Imagine that feeling on bid day: You’ve worked hard to ensure your bid includes everything. You’ve lined-up your subcontractors, secured your bid bond and are awaiting the owner’s opening of bids. But as the bids are opened, you quickly realize that you’ve made a major mistake. Maybe you missed some critical scope items, or underpriced certain portions of the work. Regardless, once the bids are opened you are low, but a wide margin. You soon realize your error and figure out that if you perform the work, you will lose large amounts of money. Likewise, even you want to perform the work, your surety may not issue you the final payment/performance bonds because you are so low in contract price. What can you do?
Can you withdraw your bid?
The short answer is maybe, but you better act quickly.
A bidding contractor may withdraw its bid at any time up until the bids are opened. After that, California law allows a successful bidder to withdraw its bid in very limited circumstances. Withdrawing a bid without a claim on your 10% bid bond requires some analysis and close attention to the calendar.
Public Contract Code Section 5103 allows a successful bidder to withdraw its bid, within 5 working days of bid opening, without impact to the bid security (bid bond), but only if the winning bidder can establish, to the owner’s satisfaction, that the bidding mistake was typographical or clerical in nature and only if the owner consents to the withdrawal.
Examples of typographical errors include transposing numbers from a takeoff into the bid or failing to incorporate a subcontractor’s price into your overall bid. The mistake must be clerical in nature, not that you simply regret the bid or the price submitted for the work. Errors in judgment, or overall carelessness in your bid, is not grounds for bid withdrawal without a hit on your bid bond.
In this situation, time is the most important element to consider. A winning bidder must act promptly and in no event later than 5 business days after bid opening.
You must promptly notify the owner in writing of your mistake and request for withdrawal. If you choose to withdraw your bid, best practices dictate that you want to show the owner your mistake. They don’t have to simply take your word for it. Demonstrate to the owner how you made the mistake. Show them material or labor take-offs, subcontractor pricing, etc. The more detail you can provide to the owner through bid-day documents, the stronger your withdrawal will be and thus, the greater the likelihood the request to withdraw will be granted. Best to hire a lawyer who has experience in this field to assist you in getting this done.
If the owner grants your request to withdraw and the project is re-bid, you are prohibited from bidding again on the project.
What if the owner refuses to grant your request to withdraw? In that situation, you should immediately consult with legal counsel. The law affords a winning contractor 90 days to pursue legal action against an owner who fails to consent to a timely bid withdrawal, but certain procedures should be employed to ensure that you will ultimately win a legal challenge. You should also promptly notify your surety of your plan to withdraw so that they are kept in the loop on our efforts in order to protect the bid bond penalty.
For more information on public works bid withdrawals, please contact Lanak & Hanna Principal Attorneys Frank J. Lanak, [email protected] and Colin K. McCarthy, [email protected].
The information contained herein is not advice and should not be treated as such. You must not rely on the information as an alternative to legal advice from an appropriately qualified attorney.
Pursu Agency
Another good, to the point newsletter. Thank you