Managing Claims of Error on Public Works Projects

There are two types of errors that bidders on public works projects make in submitting a bid.

1. Clerical or administrative errors where the bidder added up something incorrectly or transposed a number.
   
2. Errors of judgment where the bidder simply didn't understand what was involved in the project.
   

Bidding documents should always describe a process for how bidders should submit a claim of error to the public agency. At a minimum, these instructions should provide for:

1. Timely notice to the agency of the error (maybe 24 hours after the bid submittal deadline)
   
2. A description of the nature of the error
3. Transmittal of original worksheets demonstrating and documenting the error
4. A request to be relieved of liability for the bid
   

In evaluating a claim of error, it is important for public agencies to realize that a claim of error should never result in negotiation of the bid price. In submitting a bid, the bidder agrees to enter into a contract for the amount of the bid, or in submitting a claim of error, requests permission to withdraw their bid and not be held to it.

When should claims of error be accepted? Generally, court cases indicate that claims of error that are filed in a timely manner and are based on a clerical error should be accepted by the public agency, without taking action against the bidder's bid guaranty. An agency does not generally have to accept a claim of error based on a judgment error.

But it is always good to remember that if a bidder is requesting permission to withdraw their bid for an error, regardless of the reason, it's probably a good idea to let them off the hook. You don't want to start a project with the bidder set to lose money and looking for change order opportunities in order to make up for the error. It's not in anyone's best interests to proceed with such a project. Also, if the bidder didn't understand the project when bidding it, there's a good chance that there may be problems with them understanding what needs to be done to perform the work of the contract.

If you find that a particular bidder regularly claims error based on judgment misinterpretations of the bidding documents, then it may be appropriate to consider taking action against the bidder's bid guaranty.

In Washington State, remember that RCW 39.04.107 prohibits a bidder who has claimed error from re-bidding the project in the event the public agency chooses to re-advertise the project.

These are some general observations about how to manage claims of error, realizing that each case has different facts associated with it and may call for things to be handled differently depending on the circumstances.