Once submitted, can a bid be withdrawn without penalty? The answer depends on the rules governing the submission of bids, and the timing of their withdrawal.
On Massachusetts public projects, general bids and filed sub-bids are controlled by statute (M.G.L. c. 149, §§44A-J). Until bids are opened, any bid may be withdrawn. But once opened, no bid may be withdrawn except as provided in the bid statute.
On most Massachusetts public jobs, the bid statute allows the awarding authority 30 working days to award the general contract (somewhat longer if federal funds are involved). Neither general bidders nor filed sub-bidders have the discretion to withdraw their bids during this award period. But once that period expires, both general and sub-bidders may withdraw their bids without any penalty.
Within the award period, bids may be withdrawn in only two circumstances. First, a bidder is entitled to withdraw if it can demonstrate a legitimate and substantial clerical error in the formulation of its bid price. Clerical errors that qualify include errors in copying numbers, or errors in arithmetical computations that occur in the final stages of bid preparation. Second, a bidder may withdraw if a death, disability or some other catastrophic circumstance substantially affects the bidder. A bidder who meets either of these conditions may withdraw its bid without penalty and is entitled to return of its bid deposit.
A low selected bidder on a public project who attempts to withdraw without adequate statutory grounds forfeits its bid deposit up to the difference between its bid price and the price of the next lowest, responsible and eligible bidder. The awarding authority may not recover any amount in excess of the bid deposit, even if that deposit is less than the difference in bid prices.
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