ConstructionPro Week, Volume: 2 - Issue: 46 - 11/15/2013

Should Bid Correction Be Allowed to Displace a Low Bidder?

By Bruce Jervis

Correction of a mistaken bid is a controversial matter in the public bidding arena. It is contrary to the nature of sealed bidding to allow a bidder to alter its price after bid opening. It raises questions of impropriety and calls into question the integrity of the bidding process. This is particularly true when a bidder wants to correct its bid downward, displacing an apparent low bidder.

Despite all of these concerns, the downward correction of a mistaken bid -- and displacement of a low bidder -- is allowed under narrow circumstances. The mistake must be clerical or mathematical in nature. It cannot be an error in judgment such as failure to properly price performance costs. The nature of the mistake must be readily apparent on the face of the bid itself. And, the intended bid price must be apparent as well. The bidder cannot resort to bid-preparation worksheets to prove its intended bid price.

A recent Louisiana case took these requirements one step further. A public project owner should have compared total base bid prices as stated on the front page of a seven-page bid package. It was improper to refer to the interior pages of the package to determine the nature of a bid mistake and the intended bid price.

These safeguards seem sufficient to prevent outright fraud. Yet, there is still something unsettling about “correcting” a bid price downward to displace a low bidder; a lingering whiff of manipulation of the sealed bidding process. What is your opinion? Have you seen instances where a low bidder has been displaced? Do you think this should be allowed under the appropriate circumstances? Or, should it never be allowed? I welcome your comments.

COMMENTS

I do not think any type of “correction” should be allowed. A premeditated effort could be construed by unscrupulous entities so as to alter the outcome on an "as needed" basis. Too many "clever" folks out there...
Posted by: John - Friday, November 15, 2013 12:49 PM

Good question. I would say no, never.

A contractor should be able to verify the correctness of its bid prior to submitting. That is its business and livelihood. As the agency representative I am looking at the bottom line. If a contractor is not diligent enough to review its bid and make corrections prior to submitting what does that say about the quality of work and its ability to comply with the terms of the contract.

If the erroneous bid is “low bid” would the bid price be adjusted down after award?

Posted by: Will Weber - Friday, November 15, 2013 12:55 PM

Bruce:

It has been my experience that a contractor only has two options after submitting a proposal to public or most private sector owners - accept the award if he is the lowest responsible bidder or withdraw his bid if he can show an error in putting his proposal together.
Posted by: Frank E. Young FCPE - Friday, November 15, 2013 12:58 PM

Thank you for this ethical question. I think bidders should not be allowed to revise their numbers for any reason. If it becomes common to allow estimators to revise their bids, the process will become careless because estimators will know ahead of time that they can revise the final bid. Once the bid is assembled, several pairs of eyes should check it thoroughly!
Posted by: Melinda Driscoll - Friday, November 15, 2013 1:10 PM

It depends. If there is a mathematical error in calculating the total bid amount, i.e., an error that is apparent on its face, an adjustment downward seems appropriate. For instance, a bidder may have improperly added a unit based cost on a bid item that results in an incorrect higher total price. If the bid instructions indicate that the unit price will take precedence over the (incorrect) added total price, there is no manipulation of the bid. This should also be true even without an order of precedence provided that the error is apparent from the bid documents. This serves the public entity's interest in obtaining the lowest responsive bid by a responsible bidder in the competitive bidding process. A potential problem arises, however, when the mathematical error results in an incorrect lower total price. This latter circumstance may provide the bidder with bid relief on the ground of mistake. The challenge is dealing with the situation when the low bidder is willing to honor the total (incorrect) low price notwithstanding the error, rather than seeking relief from the bid without losing the bid bond.
Posted by: Stephen Cali - Friday, November 15, 2013 1:12 PM

I agree with John. Some entities allow for correction. Contractors could have several errors to allow the bid to go up or down to suit the situation. Not a good thing.
Posted by: Ed Trotter - Friday, November 15, 2013 1:19 PM

Never. Nothing would be more of an indicator not to hire a firm than an overlooked clerical or mathematical error.
Posted by: Steve Jackson - Friday, November 15, 2013 1:30 PM

When last minute bids are received from subcontractors after the bid has been sent, but before the bid opens, we have in fact sent a fax to the authority listing the amount that we wish to reduce our bid by. We do not disclose the revised bid price, just the amount to be deducted. In almost every case, our adjustment has been accepted. Once accepted, our revised bid amount becomes our bid price and considered accordingly. We have received awards if our revised price unseats a low bid, and we have also received awards at the lower bid price even though we were low bidder before the adjustment.

I've never seen an adjustment or revision accepted after the bid opening.
Posted by: Jim Miller - Friday, November 15, 2013 1:48 PM

Under no circumstances should a party to the bidding process, whether it be bidder, the agent for the Owner, or the Owner be allowed to change the final bid price in the competition for the tender after the deadline for tender submission. The process must be absolutely transparent and rigid.
Posted by: John Attrell - Friday, November 15, 2013 7:11 PM

include a state to the bid form that no bids will be corrected after bid date...
Posted by: frank de stefano, aia - Saturday, November 16, 2013 3:46 PM

Often times this happens in the public sector where we practice. I would rather find this out early in the process rather than after bids are accepted. Public Contract Code is clear in California on this and does work in practice. In fact if a bidder is given relief in an error in his bid he cannot rebid if project is rebid, Colomobo vs Supertindent of Schools. Again we never award bids until after the staturatory time for clerical error time. If we see a bid is odd or unreasonably low compared to others we will quiz the bidder to make sure there is no mistake or clerical error. There are precise requirement what is a clerical error and have done at least a dozen for more times in our practice. Its better to have valid bids rather a contractor upside down to begin with. We have never allowed a contractor to change his bid after time of opening bids either public or private work. Private work is somewhat different as the rules can be vague, as many private owners are bottom line oriented. We have had cases where contractors tried to change his bid and under no circumstances is this ever allowed, the process has have a high level of integredity.
Posted by: Chris Addington FARA, AIA - Sunday, November 17, 2013 8:11 PM

In American construction, there is no legitimate "bidding" process anymore. It is called a multiple "pricing" exercise(es) that consists of trade subcontractors fronting the costs of estimation of their work multiple times, to "builders" (paper shufflers/risk managers), so as to obtain several multiple moving bids in an attempt to land on the owners original dreampt up budget (less some). Then, after exhaustion, last look white wash. Give the debate a rest.
Posted by: James - Monday, November 18, 2013 10:41 AM