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Subcontractor's Sloppy Bid Drags Risk-taking Contractor Through The Mud

Friday, April 04, 2008 02:40 pm

Subcontractor's Sloppy Bid Drags Risk-taking Contractor Through The Mud

A general contractor and a subcontractor -- who clashed over an erroneous bid the subcontractor attempted too late to rectify -- both failed to convince an appeals court that they were not liable, at least in part, when the general contractor pulled out of the project it had been awarded.

NewMech Companies, Inc. (NewMech) submitted a bonded bid to the City of Lionsdale, Minnesota for construction of a wastewater-treatment plant. The bid included a subcontractor's bid from BNR Excavating, Inc. (BNR) for the project's necessary excavation work. BNR's bid, which reached NewMech just 20 minutes before the bidding deadline, excluded certain labor and materials and totaled more than $1 million less than a competing excavation work bid.

Upon receiving the bid, NewMech contacted BNR to confirm its completeness and accuracy. BNR's project manager and estimator, despite being shocked by the price difference between BNR's and the other excavator's bid, affirmed the bid included all associated labor and material. This confirmation "completely satisfied" NewMech's bid captain that BNR's bid "was free of mistakes,"he testified.

That was not the case, as the two parties discovered after the city informed NewMech that it was the lowest bidder on the project by more than $800,000.

Contractor underestimated bid mistake's magnitude

According to the project bid form, bidders were permitted to withdraw without penalty a submitted bid within 24 hours after the bid opening if it contained a "material and substantial mistake." [...]

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