Council approves complete-streets contract after rejecting apparent low bid over pricing irregularities amid protest

City staff told the Arroyo Grande City Council on June 23 that the apparent low bidder for the Hion Complete Streets project had submitted an unbalanced bid with material irregularities, and recommended awarding the contract to the second-lowest bidder. Assistant city counsel described supplemental documentation and a staff recommendation to proceed with the second-lowest bidder because the low bid’s line-item pricing appeared to shift costs into items likely to be covered later by change orders.

Adam Vasquez, outside counsel for the city’s contracting review, explained the unbalanced-bid concern and said staff found the low bid’s pricing irregularities posed a risk of future cost overruns. Vasquez told council the city had provided the bidder due process, exchanged letters, and that while litigation could be pursued by the bidder, the city’s discretionary responsiveness determination was likely defensible.

Josh Hardy of SMTD Law, speaking for Edwards Construction (the apparent low bidder), said the city improperly rejected Edwards as non-responsive without giving the supporting documents and denied a meaningful opportunity to respond. Hardy warned that awarding the contract to V. Lopez (the recommended bidder) would increase project costs by more than $600,000 and expose the city to legal liability under the Public Contract Code.

Council discussed the procurement rationale and the absence of any present litigation threat. After council moved and seconded the consent calendar (items 9A through 9J), the clerk called a roll call and the council voted to approve the consent items, including the contract award and an associated resolution included in supplemental materials.

The dispute centers on procurement practice: staff argued an unbalanced bid creates downstream risk; the protester’s counsel argued the city did not provide the requested supporting documentation or opportunity to respond before formal rejection. The council approved the award to the second-lowest bidder while acknowledging the protest and letters exchanged earlier the same day.

Next steps: the award and resolution were adopted as part of the consent calendar. City staff said there is currently no active litigation, but counsel noted the protester retains the right to seek a writ to challenge the responsiveness finding.