Bid errors happen. Despite best efforts, sometimes a significant mistake makes it into a submitted bid. Understanding your rights and procedures for bid withdrawal or correction can save your company from disastrous financial consequences. Here's what every contractor needs to know.
Understanding Bid Errors
Types of Bid Errors
Clerical Errors
- Math mistakes
- Transposition errors
- Decimal placement
- Extension miscalculations
Judgment Errors
- Underestimating quantities
- Misinterpreting scope
- Pricing decisions
- Production assumptions
Legal Distinction Clerical errors often allow relief. Judgment errors typically don't. The distinction matters significantly in determining your options.
Common Error Examples
| Error Type | Example | Relief Possible? | |------------|---------|------------------| | Clerical | Typed $50,000 instead of $500,000 | Usually yes | | Clerical | Forgot to add subcontractor quote | Usually yes | | Clerical | Double-counted an item | Usually yes | | Judgment | Underestimated labor hours | Typically no | | Judgment | Missed scope in specifications | Typically no | | Judgment | Market pricing decision | Typically no |
Legal Framework
Public Contracts
Bid Relief Principles Most jurisdictions allow bid relief when:
- Error was clerical, not judgment
- Error was material (significant impact)
- Bidder exercised reasonable care
- Owner not seriously prejudiced
State Variations Rules vary by state. Some are more liberal with relief, others more restrictive. Know your jurisdiction's approach.
Private Contracts
More Flexibility
- Contract law governs
- Owner discretion larger
- Negotiation possible
- Relationship factors
Less Predictable
- No standardized rules
- Owner may or may not grant relief
- Business considerations dominate
Bid Withdrawal Procedures
Before Bid Opening
Generally Allowed
- Right to withdraw usually exists
- Follow specified procedures
- Written notice recommended
- Document the withdrawal
Procedure
- Review bid documents for withdrawal rules
- Prepare written withdrawal notice
- Submit before opening time
- Confirm receipt
After Bid Opening
More Restricted
- Must meet legal standards
- Prompt notice required
- Documentation critical
- Owner decision process
Required Elements
- Immediate notification
- Specific error identification
- Supporting documentation
- Relief request
Error Discovery and Response
Discovering Errors
Common Discovery Points
- Post-opening price comparison
- Internal review after submission
- Subcontractor notification
- Client questions about pricing
Warning Signs
- Your price significantly lower than others
- Subcontractor says "that's not my number"
- Internal check reveals discrepancy
- Missing items identified
Immediate Actions
Upon Discovery
- Stop and verify the error
- Document exactly what happened
- Calculate the impact
- Prepare supporting materials
Notification
- Contact owner immediately
- Written notice same day if possible
- Preserve all evidence
- Be honest and specific
Documentation Requirements
What to Document
Error Evidence
- Work papers showing error
- Correct calculations
- Before/after comparison
- Source documents
Timing Evidence
- When error was made
- When discovered
- Notification timeline
- Communication records
Maintaining Records
Best Practice
- Keep all bid work papers
- Preserve in organized fashion
- Date and label materials
- Retain for potential disputes
Specific Items
- Subcontractor quotes
- Takeoff sheets
- Pricing spreadsheets
- Calculation records
Relief Standards
Clerical Error Relief
Typical Requirements
- Error was computational/clerical
- Error can be proven clearly
- Enforcement would be unconscionable
- Owner not materially prejudiced
- Prompt notice given
Supporting Your Claim
- Clear documentation of error
- Calculation showing correct figure
- Evidence of when error occurred
- Demonstration of error's nature
Material Prejudice
Owner's Position
- Reliance on your bid
- Award decisions made
- Other bidders released
- Project timeline impact
Balancing Test Courts balance bidder's hardship against owner's prejudice. Significant bidder harm with minimal owner impact favors relief.
Practical Scenarios
Scenario 1: Major Math Error
Situation: Bid extension error results in price $200,000 below intended
Response
- Notify owner immediately after discovery
- Provide calculation showing error
- Request withdrawal
- Document everything
Likely Outcome: Relief often granted for clear math errors with proper documentation and prompt notice
Scenario 2: Missing Subcontractor
Situation: Major subcontractor quote omitted from bid
Response
- Document which quote was missing
- Show work papers without that quote
- Provide correct total with quote included
- Request relief
Likely Outcome: Can be granted if clearly clerical—quote existed, simply wasn't included
Scenario 3: Scope Misunderstanding
Situation: Misinterpreted specification, priced cheaper alternative
Response
- This is typically judgment, not clerical
- Relief less likely
- Negotiation may be possible
- May need to perform as bid
Likely Outcome: Relief difficult—interpreting specs is judgment, not clerical
Alternatives to Withdrawal
Error Correction Without Withdrawal
If Owner Allows
- Correct obvious errors
- Mutual agreement
- No material change to competitive result
- Documented correction
When Possible
- Clearly unintentional errors
- Owner identifies error
- Correction doesn't change result
- Good faith evident
Negotiated Resolution
Private Contracts
- Discuss situation with owner
- Propose alternatives
- Consider scope modifications
- Find mutual solution
Public Contracts
- More constrained
- Must follow procedures
- Limited negotiation
- Transparency required
Preventing Bid Errors
Process Controls
Estimating Practices
- Systematic takeoff methods
- Checklist utilization
- Multiple review points
- Template verification
Calculation Checks
- Independent recalculation
- Spreadsheet auditing
- Cross-footing verification
- Reasonableness checks
Review Procedures
Internal Review
- Second estimator review
- Manager verification
- Pre-submission checklist
- Final number confirmation
Timing
- Don't finish at deadline
- Build in review time
- Complete early when possible
- Allow for corrections
Common Error Points
Watch Carefully
- Decimal placement
- Unit conversions
- Subcontractor quote transcription
- Extension calculations
- Summary totals
When Relief Is Denied
Consequences
If Required to Perform
- Must execute contract at bid price
- Financial loss possible
- Relationship with owner may suffer
- Future bidding impacted
If You Refuse
- Bid bond forfeiture
- Potential damages claim
- Reputation damage
- Debarment possible (public)
Damage Mitigation
If Stuck with Bad Bid
- Execute efficiently
- Control costs carefully
- Document everything
- Learn from experience
Bid Bond Implications
Bond Purpose
Protection for Owner
- Guarantees bid validity
- Provides damages if withdrawn
- Ensures serious bidders
- Typically 5-10% of bid
Forfeiture
When Bonds Are Called
- Improper withdrawal
- Refusal to execute contract
- No valid legal relief
Financial Impact
- Bond amount lost
- Surety relationship affected
- Future bonding impacted
- Reputation damaged
Conclusion
Bid errors are serious but not always fatal. Understanding the legal framework, acting promptly, and documenting thoroughly gives you the best chance at relief when errors occur.
Prevention is better than cure. Build review processes that catch errors before submission. When errors do occur, respond immediately, document completely, and pursue appropriate relief.
Know that clerical errors typically offer more relief options than judgment errors. Be honest about the nature of the error and realistic about your options. And always maintain the documentation that supports your position.
ConstructionBids.ai helps you track bid deadlines and requirements, reducing the pressure that leads to errors. Better bid management means fewer mistakes.
