August 31, 2015

Three Ways to Avoid Bidding Pitfalls

When submitting a bid, contractors must take care to fulfill all pre-bid obligations to help the project run smoothly. What are the most important pre-bid actions to take? I was reminded of three critical points every contractor should remember while authoring two chapters dealing with the law affecting pre-bidding and bidding in the American Bar Association’s Model Jury Instructions: Construction Litigation, 2nd Edition.

1. Check your numbers; check your numbers; check your numbers.

If a bid contains a clerical error, like a math mistake or omission of a listed value from the total bid amount, the contractor will probably be required to perform the contract in accordance with the mistakenly low bid. A contractor is typically only entitled to rescind a mistaken bid under two circumstances:

  1. Where the owner does not have reason to know about the contractor’s unilateral mistake and has not yet accepted the bid.
  2. Where the owner knows of or should reasonably suspect the contractor’s unilateral mistake (regardless of whether the bid has been accepted). In other words, if a bid is mistakenly low, and the owner accepts the bid, the law will not come to the contractor’s aid unless the owner has reason to know about the mistake. 

2. Inspect the site according to your contract.

It may be easy to perform only a cursory review of the documents and project site before submitting a bid. But complacency in these two areas may come at a great cost. Contractors must scrutinize the contract requirements to conduct a site investigation or otherwise confirm specific site conditions. If the requirements exist, the contractor should conduct an inspection in reasonable conformance with the requirements. If the contract requires specific investigative actions, the contractor should be sure to follow through on these. Failure to do so precludes additional compensation or other relief for the subsequent discovery of a site condition that should have been discovered during the inspection or investigation. The losses stemming from this type of discovery can be devastating, and once again, the exercise of care prior to submitting a bid pays dividends. 

3. Ask questions.

Another reason to read contracts carefully is that contractors have a pre-bid duty to inquire about patent (obvious) ambiguities in the contract documents. Contractors are not expected to seek clarification of ambiguities that are latent (not obvious from the face of the contract). However, if a contractor submits a bid ignoring patent ambiguities in the contract documents, and a dispute arises regarding the work required by the contract, the contractor will not be entitled to compensation for the disputed work. Once again, extra energy is well-spent prior to submitting bids where it can save a contractor from a later, heavy financial blow.

Contractors must own the bidding process and take advantage of the control they possess before submitting a bid. Once a bid is submitted, the law is not sympathetic to the plight of the contractor who did not satisfy its pre-bid obligations.

[See Model Jury Instructions: Construction Litigation 2nd Edition (Melissa A. Beutler and Edward B. Gentilcore eds., American Bar Association) (2015) §§ 2.03, 2.04, 3.03, 3.04; 1 Bruner & O'Connor Construction Law §§ 2:123, 2:63, 2:64, 3:24; 4A Bruner & O'Connor Construction Law § 14:55.]

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