How Paying Closer Attention to Contracts Can Mean More Successful Bids

Submitting a competitively priced bid is key for a bidder to be selected and awarded a contract to build an owner’s project. However, submitting a competitive price is only part of the equation. Complying with the bidding documents and providing all requested information are the other parts.

Owners often develop their own bidding documents for their projects. However, to ensure that no details are missed, an owner’s procurement officer — or other individual overseeing the bidding documents — may choose to use a standard form, such as AIA A701-2018 Instructions to Bidders, to disseminate information about the bidding documents and requirements.

The Instructions to Bidders, like A701, address the bidder’s representations, bidding documents, bidding procedures, consideration of bids, post-bid information and performance and payment bonds. We will look at each in turn.

Bidder’s Representations

Bidding documents generally require a bidder to acknowledge, or represent, its understanding of certain criteria pertaining to the project. The representations are usually initialed or signed, then submitted with the bid. Common representations include:

• Reading, understanding and complying with all bidding documents (in accordance with industry practice, A701 defines bidding documents as consisting of the advertisement or invitation to bid, instructions to bidders, supplementary instructions to bidders, the bid form and other bidding forms, the unexecuted owner-contractor agreement, conditions of the contract, drawings and specifications).

• Understanding how the bidding documents correlate to other construction projects on the
owner’s jobsite.

• Submitting a bid that complies with the bidding documents.

• Visiting the site to become familiar with the site conditions, as well as the nature and location of the work.

• Reviewing and agreeing to all contractual terms presented within the bidding documents.

Bidding Documents

After the bidder representation phase, it is important for a bidder to follow all instructions within the bidding documents. One such instruction may be for a bidder to provide a deposit, which is refunded when certain conditions are met.

Bidders should always be aware of communications from the owner’s procurement officer during the timeframe in which bids are being accepted. These communications may include clarifications, interpretations and substitutions issued in the form of addenda.

Additionally, addenda may consist of information concerning withdrawal of bids or postponing the bid receipt date. Bidders are to acknowledge receipt of addenda, too. The bidding documents also contain such crucial information as the time frame to complete the work and potential liquidated damages.

Bidding Procedures

Submitting a complete bid in accordance with bidding procedures is essential. To comply with bidding procedures, bidders must submit their bids on the forms included with or identified in the bidding documents. Clerical errors, such as omitting a signature, entering an incorrect word or number, or entering information in the incorrect place, can all disqualify a bid.

It is equally important to complete
every required blank on the bid form to avoid disqualification. This means filling out allowances, unit prices and totaling items correctly. Information entered into blanks on the bid form must be legible, and all amounts must be entered for requested alternates.

Two common bidding procedures are for the bidder to provide proof of licensure to work in the jurisdiction where the owner’s project is located and provide bid security in the form and amount required. When a surety bond is required as bid security, a bidder can use AIA A310-2010 Bid Bond. A bid bond guarantees that, if selected, a bidder will contract with the owner and provide certificates of insurance. After following these procedures, it is important that a bidder submit its bid before the closing time and date, as a bid delivered even one minute late may be considered disqualified.

Consideration of Bids

When considering bids, a public owner will publicly open bids that are received within the specified time limits. Private owners, on the other hand, have no obligation to open bids publicly. An owner retains the right to reject any and all bids, subject to state law. While private owners are interested in awarding a contract to the lowest bidder, they can waive informalities and irregularities in a bid and accept the bid that they believe is in their best interest, subject to state law.

Traditionally, a bidder submitted its sealed bid in paper format by personal hand delivery or mail. However, it has become common to submit bids by uploading them to a third-party platform or via an owner’s website.

For selection and award of the bid, public works owners typically stipulate that the contract will be awarded to the lowest responsive, responsible bidder. By contrast, private owners are free to select a bidder based on any qualification, not just the lowest bid.

Post-Bid Information

Post-bid, the successful bidder being awarded a contract will likely be required to submit a Contractor’s Qualification Statement, such as AIA A305-2020, unless this was required with the bid. At this stage of the process, the successful bidder can ask the owner to furnish proof of its financial capability. Additional bidder formalities then take place, namely, specifying manufacturers and suppliers to be used and the names of persons or entities who will furnish and perform the work. This is the period where the owner and bidder can settle any objections by the owner to such proposals.

Performance & Payment Bonds

If required by the bidding documents, a bidder is to furnish performance and payment bonds. As their names imply, a performance bond ensures that the contractor and its surety will perform the work that has been contracted, and a payment bond ensures that the contractor and its surety will pay labor and material bills incurred on the project. When the bidding documents do not require furnishing performance and payment bonds, but they are requested post-bid, this cost is added to the bid.