Award Recommendations, A Guideline for Design Professionals
by Kevin O’Beirne, PE, FCSI, CCS, CCCA, CDT
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Design professionals often assist project owners with evaluating bids received from prospective contractors and furnish to owners written recommendations on awarding the associated construction contract(s). Many such recommendation letters read by this writer are quite brief—sometimes only one or two paragraphs. However, many owners may desire some detail on how the bids were obtained and evaluated. Also, to properly manage the design professional’s risk, certain actions should be taken and language included in award recommendations.
Although construction managers-as-advisors (CMa) and program managers also assist owners with procuring construction services, this brief essay addresses only design professionals; similar considerations apply for CMa’s and program managers. Also, while the owner may solicit either bids or proposals, this essay addresses only competitive bidding and closely related procurement methods.
Commonly, the design professional prepares a tabulation of the bids indicating, for each bid item, the bid price submitted by each bidder. Often, bid tabulations also feature the design professional’s opinion of probable bid prices. Other basic information, such as the project name and contract designation; bid opening date; bidder’s name, address, and contact information; and indication of each bidder’s surety are also typical in bid tabulations. The tabulation frequently indicates the bids from lowest to highest-priced. When a bid includes a math error, typically, the mathematically correct amounts are presented on the tabulation. The tabulation is an important attachment to the award recommendation.
A second attachment is often appropriate to briefly summarize all the irregularities in the bids, especially for public work. In competitive bidding, owners often award the contract to the “responsible” bidder submitting the lowest-priced, responsive bid. “Responsiveness” entails determining whether bids comply with the bidding requirements—e.g., all required blanks are properly filled in, required bid security is furnished, and the bid includes all other required information and attachments. Some matters of non-responsiveness may be deemed minor by the owner and waived. The owner may decide that other irregularities are sufficient grounds for rejecting the bid. Because it is the owner who determines what is and is not the basis for rejecting a bid for apparent lack of responsiveness—especially in public work. Therefore, it is good practice for the design professional to bring to the owner’s attention all irregularities, no matter how minor. For this, a tabular format, specific to the bid form and its supplements (bid bond form, qualifications statement form, and other forms to be completed and submitted with the bid), may be useful.
The following are suggested topics to be addressed in design professionals’ award recommendations:
- Receipt of Bids – Indicate the date, time, and location at which the bids were received and opened; it may be appropriate to list the firms that submitted bids, although this is also indicated in the bid tabulation. This part of the letter may direct the reader to the attached bid tabulation and summary of irregularities.
- Publicity – A brief description of measures taken by the owner’s staff and design professional to publicize the project to attract prospective bidders and sub-bidders may be appropriate, especially when the owner is budget-conscious and believes that increased competition will result in lower-priced bids. If fewer bids than expected were received, it may be appropriate to indicate the reasons for the lack of bids, if known.
- Identification of Apparent Best Bid – The award recommendation should identify the bidder that submitted the lowest-priced bid. When alternate bid items are used, the award recommendation should indicate how the alternates were evaluated to identify the low bid.
When either “best value” or “competitive sealed proposals” are the basis for awarding a competitively-bid contract, the recommendation should identify the bidder that submitted the best-scoring bid and should briefly recap the basis for the evaluation, in accordance with the Instructions to Bidders.
Bids submitted with conditions or exceptions to the requirements of the bidding documents are often rejected. However, the direction of the owner and its legal counsel should always be obtained concerning rejection of any public bid, regardless of whether the basis for rejection appears obvious and justifiable.
Where the owner desires to reject the low-priced or best-scoring bid for either non-responsiveness or lack of responsibility, the recommendation letter should briefly address the rejection directed by the owner, using language such as: “After initially considering the Bids, the Owner directed the Architect that the Owner will reject the Bid of XYZ Construction, Inc. because: ___.” For public work, the owner’s attorney should furnish the language indicating the reasons, because the recommendation letter will be part of the public record and, therefore, could become an exhibit in a bid protest.
- Comparison with Budget – Many owners may desire to know how the apparent low bids compared with the design professional’s opinion of probable bid prices. When there are substantial differences, it may be appropriate to explain the reasons for the discrepancies between the low bid and the design stage estimate.
