Damages Allowed for Sucessful Bid Protest
An Ohio appeals court recently ruled in Cementech v City of Flowood, Download file , that a disappointed bidder can recover lost profits as well as bid preparation costs in a lawsuit successfully challenging the wrongful award of a construction contract to another bidder.
Contrast this holding with our post on Hill Brothers Construction & Engineering Company, Inc. v. Mississippi Transportation Commission , a recent Mississippi Supreme Court decision, in which a majority declared damages were not recoverable.
One possibly important distinction between the cases--Cementech sought but was denied injunctive relief before seeking damages; Hill Brothers did not.
The Ohio Court observed limiting Cementech's remedy to injunctive relief effectively deprived Cementech of any effective relief since the project went forward after the injunction was denied and would not deter futur wrongdoing:
We find Fairlawn’s argument that Cementech could not receive monetary damages because it could have received injunctive relief illusory. Cementech requested injunctive relief and it was denied. When it was determined that Fairlawn abused its discretion and that Cementech was the lowest and best bid and thus, injunctive relief was improperly denied, the project was already complete. With the project complete, injunctive relief wrongfully denied, a determination that Cementech was the lowest and best bid, and a trial court ruling limiting damages to bid preparation costs, Cementech was left with inadequate relief.Under the circumstances of this case, we find that injunctive relief does not preclude monetary damages because such a preclusion would leave companies like Cementech with no real relief and allow government entities to go unpunished for ignoring Ohio and municipal laws. Further, such a limitation undermines the integrity of the bidding process because it does not adequately deter violations of bidding procedures.