A bid dispute involving an $11.5 million contract threatens to substantially delay the City of Las Vegas’ plans to build a $50 million Mob Museum designed to chronicle the influence of organized crime on Southern Nevada. The dispute evolved after the City publicly opened and then rejected all bids submitted at the first bid opening because the project, according to the City, didn’t attract enough bidders due to specifications that were too restrictive. The specifications were modified and bids were again solicited for the project.

At the second bid opening, Flagship Construction Co., the low bidder at the first bid opening, was not the low bidder. Before a contract could be awarded to the low bidder at the second opening, Flagship protested the award. In its protest, Flagship complained that the City had wrongfully rejected its bid at the first bid opening because its bid satisfied the requirements of Nevada’s public competitive bidding act. The act, like those of many other states, including Oklahoma, requires a public contract to be awarded to the lowest bidder that turns in a complete bid and demonstrates the qualifications to complete the project. Flagship also complained that by publicly opening and announcing its bid at the first bid opening, the City unfairly gave its competitors the advantage of knowing Flagship’s original bid amount when the competitors prepared their bid for the second bid opening, ultimately resulting in Flagship’s unsuccessful second bid.

At the protest hearing on June 17, 2009, the Las Vegas City Council was unable to reach a decision as to whether or not to honor the protest or award the contract to the low bidder from the second opening. The Council has reset the matter for hearing in July 2009, but the Las Vegas City Attorney, as well as the Mayor, predict that whatever the Council decides, the dispute will likely result in litigation and further delays to the project.

Steven K. Metcalf

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