November 2014

Dealing with Mistakes in Bids for State and Local Government Contracts

Joining us to discuss the procedures for handling a MCN Podcast 130x130 Brownbid made to a state or local government entity which contains an error is Jackson B. Boyd an associate with Ober|Kaler’s Construction and Litigation Groups.

First and foremost, it is very important for contractors always to be aware of the rules in the jurisdiction where they are submitting bids.

State Projects:

  • governed by the Code of Maryland Regulations (COMAR)
    • if the contractor becomes aware of a mistake in its bid before bids are opened
      • the contractor can modify or withdraw the bid if it gives proper notice to the applicable State agency before bid opening
    • if the mistake is discovered after bid opening
      • if the procurement officer recognizes an obvious mistake in a bid
      • or that the bid is unreasonably lower than other bids
      • the procurement office can ask the contractor to confirm the bid, which creates a couple of scenarios
        • the mistake and the intended correction are clearly evident the contractor can correct the mistake, but the bid can’t be withdrawn
        • if the mistake is clearly evident on the face of the bid but the intended correction is not obvious, the contractor may be permitted to withdraw the bid with the approval of the Office of the Attorney General
        • the contractor can also withdraw its bid at this stage, with approval of the Attorney General’s office, given strict provisions
    • if the mistake is discovered after the project is awarded
      •  a mistake can only be corrected if the agency determines it would be unconscionable not to allow the correction.

Other Local Governments

  • Jurisdictions can and so have separate rules
  • This is where you must check local rules
  • Baltimore County’s Standard Specifications and COMAR have substantially the same provisions for correcting and withdrawing bids
  • Baltimore City follows the Charter of Baltimore City (Article VI, § 11) which expressly provides that bids are irrevocable once they are filed
    • the City’s Department of Public Works Specifications for Materials, Highways, Bridges, and Incidental Structures, for example, incorporates this policy
    • if a contractor recognizes a mistake in its bid for a Baltimore City Department of Public Works contract before bid opening, it does not automatically have the right to modify or withdraw the bid.
    • What should you do if you find an error?
      • immediately notify the applicable City procurement agency and the City’s Board of Estimates to see if its bid can be withdrawn
      • there is precedent for possible relief via the Maryland Court of Appeals in City of Baltimore v. DeLuca-Davis Construction Co., Inc.
        • The Court of Appeals ultimately allowed the contractor to rescind its mistaken bid for equitable reasons, mainly due to the capacity of the company and the fact that the company would not have been able to complete the project without going into bankruptcy
        • even so there was, and would be, considerable expense incurred to reach this outcome.

Important information:

  • make sure you know the withdrawal and modification rules for the different procurement jurisdictions
  • allow time on your bidding process for careful review of scope of work and all pricing
  • act promptly and appropriately upon learning of an error.

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