Is a Bid Guaranty Required on Small Works Roster Projects?

In Washington State, most public agencies may streamline the selection of a contractor for public works projects less than $300,000, by not publicly advertising these projects but instead sending the Invitation to Bid to firms on the agency's Small Works Roster.

The Question:  The requirements for Small Works Rosters are found in RCW 39.04.155.  Many of the public agencies that use a Small Works Roster also have specific laws requiring them to obtain a bid guaranty from bidders on public works projects.  So, is a bid guaranty required on a Small Works Roster project for these agencies?  I was recently asked this question in a class I taught for contract administrators from many different agencies. 

No Bid Guaranty on Small Works Roster Projects:  I think there is a strong case to be made that a bid guaranty is not required on a Small Works Roster project.  I base my opinion on two elements from the Small Works Roster law (RCW 39.04.155):

• Alternative Procedures:  RCW 39.04.155 (1) states that "these [Small Works Roster] provisions may be used in lieu of other procedures to award contracts..."  Thus, as an example, even though second class cities are required by RCW 35.23.352 to obtain a bid guaranty on public works projects, the argument can be made that such requirements don't apply for Small Works Roster projects.  However, RCW 39.04.155, in describing the procedures for Small Works Rosters, doesn't specifically discuss bid guaranties at all, so technically there are no alternate procedures relating to bid guaranties.

• Electronic Quotations:  Perhaps more convincing, however, is that RCW 39.04.155 (2)(c), in describing Small Works Rosters, states that procedures shall be established by the public agency "for securing telephone, written, or electronic quotations from contractors..."  Thus, it is permissible under the Small Works Roster process to receive telephone or electronic quotations.  In the event an agency does this, obviously it would not be possible to obtain a bid guaranty since the guaranty couldn't be submitted by telephone or electronically.

Reasons to Still Require a Bid Guaranty:  Thus, all things in balance, I don't think it is required that public agencies obtain a bid guaranty on a Small Works Roster project.  However, just because it might not be required, doesn't mean that agencies should automatically waive bid guaranties.  There are some very good reasons for requiring a bid guaranty, especially in this difficult economic market.  Many contractors are struggling with obtaining bonding on public works projects.  A bid guaranty (especially a bid bond) is an indication that the contractor will be able to obtain Payment and Performance Bonds, and may serve as a good screening tool to ensure that only financially viable companies bid on public works projects.

Talk With Your Attorney:  In deciding whether to require a bid guaranty on a Small Works Roster project, consult with your attorney and others as you make a legal and risk analysis of how to approach this question.

Mike Purdy's Public Contracting Blog 

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