Careful bid preparation is always important, but it is more crucial in recessionary times when bid opportunities are reduced and competition is increased. As opportunities dwindle, the importance of each low bid to a contractor or subcontractor is magnified. A bid mistake can doom an otherwise low bid and cause its rejection on that job you really wanted and needed. That is especially true on public projects, where bidding is formalized and controlled by statute.
Not all public bid mistakes are equal, and not all are necessarily fatal, although almost all may be. There are essentially two types of bid mistakes, those which require automatic rejection, and those which permit but do not require rejection.
A good rule of thumb is that where a bid mistake involves a statutory requirement or affects competition, the Awarding Authority must reject; but where a mistake does not violate a statutory provision or affect competition, the decision to accept or reject the bid is optional with the Authority.
Some examples of bid mistakes requiring automatic rejection include: (a) Failure to submit adequate bid security. The statute requires bid security equal to 5% of the bid by certified check or bond. If the amount of the bid security fails to cover the base bid plus alternates, or is not in the prescribed form, bid rejection is certain. (b) Failure to deliver the bid on time to the designated place for bid opening. This goes to the heart of fair and open competition. Any bid not delivered on time is automatically rejected. (c) Qualifying a bid by adding conditions. Every bid must stand on the very same footing and any attempt to condition a public bid requires automatic rejection. Some examples of bid mistakes which permit, but do not require rejection, include: (a) Failure to acknowledge an addendum not affecting the scope of work being bid. (This would apply to subbidders since all addendum affect the general bidder). That failure neither violates the statute nor affects competition. (b) Failure to submit information called for in the specification but not required by the bid statute. For example, the bid instruction may require the bidder to submit a progress schedule with its bid. That information is not required by the statute and does not affect the price of the bid. The Authority may reject a bid that does not include that information, but it may also waive the omission and consider the bid.
Where a bid mistake permits but does not require rejection, the bidder's first recourse is to the Authority. An immediate attempt should be made to convince the Authority that the mistake neither violated the bid statute nor provided any competitive advantage. An Authority convinced that it is not required to reject a low bid has a financial incentive to waive the mistake because it receives the benefit of that bid.
If the Authority insists on rejecting, the next step is to seek review before the Department of Labor and Industries, which is the state agency designated by statute to decide public bid disputes. A Department hearing may be useful in convincing an Authority to waive a minor bid mistake because it requires the Authority to offer a public explanation as to why it wants to reject a low bid which it has the discretion to accept. Moreover, the Department may encourage the Authority to utilize a low bid it is not legally obligated to reject. But an Authority is not bound to follow the recommendation of Labor and Industries, and if the Authority insists on rejecting, the bidder's last recourse is to the court.
Unfortunately, Massachusetts' courts have repeatedly taken the position they will not substitute their judgment for the judgment of a public Authority, and will overrule the Authority only where there is a clear error of law, or the Authority has abused its very broad discretion. That rarely happens.
The lesson here is that even in the crush of final bid preparations, the bid must be carefully reviewed. Although many bid mistakes are subject to the Authority's discretion, a bidder cannot force the Authority to exercise that discretion in its favor, and once rejected the chances of reversing that decision are slim. This is truly one of those areas where an ounce of prevention is worth far more than a pound of cure.
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