Sunday, July 18, 2010

Can You Re-Design a Project After Bid Opening to Keep it Within Budget?

Let's say you've just opened bids on a  public works construction that has been competitively bid under the traditional Design-Bid-Build method.

Budget Constraints:  The low bidder withdraws their bid due to an error, leaving you with the second low bidder whose bid is right at your budgeted amount, including contingencies.  You're concerned that the budget is too tight to award to the second low bidder.

Can You Re-Design the Project After Bid Opening?  Can you award the project to the second low bidder, enter into conversations with the contractor to conduct value engineering as part of re-designing the project in order to bring the costs down, and then execute a change order for the re-designed, lower priced contract?

Negotiating a Bid Not Permitted:  In most circumstances, the short answer is "no."  Re-designing the project to bring it within the budget amounts to bid negotiation.  Negotiating a public works bid is directly at variance with most competitive bidding laws and regulations.  By re-designing the project, you essentially have a different project than the one that was put out for bid and that other bidders submitted their bids on.

Audit Finding:  In a similar vein, the Washington State Auditor's Office has issued findings in the past after the City of University Place awarded a public works construction project when they didn't have the funding for it, negotiated deletion of work after bid opening and prior to award, and then immediately issued a change order after award to bring the contract amount within budget.  Click here to read my blog entry from January 29, 2009 on this audit finding.

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