By Bruce Jervis
The public competitive bidding process is formal and structured. The underlying policy is to treat all bidders fairly and equally, as well as to protect taxpayer dollars through open competition. The mere appearance of favoritism or impropriety is offensive to the public procurement system. A formal process with a stipulated bid form and price breakdown avoids problems.
The private procurement of construction contracts is quite different. Without the expenditure of public funds, the policy concerns underlying the public bidding system do not exist. Private entities may contract as they choose. Sometimes, however, private project owners could benefit from the greater structure found in the public system.
An example is found in a recent case from Missouri. A private project owner was planning renovation of a nursing home facility. The owner hired an architect to prepare a detailed design for review by prospective bidders. The owner then became nonchalant, however, apparently allowing each bidder to, in effect, draft its own proposal. The successful bid became a term of the resulting contract. The parties couldn’t even agree whether the contract was fixed price or time and materials based.
Have you seen examples of private project owners failing to exercise discipline during the bidding process? Do you prefer the structured “take it or leave it” public bidding system? Or, do you prefer the more flexible private procurement process where there is an opportunity to negotiate terms and conditions? I welcome your comments.