - Filed May 18, 1998

REVERSED AND REMANDED

David B. Summer, Jr., and Faye A. Flowers, of

Parker Poe Adams & Bernstein, L.L.P., of

Columbia, for petitioner.

Donald A. Harper and N. Ward Lambert, of The

Harper Law Firm, of Greenville, for respondent

Greenville County School District.

Theodore S. Stern, Jr., and Thomas E. Dudley, III,

p.13


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

of Covington, Patrick, Hagins, Stem & Lewis, P.A.,

of Greenville, for respondent M.B. Kahn

Construction Company, Inc.

WALLER., A.J.: We granted certiorari to review the Court of

Appeals' decision in Ray Bell Constr. Co. v. School Dist. of Greenville Cty.,

324 S.C. 320, 478 S.E.2d 67 (1996). We reverse and remand.

FACTS/PROCEDURAL POSTURE

In June 1994, Respondent Greenville County School District ("District")

issued an Invitation for Construction Bids on a new high school. Three

contractors submitted bids for the project: (1) Respondent M.B. Kahn

Construction Company, Inc. ("Kahn"); (2) Petitioner Ray Bell Construction

Company, Inc. ("Ray Bell"); and (3) Ellis-Don Construction, Inc. When bids

were opened, Kahn's was the lowest, some $240,000 lower than Ray Bell's.1

Ray Bell questioned the responsiveness2 of Kahn's bid because Kahn had

listed multiple subcontractors in the alternative for the same specialty work

on its bid form.

District required contractors to list subcontractors for fifteen separate

specialties. Ray Bell's complaint involves Kahn's listings in five areas:

ROOFING: "Piper or Pickens"

STRUCTURAL STEEL: "G.C. [general contractor, i.e. Kahn] and

or McAbee or Falcon"

MASONRY: "GC and/or Pettit and/or Brickmaster and/or Marion

and/or Byers and/or New Carolina and/or Cherokee and/or

Goucher"

TERRAZZO/HARD TILE: "Campbell Tile or Capital/Adams"


1Ellis-Don was the highest bidder and is not a party to this action.

2According to District's Procurement Code, contracts "shall be awarded

. . .to the lowest responsible and responsive bidder whose bid meets the

requirements and criteria set forth in the invitation for bids . . . ."

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BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

HVAC CONTROLS: "Barber Coleman or ACTS."

In response to Ray Bell's questions, District requested an explanation

from Kahn for its listings. Kahn made the following representations by

letter. For roofing, Kahn stated it listed two subcontractors because it

intended to award roofing by type: conventional built-up roofing to Piper and

metal roofing to Pickens. For Structural Steel and Masonry, Kahn stated it

intended to do the work itself, and would enlist the aid of additional

subcontractors should they be needed to complete the work on schedule. For

Terrazzo/Hard Tile, Kahn stated it intended to award terrazzo and ceramic

tile separately: terrazzo to Campbell "and the ceramic tile to be awarded

next in accordance with our proposal." For HVAC Controls, Kahn stated it

was necessary to list two subcontractors "due to the proprietary nature of

certain aspects of the controls systems depending on equipment selection."

After reviewing Kahn's written explanation, District issued a notice

stating it intended to award Kahn the contract. Ray Bell then filed a formal

protest with District's purchasing agent. The purchasing agent denied the

protest, stating that based on Kahn's written explanation, "'bid shopping' is

neither contemplated nor possible." The same day of this denial, District

awarded Kahn the contract. Ray Bell appealed the purchasing agent's

decision. The matter was subsequently set before a master-in-equity3 for an

administrative hearing.

At the hearing, held seventeen days after Kahn received the contract

award, Kahn gave further information regarding the subcontractor listings.

