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Competitive Bidding: Use Care when Requiring Submittal of Non-Price Information

By Kevin O'Beirne, PE, FCSI, CCS, CCCA, CDT posted 04-23-2020 12:56

  

Competitive Bidding: Use Care when Requiring Submittal of Non-Price Information

by Kevin O’Beirne, PE, FCSI, CCS, CCCA, CDT

 

Editor's Note: CSI is pleased to publish this blog from Kevin O’Beirne, PE, FCSI, CCS, CCCA, CDT. If you have an idea or opinion you would like to share with your colleagues in the construction industry, please contact CSI Content Strategist Peter Kray at pkray@csinet.org. He would love to help publish your thoughts.

 

In competitive bidding for construction contracts, especially public work, it is critical that the project’s Instructions to Bidders, in coordination with the bid form, establish a clear, fair, method for evaluating the bids to identify the bidder that will be awarded the contract. Unfortunately, the more complicated the information required with the bids, the greater the potential for problems.

 

In competitive bidding, most bidding documents require submittal of pricing and little other information, aside from the basic information necessary for evaluating a bidder’s experience, qualifications, and record—collectively, “responsibility.” Owners typically award competitively bid contracts to the bidder who submitted the lowest-priced, responsive bid (i.e., the bid is complete, and in accordance with the bidding documents) and is deemed to be “responsible.” Evaluating responsiveness and low price is usually reasonably objective, whereas determination of “responsibility” is, to a certain extent, subjective. Such evaluations are somewhat less-subjective when the bidders are required to submit uniform types of information on experience, qualifications, and record using a widely-accepted standard form, such as: AIA A305—1986, Contractor’s Qualifications Statement; EJCDC C-451—2018, Qualifications Statement; AGC ConsensusDocs 220—2017, Contractor’s Qualifications Statement for Engineered Construction; or CCDC 11—2019, Contractor’s Qualifications Statement. Often, this type of non-price information is necessary in open, competitive bidding, whether furnished with or immediately after the bid or as part of a prequalification submittal.

 

The principal basis for evaluating competitive bids—price—is supported by mathematical objectivity.  This generally makes evaluating competitive bids reasonably straightforward.

 

There are variations used in public work in some jurisdictions, such as:

  • “Best value” bidding, in which bid evaluations consider a combination of construction pricing and other mathematical factors submitted in the bids, resulting in calculation of a present-worth value for each bid.
  • “Price-plus-time” (“A+B”) bidding, in which each bid indicates the construction price and the time(s) of completion. In evaluating the bids, the bid completion time(s) are—using a stipulated amount-per-day applied uniformly to all bids—converted to an amount which is added to the bid construction price. The contract is awarded to the bidder with the lowest total of “construction price plus the cost-of-time.”
  • “Competitive sealed proposals” (CSP), in which competitive proposals for a public contract are evaluated using a stipulated, weighted scoring system that considers construction price and other information required with the CSPs, and the contract is awarded to the “responsible” proposer submitting the best-scoring, responsive proposal. This method sometimes features certain subjectivities in the scoring and often considers certain, non-price information in the proposals, such as the proposer’s prior experience with the owner and prior experience with similar work on other projects.

All of these permutations, when enabled by statute for public work, rely heavily on mathematical evaluations and are intended to be fully or reasonably objective.

 

On some competitively-bid construction contracts, however, owners or design professionals require that bidders submit other, non-price information that the owner or design professional believes will assist in evaluating the bids, to support appropriate award of the contract. Types of non-price information are almost endless and may include: preliminary shop drawings for certain major equipment, resumes of key personnel, indication of proposed construction means and methods, preliminary progress schedules, and many others.

 

Requiring non-price or non-mathematical information with bids, especially for public work, increases the potential for problems. Non-mathematical information can be evaluated typically only subjectively, which may open the door to bid protests. Furthermore, non-mathematical bid information gives others—especially in public work, where the bids often become public records subject to freedom-of-information statutes—the opportunity to scrutinize the bids and possibly take exception to how such information was considered in awarding the contract.

 

In bidding public work, one of the worst things that can happen is a bid protest, which is an objection by a bidder or other entity with a substantial interest in the award of the contract who believes themselves aggrieved in how the bidding process was administered. Bid protests may be relatively informal, such as a letter of complaint to the design professional or owner’s department head, or as formal as a motion filed in a court of competent jurisdiction seeking an injunction on the contract award or start of construction. Laws and regulations may limit who can submit a formal bid protest on public projects.  Bid protests can result in delays, added costs, unwanted media attention, and embarrassment.

 

The more that non-price or non-mathematical bid information is considered, especially in public work, the greater the potential for bid protests. For example, several years ago on a certain, public tunnel project, the bidding documents required, in addition to pricing, submittal with each bid of information on the type of tunnel boring machine (TBM) the bidder intended to use, the resume’ of the TBM operator, and other non-mathematical information. When the low bidder was identified, bid protests were filed by the second- and third-low bidders, who asserted that the type of TBM indicated in the low bid implied that the bid was based on a tunnel lining method not allowed by the specifications; thus, they contended, the low bid should be rejected as non-responsive. The bid protests further stated that the low bidder’s proposed TBM operator did not comply with the experience required by the project’s tunneling specifications.

 

In response, the low bidder advised that it intended to use a specially-modified TBM that would enable it to provide the specified tunnel lining. The TBM operator’s apparent lack of sufficient experience eventually became a non-issue, because the contractor was required to comply with all the other quality requirements of the tunnel specifications. Ultimately, after delays, extra costs and legal fees, press coverage, and other tribulations, the both bid protests were rejected and the public owner awarded the contract to the low bidder, who successfully performed the work in accordance with the contract.

 

On the above project, the bid protests, delays, extra costs, and embarrassing press coverage would likely have been avoided had the bids been limited to price-based information, plus the ordinary bidder qualifications statements submitted on a stipulated, standard form.

 

Thus, when determining what types of information to require with bids for public work and perhaps other competitively-bid work, it is often advisable to limit such information to pricing—and perhaps other mathematical information, when “best value” bidding, “A+B” bidding, or competitive sealed proposals are used—and reasonable bidder qualifications statements, to reduce the potential for both subjective evaluations of bids and to avoid placing ammunition in the hands of aggrieved or disappointed bidders.

 

Kevin O’Beirne, PE, FCSI, CCS, CCCA is a professional engineer licensed in NY and PA with over 30 years of experience designing and constructing water and wastewater infrastructure for public and private clients.  He is the engineering specifications manager for a global engineering and architecture design firm.  He is a member of various CSI national committees and is the certification chair of CSI’s Buffalo-Western New York Chapter.  He is an ACEC voting delegate in the Engineers Joint Contract Documents Committee (EJCDC) and lives and works in the Buffalo NY rea.  Kevin O’Beirne’s LinkedIn page

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