A contractor submitted an $89 million bid to expand Orange County's (California) John Wayne Airport. After bid opening, the contractor claimed that they had made an error and transposed the numbers in the bid, and that their bid amount should be $98 million. The second low bid of McCarthy Builders, Cos. came in at almost $101 million. The low bidder, Whiting-Turner, wants the job at the $98 million price tag. They have apparently submitted documentation showing that their bid was intended to be $98 million, not $89 million.
What should Orange County do? In many ways, other than the magnitude of the error, there is not that much unusual about the situation. Contractors make mistakes on bids frequently, and submit claims of error. A contractor who makes a mistake on a bid really has just two choices:
- Accept the bid at the actual price they bid. The contractor needs to determine whether they can afford to do the project for the bid amount. Owners should be wary of contractors who may be starting a project without much margin or profit as it could lead to a problem project fraught with disputes and change orders. It benefits neither the contractor nor owner for a contractor to be in a difficult financial situation on a project.
- Request that their bid be withdrawn and that they be relieved of obligation and liability for the bid because of the error, with the owner agreeing to not go after their bid bond. Claims of error should be filed with the owner in a timely manner after the bid submittal deadline and should document the nature of the error.
Generally, there are two types of errors that occur on public works projects: mathematical or clerical errors (such as a transposed number or adding up a column of numbers incorrectly), and errors of judgment in which the contractor didn't understand completely the scope of work called for in the bidding documents.
For more information on Orange County's situation, visit the website of OCregister.com
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2 comments:
They are exploring the best option by considering allowing them to make the correction. Even per your summary, they are doing the right thing. The contractor made a mathematical error, and they have shown where the actual cost was $98m.
The bigger problem was where I read in the article that they allowed them to phone in their bids. That seems off to me considering the magnitude of the project and the obvious problems that have resulted from that action.
Clearly, the airport needs to explore all of the options, especially given the dollar amount at stake. However, to allow a correction of the bid amount provides Whiting-Turner with an advantage not enjoyed by other bidders - the ability to choose whether to accept the bid or not. It's a slippery slope that undermines all the principles of competitive bidding.
Errors like the transposition that happened do occur in the bidding environment, especially where all the subcontractors are calling their bid prices into the general contractor at the last minute, all to prevent their bid from being "shopped" by the contractor.
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