Regarding the roofing, Kahn represented it did not get breakout bids (broken

down into built-up and metal) from Piper or Pickens until after it received

the contract. Prior to that, it only had bids for the whole project. It used


3District's Procurement Code provides its "Procurement Review Board"

is charged with responsibility for providing administrative review of protests

arising from contract awards. Thus, when Ray Bell filed its request for

review of the purchasing agent's decision, the matter should have been heard

by this Board. However, at the time there was no active District

Procurement Review Board. Therefore, in an unusual agreement, all parties

stipulated the matter would be heard by a master-in-equity, who would have

all rights and powers of any administrative body authorized to hear the

protest. The presiding circuit court judge agreed to this stipulation and

reference, further providing any appeal of the master's decision would be to

circuit court. We make no representations regarding the propriety of a

judicial officer hearing this case in an administrative capacity.

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BELL CONSTRUCTION COMPANY, INC. , v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

Piper's sub-bid in its bid calculation. After receiving the breakout bids post-

award, Kahn decided to award the entire job to Piper.

Regarding structural steel and masonry, Kahn maintained it still

intended to do the work itself, and would get District approval (i.e. comply

with S.C. Code Ann. § 11-35-3020(2)(b)(ii), quoted below, regarding self-

bidding) before resorting to subcontractors. Regarding terrazzo/hard tile,

Kahn represented Campbell gave a pre-award bid, broken down into terrazzo

and hard tile. Capital gave a pre-award bid for the hard tile only. Adams

originally bid for both terrazzo and hard tile, but withdrew its bid at some

point (the record is unclear whether this occurred pre- or post-award).

Finally, regarding the HVAC controls, Kahn stated in actuality this

subcontractor is chosen by the mechanical subcontractor, (i.e. it would be a

"sub's sub"). Therefore, Kahn had no control over that award. It received

no quotes from either Barber Coleman or ACTS, and its listed mechanical

subcontractor did not provide these names. Kahn stated it had ultimately

awarded subcontracts to those subcontractors who submitted the lowest pre-

award bid. Kahn also denied it ever shopped bids.

After the hearing, the master denied Ray Bell's protest. The circuit

court affirmed. The Court of Appeals likewise affirmed. Ray Bell Constr.

Co., 324 S.C. 320, 478 S.E.2d 67 (Cureton, J., dissenting).

We granted certiorari.

ISSUES

I. Does state law prohibit the listing of alternate subcontractors in bid

forms?

II. If listing alternate subcontractors is improper, can doing so constitute

a minor informality such that District could waive it?

DISCUSSION

Standard of Review

Under District's Procurement Code, factual determinations required by

competitive sealed bidding "shall be final and conclusive unless they are

clearly erroneous arbitrary, capricious or contrary to law." No

p.16


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

determination by the Review Panel or Board concerning an issue of law shall

be final or conclusive."

I. Statutory Construction of S.C. Code Ann. § 11-35-3O2O

Ray Bell argues S.C. Code Ann. § 11-35-3020(2)(b) prohibits the listing

of multiple subcontractors in the alternative on bid forms. Under the

circumstances that exist in this case, we agree. In 1994, this section

provided, in pertinent part:

(b) Bid Acceptance. . . . The using agency's invitation for bids

shall set forth all requirements of the bid including, but not

limited to:

(i) The using agency ... shall identify by specialty in

the invitation for bids all subcontractors ... who are expected to

perform work or render service to the prime contractor to or

about the construction when those subcontractors' contracts are

each expected to exceed three percent of the prime contractor's

total base bid. In addition, the using agency ... may identify by

specialty in the invitation for bids any subcontractors who are

expected to perform work which is vital to the project. The

determination of which subcontractors are included in the list

provided in the invitation for bids is not protestable under

Section 11-35-4210 or any other provision of this code. Any

bidder in response to an invitation for bids shall set forth in

his bid the name of each subcontractor so identified in the

invitation for bids. If the bidder determines to use his own

employees to perform any portion of the work for which he would

otherwise be required to list a subcontractor and if the bidder is

qualified to perform such work under the terms of the invitation

for bids, the bidder shall list himself in the appropriate place in

his bid and not subcontract any of that work except with the

approval of the using agency for good cause shown.

(ii) Failure to complete the list provided in the invitation

for bids renders the bidder's bid unresponsive.

