Tuesday, September 14, 2010

Breaking a 3-Way Tie in Bids

A county recently solicited bids for the removal of one tree and grinding the stump on-site. They received three bids, all for the exact same price of $350.  A further complicating factor is that one of the bidders is related to a county commissioner and another bidder is related to a county employee.

What are the county's options for breaking the tie?

Given the family relationships between two of the bidders and county personnel, it is very important to manage the selection of the bidder carefully in order to avoid either the appearance or the reality of the decision being made because of the family connections.

There are four general options that I can think of for breaking the tie:
  1. Select based on chance.  Often when two bidders are tied, the agency will flip a coin.  That obviously doesn't work with three tied bidders, but the county could draw straws and the firm pulling the longest (or shortest) straw would get the contract.
  2. Ask the three bidders to submit revised bids.  Establish a deadline for the three bidders and ask them to submit a new bid.  They would have the choice of keeping the same price, lowering their price, or increasing it. 
  3. Re-bid the project.  Reject all bids and re-solicit from a wide range of bidders.  
  4. Select based on qualifications: This could include the safety record of the bidders, their experience in performing similar work, or the satisfaction with previous customers.  The downside of this approach is that it is much more subjective, and since one of the bidders is related to a county commissioner and one is related to a county employee, this approach doesn't necessarily promote a sense of transparency related to the bidding process.
An agency faced with a decision like this would also need to look at applicable state and local laws, and if the project was federally funded, by any federal requirements.

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