Yes; there is a 10% bid tolerance, only. Contractors with a restricted limited license (BC-A/r) classification, do NOT have a 10% bid tolerance. Projects cannot be split into phases to circumvent the law's monetary limit for the total project amount. In addition, contractors exceeding their monetary limit do not have the right to file a lien, regardless if it is a residential or commercial project.
Prime contractors must be cautious when obtaining bids from subcontractors that are required to be licensed. TCA § 62-6-120 finds it a violation for a contractor to accept a bid from a subcontractor without the sufficient monetary limit and classification. In addition, only the owner may supply labor/equipment, therefore, these portions could not be deducted from the total cost of the project. Caution is also recommended when bidding alternates as part of the total bid. The Attorney General has issued opinions on this matter; February 11, 1993 (#93-12); and August 6, 1981 (#81-452). If a bid is rejected for failing to supply a valid bid due to violating the law, the contractor may not be allowed to re-bid.
Always ask for a copy of the subcontractor's license before listing them on the outside of the bid envelope or verify online.
Can a contractor bid in excess of their monetary limit?
Tim Smith -