Chapter 15 — Advertise and Award

Where Ch 15 sits in the project lifecycle

LAPM Chapters 15, 16, and 17 form the construction triad — advertise/award, administer, complete. Ch 15 begins only after Environmental, Design (PS&E), and Right of Way work is complete and the LPA is ready to hire a contractor. See LAPM Ch 12: PS&E for the PS&E and Construction Authorization Package; LAPM Ch 13: R/W for R/W certification prerequisite; LAPM Ch 16: Administer Construction for what happens after award.

If the project is locally sponsored but within State R/W and Caltrans is the administering agency, the Caltrans Construction Manual is used in lieu of LAPM Chs 15-17.

The Resident Engineer (RE) is the central figure in Ch 15-17. The RE must be familiar with all three chapters before construction begins.

Significant NHS — written procedures approval; everything else — Exhibit 15-A

Significant NHS Projects. The DLAE makes the determination at field review (see Ch 7: Field Review) of which NHS projects are considered significant. Before the LPA can advertise a significant NHS project for construction:

1. Written contract administration procedures must be developed by the LPA
2. The DLAE must approve those procedures in writing
3. The LPA must receive in writing an Authorization to Proceed (E-76) with construction from Caltrans (see Ch 3: Project Authorization)

The written CA procedures must cover: CM personnel and procedures; consultant use and selection; Employee in Responsible Charge; advertisement, bid opening, award procedures; preconstruction procedures; subcontracting; traffic safety; materials testing; change order review/approval; oversight procedures if state highway involved; records maintenance and access; estimates and progress payments.

All Other Projects. Approval of written CA procedures by Caltrans is NOT required. But each LPA must complete Exhibit 15-A: Local Agency Construction Contract Administration Checklist before the Request for Authorization to Proceed with Construction will be approved. The LPA must not advertise until it has received in writing an Authorization to Proceed.

Lowest responsive bid under 23 USC 112 — and the 3-week minimum

"One of the most basic tenets of Federal-aid contracting is that construction contracts are to be awarded competitively to the contractor which submits the lowest responsive bid." 23 USC §112 and 23 CFR 635.114(a): "Federal-aid contracts shall be awarded only on the basis of the lowest responsive bid submitted by a bidder meeting the criteria of responsibility as may have been established by the SHA."

Construction engineering on locally administered projects is performed by LPA personnel unless arrangements are made to hire a consultant. If a consultant is used, the LPA must still designate an employee of the agency as the person in responsible charge of the project (cannot be a consultant — non-delegable). See Ch 16 for full CE requirements.

The LPA and all of its contractors, subcontractors, and vendors must take all reasonable steps to assure that DBEs have equitable opportunity to compete and provide language access to Limited English Proficiency (LEP) individuals under Title VI of the Civil Rights Acts of 1964 (see Ch 9: Civil Rights & DBE).

15.3.2 Procedures

Upon receipt of Authorization to Proceed for construction, the LPA can advertise. The LPA must complete and retain Exhibit 15-C: Project Advertising Checklist prior to advertisement.

During advertising:

• Notify all prospective bidders of PS&E addenda in the same manner as non-federal projects
• For Federal-aid, the LPA is required to certify that all bidders certify receipt of all addenda
• The LPA must ensure free and open competition
• Advertisement period is determined by the LPA, but a minimum advertisement period of three weeks is required for all Federal-aid projects
• Caltrans DLAE may approve shorter periods in special cases where justified with Exhibit 12-F: Cost-Effectiveness / Public Interest Finding
• Advertising begins with publication of a Notice to Contractors
• The Notice must identify the DBE goal
• Acceptable methods: newspaper of wide local circulation, technical publications, contractor/professional associations, recognized DBE organizations, web hosting/clearinghouses (BidSync, Planetbids), LPA's or other widely used social media/websites
• LPA is responsible to approve and issue all addenda to the PS&E during advertising
• The LPA must assure all updated estimates are fundable from available local or federal resources
• Upon advertising, the LPA must furnish the DLAE with an electronic copy of the as-advertised contract

Permitted under 23 CFR 635.110 — but the FHWA Division Administrator must approve

FHWA permits the use of a prequalified list of prime contractors developed by the LPA per 23 CFR 635.110(a). The use of a prequalification list is optional and not required. Prequalification must not be used to restrict competition or discourage otherwise responsible bidders from submitting a bid.

