What Can You Do About Mistakes in Bids?

IT IS UNAVOIDABLE that, once in a while, someone is going to make a mistake in pulling a bid together. It could be a misplaced decimal, transposing numbers, not catching additional work on other drawings, a required extended warranty or any number of other errors. One of three things can happen: The bid could be corrected; the bid could be withdrawn; or the bid could be enforced. Which one of these

IT IS UNAVOIDABLE that, once in a while, someone is going to make a mistake in pulling a bid together. It could be a misplaced decimal, transposing numbers, not catching additional work on other drawings, a required extended warranty or any number of other errors.

One of three things can happen: The bid could be corrected; the bid could be withdrawn; or the bid could be enforced. Which one of these results occurs will depend on a whole lot of variables.

First and foremost, what matters is whether the party making the mistake is bidding to a public entity — or another type of customer with rules and regulations about bidding. The general law is that, as between a prime contractor and a subcontractor or vendor, the subcontractor/vendor has no right to pull out or change its terms after the prime contractor has relied on the bid in submitting its own bid. Even if the sub promptly advises the prime contractor of the error, and the prime could seek relief under the terms of some public bid statute, the prime contractor has no obligation to ask for the relief and has the right to hold the sub or vendor to the original proposal or bid.

The party who actually bid to the owner (whom I’ll call the prime even though it could be a trade contractor, depending on the circumstances of the bid) might have the option of making a claim on behalf of its sub. In some circumstances, the prime may want to do this, particularly if it worries that the sub may not be able to perform for the mistakenly low price or will renege and leave the prime to deal with the problem. Depending on how the bid instructions or rules, regulations or statutes read, however, it may not be possible to pass on the request for relief. You have to read the fine print.

But where you have been the one to submit the bid to an owner and discover a mistake, what process do you go through to decide on a game plan?

Know the time deadlines. Probably more important than any other rule in these mistakes in bid situations, timing is crucial. It may be that a bid could have been withdrawn before opening but not after, or relief could have been allowed if the claim was made within three days. Not acting in time is the best way to give up all your options.

Gather up your paperwork. Whether you are entitled to relief or it is up to the discretion of the owner, paperwork showing how you made the mistake can be either very persuasive or possibly totally determinative. If your estimator forgot to carry a number forward or transposed digits in the process, the worksheet showing the right numbers can prove your case. If you relied on a “typical” section on a plan sheet, and the overlooked item is on an obscure spec section, copy both of them. If your supplier quoted the “standard” model, without the chrome fins, show the catalog pages and how similar the numbers are and whatever else makes your best case.

Get sworn statements from everyone involved. Even if every word you put in your request is 100% accurate, it still doesn’t carry the weight of the same words on an affidavit that is signed and notarized. It helps if the statements sound as if the people signing them actually said the words (as opposed to looking suspiciously like a lawyer drafted them all — the “hereinaboves” and “whereases” give it away every time).

Prepare your argument from the owner’s viewpoint. Sometimes in the course of explaining how a mistake was made, you uncover errors in the instructions or contract documents that caused you to misunderstand a direction. If you can present the mistake as being due to an ambiguity that could call into question the validity of other bids, the owner may prefer to scrap the entire bid opening and start over, rather than have another potential claim on its hands with the alternative bidder or ending up with an end product that is not what it wanted.

Ask for realistic relief. Some, but very few, public owners can allow a bid to be corrected. Where the bid would still be low and the evidence is clear and convincing, this may be possible (a construction lawyer can tell you what the rules are for the agency in question). Most of the time, the best you can hope for is the right to withdraw the bid or the right to confirm that you will do the work exactly as required, no matter how ambiguous the entries on your form appear.

Many “mistakes” in bids are really due to a failure to read the bid requirements carefully before preparing the bid. If a “qualified” bid has to be rejected, don’t add explanations and stipulations to the form. If a bid bond on a certain form needs to be included, don’t let your surety agent use any other form. If all line items need to be extended and multiplied, then do it. Most of these mistakes are totally avoidable, and you have better things to do with your time than beg for relief.

Susan McGreevy is a partner at Husch & Eppenberger, Kansas City, Mo., telephone 816/421-4800, or e-mail to [email protected].

TAGS: Law