Despite the best efforts of public agencies and contractors, sometimes things go awry and there are problems with public works bids.
Sometimes the public agency's bidding documents were less than clear and resulted in a misunderstanding of the scope of work. Or maybe the bidder just made a mistake in their price. Rarely, two bidders may submit the same price.
Let's take a look at 8 things that may complicate a public works bid.
1. Missing Bid Prices: Public agencies frequently request multiple types of prices on a bid form, such as the following:
- Lump Sum bid
- Line item bid with unit prices to be applied to estimated quantities
- Unit prices for change order work
- Alternate bid items for different materials or methods of constructing the project
- Additive or deductive bids addressing desired work that will be awarded if there is sufficient funding
In order for the public agency to be able to equitably compare bid prices to identify the low bidder, bidding instructions should require that bidders submit a bid on all items. If a bidder fails to submit a required bid price, their bid should probably be declared non-responsive and not considered further.
2. Unbalanced Bids: According to Seattle construction attorney
John Ahlers, "the unbalancing of a bid is the shifting of part of the cost of the work for one element of the work to another element of the work." Unbalanced bids may result in a final cost to the public agency that is higher than what would otherwise be expected. Assuming there is language in the bidding documents defining and prohibiting unbalanced bids, an unbalanced bid should generally be rejected as non-responsive.
Click here to read a read blog entry by John Ahlers on unbalanced bids.
3. Conditioned or Qualified Bids: In requesting bids, public agencies should require that bids be submitted on a structured bid form, and prohibit the bidder from imposing any conditions, exceptions, or qualifications to the scope of work. If a bidder does take exceptions to any of the requirements of the bidding documents, or bids on an unauthorized alternative scope of work, the bid should be declared non-responsive. I've seen letters submitted with the bid form that don't necessarily condition or qualify the bid. In other words, if the bidder has simply repeated statements that are consistent with the bidding documents, their bid would be responsive. It is only if the stated assumptions submitted with their bid change any of the requirements of the bidding documents that the bid should be rejected as non-responsive.
4. Bid Price Conflict Between Words and Numbers: If a bid form requires bidders to provide the bid price in both numbers and words, and there is a conflict between the two, the bidding documents should have instructions about which takes precedence - usually the words. Asking for bid prices in both words and numbers can be problematic for bidders who are faced with the challenge of developing their bid price at the last minute. The last minute preparation of a bid occurs when subcontractors, concerned about having their bid "shopped" for a cheaper price by bidders, don't provide their sub-bids to general contractors until minutes before the deadline. Many agencies only request the bid price in numbers to provide bidders with the maximum time to prepare a competitive bid and to avoid potential responsiveness issues or conflicts between the words and numbers.
5. Claim of Error: A Claim of Error occurs when the low bidder realizes they have made a mistake on their bid and asks to be relieved of their liability for the bid. Bidders make both errors of judgment and mathematical or clerical errors. Provided that the bidder notifies the public agency in a timely manner of the error (usually 24 or 48 hours after the bid submittal deadline), the public agency has an obligation to review the documentation submitted by the bidder to assess the nature of the error. Generally, in most cases it's a good idea for a public agency to accept the Claim of Error. Beginning a project with the contractor losing money is not a good formula for a successful project. Some contractors will attempt to argue that their bid price should be adjusted to compensate for the error and they should be awarded the project because, even with the correction, their bid would still be low. Most public works are procured based on the low bid and to agree to a bid price adjustment amounts to bid negotiation, something generally not permitted in public works contracting.
6. Bid Calculation Error: On a unit price bid, generally public agencies should have language in the bidding documents noting that, in the event of an irregularity, the unit price prevails. Sometimes, bidders make mistakes in multiplying the unit price times the estimated quantity, or make a mathematical error in adding up the extended prices. Bidding documents should include language authorizing the public agency to make mathematical corrections of multiplication or addition errors on the bid form. After bid opening, the agency should verify the math for all bidders, as an error by one bidder may change the order of who the low bidder is for the project.
7. Bid is Too Low: Sometimes, after bid opening, a public agency may be concerned that the low bidder's bid is too low to be able to successfully complete the project. If the bidder did not make any mathematical errors on the face of the bid form that can be corrected by the agency, and the bidder does not submit a Claim of Error, is is a good practice for the agency to meet with the bidder prior to award. The purpose of this meeting is to review the scope of work, the agency's assumptions, make sure that the contractor understands the scope of work and the agency's expectations, and that the bidder can successfully complete the project. If the agency continues to have concerns, they may suggest that the bidder consider submitting a request to withdraw their bid due to an error. If the bidder continues to insist their bid is reasonable, the agency generally has limited options regarding disqualifying the bidder, as long as their bid is responsive and they have met all established responsibility criteria.
8. Tie Bids: Rarely, two bidders will submit the exact same price. There are a couple of ways to deal with tie bids. The most common method is for public agencies to include language in the bidding documents describing a random method of selecting the successful bidder - often by the toss of a coin. Others will include different criteria such as awarding the project to the contractor whose office is closest to the project site. Regardless of the method used, it should be described in the bidding documents.
Mike Purdy's Public Contracting Blog
© 2011 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com
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