Dear Decaturish – ‘May’ is the key word in Pullman Yard bidding dispute

Posted by Dan Whisenhunt May 3, 2017

The Pullman Yard in Kirkwood. Photo by Dan Whisenhunt

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Dear Decaturish,

The State of Georgia (through the Georgia Building Authority) recently voted to sell the Pratt-Pullman Yard to one of five bidders for the property. The runners-up expressed confusion at the vote, believing that the State would allow them to make additional “highest and best offer” bids before taking a final vote. One unsuccessful bidder has even threatened the State with a lawsuit.

What’s interesting about the vote is that out of five bidders, only one bidder (the winner) read and interpreted the State’s rules in the exact same way as did the State. Four out of five bidders interpreted the rules incorrectly. Why?

I’ve taken particular interest in these developments both as a practicing attorney and neighbor to the Pratt-Pullman Yard. The confusion stems from the State’s “Invitation to Bid,” which is the formal process established by the State for selling this property. The Prat-Pullman Yard Invitation to Bid package totaled 43 pages, with five containing the actual bidding instructions.

The first sentence of the bidding instructions states “Bidders must comply with all aspects of this [Invitation to Bid]” (bear with me on the legalese, but it’s necessary to unpack it to resolve this dispute). A few sections later, bidders are instructed that “Each bid must be accompanied by a certified or cashier’s check … in the amount of three percent (3 percent) of the amount of the Bid.”  One of two $8 million bids tendered only 1.5 percent earnest money. Therefore, the State (correctly) determined this bid was non-compliant.

Another section discusses minimum bids. This section states that the minimum bid established by the State is “a starting bid which is the minimum amount that a Bid must meet or exceed in order for the Bid to be considered.”  Additionally, there’s a section describing a “Best and Final Offer Process.” The process described in this section “may be initiated when multiple bids are received that meet or exceed the Minimum Bid, or at the discretion of the GBA Executive Director.” The Best and Final Offer Process essentially opens up a second round of bidding for those submitting a conforming initial bid.

The Pullman Yard bidding dispute is over whether the State was required to initiate this Best and Final Offer Process.  To be fair, the Invitation To Bid contains a full page and a half (out of five) describing this Best and Final Offer Process.  There is even a separate flowchart depicting the Best and Final Offer Process as part of the entire bidding process.  It is therefore understandable that a bidder (or three) would believe the State would automatically initiate the Best and Final Offer Process.

But nowhere is the State required to do so. The ITB uses the permissive word “may” to describe whether the Best and Final Offer Process gets initiated. In the law, there’s a massive difference in whether an agreement specifies something “may” happen or whether it “shall” happen.  The former grants discretion whereas the latter does not.  Based on the word “may,” the State ultimately had discretion whether to initiate a Best and Final Offer Process despite the lengthy description and flowchart.  As the ITB further states, “GBA, in its sole discretion, shall determine which Bid is the most advantageous and which Bid(s), if any, should be accepted or rejected.”

For what it’s worth, the bidding process also allowed interested parties to submit any questions they had about “any aspect of the Bid package.” There’s a published list of 29 questions and answers. None of them are about the Best and Final Offer Process.

It’s fascinating given the stakes that four of five bidders erred in reading the agreement. I wonder whether any bidders had an attorney review the Bid package, and if not, why not?  By overlooking (or misinterpreting) the word “may,” these developers lost out on millions.  The State could also become involved in seemingly unnecessary litigation.  And most certainly, this oversight has forever changed the Pratt-Pullman Yard’s future development.

– Will Downs, attorney with Downs Law

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About Dan Whisenhunt

Dan Whisenhunt is editor and publisher of Decaturish.com. https://www.linkedin.com/in/danwhisenhunt

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