PURPOSE
The purpose of the Escrow of Bid Documents procedure is to provide guidelines for using this process.
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RESPONSIBILITIES
Project Manager (PM): The PM must decide if the project is a good candidate for Escrow Bid Documents and then obtain the required approval from the appropriate Deputy City Engineer or the City Engineer. The PM shall also work closely with the Project Engineer (PE) to develop the specifications for the project and have the documents ready when the Ready to Advertise (RTA) Checklist, plans, and specifications are delivered to the Project Award and Control Division (PAC) for advertising and distribution to the contracting community.
Project Engineer (PE): The PE should work closely with the PM and CM to determine whether Escrow Bid Documents will be used with the project. The PE must use the appropriate sections of the Master Specifications when developing the bid documents.
Deputy City Engineer: The Deputy City Engineer makes the final determination of whether the project is a candidate for Escrow Bid Documents. Their final approval allows the project to be advertised with this requirement.
PROCEDURE
Escrow of Bid Documents is covered under Section 01351 of the General Requirements. Escrowing of Bid Documents is intended to create a spirit of cooperation in an atmosphere of honesty and candor between the City and the Contractor. Escrowed bid documents are used to assist in the negotiation of price adjustments and change orders and in the settlement of disputes and claims. The PM should consult with the PE and CM and must obtain approval from the Deputy City Engineer responsible for the project prior to including General Requirements Section 01351 with their project.
The PM, in cooperation with the CM, should establish a procedure for implementing this section prior to including the article in the project Master Specifications. The procedures may include opening an escrow account or a security deposit box with an institution such as a bank. The escrowed bid documents are then placed in escrow for the life of the Contract in a mutually agreeable institution. The City will pay the cost of the storage of the escrow documents. Alternatively, less formal procedures have been used. These usually involve placing the documents in a secure location, such as locked storage in the Bureau of Engineering (BOE) field or home office, which is mutually agreeable to the CM and the contractor. If the less secure location, such as a locked storage unit in the BOE field or home office is chosen, the Contractor is asked to provide a lock to secure the storage unit, since the Escrow bid documents are the Contractor’s property. This security measure limits both the City and the Contractor to be present when retrieving the Escrow bid documents.
This Article requires that the three (3) low bidders submit, within the specified time after receipt of bids, one (1) copy of all documentary information including, but not limited to, electronic files generated in preparation of bid prices for this project. This material is hereinafter referred to as "Escrow Bid Documents." The Escrow Bid Documents of the Contractor will be held in escrow for the duration of the Contract.
The successful Bidder agrees, as a condition of the award of the Contract, that the escrowed bid documents constitute all of the information used in preparation of the bid, and that no other bid preparation information shall be considered in resolving disputes or claims. The successful bidder also agrees that nothing in the escrowed bid documents shall change or modify the terms or conditions of the Contract Documents.
The escrowed bid documents are, and shall always remain, the property of the Contractor, subject to joint review by the City and the Contractor as provided herein. The escrowed bid documents are proprietary and secret information belonging to the Contractor and exempt from the Federal Freedom of Information Act, California Public Records Act, and the Los Angeles City Freedom of Information Act.
Escrowed bid documents must be accompanied with a certification signed by an individual authorized by the Bidder to execute bids. The certification states that the material in the escrowed bid documents constitutes all the documentary information used to prepare the bid and that the Bidder has personally examined the contents of the escrowed bid documents container and has found that the documents in the container are complete.
The escrowed bid documents should clearly itemize the estimated costs of performing the work of each bid Item contained in the Schedule of Work and Prices. The bid items should be separated into sub-items as required to present a complete and detailed cost estimate and allow a detailed cost review. The escrow bid documents include all quantity takeoffs crew, equipment, calculations of rates of production and progress, copies of quotations from Subcontractors and Suppliers, and memoranda, narratives, add/deduct sheets, and all other information used by the Bidder to arrive at the prices contained in the bid.
The Escrow of Bid Documents procedure is particularly useful for projects that have high potential for claims. These are typically the largest projects designed by the BOE. Escrowing of bid documents provides protection to both the Contractor and the City because the documents contain proprietary information about how the Contractor developed the bid for the project. Both sides use this information to resolve change orders and/or claims.
Prior to receiving Board of Public Works approval, the PM must receive approval to include General Requirement Section 01351 from the appropriate Deputy City Engineer or the City Engineer before requiring the Escrow of Bid Documents from the Contractors. Escrowing of bid documents is used to assist in the negotiation of price adjustments and change orders and in the settlement of disputes and claims. They are also used for pre-award evaluation of the Contractor’s anticipated methods of construction or to assess the Contractor’s qualifications for performing the work.
BOE has used this process occasionally in the past when awarding its projects. Some BOE programs are considering increasing the use of this procedure. Although the Escrow of Bid Documents procedure is typically used for very large and complex projects with the potential for high claims, many other projects with the potential for a large number of change orders may benefit from using this procedure. Escrow of Bid Documents provides additional information about how the Contractor developed their bid, and both the City and the Contractor can use this information to resolve issues before they end up in the claims process. Avoiding claims wherever possible is usually in the best interest of both the City and the Contractor.
RELATED PROCEDURES
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