Tuesday, December 3, 2013

Why You Shouldn't Ask About a Bidder's Qualifications...with the Bid

Most public agencies awarding a public works construction project are required to award to the bidder with the lowest responsive bid.  This is the traditional model of low bid also known as "Design-Bid-Build." 

Is the bidder responsible?  But the low bidder may not necessarily be a responsible bidder.  See my previous blog on the subject.  To assess whether a bidder is a responsible bidder, the bidder should meet specific, relevant, and objective criteria established in the bid documents.

4 reasons to not ask for qualifications with the bid:  There are four main reasons why public agencies should not request documentation of a bidder's qualifications, or how they meet responsibility criteria, with the bid.  Instead, this information should be requested from the low bidder after bids have been opened.

  • Non-responsive bids:  By asking for bidder qualifications with the bid, there is a risk that a bidder (perhaps the low bidder) may fail to provide some or all of the information required.  If the information must be submitted as part of the bidding process, the lack of submitting this information would render the bid non-responsive.  Non-responsive bids may result in protests, delays, and higher project costs.
  • Burden to bidders:  Asking for bidder qualification documentation with the bid requires all bidders to submit this documentation, which often takes time for bidders to pull together.  The best practice is to request this information only from the low bidder (or if there are schedule concerns from maybe one or two other bidders), which means it would be submitted after the bid submittal deadline.
  • Focusing on bid price:  If you ask for bidder qualification information to be submitted with the bid, this takes away valuable time from bidders to focus on preparing the most competitive bid price.  The process of developing a bid is often a last minute process.  Bidders wait until minutes before the deadline to obtain subcontractor and supplier bids who are delaying the submission of their prices in order to avoid having bidders "shop" their bid prices for a better deal with another subcontractor. 
  • Limited number of bidders:  As bidders evaluate what projects to bid on, they will often make the decision to bid on projects that have fewer bidding requirements.  Bidders have limited time and staffing to prepare bids and requiring too much information to be submitted with the bid may reduce the number of bidders who submit bids (which may result in higher prices).
State laws vary:  Individual states have different laws and requirements about bidder responsibility.  In Washington state, public agencies may develop and use Supplemental Bidder Responsibility Criteria in assessing whether the low bidder is responsible.  RCW 39.04.350 describes the process and the Suggested Guidelines for Bidder Responsibility of the Capital Projects Advisory Review Board (CPARB) provides helpful suggestions and tools regarding bidder responsibility.

Summary:  It is important to obtain qualified contractors on public works construction projects, and this can  be accomplished through evaluating the responsibility or qualifications of the low bidder.  By keeping the bidding process as uncomplicated as possible, public agencies reduce the risk of non-responsive bids, avoid burdening all bidders with requirements, allow bidders to focus on developing competitive prices, and limit the risk of reduced numbers of bidders who opt to bid on less complicated projects.

Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

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