The “or-equal” requirement has been California law since at least 1961 when former Gov. Code § 4380 was added. The current statute is Public Contract Code § 3400 (almost identical language also appears in the State Contract Act, Public Contract Code § 10129). It prohibits any public works contract from limiting “the bidding, directly or indirectly, to any one specific concern, or … calling for a designated material, product, thing, or service by specific brand or trade name unless the specification is followed by the words ‘or equal’ so that bidders may furnish any equal material, product, thing, or service.” The requirement is applicable to every “agency of the state … political subdivision, municipal corporation, or district … [and] to any public officer or person charged with the letting of contracts for the construction, alteration, or repair of public works.”
The requirement has been incorporated into the two most widely used standard public works contracts, Caltrans’ Standard Specifications (California Department of Transportation, 1999) section 6-1.05, and Standard Specifications for Public Works Construction (BNi Publications, Inc., 2003) section 4-1.6.
The goals of the “or-equal” requirement are “to widen the area of competition, and to bar local procurement officials from choosing a particular source either out of favoritism or because of an honest preference.” Jack Stone Co. v. United States, 344 F.2d 370, 373-74 (Ct. Cl.1965). These goals are essentially the same as the reasons for requiring competitive bidding: “to guard against favoritism, improvidence, extravagance, fraud and corruption; to prevent the waste of public funds; and to obtain the best economic result for the public.” Graydon v. Pasadena Redevelopment Agency, 104 CA 3d 631, 636 (1980).
When these goals cannot be achieved, courts will not enforce the competitive bidding or “or-equal” requirement. In these situations, an agency may specify a particular product or a “sole source.”
Public Contract Code § 3400(b) now spells out those situations. The statute allows sole sourcing for four reasons: (1) to conduct a field test or experiment of the product, (2) to match existing products in use on the particular public work, (3) to obtain a product that is only available from one source, and (4) to respond to an emergency.
However, before an agency can resort to sole sourcing for one of these reasons, the awarding authority or its designee (e.g., the city engineer) must make a finding that one of the four reasons applies. Further, that finding must be described in the invitation for bids or request for proposals.¹
