With work scarce in today's economy, bids are increasingly competitive. More than ever, being read low is a cause for celebration. Every so often, however, that celebration sours when a contractor realizes that its bid contains a serious mistake resulting in a bid significantly lower than intended. Nobody wants to "throw one back," but a mistaken bid gives the contractor the unhappy choice of losing money or reluctantly asking to withdraw the bid.
Fortunately, most courts recognize the right of a contractor to withdraw a bid with a mathematical or clerical error that fundamentally affects the contractor's bid. Examples of clerical errors include:
- Failure to carry subtotals forward from one page to another.
- Failure to incorporate revised quotation from a subcontractor or supplier.
- An error in multiplication, division, addition or subtraction.
- Transposition of numbers.
- Erroneous recording of numbers.
- Erroneous placement of decimal points.
- Omission of work items or materials.
Any of these, as well as others, might entitle a contractor to withdraw its bid even after bids are opened. Contractors, however, are not entitled to relief for mistakes of judgment, like underestimating costs or failing to appreciate the difficulty of the work.
A contractor who discovers a mistake should promptly ask the owner to withdraw its bid, both orally and in writing. The contractor should explain the mistake and provide bid workpapers and other supporting documentation. Notice should be given before the contract is awarded, if possible, because then the owner only loses the mistaken bid and can still award to another bidder.
A contractor cannot withdraw its bid after the contract has been awarded and bid bonds returned unless it can show that the owner knew or should have known of the mistake or somehow caused the mistake. The owner cannot "snap up" a bid known or suspected to be mistaken. Needless to say, however, the award of the contract significantly reduces a contractor's ability to withdraw.
Contractors can always accept a contract despite a mistake, and many do, but the withdrawal of a mistaken bid does not mean forfeiting the bid bond. If entitled to withdraw its bid, a contractor is also entitled to the return of its bid bond or other bid security.
Contractors never want to turn away a contract, but contractors need to know their options when a serious mistake is made. A contractor should always seek a legal opinion from an attorney before attempting to withdraw a bid.