By: Alexander A. Miuccio Published: October 2010

Contractor Allowed To Correct Mistake After Bid Opening

Failure of a contractor to carefully comply with all the requirements of the bid specifications for public works may result in the bid being rejected on the grounds of “non-responsiveness”.  A bidder may be allowed to correct his mistake after the bid opening, however, if the variance from bid specifications is not material.  For example, clerical errors or mere irregularities may be waived by the awarding authority.

The contracting agency, however, should not allow a bidder to correct its bid after the bid opening in a way that would give the bidder a substantial advantage or benefit not enjoyed by the other bidders.  When essential information is missing from a bid, it may not be supplied later by a private understanding between the bidder and the awarding authority.

In the recent case of Metra Industries Corp. v. Rockland County Sewer District No. 1, the court ruled on whether the County’s decision to allow a bidder to correct its mistake after the bid opening gave the bidder an advantage over the other bidders, thereby undermining the open competitive bidding process.

Background 

In June of 2010 Rockland County invited bids for a project to extend and replace the North Pascack Sewer Interceptor.  Among the bid specifications was a requirement that the total value for Mobilization/Demobilization could not exceed five percent of the total contract award.  All bids were submitted by the July 8, 2010 deadline.  Montana Construction Corp., Inc. had the lowest bid, which was $2,712,319.  Metra Industries Corporation submitted the second lowest bid, which was $2,903,214.  Montana’s low bid contained a Mobilization/Demobilization price of $250,000, which exceeded the five percent limit set forth in the bid specifications.  Unknown to Metra, after the County advised Montana of the defect in its bid, Montana lowered its Mobilization/Demobilization cost from $250,000 to $129,000, reducing their total initial bid by $121,000.  Once the bid was reduced, Montana’s bid totaled $2,591,320, approximately $311,894 less than Metra’s bid.  According to Montana, the initial figure of $250,000 was essentially a clerical error caused by the inadvertent combination of a separate cost item with the Mobilization/Demobilization price. 

On July 9, 2010 Metra sent a letter to the County complaining that Montana’s bid was defective since Montana’s Mobilization/Demobilization cost of $250,000 exceeded the five percent limitation in the bid specifications.  On July 16th, the County sent a letter in reply, acknowledging the bid defect, but went on to state that Montana’s bid had been adjusted to comply with the specifications, and that the County would approve Montana’s bid.  Metra sued to stop the County from awarding the job to Montana, arguing that allowing Montana to correct its mistake after the bid opening placed Montana at a competitive advantage over the other bidders.

Decision

The court ruled in favor of the County.  According to the court, immaterial bid errors in a bid can be waived by a municipality, so long as the municipality has a rational basis for its determination.  In determining whether a bid error is or is not material, the court looked to the effect of the waiver and whether other bidders will be placed at a competitive disadvantage.  According to the court, if the waiver of the error by the municipality promotes completion of the work as specified without placing other bidders at a competitive disadvantage, the error may be deemed immaterial and can be waived.

Here, the court noted that the effect of the waiver, and Montana’s subsequent lowering of its bid, ensured that the contract would be entered into, and the same work performed, at a lower price than initially bid.  Since it was in the County’s best interest to waive the bid defect and permit correction, the court held that a rational basis existed for the County’s determination.  Also, the court pointed out that the County’s waiver of the defect did not place Montana at a competitive advantage since Montana was the lowest bidder with or without the error.  Accordingly, the court permitted the County to move forward with awarding the contract to Montana.

Comment 

There is no conclusive formula for determining on a case-by-case basis what constitutes a substantial bid defect as opposed to a minor defect.  The courts give broad discretion to public authorities in determining whether a bid is responsive and will uphold the agency’s determination if supported by a rational basis.


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