(iii) No prime contractor whose bid is accepted shall

substitute any person as subcontractor in place of the

subcontractor listed in the original bid, except for one or more of

p.17


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

the following reasons: [subcontractor (a) is financially

irresponsible, (b) did not properly bid to contractor, (c) was

inadvertently listed due to clerical error, (d) has not submitted

required bond, (e) is not licensed as required by law, (f) fails to

perform contract, (g) is doing unsatisfactory work'(h) has agreed

to substitution, (h) with using agency's consent upon good cause

shown]. The request for substitution must be made to the using

agency in writing.

(iv) Where substitution is allowed, the prime contractor,

before obtaining prices from any other subcontractor, must

attempt in good faith to negotiate a subcontract with at least one

subcontractor whose bid was received prior to the submission of

the prime contractor's bid.

(emphasis supplied).4

In disagreeing with Ray Bell's argument, the Court of Appeals stated:

". . . the express language of section 11-35-3020(2)(b) provides the failure to

complete the list in the invitation for bids renders the bidder's bid

unresponsive. The clear language of the statute, however, does not state that

listing of alternative subcontractors renders the bid unresponsive." Ray Bell

Constr. Co., 324 S.C. at, 478 S.E.2d at 70. In essence, the Court of Appeals

reasoned if the legislature did not expressly prohibit such listings, they were

permissible. In doing so, it relied on a strict rule of statutory construction:

If a statute's language is plain and unambiguous, and conveys a

clear and definite meaning, there is no occasion for employing

rules of statutory interpretation and the court- has no right to

look for or impose another meaning. Where the terms of the

statute are clear, the court must apply those terms according to

their literal meaning. This Court cannot construe a statute

without regard to its plain and ordinary meaning, and may not

resort to subtle or forced construction in an attempt to limit or

expand a statute's scope.

Paschal v. State Elec. Comm'n, 317 S.C. 434, 436-37, 454 S.E.2d 890, 892

(1995). The Court of Appeals found the language of section 11-35-3020(2)(b)


4District made these provisions applicable to the bids submitted for this

project by including them in its Instructions to Bidders and Invitation for

Bids.

p.18


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL, DISTRICT OF GREENVILLE COUNTY, ET AL.

unambiguous, and thus refused to resort to other rules of statutory

construction.

The question of whether a statute's language is unambiguous and

conveys a clear and definite meaning is not always an easy one. We find the

Court of Appeals erred in focusing only on section 11-35-3020(2)(b)(ii) in

construing the statute's meaning.5

All rules of statutory construction are subservient to the one that

the legislative intent must prevail if it can be reasonably

discovered in the language used, and that language must be

construed in the light of the intended purpose of the statute.

However plain the ordinary meaning of the words used in a

statute may be, the courts will reject that meaning when to

accept it would lead to a result so plainly absurd that it could

not possibly have been intended by the Legislature or would

defeat the plain legislative intention. lf possible, the court will

construe the statute so as to escape the absurdity and carry the

intention into effect.

Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 275, 440

S.E.2d 362, 366 (1994) (internal citations omitted) (emphasis supplied).

Allowing the listing of alternate subcontractors would conflict with the

overall purpose behind section 11-35-3020(2)(b). As Judge Cureton discussed

at length in his dissent, the underlying goals of the State Procurement Code

are, inter alia, to ensure standards for the "fair and equitable treatment of

all persons" dealing with public procurement, establish a "system of quality

and integrity with clearly defined rules for ethical behavior on the part of all

persons engaged in the public procurement process," and "foster effective

broad-based competition." S.C. Code Ann. § 11-35-20 (Supp. 1997). These

goals are to be furthered while maximizing, "to the fullest extent


5We also disagree with the Court of Appeals' reasoning to the extent

it suggests the sole criteria of responsiveness is contained in this statute.

