Lost Profit Claim is Constrained by Low Bid Setting

A contractor was the lowest bidder on a public project, and the second-low bidder was only $11,705 higher. A consultant later discovered that some of the bid quantities that it provided to the contractor (pre-bid) were mistaken. The contractor, who still turned a profit on the project, made a claim against the consultant for lost profit. But the court noted that, had the contractor’s bid reflected the correct value of materials, it would no longer have been the low bidder. Thus, the contractor’s claim failed a “but for” analysis – but for its reliance on the consultant’s error, the contractor would have earned more money.

The case is slightly more complicated, as there is a suggestion that some of the information from the public authority may have led to the incorrect quantities. And, thus, there was the potential of a claim against the public authority to recoup some of those costs. But the claim against the consultant would not succeed, where any reliance on accurate information would have meant that the contractor would no longer have been the low bidder. The case is Valley Paving v. Stanley Consultants, 2016 Minn. App. Unpub. LEXIS 460 (May 9, 2016).