Wednesday, August 26, 2009

Evaluating and Awarding Alternate and Additive Bids

Frequently, on public works projects, a public agency will request bids for alternates or additives.

While actual usage of these terms varies between agencies, I would characterize an alternate as an alternate material or method of construction different from what is included in the base bid. An additive, on the other hand, is an additional body of work that the owner may award if there is sufficient funding for it. It's a body of work that isn't critical for the project, but which allows the owner to bring the bid amounts within budget without having to re-advertise the project.

How should a public agency evaluate who is the low bidder? That decision should be based on what bidder is the low bidder on the base bid and the combination of alternates or additives that the owner chooses to exercise. Doing so ensures that the owner receives the lowest price for the work performed and is consistent with most laws that require award to the low bidder.

Depending on which alternates or additives are selected, the order of the bidders could change.
This is a cause of concern for some contractors who fear that public agencies may use alternates and additives to manipulate who the low bidder is and to purposely exclude a bidder from receiving the award. A reputable owner should base their decision on award based on what funding is available for the project and what is in the best interest of the project.

Thus, if the owner decides not to award any alternates or additives, the award evaluation would be based on just the base bid and that is all that would be awarded. If, on the other hand, the owner had funding for additive bids 1, 3, and 5, the owner would add up the prices for the base bid and additives 1, 3, and 5 for all of the bidders to determine which bidder was low on this combination.

Some owners prioritize the alternates and additives in order to ensure that it is not possible to pick their favorite bidder. The downside to such prioritization is that it can limit options for what may be best for the project and the funding available.

After making an evaluation and award, it is inappropriate for an owner to later change order an alternative or additive bid into the project, if in so doing it would change the order of who the low bidder was. Such an action would likely result in an audit finding.

1 comment:

Anonymous said...

Also, you must check what your funding source requirements are for this type of procurement. I know of at least one that insists you include ALL pricing in the evaluation even though you may not award it.