By Albert B. Wolf – Wolf Slatkin & Madison P.C.
One of the problems which frequently troubles the construction industry is bidding mistakes. The high incidence of mistaken bids is understood by industry people who know that the bidding process is often a frenzied last-minute accumulation of ideas and numbers quickly inserted into documents and rushed at break – neck speed before the deadline hammer falls.
The legal question resulting from that chaos is whether bidders are to be stuck with their bids even though they contain serious mistakes. Unfortunately, there is no clear-cut legal answer except in terms of the actual circumstances involved and a court’s perception of the problem.
In attempting to resolve disputes arising out of the bid mistakes the courts frequently wrestle with questions like:
… Was the mistake apparent (obvious) on the face of the bid itself? For instance, a mistake in the addition of a column of figures.
… Was the mistake in the bid such that the soliciting party’s representative knew upon examination that a mistake had been made?
… Was the dollar amount of the mistake in proportion to the total bid?
… Was there a substantial difference in the dollar amount between the mistaken bid and bids received from other bidders?
… How quickly was the bid error discovered and brought to the attention of the owner?
… Would the owner suffer because of his having taken some action in reliance upon the mistaken bid? For example, if the mistake was not detected until after contract was executed and when other bidders would not stick to their bid amounts.
… The degree of carelessness involved in the resulting mistake.
Naturally, courts are inclined to relieve bidders whose mistakes are quickly determined and promptly reported to the awarding authority – – particularly when the air was obvious on the face of the bid or excusable in the context of the bidding circumstances.
Where an honest mistake was involved and it would be unfair to hold the bidder while the next bid might be accepted, court relief may be granted in allowing the mistaken bidder to withdraw its bid without calling the bid bond.
Early detection and reporting of bid errors is a must. Courts frequently appear favorable toward excusing quickly-reported honest bid errors, but the risk and uncertainty involved should convince estimators that an ounce of care may be worth pounds of gold.
EDITOR’S NOTE: Albert B. Wolf is a principal in the Denver, Colorado law firm of Wolf Slatkin & Madison P.C. This column was written with the intent of providing general legal information intended to be reasonably accurate although not comprehensive. Readers are therefore urged to consult their attorneys for any specific legal advice they may desire concerning the subject matter of this blog post.)