No Equitable Adjustment for Contractor with Penny Bid
March 3rd, 2015
Believing actual quantities of rock removal would be far less than the engineer’s estimate, the contractor bid a penny per cubic yard of rock removal on a water main extension project. Of course, other bid items could then be inflated and yet the contractor would – and did – remain the low overall bidder. But the estimated 1,000 cy of rock turned out to be an actual amount of 2,524 cy. The contractor sought an “equitable adjustment” in the unit price, from $.01/cy to $220/cy. (Expressed in percentages, that’s a 2,199,900% increase!) The contractor later reduced the request to a mere $190/cy, but the town denied any adjustment. The lower court agreed. The Massachusetts Appeals Court was polite, taking eight pages to reach what most would consider a foregone conclusion. It held that the statutory differing site condition clause “is designed to protect contractors from unknown and unforeseen subsurface conditions, not from the consequences of their decisions to bid a unit price for the performance of the work that is wholly unrelated to their anticipated cost to perform the work. In such circumstances it defies logic to invoke ‘equity’ as a basis for adjustment to the contract price.” So the contractor would receive $25.24 for the rock removal, as it had bid. A just and equitable outcome. The case is Celco Construction Corp. v. Town of Avon, Mass. App. Ct. No. 13-P-1880 (Mar. 2, 2015).