Types of construction bids

In sealed bidding, the owner issues an invitation for bids (IFB) that describes the requirement clearly and completely. Bids are opened publicly at the stated time and place, evaluated without discussions and awarded to the responsible bidder whose conforming bid is most advantageous on price and price-related factors. Federal rules are in FAR Part 14, and Standard Form 1442 is the federal form for construction solicitations, offers and awards.

Small details decide whether a bid counts. A bid must comply in all material respects with the invitation. Federal bidders must acknowledge each amendment by the time set for receipt of bids, and bids received late are generally not considered.

Some bid forms list additive or deductive alternates in priority order. On Department of Defense construction, the low bidder is determined by taking those items in priority order within the funds available.

• Price exactly what the bid form lists: base bid, alternates and unit prices
• Acknowledge every addendum where the bid form asks
• Provide the bid security the invitation requires
• Deliver before the deadline by the stated method

An RFP is used when the owner wants to weigh more than price or expects to hold discussions. Federal agencies use sealed bids when time permits, award can rest on price and price-related factors, discussions are unnecessary and more than one bid is expected. Otherwise they may request competitive proposals under FAR Part 15.

Under FAR Part 15, an RFP must describe the requirement, the anticipated terms and conditions, the information proposals must contain and the evaluation factors with their relative importance. When requirements are clear and performance risk is low, cost or price can dominate. When requirements are less defined or risk is higher, technical and past performance factors carry more weight.

• Build a requirements matrix before writing
• Answer each evaluation factor where evaluators will look for it
• Keep price, schedule and narrative consistent
• Respect page limits and format rules

A request for qualifications asks firms to show experience, team and capability, often to build a shortlist before an RFP. Responses are often called statements of qualifications (SOQs). RFQ can also mean request for quotation, which asks for a price on a known scope, so confirm which one you have before planning the response.

Qualifications steps often leave price out. In federal two-phase design-build, phase one evaluates technical approach, qualifications and past performance, and cost or price factors are not permitted. Arizona’s procurement statute, as another example, has agents shortlist three to five firms from statements of qualifications for construction-manager-at-risk work and bars fees and price from that selection.

Prequalification is a review of a contractor’s capability before it may bid. It looks at factors such as financial stability, experience, licenses, safety records, insurance and quality control.

• Use only project facts, references and resumes your company approves
• Map each criterion to the page that answers it
• Supply financial statements and surety letters from your own company and surety

Design-build combines design and construction in a single contract with one entity. Federal agencies can use two-phase selection: a shortlist of normally five or fewer offerors based on qualifications and technical approach, then technical and price proposals evaluated separately.

Construction manager at-risk (CMAR) keeps the design contract separate from the construction contract. The construction manager provides preconstruction services during design, such as constructability and pricing input, and later commits to a construction price, often a GMP. Under a GMP contract the contractor is paid actual costs plus a fee up to the cap and generally carries costs above it unless a change order raises the cap. Florida law, for example, lets public owners require a GMP and then requires the construction manager to furnish a surety bond and hold the construction subcontracts.

• Selections are often staged: qualifications, proposal, interview and price or fee
• Confirm which costs sit inside the GMP and which count as fee
• Commit only the staff your company can assign

General contractors solicit bids from subcontractors and combine them into the bid they submit to the owner. A subcontractor proposal states a price and the scope behind it: inclusions, exclusions, alternates, unit prices and qualifications tied to the documents priced.

Because scope letters differ, bids are leveled before they are compared. Leveling puts each bid in a common format against the same scope list and shows what each bidder excluded or left out, so bids can be compared like for like.

• Name the documents and addenda your price covers
• List exclusions and qualifications plainly
• Price alternates and unit prices the way the bid form asks

Some items can only come from the bidder, whatever the procurement method. A bond is a written instrument between the bidder or contractor and a surety that backs the bidder’s obligations to the owner. Bid security, such as a bid bond, assures the owner that the bidder will not withdraw during the acceptance period and will sign the contract and furnish required bonds. On federal construction contracts above the threshold in FAR 28.102-1, performance and payment bonds are required.

Signatures, certifications, pricing decisions and the final submission also belong to the bidder. Bidmere prepares estimates and response material for review. It does not sign, provide bonds or insurance or submit on anyone’s behalf.

• Bid security and performance and payment bonds, from your surety
• Insurance certificates, from your carrier
• Signatures, certifications and addenda acknowledgments, from an authorized signer
• The final price and the submission itself