Volume 8 - Number 2 | January 11, 2010
Recent Issues
EDITOR'S NOTES | Issue 8-2
What a difference an undetected typographical error can make, particularly when it occurs in a legally binding document. Two recent cases illustrate this point. One involves a bid on a federal contract, the other an arbitration award.
In the bid case, the bidder misplaced decimal points when transposing subcontractor price quotations from bid preparation worksheets to the bid schedule, understating its intended bid by almost $1.5 million. The bidder then asked to correct its bid upward, which would still leave it in the position of low bidder. This request was strongly opposed by the second low bidder who insisted that the mistaken bid had to be withdrawn.
The arbitration case involved the award of attorney fees to a contractor that had prevailed in a payment claim against a project owner. The arbitrators inadvertently awarded the contractor $110,000 more than it requested or documented. The owner eventually discovered the mistake, but only after it was too late for judicial relief.
The third case this week addresses the proper calculation of a contractor's backcharge against a subcontractor. The contractor was forced to perform some of the subcontracted work with its own forces. When pricing the backcharge, the contractor did not document its actual labor costs with its payroll records. Instead, it used average burdened labor rates from an R. S. Means estimating guide. The case went all the way to the Utah Supreme Court.
LOW BIDDER ALLOWED UPWARD PRICE CORRECTION
A low bidder could correct documented clerical errors in its bid, adding direct subcontractor costs and retaining its position as low bidder. The bidder could add omitted direct costs without including mark-ups applied throughout the bid to other direct costs.
CONTRACTOR RECEIVES WINDFALL DUE TO OWNER INATTENTION
A project owner failed to seek modification of an arbitration award within 90 days of issuance and was obligated to pay the contractor a windfall of $110,000 created by the arbitrators’ misstatement of the contractor’s attorney fees.
SUB BACKCHARGED AT CONTRACTOR’S ESTIMATED LABOR RATES
A contractor was allowed to backcharge a subcontractor for the labor of the contractor’s own employees using hourly rates from an estimating guide rather than actual payroll records.