- Evaluation of Responsiveness – The award recommendation should discuss the responsiveness of the lowest-priced bid that will not be rejected and refer to the attached summary of irregularities in the bids received. For most projects, especially public work, the design professional should avoid making judgments as to whether an irregularity is sufficient basis for the owner to reject the bid. Oral discussions with the owner, to obtain the owner’s opinion and directions on apparent irregularities should be held prior to finalizing the award recommendation.
- Evaluation of Responsibility – Deciding whether a bidder has sufficient prior experience, qualifications, resources, and an appropriate record (collectively, “responsibility”) to be awarded the contract is subjective. While the design professional often assists the owner with evaluating bidders’ responsibility by reviewing bidders’ submitted qualifications statements and checking references, the decision of whether to deem a bidder sufficiently responsible for purposes of award should reside with the owner. Thus, when the owner and design professional are unfamiliar with the apparent low bidder or have any reasonable doubts, oral discussions between the owner and design professional are necessary to identify the owner’s views and directions on the bidder’s responsibility, especially for public work.
Rather than making express judgments of responsibility, design professionals should indicate only facts, e.g.: “Based on the Qualifications Statement submitted with the Bid and the Engineer’s prior experience with this contractor, the Bidder appears to possess a record of successfully completing work generally similar in nature, complexity, and size to the Project,” or, “Only two of 10 ongoing and completed projects indicated in the Bidder’s Qualifications Statement appear to be generally similar in nature to the Work required for this Contract.”
Design professionals usually have little or no experience with matters of construction safety, including interpreting a bidder’s safety record. While certain indices, such as a bidder’s workers compensation liability insurance experience modification rate (EMR) may be indicated on a qualifications statement, interpreting the meaning of such data, or evaluating its accuracy, is often not within the design professional’s experience or expertise. When safety is addressed at all, award recommendations should indicate only facts, e.g.: “This Bidder’s reported five-year EMR record is indicated in its Qualifications Statement submitted with the Bid. Based on the limited information readily available to the Engineer, this Bidder has no apparent OSHA-reportable safety violations during the past three years.”
- Recommendation and Next Steps – The final part of a letter on awarding the contract should present the design professional’s recommendation for award. Certain aspects of bid evaluations, such as responsiveness, responsibility, and ranking of competitive sealed proposals (when solicited) have subjective elements. Thus, it is essential for the design professional to engage the owner in oral discussions before the recommendation is finalized
. In public work, bidders or others may have rights to submit bid protests; a formal bid protest is filed with a court of competent jurisdiction seeking an injunction against either awarding the contract or starting the construction. Therefore, on most projects, and for all public work, it is very important that the design professional’s recommendation be expressly conditioned upon the owner’s attorney’s review of the apparent successful bid and all rejected bids, if any, and approval of the award recommendation. Awarding a public contract may have legal consequences and architects, engineers, and geologists do not practice law. The owner’s legal counsel is, therefore, in the best position to advise the owner on the potential for bid protests and, if one occurs, the defensibility of rejecting a bid, waiving irregularities, or awarding certain alternates and not others.
Appropriate language in the award recommendation may include, “Subject to review and approval by the Owner’s legal counsel and based on the Owner’s directions and other information presented above, we recommend awarding the Contract to ABC Contracting, Inc., [indicate the successful bidder’s address], in the amount of $____, [for the base bid plus alternate bid item nos. _].”
The award recommendation may also briefly list next steps, such as: (1) a vote by the owner’s governing board to award the contract; (2) preparation of a notice of award (which may be drafted by the design professional and enclosed with the award recommendation) for the owner’s signature, followed by issuance to the successful bidder; (3) advising the owner, based on time limits stipulated in the Instructions to Bidders, when the contract will likely be available for the owner to sign; (4) actions needed from funding or financing entities, if any, prior to award; (5) authorization of professional services for the construction stage; (6) which entity will receive and initially review the successful bidder’s signed agreement, contract bonds (when required), and insurance documentation; and (7) procedures for preparing and issuing a notice to proceed, if any, signed by the owner.
Thus, evaluating bids and issuing a recommendation for awarding the construction contract, particularly for public work, is an important action that should never be treated lightly. In awarding public contracts, the owner’s legal counsel should be involved in the decisions on awarding the contract. In drafting its award recommendation, the design professional should understand the risks, act accordingly, use professional judgment, and employ appropriate wording.
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.