Damages in Competitive Local Bidding

The California Public Contract Code, in Division 2, Part 3, Chapter 1, provides the Local Agency Public Construction Act. Article 1.8 deals with damages related to competitive bidding.

Section 20104.70 specifies that the second lowest bidder, and any person or other legal entity which has, prior to the letting of the bids on the public works project in question, entered into a contract with the second lowest bidder, may bring an action in superior court if that entity suffers damages as a result of the bid of the second lowest bidder for any contract subject to this part not being accepted due to the successful bidder’s violation, as evidenced by the conviction of the successful bidder.

In addition, there is a rebuttable presumption that a successful bidder who has been convicted of a violation of any provision of Division 4 of the Labor Code or of the Unemployment Insurance Code was awarded the bid because that successful bidder was able to lower the bid due to this violation or these violations occurring on the contract for public work awarded by the public agency.

In an action brought pursuant to this section, the court may award costs and reasonable attorney’s fees, in an amount to be determined in the court’s discretion, to the prevailing party. Employee status is determined pursuant to the Labor Code and the Unemployment Insurance Code.

The terms “second lowest bidder” and “successful bidder” are defined. A second lowest bidder who has been convicted of a violation of any provision of Division 4 of the Labor Code or of the Unemployment Insurance Code, within one year prior to filing the bid for public work, and who has failed to take affirmative steps to correct that violation or those violations, is prohibited from taking any action authorized by this section.