Bid low and look high – How to deal with unfair offers in construction law

Solution approaches

The starting point is the question of whether a bidding contractor is permitted to underestimate the quantities and expenses required to perform the work for which it is bidding in order to then take into account the additional quantities and expenses that will almost certainly be required later in the form of supplements. Such unfairly acting contractors regularly rely on gaps in the specifications to justify their subsequent additional charges.

In principle, this procedure is not permitted!

The strategy of“bid low and add high” is unlawful. The bidding company may not simply retreat to a particularly favorable calculation approach in order to improve its prospects of being awarded the contract with the disadvantageous consequence for the client that the risk of a subsequent supplement increases accordingly.”

This can be clearly inferred from the case law of the BGH.

By way of example, the notable judgment of the BGH of February 25, 1988 (case no. VII ZR 310/869), which has become known under the keyword “frivolity”, should be mentioned. In this judgment, the BGH stated (note: “plaintiff” refers to the “frivolous” bidder):

“The clients must have been aware that the soil and water conditions were only incompletely specified in the tender documents. Since the soil report did not contain any water permeability values and pumping tests had obviously not been carried out, only rough estimates could be considered from the outset. If the plaintiffs did not want to accept this in their calculation, they should have asked the defendant to supplement the tender documents accordingly. Therefore, there is much to suggest that the principles which the Senate has long developed for the case that a specification is recognizably incomplete for the contractor should be applied here (e.g. MDR 1966, 317 = NJW 1966, 498; most recently Senate judgment, MDR 1988, 43 = BauR 1987, 683).

Ultimately, however, this can be left to one side because a claim for damages is already ruled out here for another reason. The basis for a claim for damages based on culpa in contrahendo is always “disappointed trust” (Senate judgment, MDR 1966, 317 = NJW 1966, 498; cf. also Ingenstau/Korbion, VOB 10th ed. A § 9, para. 5). This cannot be said to be the case here because, according to the findings of the Higher Regional Court, the plaintiffs calculated “frivolously” in their offer and accepted the present dispute about the additional costs incurred. How correct this statement is is shown above all by the fact that the plaintiffs in their offer for the water maintenance costs for lot 2 only estimated DM 2.00 per running meter, while the plaintiff to 1 had shortly before demanded DM 75.00 per running meter for lot 1. The fact that in the case of the lot in question here it was not plaintiff 1 alone, but rather together with plaintiff 2, who submitted the offer, is irrelevant, since both bidders clearly had the calculation documents from the earlier offer for lot 1 at their disposal. The reason given for the difference in approach, firstly that the costs for the dewatering work for lot 2 had been partially allocated to the construction site equipment, and secondly that it had been possible to calculate “lower” because a lot of groundwater had already been extracted from the construction area by the dewatering for lot 1, does not explain such a wide divergence in the cost estimates for the two lots.

Rather, this disproportionately large, objectively unjustifiable difference shows that the plaintiffs ultimately calculated more or less “in the blue” – if not even “speculatively” – without any reasonable reference to the invitation to tender (cf. Senate judgment, MDR 1988, 43 = BauR 1987, 683, 685 = ZfBR 1987, 237, 238). In doing so, they not only significantly increased the risk that unforeseeable “additional claims” would later be made (in this case around one hundred times the bid price stated for the dewatering) (cf. Senate loc. cit.), but virtually conjured up the risk in order to be able to take advantage of it without jeopardizing their prospects of being awarded the contract. Anyone who acts in this way cannot invoke “disappointed trust”.

The following principles can be inferred from the above extract, which stand in the way of any subsequent proposals:

• Gaps in supply must not be accepted in silence.
• Calculating “frivolously” is prohibited.
• Supplements cannot be based on tenders submitted “in the blue”.