By Bruce Jervis
It seems self-evident that once a contractor enters into a fixed-price contract on publicly bid work, the base price of the contract has been established. But what if the contractor subsequently claims it made a mistake? Is a contractor entitled to an upward reformation of the contract price to correct a bid mistake?
The answer is yes, but only in certain narrow circumstances. The bid mistake must be clerical or mathematical or involve a misreading of the specifications. The public project owner must have known, or should have known, of the mistake. The public project owner must have failed to request pre-award verification of the accuracy of the bid. And the contractor must provide clear and convincing evidence of its intended bid amount.
These are stringent requirements. This was illustrated in a recent case where the government did not request pre-award verification of the accuracy of the bid and the contractor was still denied upward reformation of the contract price. The bid price had been close to the government estimate, so there had been no reason to suspect a mistake or seek verification. And the contractor had not provided sufficient evidence of its intended bid amount.
Do you think these requirements are adequate to prevent abuse of the competitive bidding process? The contractor in the recent case alleged it transposed numbers from a subcontractor price quotation. However, the allegation came seven months after contract award and only after the contractor experienced performance problems with the subcontractor. Should post-award reformation of the contract price ever be allowed? I welcome your comments.
Featured in Next Week’s Construction Claims Advisor:
- New York Court Enforces “Pay-If-Paid” Clause
- Low Bid Improperly Rejected as “Mistaken”
- Agency Failed to Show Where Bid Deviated from Specifications