Minnesota "Best Value" Bidding: Lessons from the I-35W Bridge Bid Protest

Minnesota's "Best Value" Procurement Law

In 2001, Minnesota enacted legislation (Minn. Stat. Section 161.3410, et seq.) authorizing the Minnesota Department of Transportation (MnDOT) to use design/build best value procurement. The statute includes the following provisions:

• Under specified circumstances, and notwithstanding any law to the contrary, MnDOT can solicit and award design/build construction contracts on the basis of a best value selection process.
• MnDOT must appoint a technical review committee (TRC) of at least five members, including a member nominated by the Minnesota Chapter of the Associated General Contractors (MnAGC).
• MnDOT must issue a request for proposals (RFP) that includes a description of the selection criteria and the weight or relative order of each criterion.
• Each proposal must to be segmented into a technical proposal and a price proposal.
• The TRC must score the technical proposals before opening the price proposals, using the RFP selection criteria and must reject any proposal it deems nonresponsive.
• "Best-value" scores are obtained by dividing each proposer's time-adjusted price by its technical score.
• Unless it rejects all proposals, MnDOT must award the contract to the responsive and responsible bidder with the lowest best value score.

MnDOT awarded six best value contracts prior to the I-35W bridge project, none of which resulted in a legal challenge to the procurement process.

I-35W Bridge Reconstruction Project

On August 1, 2007, the I-35W bridge spanning the Mississippi River in Minneapolis collapsed, resulting in the deaths of 13 people and injuries to many others.

Within days, MnDOT decided to use its authority under the best value legislation to procure the contract to rebuild the bridge because, among other things, the design/build best value process would allow a replacement bridge to be constructed much more quickly than would be possible using a traditional design-bid-build process.

Proposal Review Process

MnDOT issued an RFP that identified and described the weighted proposal evaluation criteria and described how proposal responsiveness would be determined. MnDOT also appointed a six-member TRC that included a MnAGC representative, city of Minneapolis representative and four MnDOT employees.

Four proposals were submitted, including one by the Flatiron-Manson joint venture (Flatiron).

TRC members individually and privately scored each technical proposal using the RFP criteria. In doing so, every committee member scored Flatiron's technical proposal significantly higher than any other proposal. The price proposals were then opened and the technical scores, prices and proposed durations were run through the statutorily mandated formula.

Under that formula, Flatiron submitted the best value proposal despite having the highest bid price and tying for the longest proposed delivery schedule. Flatiron was awarded the contract on October 8, 2007, and immediately began around-the-clock construction operations.

Bid Protest Lawsuit

A lawsuit filed October 16, 2007, asked the Ramsey County District Court to stop all work on the bridge and declare the contract illegal. The lawsuit claimed Flatiron's proposal violated mandatory RFP requirements such that MnDOT had to reject it as nonresponsive. The lawsuit also claimed that MnDOT used improper evaluation criteria, orally misled some of the bidders regarding permitted construction techniques and abused its discretion by not awarding the contract to the proposal with the lowest upfront cost and shortest proposed completion date.

The district court on October 31, 2007, denied the plaintiffs' request for a temporary restraining order, ruling it was not likely that plaintiffs could prove Flatiron's proposal was nonresponsive or that MnDOT abused its discretion.

A year later, the district court completely dismissed the lawsuit. The court ruled that the plaintiffs failed to establish any right to stop construction—noting, among other things, that the plaintiffs did not ask for an injunction until construction was almost complete—and also ruled they failed to establish any RFP violation by Flatiron or any abuse of discretion by MnDOT.

The plaintiffs then appealed to the Minnesota Court of Appeals.

Court of Appeals Decision

Following full briefing of the issues and oral argument, the court issued its decision affirming dismissal of the lawsuit.

At the outset, the court acknowledged the potential statewide significance of its decision, noting that the best value statute is likely to influence the procurement of significant public projects in the future.

The court then addressed what it considered to be the crucial issue: How much discretion does a TRC have to determine the responsiveness of a proposal?

Technical Review Committee Discretion

The plaintiffs argued that responsiveness under the design/build best value statute must be determined exactly like responsiveness is determined under traditional design-bid-build procurements; in essence, plaintiffs argued that the TRC has no discretion.

The court disagreed. It noted that the best value statute expressly grants the TRC authority and responsibility to reject proposals that it "deems" nonresponsive, and that the dictionary definition of "deems" is: to consider, think or judge. The court also noted that design/build procurements, by definition, are not based on fully detailed specifications. Those two factors led the court to conclude it was the intent of the law "to permit the TRC, by applying its judgment based on the advertised selection criteria, to evaluate proposals where no finished design exists to which the proposals must conform."

The court's bottom line: "the TRC has discretion in deciding whether a proposal is responsive."

However, the court was also quick to state that the TRC's discretion is not unfettered. The TRC's responsiveness determinations cannot constitute an error of law and must be supported by substantial evidence.

In this instance, the court found there was no error of law and that substantial evidence supported the TRC's determination that Flatiron's proposal was responsive, leading the court to conclude that dismissal of the lawsuit was proper.

Lessons Learned

Among the lessons that can be gleaned from the lawsuit and the court's decision are the following:

• Courts likely will be much more reluctant to interfere with TRC responsiveness determinations in best value procurements than they will be when reviewing public body responsiveness determinations in traditional design-bid-build procurements. So long as the TRC can point to substantial evidence supporting its determination (and substantial evidence does not necessarily mean most of the evidence), courts are unlikely to substitute their judgment for that of the TRC.
• Generally speaking, MnDOT has the authority to issue RFPs that incorporate selection criteria, criteria weighting and responsiveness definitions of its choosing. It is therefore crucial that bidders read the RFP carefully and structure their proposals to maximize scoring in accordance with the published criteria, weights and definitions. After-the-fact complaints that the criteria, weights and/or definitions are improper or did not identify the "real" best value proposal are unlikely to prevail.
• Challenges to best value procurements must be pursued immediately and without pause. Although this issue was not addressed by the court of appeals, the district court made clear in its dismissal of the lawsuit that one significant factor was the plaintiffs' failure to move for a temporary injunction until almost ten months after the lawsuit was filed, by which time the new bridge was almost complete.

In sum, the Sayer and Phillippi vs Minnesota Department of Transportation and Flatiron-Manson decision publicly announces a new chapter in bidding and bid protests under the Minnesota best value law.