School Board Roof: Bid Error and the 5% Bid Bond
A general contractor submits the low bid of $1,780,000 on a parish school board roof replacement. The solicitation required a 5% bid bond and 100% performance and payment bonds. Two days after opening, the estimator discovers that the bid omitted $80,000 for tear-off and decking; the correct price should have been $1,860,000. The second bidder is $1,840,000. The contractor sends written notice to the board asking to withdraw, citing a clerical mistake. The board refuses and threatens to forfeit the $89,000 bid bond and award to the second bidder.
Meanwhile, the contractor had lined up a roofing subcontractor, who later claims $140,000 for work it performed under a letter of intent before the contract was signed. The subcontractor did not file a sworn statement with the school board, and the board has not recorded acceptance. The contractor asks whether it must sign at the mistaken price and what exposure it has to the sub.
1. Can the contractor withdraw its bid without forfeiting the bid bond? What standards apply?
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A bid bond secures the bidder's promise to execute the contract at the bid price; it is not a performance bond. If the low bidder refuses to sign, the public entity may forfeit the bond, but Louisiana public bid law allows relief for certain clerical errors that are not the result of bad faith and are promptly brought to the entity's attention.
The key facts favor the contractor: the error is a discrete omitted quantity of $80,000, it was discovered two days after opening, and the contractor gave written notice before award and before signing. The board should not award to a bidder it knows made a material mistake. However, withdrawal is not automatic; the contractor must show the mistake was clerical, material, and not due to gross negligence. If the board awards and the contractor refuses to sign, forfeiture is likely. The contractor should not sign at $1,780,000 and then seek a change order; that is a weaker argument and may be treated as accepting the risk.
2. What are the subcontractor's rights against the board and against the contractor?
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The subcontractor has no direct contract with the school board, and public property cannot be subjected to a mechanics lien. Its claim against the public entity must be asserted under the Louisiana Public Works Act against retained funds or the payment bond. That requires a timely sworn statement filed with the public entity; the subcontractor apparently missed the statutory period, which generally runs from recordation of acceptance or notice of default. The board has not recorded acceptance, so the deadline may not have started, but the subcontractor must still perfect the claim when it does.
Against the contractor, the subcontractor has a contract or unjust enrichment claim, but the letter of intent may not be a binding contract. The contractor's exposure depends on the letter's terms and whether work was authorized. The payment bond, if issued, is the better route.