Legal Dig

bid correction rules are not always enforced

By: adrienne isacoff, esq., florio, perrucci, steinhardt, cappelli, Tipton & Taylor LLC

Bidders are familiar with the rules included in most bid specifications that specify how pricing mistakes will be governed. Most often, if the extension of the unit price is calculated incorrectly, the extension will be corrected to reflect the unit price. If there is a discrepancy in the written price and the numerical price, the written price prevails. These rules make it easy to know how a contracting unit will act when a bidder makes one of these mistakes. A governmental agency will follow its own rules, right? Wrong. The real answer is a lawyer’s dream and a contractor’s nightmare — it depends!

Bidders, reasonably, expect that public owners should be compelled to follow their own rules since the bidder will be held to the specifications. A bidder knows, as does its competition, that if corrections amount to it no longer being the lowest bidder, then it will not be awarded the job. But when bidders take State and local agencies to court because they are not following the correction rules, they are faced with a surprising lack of concern by the courts about the lack of uniform enforcement.

Typically, the courts seek to determine the intent of the bidder, rather than require the public owner to simply make the correction set forth in the specifications. For example, if the unit price in the extension column is the correct multiplier of the numeric price and the total price bid for the job is based on totaling all the extensions, the court may decide that the rule about the written price governing over the numeric price will not be followed because the total price conveys the intent of the bidder.

In Spina Asphalt Paving Excavating Contractors, Inc. v. Borough of Fairview, 304 N.J. Super. 425 (App. Div. 1997), one of the leading cases of this type, the bidder wrote the numeric number $400 for a line item with an estimated quantity of 1,350 S.Y., rather than $4.00. There was no space for putting the bid quote in writing. The line item total was $5,400 – which is what the bidder intended and was used in calculating the total bid. Despite the bid specifications that in the event of a discrepancy between the unit prices and the extended totals, the unit prices shall prevail, the court held that a “patent error” in the statement of a unit price for a line item was nonmaterial and could be waived where the true intent of the bidder was obvious.

Other ways that a court may try to discern the true intent of the bidder is to compare the line item prices with the engineer’s estimate and with the pricing of other bidders. If the bidder’s line item price is significantly different from the estimate or other bidders’ pricing, the court may not apply the correction rule, calling the mistake “patent error” or “exorbitantly higher.”

An example of this type of reasoning was used by the court in Colonnelli Bros., Inc. v. Village of Ridgefield Park, 284 N.J. Super. 538 (App. Div. 1995). For traffic maintenance, Colonnelli bid one hundred dollars in writing, but $10,000 numerically. The Village relied upon its engineer who estimated the line item at about $5,000, and by comparing the unit prices of other bidders in that general range. The Village concluded that $100.00 would not cover the line item and, therefore, would not apply its bid specification to correct the unit price to the written number. Colonnelli lost the award and filed a complaint demanding that the Village apply its own bid specifications. The trial court agreed with Colonnelli. The Village appealed, continuing to maintain that it could disregard its bid specifications under these circumstances.

The Appellate Division reversed, agreeing with the reasoning of the Village engineer who explained in a certification that:

If a contractor was allowed to revise his bid where a lump sum bid was called for, it would lead to a situation where a person could submit two prices for a lump sum item and they would have built-in float in their bid, depending on which price was used. This could lead to irresponsible prices being submitted for the same item, which would favor bidders who failed to follow a careful analysis in preparing their bids.

Id. at 543.

On the one hand, the public policy behind such decisions may be to prohibit bidders from being able to pick and choose between the ambiguities in their bid after they have an opportunity to see the pricing of their competitors and then seek to persuade the owner to make the correction if they will still be the low bidder.

On the other hand, despite that policy objective, there are significant problems with this approach. First, it opens the door to corruption on the part of the public owners, because they can choose to enforce their own bid specifications or to disregard them, depending on whether they want the ambiguous bid to wind up being low.

Second, it is one more example of a lack of uniformity in public bidding, especially on the local level. While uncertainty about the bid process may be good for lawyers, it is not good for contractors!