District's bidding requirements provide that a bid will be unresponsive if it

does not comply with applicable state law. Thus, if the listing of multiple

subcontractors in the alternative violates state law, the bid can be considered

unresponsive despite section 11-35-3020's failure to so specifically provide.

p.19


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

practicable[,] the purchasing values of [public] funds." Id.6 To these ends,

a primary objective of the bid listing provisions, particularly regarding

subcontractors, is to prevent bid shopping and peddling.7 Allowing the listing

of alternate subcontractors would only serve to foster these unethical

practices because it would give contractors the opportunity to choose from

among several prospective subcontractors, depending on who offered the

lowest bid post-award.

Additionally, the strict substitution requirements of section 11-35-

3020(2)(b) would be rendered virtually meaningless under the Court of

Appeals' interpretation. These provisions allow subcontractor substitutions

only with prior approval of the using agency and in certain limited

circumstances. However, if a contractor could list subcontractors in the

alternative on the bid form and then make its choice post-award, these

substitution requirements could be completely circumvented. "In construing

statutory language, the statute must be read as a whole, and sections which

are part of the same general statutory law must be construed together and

each one given effect, if it can be done by any reasonable construction."

Higgins v. State, 307 S.C. 446, 449, 415 S.E.2d 799, 801 (1992). See also

Jackson v. Charleston Cty. Sch. Dist., 316 S.C. 177, 181, 447 S.E.2d 859, 861

(1994) ("The true guide to statutory construction is not the phraseology of an

isolated section or provision, but the language of the statute as a whole

considered in the light of its manifest purpose.").

A Pennsylvania court reasoned, in interpreting similar subcontractor


6District's Procurement Code has incorporated these policies into its

provisions as well.

7" Bid shopping is the use by the general of one subcontractor's low bid

as a tool in negotiating lower bids from other subcontractors. Bid peddling,

conversely, is the practice whereby subcontractors attempt to undercut known

bid prices of other subcontractors in order to get a job. In most

circumstances, bid peddling is simply a response of competing subcontractors

to the bid shopping activity of a general, and insofar as a solution to this

problem is concerned, bid shopping and peddling may be treated as one."

Thomas P. Lambert, Comment, Bid Shopping and Peddling in the

Subcontract Construction Industry, 18 UCLA L. Rev. 389, 394 (1970). Bid

shopping allows a bidder "to be in a position to increase his profit, often to

the detriment of the project itself, by forcing subcontractors to provide

services at destructively low prices in order to obtain work." George &

Lynch, Tnc. v. Division of Parks and Rec., 465 A.2d 345, 349 n.4 (Del. 1983).

p.20


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

listing requirements contained in bid instructions: "Although it is true that

the bid instructions do not expressly forbid alternative listings, it is also true

that the apparent intent of the language 'to identify the equipment and

material which has been used by [the contractor] as a base bid . . .' together

with another requirement that no modifications would be allowed after bid

opening, makes the most reasonable interpretation seem to be that only one

listing would be permitted, and that was in fact how all the other bidders

understood the instruction." Conduit & Found. Corp. v. City of Philadelphia,

401 A.2d 376, 379 (Pa. Commw. Ct. 1979).8 We find section 11-35-3020


8In reaching its decision, the Court of Appeals relied on Thomas P.

Carney, Inc., v. City of Trenton, 562 A.2d 807 (N.J. Super. Ct. App. Div.

198S). In Carney, a bid was submitted listing multiple subcontractors for one

specialty. Carney argued this violated applicable law requiring bidders to

give "the name or names or all subcontractors to whom the bidder will

subcontract." The court disagreed, finding, "The 'one subcontractor to a trade'

rule contended by Carney is simply not found in the text of the statute. If

the drafters of the statute intended to prohibit general contractors from using

multiple subcontractors in each trade, we assume more precise wording would

have been used." Id. at 810. Carney held the statute neither prohibited a

bidder from contracting with more than one subcontractor in a trade, nor

required each subcontractor named actually receive a contract. "The purpose

of the word 'will' in the statute is to prevent substitutions of unlisted

subcontractors, not to guarantee that each listed subcontractor receive a

contract." Id.

Carney's holding was subsequently limited by Prismatic Dev. Corp. v.

Somerset Cty. Bd. of Chosen Freeholders, 564 A.2d. 1208 (N.J. Super. Ct.

