Pavel Enterprises, Inc. v. A.S. Johnson Co., Inc.

674 A.2d 521 (1996)

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Nature of the Case

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Facts

The National Institute of Health solicited bids for a renovation project. Pavel Enterprises Inc. (P), a general contractor prepared a bid for NIH work. P solicited bids from various mechanical subcontractors. A.S. Johnson Co. Inc. (D) responded with a written scope of work proposal on July 27, 1993. On the morning of August 5, 1993, the day NIH opened the general contractors’ bids, D verbally submitted a quote of $898,000 for the HVAC component of the work. P used D’s sub-bid in computing its own bid. P submitted a total bid of $1,585,000 for the entire project. P’s bid was second lowest, the low bidder was disqualified, and in mid-August, NIH notified P that its bid would be accepted. The president of P visited D on August 26, 1992, and met with D’s chief estimator to discuss D’s proposed role in the work. P asked D if D would object to P contracting directly with Powers for electric controls. D did not object to Powers being D’s sub instead of its own. Following that meeting, P then sent a fax to all the mechanical subs who gave bids to P on the NIH job. The fax asked each to review their bids because it was anticipated that P would get the job as the low bidder was disqualified. The fax asked each party to break out the cost for the Powers supplied control work as that would be subcontracted directly to Powers. The parties were asked to resubmit their quotes. On August 30, 1993, P notified D that it was to be the mechanical sub on the job. On September 1, 1993, P mailed and faxed an acceptance letter to D. Upon receipt of the fax, D called P to inform them that there was an error in the bid. D claimed that it had in fact discovered the error earlier but did nothing because D felt that P would not get the job because P was not low bidder. D sought to withdraw his bid by phone and by letter dated September 2. P refused that offer. NIH formally awarded the contract on September 28, 1993. P found another mechanical sub but at a cost of $930,000. P sued D to recover the $32,000 difference. The trial court made findings of fact; P relied on D's bid in making its bid to NIH; the fact that the low bid was not awarded takes this case out of the ordinary; D withdrew its bid on September 2 prior to the NIH formal award; and P’s letter to all mechanical contractors shows that there was no agreement between P and D and that D was not relying on D’s bid after the bid. D got the judgment and P appealed.