Public Contract

A low bidder is ordinarily entitled to reasonable notice and a hearing prior to rejection of the bid unless the bidder has blatantly failed to comply with a specific contract provision, such as the minority contractor requirement. Unsuccessful bidders can start lawsuits that challenge the rejection of their bids and the awarding of a public contract to another bidder. Because public contracts are matters of public interest, taxpayers can also contest the award of a contract.

The courts ordinarily will not interfere with an action of a public official or body in accepting or rejecting bids and awarding a contract, provided that the official or organization made it fairly and honestly, in good faith, and in the interest of the public. An award that was made arbitrarily or capriciously or as result of favoritism or fraud will be subjected to judicial scrutiny. There should be a reasonable time interval between the opening of the bids and the execution of a public contract to allow a disappointed bidder to bring any complaint before a court for JUDICIAL REVIEW.

Contracts executed by public officers who do not have the authority to make contracts are void and unenforceable. A contract is void if the bidder has failed to comply with competitive bidding requirements. A contractor has the responsibility to learn whether the contract complies with the law. In general, once the courts declare a public contract void, the contractor cannot recover unpaid claims, but the government can recover any payments it made under the contract. A public entity may be obligated to pay the reasonable value of the benefits received under a void contract but only in the absence of a statutory prohibition against such arrangements.