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?