The Tippecanoe County Circuit Court recently rejected a contractor’s argument that, as a local Indiana business, it should have been awarded a project even though it was not the lowest bidder.
Facts: The Tippecanoe County Public Library solicited bids for the Stein Building Project. JR Kelly Company, Inc. claimed the local preference and submitted a bid of $686,000. Non-local contractor Mattcon submitted a bid of $630,000. JR Kelly Company filed a lawsuit in the Tippecanoe County Circuit Court challenging the subsequent award to Mattcon.
Indiana Code section 36-1-12-22 grants a preference–in the form of a percentage deduction to a bid–to local Indiana businesses. That statute then states:
(d) Notwithstanding provisions of this chapter that require the award of a contract to the lowest responsive bidder or the lowest responsive and responsible quoter, but subject to subection (e), a contract shall be awarded to the lowest responsive and responsible local Indiana business that claims the preference provided by this section.
(e) Notwithstanding subsection (d), a contract shall be awarded to the lowest responsive and responsible bidder or quoter, regardless of the preference provided in this section, if the lowest responsive and responsible bidder or quoter is a local Indiana business.
JR Kelly Company argued that the “shall” language in subsection (d) required the Library to award the project to it.
Decision: The Court disagreed. After analyzing the language of the statute, it held:
While it appears unclear in the statute how the price preference scale is to be applied, it does seem relatively clear that some sort of price preference scale is to be applied and an absolute preference was not the intention.
Moreover, the Court argued that interpreting the statute to require an absolute preference for a local Indiana businesses could produce an absurd result clearly not intended by the Indiana Legislature:
All a company has to do, under Plaintiff’s interpretation of an absolute preference, is to submit a bid, and claim preference, and then hope they are the only local Indiana business submitting a bid. If they are the only bidder that can be found to have a local preference then their bid “shall” be accepted. The implications of this could be great. It could become general practice, encouraged by this law, for local Indiana businesses to submit high bids for local projects, and hope they are the lowest of the high bids.
The Court confirmed the award to Mattcon.