Monday, October 11, 2010

Dealing with Conflicting Bid Prices

If your agency requests that bid prices be submitted in both words and numbers, make sure that you have a statement in your bidding documents addressing which takes precedence in the event of a conflict.

Not all agencies have such precedence language.  Without such language, it can lead to bid protests that are difficult to manage.

Example:  In one case, a public agency requested unit bid prices in both words and numbers.  The low bidder (at least based on the numbers) submitted a bid price in numbers for $150 per unit.  When multiplied by the estimated number of units, their extended price was $7,500.00.  But in writing the unit price in words, the bidder wrote down "seven thousand five hundred dollars," the amount of the extended bid price.

No Precedence Language:  The public agency had no language about how to handle a conflict between words and numbers, and decided to accept the unit price in numbers as the correct bid price.  

Bid Protest Filed:  This led to a bid protest in which the second low bidder argued that the low bidder's bid contained a material irregularity and that the bid should be rejected as non-responsive.  The basis of the material irregularity argument was that the low bidder had an advantage or benefit that other bidders didn't have:  they could choose, after submission of their bid, to either accept or not accept award of the bid based on the irregularity.  While I think the protesting contractor had a strong argument, the public agency denied the protest, and the protester chose not to pursue the matter further.

Bidding Should Promote Public Trust:  The public agency's deficient bidding documents caused delay in the project, and did not promote one of the basic principles of public contracting:  public bidding should be transparent and promote public trust in the process.
Note:  I've changed some of the numbers in the example above.

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