Choosing Better Budgeting

Posted on: 29 August 2017

With construction projects—especially those for public projects developed by the government—bids are typically required to remain valid for the entire consideration period. Withdrawing a bid may result in the recipient filing a claim against your contract bond, even though you will not be awarded the contract. However, there are two times when it may be possible to withdraw a bid without losing your bond:

Before the Recipient Opens the Bid

You may be able to withdraw a bid if the agency or company you sent it to didn't open and/or read it. This is because any claim against your bid bond would typically be based on the losses the recipient sustained as a result of relying on your offer. If the person doesn't know what your bid actually is, he or she wouldn't have the legal standing to make this claim.

For example, say you submit an offer to build a local school for $1 million dollars. If the person opened your bid and decided to award you the contract based on it, the person would have cause to file a claim against you if you withdraw the offer, even if the person hadn't officially notified you that you won the project. The person relied on your bid to make a decision on the project and must now go with a different offer, which may result in losses to him or her.

On the other hand, if the person didn't open the bid, he or she can't claim to have relied on it in his or her decision making. Therefore, any claim for losses would likely be denied, because the person wasn't worse off for having never looked at your offer.

The first thing you should do is to contact the recipient to determine if he or she opened the bid. If not, the person or agency may be willing to let you withdraw it.

To Correct a Material Mistake

It may be possible to withdraw a bid without incurring a claim on your bid bond if you need to do so to correct a material mistake on the offer. For instance, if you transposed a number that resulted in an incorrect sum, the recipient may let you withdraw the incorrect bid and submit a new one.

In these cases, you will typically be required to submit clear evidence there was an error on the bid. One company submitted a bid to a school district that estimated its electrical work at $33,500 instead of $335,000, for example. In a situation like this, you would need to submit a detailed letter explaining the mistake and possibly include other materials backing up your claim (e.g. copies of check stubs showing your electrician's hourly wage). As long as your explanation appears legit, most bid recipients will let you correct the offer and resubmit it.

For more information about bid bonds or to obtain one for your offers, contact a contract bond company.