bidding process questions

Follow

Christina Fu

November 18, 2020 16:03

I am reading the AHPP chapter 10.8 regarding bidding and negotiation. Got a few questions regarding the bidding process:

1.  Is Bid Bond required for a bid to be considered a "responsive bid"?  Do General Contractors provide a Bid Bond even if the Owner does not request for one?

2. AHPP states a "responsible bidder" is one who can demonstrate financial capacity to perform the contracted work.  My question is, if this bidder turns in the bid after the deadline, then it doesn't even matter if they can financially do the work right? Since late bids are rejected?

3. Who pays for the Bid Bond and how much is it?   AHPP states "AIA Doc A310 guarantees that, should the low bidder withdraw after selection but before the execution of the contract, the owner will be reimbursed by the low bidder for the difference between the low bid and the next lowest bid." 

Does this mean that if the owner rejects the lowest bidder, and if the owner has a Bid Bond between him and the lowest bidder,  owner needs to pay the lowest bidder the difference between the lowest and the next one up for not hiring that GC?

4. What type of project would the owner use an A310 as part of the bidding process?

TIA

0

• 

  Tabitha Russell November 18, 2020 21:00

  Hi Tia! 

   

  1. If the owner requests a bid bond, yes the bond is required to be considered a responsive bid. 
  2. Correct, late bids are thrown out normally, for sure on public projects. As far as the test is concerned, I feel like once a bidder is considered non-responsible for any reason you should disregard their bid unless the question states a reason to do otherwise. 
  3. The GC pays the surety a premium type fee like insurance for a bid bond. They frequently put this premium in their base bid. If the GC were to back out and not go under contract the surety would pay the difference between the lowest and next lowest bidder so that the owner can enter a contract for what was the lowest bid. The bid bond would really only come in to play if the GC decides not to enter the contract after being the lowest bidder. If the owner doesn't chose them it doesn't matter. The owner can chose a bidder higher than the lowest on public projects when they have other factors in the decision such as references, personnel etc. This is a "value-based decision."
  4. Most public projects will use this. A private could as well. Bid bonds are really up to the discretion of the owner. I don't think they would use them in anything that isn't competitively bid though. 

  I hope this helps! Good luck! 

  1

  Comment actions Permalink
• 

  Christina Fu November 18, 2020 21:33

  Hi Tabitha!

  Thank you so much for your comments.  This is super helpful.  

  All my work experiences have been in the private/residential sector and have never cross path the issue of Bid Bond with the GCs. 
  
  Thank you!

  0

  Comment actions Permalink
• 

  Gang Chen November 18, 2020 21:34 (Edited November 18, 2020 21:35)

  Does this mean that if the owner rejects the lowest bidder, and if the owner has a Bid Bond between him and the lowest bidder,  owner needs to pay the lowest bidder the difference between the lowest and the next one up for not hiring that GC?

  Answer: No, the owner can select any of the bids or reject all bids per AIA doc.

  Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

  1

  Comment actions Permalink

Please sign in to leave a comment.