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Pennsylvania Commonwealth Court holds that acceptance of a public contract bid does not form a contract

8/21/2014 | Construction Blog

The Commonwealth Court recently considered a breach of contract claim by Allan A. Myers after the Montgomery County Commissioners reversed course and awarded paving work to another bidder.Allan A. Myers, LP, was awarded a contract by the County Commissioners in Montgomery County to perform certain paving work. Upon being awarded the bid, Myers incurred the expense of procuring the bonds required for the project. Thereafter, the County, by formal resolution, rescinded the award to Myers and awarded the work to another bidder.

Myers sued the County and the Commissioners claiming that acceptance of its bid constituted the formation of a binding contract and that the County was bound by those terms. The trial court rejected this argument, stated that the award of the bid did not constitute contract formation, and dismissed the lawsuit. The Commonwealth Court affirmed the decision by agreeing that the acceptance of the bid did not form a contract. However, the Court disagreed that the entire case should have been dismissed because Myers could recover for the cost of obtaining the bonds after the County reversed course and awarded the work to another contractor.

It has long been the law of the Commonwealth that a contract is not formed with a public body until the terms outlined in the accepted bid are memorialized in an agreed upon contract document executed by the parties. This decision, as a result, seems to affirm that precedent.