Recently, a public owner solicited bids for a university construction project. The bid form sought pricing for base bid work and alternate work. One of the bidders included ambiguous pricing for an alternate item, in that the pricing was neither an “add” nor a “deduct” to the base bid price. Instead, it appeared to be a “total” price for all of the work combined. This “total” price, if accepted, would have been the lowest if award was made on the basis of the alternate. The problem with this bid pricing was soon apparent. The bid instructions had informed bidders that alternate pricing was to be added to the base bid pricing to arrive at a total bid price for use in determining the ranking of the bids. The owner was understandably confused by the pricing which did not conform to the bidding instructions.
Under these circumstances, the owner did not reject the bid as ambiguous, but instead actually called the bidder to seek clarification of the pricing. Having received a “clarification,” the owner then expressed an intent to award a contract to the bidder. A protest was soon filed by another bidder, and the protest was later sustained for obvious reasons.What were those reasons?
First, longstanding case law supports the sanctity of price in public bidding. In American Totalisator Co., Inc. v. Seligman, 489 Pa. 568 (1980), the PA Supreme Court voided a contract award to a bidder who was permitted to “clarify” its bid price after the bids were opened:
We acknowledge that the chancellor made no findings of bad faith, fraud or capricious action. Nevertheless, the chancellor did find that elementary principles of competitive bidding had been violated when Control Data was allowed to “clarify” its bid after American Totalisator’s bid had been opened. Before the clarification, Control Data’s bid was higher than the bid of American Totalisator; yet, after the clarification the opposite was true. The evil of the instant procedure is readily apparent. When competitive bidding is used and the procedures followed emasculate the benefits of such bidding, we believe judicial intervention is proper.
Second, while the owner argued it had a right to waive the ambiguity in the bidder’s pricing, waiver was not an option. In Gaeta v. Ridley School Dist., 567 Pa. 500 (2002), the PA Supreme Court ruled that a school district could allow a bidder to substitute the required higher-rated bid bond for the lower-rated bid bond that was included with its bid. In reaching its decision, however, the Supreme Court drew a clear distinction between a bid bond deficiency, which was deemed to be non-material, and one that involved price:
We find the circumstances distinguishable from those involving price discrepancies, failure to bid on all necessary terms, the omission of cost or performance items, and defects related to a performance bond, concerning which liability is generally of far greater magnitude. [Emphasis added]
A golden rule of public bidding is that pricing is sacrosanct and that ambiguous pricing is almost always the death knell of a public bid. So, in answer to the question posed by this post, a public owner can rarely if ever seek clarification of ambiguous bid pricing.
If you need assistance on a bid issue, feel free to call me or email me. I’ll be happy to assist in anyway possible.
Christopher I. McCabe, Esq.
