Wednesday, March 12, 2014

Is An Unreasonably Low Bid Non-Responsive?

Is an unreasonably low bid on a public works construction project non-responsive, or is the bidder not responsible, or neither?  

Bid tabulation:  Let's say that low bid came in at $25,000, with the second low bid at $160,000, and the third low bid at $180,000.  The engineer's estimate for the project was $200,000.

Responsiveness:  If the low bidder responded in accordance with all of the requirements of the bid documents, their bid would be responsive.  In other words, did they submit their bid on time, sign the bid form, include the required bid guaranty, etc.? 

Responsibility:  While responsiveness always relates to the bid, responsibility relates to the bidder and whether they are capable and qualified to perform the work.  Different states have different requirements for establishing responsibility.  In Washington, a public agency may include bidder responsibility criteria in the bid documents to evaluate after bid opening whether the low bidder met those relevant criteria and is capable of performing the work.  If no responsibility criteria were included, a very low bid would not be enough to find the bidder not a responsible bidder.  If bidder responsibility criteria were included in the bid documents, as long as the bidder met them, a public agency could not determine that a very low bid price made them not responsible. 

Meet with the bidder:  When faced with an unreasonably low bid, a public agency should meet with the bidder to review their understanding of the scope of work and how they estimated the project.  In the example bid tabulation above, it appears that the bidder didn't include all of the work in its bid.  In meeting with the bidder, the public agency would try to convince the bidder to withdraw their bid, rather than risk almost certain financial losses and a problem project.
Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC

No comments: