PURPOSE
The purpose of this procedure is to discuss how Contractors’ Bids are evaluated and how the City determines whether the Bids and submittals for construction projects are responsive.
REFERENCES
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RESPONSIBILITIES
Project Award and Control Division (PAC): PAC is responsible for analyzing Bids for every project to ensure that the Bids are arithmetically accurate. PAC posts the latest bid results on the Bureau of Engineering's (BOE) web page. http://eng2.lacity.org/apps/bids/index.cfm (City Staff only)
Project Manager/Project Engineer (PM/PE): PM/PE is responsible for analyzing Bids that the Bids are balanced.
Bureau of Contract Administration (BCA)/Office of Contract Compliance (OCC)/Special Research & Investigation Section (SRIS): OCC analyzes the Contractor’s Business Inclusion Program. SRIS is responsible for the enforcement of the Board’s Public Works Bidder Responsibility policy. SRIS also conducts first- time bidder analysis and reviews the Contractor Responsibility Questionnaires submitted with the bids to make sure that the bidders are responsible and the Low Bidder has the quality, fitness, and capacity to build the project.
PROCEDURE
Bids are evaluated to determine if the apparent Low Bidder’s Bid and submittals are responsive to the requirements in the bid proposal. By definition, construction projects are awarded to the lowest responsive and responsible bidder. PAC and BCA evaluate the submittals to determine the responsiveness of the bids. BCA evaluates the bidder Responsibility Questionnaires to determine whether the bidders are responsible.
PM/PE analyzes bids to justify the award or rejection of the bids. The analysis ensures that the competition between the bidders was fair. PM/PE carefully reviews the prices bid by the Contractors to make sure that the prices bid are reasonable.
PAC confirms the prices submitted for the bid items and total bid amounts are arithmetically accurate. If there are errors, PAC will notify the bidder that there is a bid amount variance and adjust the bid according to the protocol set forth in the General Instructions and Information for Bidders posted in the Bid Proposal Package. PM/PE is responsible for analyzing Bids to ensure that the bids are balanced. A balanced bid means that the Contractor spreads the work throughout the construction period. High mobilization costs, if not caught during the analysis, may result in a front loaded bid. A front loaded bid means that too much money is paid early in the construction period. The danger of a front loaded bid is that the Contractor may have less incentive to complete the project on schedule or there may not be enough money left for the bonding company to complete the project in case the Contractor defaults on the project.
Staff analyzes prices to make sure that the bids conform to the City Engineer's estimated prices. PAC and PM/PE staff looks closely at the following factors:
The number of bids received for the project
The distribution of the range of the bids received
The urgency of the project. Urgent projects may result in increased prices
The current market conditions, as they exist in the contracting community, and the workload of the apparent Low Bidders
The potential for the City to receive lower prices, if bids are rejected and the project is advertised again at a later date
Bid prices received are compared to prices for items bid on similar projects. Is there justification for significant bid price differences between bidders? Are there irregularities in the bid?
Are the bids unbalanced in any way?
Irregularities found during the analysis may not be a problem if the bid results indicate that the prices received are reasonable and if the competition appears to be fair. When the low bid exceeds the City Engineer’s estimate by an unreasonable amount (15% or more), a more thorough analysis is conducted to determine if the bids should be rejected or if a justification for the award of the project can be made.
The following justifications allow PM/PE to recommend award of the project if the bids for a project received were higher than expected:
The competition between the bidders was fair and enough Contractors actually bid the project
The project is essential and deferral of the award could result in liabilities for the City
Re-advertising the project could result in higher bids received by the City
Assumptions made in the City Engineer's estimate made it lower than the current market prices
The budget allocation for the project can be increased and the project can then be awarded to the apparent Low Bidder.
PM/PE explains the reasons for the differences between the City Engineer's estimate and the bid amount to the Board of Public Works in the final Project Award Board Report. The justification for the award is included in the report. All questions about bid evaluations for a project should be directed to the Division Engineer of PM/PE.
In the event only a single bid is received for a construction contract, the award of the contract must still comply with all the Procedures in Chapter 14. In addition to and concurrent with those procedures, the following additional activities will be implemented for projects receiving a single bid:
The PM will carefully review and analyze the bid amounts submitted by the listed subcontractors and compare them with the City Engineer’s estimate. In addition, the PM may request review and comments on the subcontractor’s bids by the project designer.
The City Attorney has determined, and the California Public Contract Code allows, that with a single bid the PM may negotiate the bid amount prior to the award of the contract. The PM will contact the General Contractor (single bidder) for a pre-award meeting to discuss possible reduction of the bid amount.
Depending on the size of the project, the PM may request that the General Contractor discuss value engineering with their subcontractors to identify deletions, substitutions or clarification of scope or materials to reduce the bid amount. This includes the General Contractor’s scope of work. The Contractor’s submittal for any reduced/revised amounts should include a detailed scope and cost estimate from their subcontractors. The submittal should contain a copy of the subcontractor’s proposal for reduced bid amount.
The PM should carefully analyze the scope and cost estimate submitted by the Contractor to determine if the project meets City standards. The PM may request the designers to submit their evaluation and comments in writing. Copies of any meeting minutes should also be kept in the project files.
The PM may seek a “third party” cost estimator to review the scope and cost submitted by the General Contractor.
The PM should negotiate with the General Contractor to finalize the scope and cost of the agreement.
Once an agreement is reached, the PM will document the agreement in detail and will include the agreement in the Board of Public Works Award Report. A Record of Negotiation should be included as a transmittal to the Board Report. The Record of Negotiation should document the negotiation process and include relevant information as attachments in the document.
The City Engineer always has the option to recommend to the Board of Public Works not to award the contract.
Finally, it is important to note that the Contractor’s original bid will contain a list of subcontractors referred to as “bid- listed” subcontractors. The subcontractors listed and their dollar amounts cannot be changed without prior approval by the City. It is important to maintain the integrity of the bidding process and not allow the Contractor to “job shop” to other non-bid-listed subcontractors. Should the Contractor propose changes to any bid-listed subcontractors, the PM should consult with the Bureau of Contract Administration to determine the appropriateness of any change.
RELATED PROCEDURES
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