App. Div. 1989), cert. denied, 570 A.2d 965 (N.J. 1989), and overruled on

other grounds by Meadowbrook Carting Co. v. Borough of Island Heights, 650

A.2d 748 (N.J. 1994). Prismatic also addressed whether contractors could

name alternative specialty subcontractors under the same statute analyzed

in Carney. Relying in part on legislative history, but also in part on

statutory language, Prismatic held it was impermissible "to name multiple

subcontractors for some (or all) of the branches of work and then select

between them after the opening of bids." Id. at 1212. In so holding, it

factually distinguished Carney: "In that case ... the contracting unit's bid

request contained a number of alternative proposals, all of which were to be

provided for in the bids. The prime contractor, in a single overall contract

bid, named more than one subcontractor for the same trade but was really

required to do so because the selection of the subcontractor det)ended upon

what the contracting unit ultimately decided to do." Id. at 1210 (emphasis

p.21


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

prohibits the listing of multiple subcontractors in the alternative on a bid.

However, our holding is not intended to proscribe listing multiple

subcontractors when more than one subcontractor is actually going to perform

the work (i.e. the 'ob will be shared), or when the award of subcontractors

will depend on some post-award action by the awarding Agency. See Ray Bell

Constr. Co., 324 S.C. at 331-32, 478 S.E.2d at 73 (Judge Cureton, dissenting);

Prismatic, 564 A.2d 1208.9 Under the circumstances of this case, we find

Kahn improperly listed subcontractors on its bid form because it provided the

opportunity to choose from among several subcontractors post-award.10

In finding Kahn's bid complied with applicable law, the master seemed

to focus on the fact that (1) it did not appear Kahn actually "shopped" its bid

among subcontractors, and (2) Kahn ultimately awarded subcontracts to those


supplied). Carney can be similarly distinguished here, a fact the Court of

Appeals ignored.

9Section 11-35-3020(2)(b)(i) was amended in 1997, after the Court of

Appeals issued its decision in this case. It now reads in pertinent part:

"Any bidder in response to an invitation for bids shall set forth in his bid the

name of only those subcontractors that will perform the work as identified

in the invitation for bids." (emphasis supplied to reflect amendment). We

do not suggest this amendment should be read as an indication of legislative

intent in enacting the statute we interpret today. See Whitner v. State, 328

S.C. 1, 492 S.E.2d 777 (1997) (Generally, the legislature's subsequent acts

cast no light on the intent of the legislature which enacted the statute being

construed).

10Neither of the limitations to our holding applies in this case. We do

take note of Kahn's initial, pre-award representations that the two roofing

subcontractors would share the work. Had that been the case, a good

argument exists this listing would not have violated section 11-35-3020.

However, this is not what ultimately occurred. Kahn used Piper's whole bid

in computing its bid offer. It admitted at the hearing it never asked for a

break-out bid from either Piper or Pickens until after it was awarded the

contract (and after it responded to District's inquiry). After receiving the

break-out bids, it decided to use Piper for the whole project, ostensibly

because Pickens bid too high. It is difficult to understand how a contractor

could have intended to award subcontracts separately by type when it never

had break-out bids. While Kahn may not have actually shopped its bid, it

appears by its own admissions to have engaged in some post-award

negotiations and decision-making.

p.22


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

subcontractors who gave the lowest pre-award bids. His reasoning was that

if the underlying policy of section 11-35-3020 is to prevent bid shopping, and

no bid shopping actually occurred, then Kahn effectively complied with the

statute.11 We disagree with this reasoning. Section 11-35-3020(2)(b) is a bid

listing statute. Although the legislature could have written a statute directly

prohibiting bid shopping, it chose instead to adopt preventive measures

regulating conduct which provides the opportunity to engage in unethical

practices.12 We find that to establish a violation of section 11-35-3020, proof

of actual bid shopping is not required. A contrary interpretation would not

only render subcontractor listing requirements largely superfluous, but would

create practical difficulties in light of the time and proof restrictions


11This was also the reasoning of District's purchasing agent. Of course,

District's willingness to adopt the "no harm, no foul" approach is colored by

its desire to get the lowest contract. Once it assures itself no actual bid

shopping occurred (even if it were only because of Ray Bell's protest), its

incentive to find the lowest bid unresponsive must have been greatly

diminished.

