Friday, April 24, 2009

Recommended bid procedures part 1

1. Invited or selected bidders

1.1 Invited or selected bidders-prime bidders

The Issue: Should Prime bids be received from any Prime Bidder, or should bids be received only from invited (Pre-qualified) Bidders?

Many public Owners are required by law to solicit and accept bids from any bidder which meets the criteria set forth in the bidding documents (e.g., which provides a bid bond, properly executes its bid form, etc.).

These criteria are often inadequate to determine whether the Prime Bidder is “responsible”. That is, such criteria fail to determine whether the firm has the financial and organizational resources necessary to bid and construct the project under consideration.

For this reason, many Owners use a pre-qualification process to gather information from and about a prospective bidder prior to issuing bid documents. After evaluating this information, the Owner selects those Prime Bidders which it determines are best qualified to both bid and construct the project.

Recommendations: Where pre-qualification is used:

1. The number of Prime Bidders selected should be limited to no more than four to six. This number will insure both adequate and spirited competition.

2. The selected Prime Bidders and the construction community at large should be notified of the names of selected Prime Bidders prior to issuing bid documents.

3. Bids should be publicly opened. See also Section 4, Day and Time for Receiving Bids.

4. The contract should be awarded to the lowest responsive bidder.

5. All pre-qualified Prime Bidders should be able to furnish payment and performance bonds for the project being bid to the Owner, and to identify for the Owner the costs for such bonds.