Rochon Corporation lost the municipal general-contract bidding contest to construct the Lofts at Farmer’s Market for the city of St. Paul to Shaw-Lundquist Associates. When the city opened the sealed bids, Shaw-Lundquist appeared to be the clear winner. But Shaw-Lundquist discovered that it had bid $619,200 lower than it had intended due to a clerical error. Bidding instructions included the following: “A bid may not be modified, withdrawn, or canceled by the Bidder for a period of sixty (60) days following the time and date designated for the receipt of bids, and each Bidder so agrees in submitting a bid.” Nevertheless, the CHAPTER SIX | Overview and Formation of Contracts 201 city allowed Shaw-Lundquist to change its bid, raising it to cover not only the $619,200 error but adding $89,211 more. Still, Shaw-Lundquist’s raised bid was lower than Rochon’s bid, and the city awarded Shaw-Lundquist the contract for $8,041,411. State common law long held that a contract entered into in violation of competitive bidding laws is void. The state supreme court had previously stated that a competitive bidding contract is void even “without any showing of actual fraud or an intent to commit fraud, if a procedure has been followed which emasculates the safeguards of
competitive bidding.” 

CASE QUESTIONS

1. The city claimed that it benefited the public by allowing the bid change because it resulted in monetary savings for the city. Does this explanation justify the city’s disregard of established precedent? Can the court of appeals disregard established state precedent?

2. Shaw-Lundquist was able to prove that its original bid was wrong due to a legitimate clerical error. Should this have mattered?

3. Why is it good policy to not permit amendments of bids in competitive bidding situations?