12 New Mexico rejected a similar argument upon a contractor's

contention it should be relieved of complying with certain bidding statutes

when there is no "real risk" of bid shopping or peddling because an agency

hearing is required.

If the legislature believed that the hearing before the using

agency would be adequate to determine whether or not there had

been bid shopping or peddling, then there would be little point to

listing subcontractors in the first instance. The using agency

would simply make an individualized determination in each case

regarding whether bid shopping or peddling had occurred. The

Act's listing requirement, however, together with the strict

limitation on substitution or subcontractors, establishes that the

legislature was not willing to rely on after-the-fact inquiries into

bid shopping or peddling. Rather, the legislature adopted

prophylactic measures which greatly reduce the opportunity for

bid shopping or peddling and thereby avoid the delay and

expense of fact-finding regarding the existence of those practices.

We should resist adopting an interpretation of [the statute] that

undermines the value of these prophylactic measures.

Dynacon, Inc. v. D & S Contracting, Inc., 899 P.2d 613, 618-19 (N.M. Ct.

App. 1995).

p.23


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

envisioned by the procurement scheme. Aggrieved parties must protest bids

within fifteen days after the notification of award is posted; and bid shopping

only occurs after an award is made. Considering that the decision of

responsiveness should be made before a contract is awarded, it would seem

impossible to make the issue depend on whether bid shopping or other

unethical behavior ultimately occurred. We find the legislature would not

have intended such an illogical application. The statute has uniform listing

requirements which, when followed, greatly diminish the opportunity to shop

bids. Eradicating opportunities to engage in unethical behavior is clearly

what the legislature has decided to police. Because Kahn's bid form gave it

such an opportunity, it ran afoul of section 11-35-3020(2)(b).

II. Waiver

District has the authority to waive minor informalities or irregularities

in a bid. Its Procurement Regulations define "minor informality or

irregularity" as "one which is merely a matter of form or is some immaterial

variation from the exact requirements of the invitation for bids, having no

effect or merely a trivial or negligible effect on price, quality, quantity, or

delivery of the supplies or performance of the services being procured, and

the correction or waiver of which would not affect the relative standing of, or

be otherwise prejudicial to bidders." The master found that even if Kahn's

bid listing did not comply with the statutory bidding requirements, District

had the discretionary authority to waive such noncompliance. It again based

its decision on its finding that ultimately no bid shopping actually occurred.

The circuit court affirmed the master's ruling.13 Ray Bell argues this was

error. We agree. For the following reasons, we find the violation in this case

was material and could not be waived. 14

While we have found no South Carolina authority directly on point,

courts from other jurisdictions have held noncompliance with bid listing

statutes material and non-waivable. See generally 64 Am. Jur. 2d Public


13The Court of Appeals, in light of its interpretation of section 11-35-

3020, did not address this issue.

14 The question of whether a variation is material is normally a question

of fact. 72 (Supp.) C.J.S. Public Contracts § 13 (1975). However, our ruling

is not grounded on individual fact determinations. Rather it is a finding

that, as a matter of law, District has no authority to waive the statutory

bidding requirements in this case.

p.24


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

Works & Contracts § 62 (1972) (mandatory statutory requirements cannot be

waived).

Essentially this distinction between conditions that may or may

not be waived stems from a recognition that there are certain

requirements often incorporated in bidding specifications [that] by

their nature may be relinquished without there being any

possible frustration of the policies underlying competitive bidding.

In sharp contrast, advertised conditions whose waiver is capable

of becoming a vehicle for corruption or favoritism, or capable of

encouraging improvidence or extravagance, or likely to affect the

amount of any bid or to influence any potential bidder to refrain

from bidding, or which are capable of affecting the ability of the

contracting unit to make bid comparisons, are the kind of

conditions [that] may not under any circumstances be waived.

