Tuesday, November 11, 2008

Asking for Competitive Unit Prices with the Bid

Often, a public agency will want to request that bidders submit unit prices to be used in the event of change order work during a project.

If, however, the agency only asks for unit prices that are in addition to the base bid and that have no relationship to whether the bidder is the low bidder, there is little motivation for the bidder to provide competitive unit prices. In fact, the owner could end up paying significantly more for change order work if the bidder includes high unit prices.

If establishing unit prices for potential change order work is important for the agency, unit prices should be competitive. The following sample bid form layout is one way to accomplish that.

Base Bid


Item #

Unit Price Description

Estimated Quantities

Unit of Measure

Unit Price

Unit Price Extension







Total Bid for Award Evaluation Purposes:

(Base Bid plus all Unit Price Extensions)


Here's how it would work. For bid evaluation purposes, the low bid is determined based on the combination of the base bid amount and the Unit Price Extension amount (which is based on the bidder's Unit Price multiplied by the owner's estimated quantities). However, the owner would only award the project for the amount of the base bid.

Under this scenario, the owner needs to have clear language in the bidding documents describing how the award will be made. I have developed language for bidding documents that can be adapted for any agency to address this type of situation. Please contact me if you are interested in a copy of the language.

No comments: