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California Appeals Court Rejects Legal Challenge to Bid Proposal for Orange County Fair

By June 25, 2024June 26th, 2024No Comments

In a case of first impression, the California Court of Appeals has denied a bidder’s injunction request for violation of Public Contract Code Section 10339 relating to Requests for Proposals on State property in Talley Amusements, Inc. v. The 32nd District Agricultural Association, et al. Case G062646.  

The 32nd District Agricultural Association is a State entity that owns and operates the Orange County Fairgrounds and hosts the annual OC Fair every summer.  In 2021, the OC Fair put out a Request for Proposal (RFP) seeking proposals for a master carnival operator to operate the Fair’s midway gaming section.  OC RFP 21, as it was called, utilized a detailed scoring process to rank bidder’s proposals.  The bidder with the highest overall ranked score would be awarded this lucrative contract.  

OC RFP 21 contained very specific and aggressive bidding requirements, including:

“[c]ontractor [to] provide a fully operational carnival including no less than approximately 65 quality rides 3 (one of which must be a Sky Ride, which will utilize the existing infrastructure), approximately 50 games, and approximately 25 food concessions.” 

OC RFP 21 also required the use of “an electronic ticketing and redemption system for rides and games, an app to support advance carnival tickets sales, and on-site sales.”

Under the RFP section entitled “Minimum Experience and Qualifications,” OC RFP 21 specified the contractor must have held master carnival contracts for three different fairs with attendance of over 500,000 at each during the past three years, and further that the contractor must have held master contracts utilizing an electronic ticket/redemption system for rides and games at such fairs.  

The OC Fair claimed that these exhaustive requirements were included to ensure the winning bidder would be able to service a large fair like the OC Fair and to provide the best possible gaming experience for the public.   

With these aggressive requirements, Ray Cammack was the only carnival operator in the State to submit a proposal.  Another proposed bidder, Talley Amusements, Inc. considered submitting a proposal, but could not meet the onerous RFP requirements, including requisite experience with electronic ticketing systems.  

Talley cried foul and objected to the RFP requirements as being so robust that only one bidder could submit an acceptable proposal.  Talley relied on Public Contract Code Section 10339, which states:

“(a)  Subject to the provisions of Section 10348, no state agency shall draft, or cause to be drafted, any invitation to bid or request for proposal, in connection with the awarding of a contract, in a manner that limits the bidding directly or indirectly to any one bidder.

(b)  Any contract awarded in violation of subdivision (a) shall be void.”

Talley filed suit, seeking injunctive relief to stop the OC Fair from awarding the midway contract to Cammack as being in violation of Section 10339.  The trial court denied Talley’s injunction request and Talley timely appealed.  

On Appeal, the Fourth District Court of Appeals agreed with Talley that Section 10339 prohibits the OC Fair, as a State Agency, from issuing an RFP that directly or indirectly limits the bidding to any one bidder.  However, the Appeals Court denied Talley’s appeal on more technical grounds.  The Court found that although Section 10339 may apply to the OC Fair, as a State Agency, this particular RFP is not a contract “for services to be rendered to the state.”  

Because the Midway contract is for carnival rides and games for fair patrons (and not the State) the master carnival operator contract contemplated by the RFP is not a contract “for services to be rendered to the state”, so it is not subject to the competitive bidding requirements of Section 10339.  

Essentially, because the winning bidder would be operating the OC Fair midway independent of the State Agency (OC Fair) and the contract would require the bidder to pay the OC Fair for that use, the RFP did not call for the use of public funds to pay the successful bidder for any services.  Therefore, Talley’s appeal would not hold-up.  

This decision illustrates that the courts will apply Section 10339 in a limited fashion when addressing challenges to RFP’s.  Unless the contract being challenged directly benefits the State, the courts are unwilling to stop a successful bidder from entering into a contract with the State, even if the exhaustive underlying RFP criteria yields only one bidder.  

In this case, had the beneficiary of the Cammack contract been the State of California, and not the OC Fair patrons, it is likely that this outcome would be different.  

This case presents a reminder that any bidder challenges to the RFP and public bidding process will be scrutinized carefully by the courts and must meet the technical requirements of the applicable statutes in order to be successful.

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