Meadowbrook Carting Co. v. Borough of Island Heights, 650 A.2d 748, 751-52

(N.J. 1994). See also George & L3mch, Inc., 465 A.2d at 351 ("the contract

should never be awarded on the strength of a promise that the statutory

conditions restricting the very right to accept a bid will be satisfied

subsequent to its acceptance"); Haddock v. Board of Pub. Educ., 84 A.2d 157,

161-62 (Del. Ch. 1951) (multiple listing of alternative subcontractors could not

be a technical irregularity "in light of the special requirements of the statute"

making subcontractor listings a condition precedent to receiving award);

Neilsen & Co. v. Cassia, 536 P.2d 1113, 1116 (Idaho 1975); Williams Bros.

Constr., Inc. v. Public Bldg. Comm'n, 612 N.E.2d 890, 896 (111. App. Ct. 1993),

cert. denied, 622 N.E.2d 1229 (111. 1993) ("an agency has no power to waive

compliance with a requirement imposed by the legislature"); Prismatic, 364

A.2d at 1212 ("The failure to list the subcontractors in-the manner prescribed

by the statute is material and non-waivable").

Courts have adhered to this rule even when there is no actual harm

done, if the deviation had the "capacity" to affect the competitive bidding

process.

This court has required strict adherence to bidding requirements

even where no harm to the public authority was shown; where

the violation benefited the public; and where there was no

showing of bad faith or corruption. There are, however,

circumstances in which noncompliance with bidding requirements

has been characterized as technical rather than substantive, as

a minor deviation not requiring invalidation of a bid or a

p.25


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

contract. The question is whether invalidation is necessary in

order to fulfil the legislative purpose.

Phipps Prod. Corp. v. Massachusetts Bay Transl2. Auth., 443 N.E.2d 115, 118

(Mass. 1982) (internal citations omitted). In Conduit, the court discussed the

issue of whether listing alternative subcontractors is a waivable defect:

Although there is no evidence that [the low-bidding contractor]

engaged in bid shopping, a problem as to the statutory

requirement of open and equal competition occurs because the

benefits from bid-shopping can be anticipated when a bidder

intends to list several suppliers. Therefore, those benefits can be

factored into the amount quoted on the submitted bid, a benefit

all the other bidders reasonably believed would not be permitted

in this case. Thus, the aberration in [the protested] bid is one

allowing an opportunity for a Competitive advantage in preparing

the bid.

401 A.2d at 379 (here, prohibition against alternative listing was not in

statute but in bidding specifications). See also Meadowbrook, 650 A.2d at

755-56 (bidder's failure to include consent of surety in its proposal non-

waivable, even though cured four days later, because it had the "capacity to

affect the fairness of the bidding process," "even though it is evident that in

fact there was no corruption or any actual adverse effect upon the bidding

process").

We find allowing the subcontractor listing requirements to be waived

in this case would frustrate the purpose of the legislature in enacting the

statute. Therefore, Kahn's failure to properly list subcontractors as required

by section 11-35-3020 was a material violation of the bidding requirements

and was not waivable by District. Kahn's bid was therefore unresponsive.

For the foregoing reasons, we reverse the Cour-t of Appeals' decision in

this case and remand for further proceedings consistent with this opinion. 15


15Although Ray Bell originally sought a re-award of the contract, it is

now only seeking reimbursement costs and attorneys' fees. Kahn additionally

argues that because the master found Ray Bell's own bid unresponsive, it

does not have standing in this case. We disagree with Kahn's interpretation

of the master's order. A close reading shows any language referring to Ray

Bell's bid was purely hypothetical in nature. Under the factual

p.26


BELL CONSTRUCTION COMPANY, INC., v. SCHOOL DISTRICT OF GREENVILLE COUNTY, ET AL.

REVERSED AND REMANDED.

FINNEY, C.J., TOAL, MOORE, and BURNETT, JJ., concur.


circumstances of this case, we decline to find such language amounted to a

final, dispositive ruling.

p.27