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ConstructionPro Week, Volume: 3 - Issue: 19 - 05/09/2014

Is the Bidding System Subject to Manipulation?

By Bruce Jervis

 

Two of the cases featured in this week's Construction Claims Advisor involved two scourges of the competitive bidding system: unbalanced bidding and alternate item bidding. Both practices distort the system. Unbalanced bidding enables bidders to misallocate cost and profit among bid items, possibly front-loading contract payments or exploiting suspected errors in quantity estimates. The use of alternate bid items, additive or deductive, enables project owners to craft a scope of work, after bid opening, which will result in award of the contract to one bidder or another.

 

In the first case, it was ruled that a public project owner should not have rejected a mathematically unbalanced bid without first making a written finding that the bid was also materially unbalanced. In other words, an unbalanced bid should be accepted unless there is reasonable belief the owner will ultimately pay a higher price for the work as a result of the unbalancing.

 

In the second case, it was ruled that the failure to price an alternate bid item, contrary to the instructions in the solicitation, did not render the bid nonresponsive. The public project owner chose not to include the alternate item in the contractual scope of work, so the failure to price the item was irrelevant.

 

Don’t both of these rulings allow manipulation of the competitive bidding system? The bidder’s unit prices differed significantly from the owner’s cost estimates, strong evidence of unbalanced allocation of cost and profit. Yet, in the absence of an additional factual finding, the owner had to accept the bid. And, the project owner in the other case had the option of rendering a bid responsive or nonresponsive based on the owner’s decision on the alternate item. What is your opinion?

 

COMMENTS

Following bidding instructions should always be a must. Deviations from this should be found non-responsive. Many man hours go into this process therefore every person bidding should be made to follow same rules.
Posted by: Buford Martin - Friday, May 09, 2014 10:36 AM


In the unbalanced bid, I totally agree with the findings.

In the alternative bid, the bid should have been rejected as non responsive due to not bidding the alternates. The owner may have awarded the alternates if all bidders would have bid the alternates.

If we had control of the bid review and advertising we would have included instructions in the bid documents as to how the bids would have been reviewed for award by stating the alternates would be awarded in the order requested up to the total amount of money available for this award. That would prevent selecting the "low bidder" based on manipulating the actual alternates selected.
Posted by: John Ingram - Friday, May 09, 2014 1:18 PM


The bid process in pennsylvaina is riddled with unfair project awards. Yes most contracts have alternates which the owners pick the alternates that get their man the award or else they just award to whom they desire with out any regard to the law. The lowest contractor can only sue them for the difference of the bid. Many times the difference is so minor that the lwest bidder would have to pay more for the lawyer than its worth and most likely the courts would only make the owner rebid the project.

One bid I was lowest on for $300,000 the 2nd bidder was $16,000 higher . The Township awarded to the 2nd bidder stating that he was their man. After talking to the attorney generals office , they said we would have to wait a year for the year ends budget report and then they could make the Twp manager cough up the difference to reimburse the tax payers. No penalty was ever mentioned.


Posted by: Dennis Fleeher - Thursday, May 15, 2014 10:00 AM










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