Tuesday, October 27, 2009

Las Vegas Agency Rejects All Bids

On October 20,2009, the Clark County (Nevada) Commissioners took the unusual step of rejecting all four bids received on a $55 million membrane/ozonation facilities project due to bid irregularities in all of the bids.

Earlier, the county had declared the bid of McCarthy Builders as non-responsive for being submitted almost a minute and a half past the bid submittal deadline. Click here to read my previous blog entry on October 14, 2009 on the late bid submittal protest. The county received two bid protests on the project that undoubtedly contributed to their decision to reject all bids.

In rejecting all bids and choosing to re-advertise the project, the county noted the various types of irregularities in the bids. The county appears to have required a number of documentation items to be submitted with the bid, a practice that can result in non-responsive bids, as occurred in this instance.

Unless required by funding sources or specific laws, I always advise that public agencies limit what is required to be submitted with the bid. This allows bidders to concentrate on developing a competitive bid price, often a challenge in the last minute receipt of subcontractor bids and the development of a final bid price to the owner. Limiting the submissions with the bid reduces the number and type of issues that may arise that would result in a non-responsive bid.

In making a decision about whether a bid is responsive or not, the public agency should consider whether the irregularity in the bid is material or immaterial. In other words, if the irregularity would have provided a bidder with an advantage not enjoyed by other bidders, the bid must be declared non-responsive. Irregularities that do not provide one bidder with an advantage not enjoyed by others may be either accepted or rejected by the owner.

While it may exist, I didn't find anything in the Clark County record that reflected their evaluation of whether these irregularities were material or immaterial. Without reviewing the bidding documents and facts in this situation, it's hard to make the determination of whether the irregularities are material or immaterial.

The following is a summary of some of the irregularities in the bids noted by Clark County. Unless some of these items are required for submission by law, it seems to me that the county should not be requiring these with the bid submittal.
  • Failure to submit a copy of the bidder's contractor license with the bid. This should be a matter of public record and something that should be validated after bid submittal and prior to award of a contract.

  • Failure to submit with the bid a copy of the contractor license for subcontractors performing at least 5% of the contract amount. Also a matter of public record and something that shouldn't be submitted with the bid.

  • The total bid price was not tabulated correctly. It was higher than the sum of 12 individual bid items. Most agencies have, or should have, language in the bidding documents permitting the owner to correct such mathematical errors, so it's surprising that this was cited as one of the irregularities leading to rejection of all bids.

  • Use of a form outlining the qualifications of the proposed electrical subcontractor was from a different project. Requesting qualification information with the bid requires all bidders to prepare and submit, instead of only requiring this information for the successful bidder prior to award. It also can lead to non-responsive bids. In Washington State, RCW 39.04.350 provides for the establishment of supplemental bidder responsibility criteria. I always advise that agencies request this information to be submitted after the bid submittal deadline.

  • An instrumentation supplier qualification form was not completely filled out.

  • An expired "Certificate of Eligibility" form related to bid preference was submitted. I'm not sure what the context is for this form, but if it's not required by law or the funding source, this is an example of the type of form that should not be required to be submitted with the bid.

  • The form listing subcontractors were not completely and accurately filled out and contained dollar discrepancies. Another subcontractor listing form was not the current version of the form that had been updated by an addendum. In Washington State, there is a specific law requiring the submission with the bid of a list of subcontractors who will be performing electrical, plumbling, and HVAC for projects estimated to cost $1 million or more. See RCW 39.30.060.
In addition to the bid of McCarthy Builders that was rejected for being submitted late, the other four bidders whose bids were rejected were: Whiting-Turner Contracting Co., PCL Civil Constructors, Inc., MMC, Inc., and Western Summit Constructors, Inc.

It's a good idea for public agencies to review their bidding documents to determine whether items are being required for submission with the bid that do not have to be submitted then, but could be submitted after the low bidder is identified. This helps streamline the bidding process for contractors and reduces the likelihood of receiving non-responsive bids.

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