A Variation on Kastoroff

Suppose Kastoroff discovered the addition error immediately (not the next day as in the actual case). He notified the school district after it had accepted his bid, but before the district had rejected any of the other bids.

The school district can agree to let the contractor out of the contract and still accept the next lowest bid, the one they would have accepted if the mistake had not been made.

If the school district accepts the next lowest bid they are no worse off than if the mistake had not been made.

Both answers are correct.