Should Mistaken Bids Be Corrected After Bid Opening?

Correction of a bid mistake after bid opening poses some difficult questions. If a low bid can be corrected, still leaving the bid as low, isn’t this advantageous for the project owner? The alternative is to allow withdrawal of the mistaken bid, to which the bidder would clearly be entitled, and award of the contract at a higher price to the second low bidder. But isn’t any change in a bid price after disclosure of all bid prices contrary to the fundamental principles of sealed competitive bidding?

First, let’s clarify the type of mistakes we are discussing. They are not mistakes in business judgment, inaccurate cost assumptions, or misunderstandings of the contract requirements. These are not “mistakes.” They do not even entitle the bidder to withdraw its bid. A mistaken bid results from a clerical or arithmetic error; mistakes which can be documented in the bid preparation worksheets. The most common example is an error in transposing a subcontractor or supplier price onto the bid spreadsheet. That is what happened in a recent Minnesota case.

A low bidder discovered its transcription error after bid opening. The mistake resulted in the omission of $619,200 of costs. The upward correction of the bid would still leave the bid as low. There would be no change in the order of the bidders, and the public project owner would still get the lowest available price. Minnesota law, however, prohibits a change in bid price after exposure of all bid prices, protecting the integrity of the competitive bidding process. The low bidder could withdraw but not correct. It is interesting to note that in the federal contracting arena, an upward correction of the mistaken bid would be allowed under these circumstances.

What do you think? Is any change in bid price after bid opening fuel for mischief and an assault on the integrity of the sealed bidding process? Or are there circumstances where bid correction can be beneficial to the project owner while still being fair to all bidders? I welcome your comments.

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Comments

[Paul]

The worst news for a low bidder is to leave money on the talbe (bids separating the low bidder with the second low). Would this allow the bidder a second chance at recovering what he left on the table?
I'll say, no way this should be allowed....

[Bob Peppel]

If it is a unit price bid and there is an extension error, I don't see any problem with correcting that error. Under any other circumstance, I think that the owner's rules must apply. This issue should be addressed in the IFB so that all bidders know the rules

[Cris Naegele, P.E.]

If the client/owner receives the benefit, a bid change should be allowed for typographical errors. Costing taxpayers more money is not the goal of competitive bidding.

[Reed Fickling]

I don't think changing bids should be allowed in most cases as it makes it too easy to manipulate the system. For example, suppose my normal bid with all sub cost included would be $1,000,000, but I need the job badly and am willing to reduce my profit and bid $950,000. So I find a subs bid and intentially transpose numbers that reduces my bid to $950,000. If I am low bidder at $950,000 but my $1,000,000 number is second, I claim an error and change my bid to $1,000,000 and still get the job.

[Daniel Frondorf, CPE]

Bob Peppel makes a good point above regarding unit price contract, a point with which I agree. On lump sum projects it seems to me that an opportunity to withdraw should be offered by the contracting authority or the owner, but only if the error is disclosed by the contractor. An opportunity to revise pricing after bid submittal would only be fair if offered to all bidders, but once prices have hit the street (such as on a public project), all fairness is out the window. It would not be the fault of the other bidders that the low bidder made an error, so punishing them by starting a feeding frenzy by allowing all the other bidders to resubmit once all prices are made known would not be fair either. Bidding documents on many projects include language defining and dealing with a "substantially low bid". Bidders are bound to live by these rules once that bid is submitted.

[Da]

The intent of the requirement for sealed competitive bidding is to get the taxpayers the best fair price and to give contractors a fair chance to compete for the work. Any changes after bid opening will be looked at with suspicion but rules should not be so rigid as to drive up cost needlessly. Clerical errors should be allowed to be changed by Public owners, but only openly and publicly, knowing the process could be challenged if not fair.

[Adam]

Rick Flick's post above hits the nail on the head. There are many other creative way bidders can manipulate their bids. Can you imagine trying to sort through the bids if twenty bidders did the same scenario as Rick describes or if they had other variations to that scenairo etc. etc. etc.
I bet even the bidders would not be in favor of the change if they under stood the repercutions to the change.

[@QuanEngr]

I have worked with enough spreadsheets to know how to invent an error after the bid to allow a withdrawl or to change the price. So, I don't think it should be allowed. Because there's too much chance of fraud.

The 2nd or 3rd place bidder could lower their price to be low just as easy as the low bidder raising to make more profit. If this is allowed, why don't all bids just go to the reverse auction method. Which has been proven to RAISE prices instead of lowering them for the owners.