Leo Michuda & Son Co. v. Metropolitan Sanitary District of Greater Chicago

In Leo Michuda & Son Co. v. Metropolitan Sanitary District of Greater Chicago, 97 Ill. App. 3d 340, 343, 422 N.E.2d 1078, 52 Ill. Dec. 869 (1981), defendant sanitary district advertised for bids on a project. Part of the district's bidding instructions was an appendix D, entitled "Notice of Requirements for Affirmative Action Plan to Insure Small and Minority Business Participation." This appendix required that potential bidders submit with their bidding documents a "Goal Disclosure Form" listing the minority subcontracts they would award to minority and small businesses if their bid were accepted. Four companies, including Brant Construction Company and plaintiff Michuda, submitted bids; once opened, it was revealed that Brant's bid was the lowest, followed by Michuda. However, upon examination, the district discovered that although Brant had submitted a Goal Disclosure Form, the form had not been completed in accordance with the requirements of appendix D since, though Brant stated therein its intent to award subcontracts to minorities and small business, it did not list any of these. Michuda, meanwhile, had submitted a Goal Disclosure Form which was properly completed. The district's board of trustees declared it was awarding the contract to Brant regardless of the error and Michuda initiated suit. At trial, the court found that Brant had failed to comply with the requirements of the bidding documents and that this failure was a material omission, thereby rendering Brant's bid nonresponsive. See Michuda, 97 Ill. App. 3d at 342-43. On appeal, the Michuda court agreed with the trial court's determination. After outlining the test for materiality, it found that appendix D set forth a mandatory requirement that each bidder submit a Goal Disclosure Form. See Michuda, 97 Ill. App. 3d at 345. It was not enough that Brant merely stated an intent in the form to use minority and small businesses; rather, the form stated that these must be listed as evidence of the bidders' commitment to the project and to follow the principles of appendix D. See Michuda, 97 Ill. App. 3d at 345. The Michuda court reasoned that Brant's failure to do so resulted in a variance with the bid requirements as advertised. See Michuda, 97 Ill. App. 3d at 345. In deciding whether this variance was material, the court found that it was, since it gave Brant a substantial advantage not enjoyed by the other bidders because, with only an intent and not a commitment to specific subcontractors as required, Brant had the ability to negotiate with any subcontractor it wanted after having already submitted its bid. See Michuda, 97 Ill. App. 3d at 345. Accordingly, the Michuda court concluded that Brant's bid was nonresponsive and that the district should have awarded the contract to Michuda instead. See Michuda, 97 Ill. App. 3d at 345.