As a construction attorney, I have been on both the sending side and receiving side of a request for a time extension. Whether the deadline involves discovery responses, a witness interview or a trial brief, most requests are granted. In the construction world of competitive bidding, however, the request for an extension is not so clear.
Most bids on construction projects must be accepted within a certain time period; otherwise, they are no longer binding. Of course, the same provisions permit an extension of the time period by consent of the bidder or both of the parties. What happens if there is no formal agreement to extend the bid acceptance period? A good example of this scenario is found in the case of Prime Contractors, Inc. v. City of Girard, where a disappointed low bidder contested an award to the second bidder.
In this case, the City sought bids for repavement of a road. The bid documents included the City’s right to determine if the bidder had the ability to perform the work at the bid price, as well as a provision requiring bidders to attach materials showing they had complied with the state’s Equal Employment Opportunity Commission (EEOC) requirements.
When the bids were opened, the City learned the low bidder had failed to comply with the EEOC requirements because its Certificate of Compliance had expired two days before the bid’s submission.
Thus, the City decided to award the contract to the second bidder. The low bidder challenged the decision and sought an injunction against the award to the second bidder. The trial court ruled in favor of the second bidder.
On appeal, the low bidder relied on a state statute that required the award and execution of a contract to be done within 60 days. Under the statute, the failure to award and execute a written contract within that time frame invalidates the entire bid proceedings and all bids submitted, unless the time for awarding and executing the contract is extended by mutual consent of the owner and bidder.
Mutual consent. The court found the 60-day limit could be extended by "mutual consent." As to this point, the court emphasized that the parties to the proposed contract need not "agree" to extend the 60-day period. Instead, mutual consent could be reasonably inferred by conduct. Under this interpretation, the court concluded the bid does not automatically become invalid at the end of 60 days: It continues to be valid until one party indicates to the other that it is withdrawing its consent.
Implied extension. In this case, the court found no evidence that either the City nor the second bidder had revoked their consent to extending the 60-day period. In fact, the evidence showed that the second bidder had already begun to perform the work on the project even though a written contract had not been executed. On that basis, the court refused to grant the injunction sought by the low bidder.
Lesson learned. In most cases, public owners specifically request extensions of the bid-acceptance period when some problem holds up an award. Suppose a public owner did not seek an extension and the low bidder did not revoke its bid. Could the public owner require the bidder to perform by a notice of award several months later? Obviously, the answer to that question depends on the wording of the statute or bid proposal. Interestingly, the court in the Prime Contractors case found a consent to extend that did not require a formal agreement.