Process for getting prequalification approved:

1. Advance approval must be granted by the FHWA Division Administrator (California Division)
2. LPA submits package to DLAE that includes:
   • Overview of proposed process with timelines
   • Typical Responsibility Statement and Questionnaire prospective Contractors would submit
   • Criteria by which prospective Contractors would be evaluated for inclusion on the prequalified list

23 CFR 635.110(b): "No procedure or requirement for bonding, insurance, prequalification, qualification, or licensing of contractors must be approved which, in the judgment of the Division Administrator, may operate to restrict competition, to prevent submission of a bid by, or to prohibit the consideration of a bid submitted by any responsible contractor, whether resident or nonresident of the State or locally designated area wherein the work is to be performed."

Two prequalification methods:

• Project-by-project — LPA sets threshold (e.g., projects over a dollar amount, time-sensitive projects). Eligible for federal participation if directly attributable to a specific federal project. Invoiced against PE phase, or against CE phase if occurring after E-76 for Construction/CE.
• Programmatic — Contractor applies for finite period (typically 1-2 years) with renewal provisions. Once prequalified, eligible to bid on any project for that LPA during the active period.

Allow time for prequalification. If prequalification is used on a project, enough time must be allowed between initial advertising and bid opening for a prospective bidder to attain prequalification (if not already prequalified). Otherwise the process effectively excludes new bidders.

Two monitoring windows, the $2,000 attachment rule, and the 90-day re-insertion

Federal prevailing wage rates (Davis-Bacon) must be monitored at two points during advertisement, with different responses required at each.

Attachment requirement. Federal prevailing wage rates must be physically attached to the executed contract signed by the LPA and the contractor on all Federal-aid construction projects exceeding $2,000, and to all related subcontracts (regardless of tier or subcontract size). Projects located on roads classified as local roads or rural minor collectors may be exempt from this requirement.

The 90-day re-insertion rule. "If the contract is not awarded within 90 calendar days of bid opening, the LPA must insert the most current federal prevailing wage rates into the contract." A delayed award triggers fresh rates — meaning the LPA's contract price may diverge from the bid price, and the contractor may have grounds to seek adjustment or withdraw.

Public, read aloud, responsive bid + responsible bidder

The bid opening is a public forum for the announcement of all bids. It is the last moment that bids can be accepted. No bids can be accepted during or after bids are opened. Bids must be opened publicly and read aloud either item-by-item or by total amount.

If a bid is not read, the bidder must be identified and the reason for not reading the bid announced.

Responsive bid vs. Responsible bidder — the critical distinction

Reasons a bid may be non-responsive and precluded from reading:

• Failure to sign the bid, not signing in ink, or not supplying valid electronic signature
• Failure to furnish the required bid bond
• Failure to include a unit bid price for each item
• Failure to include a total amount for the bid
• Failure to prepare the bid in ink
• Failure to submit a completed addenda certification statement
• Failure to submit a non-collusion affidavit
• Failure to commit to the achievement of the DBE contract goals or demonstrate good faith efforts to do so
• Inclusion of conditions or qualifications not provided for in the specifications
• Submission of a materially and mathematically unbalanced bid
• Not meeting specified prequalification, or bonding and insurance requirements

Just as a bid may be rejected for being irregular or non-responsive, a bid may also be rejected on the grounds that the bidder is not a responsible bidder — past unsatisfactory performance, failure to meet qualification requirements, state or federal suspension/debarment action.

Check for debarment. The LPA should check whether a contractor is suspended or debarred from federal contracts and document in the project file that it has verified that the low bidder and subcontractors have not been suspended or debarred. www.sam.gov publishes "A Listing of Parties Excluded from Federal Procurement and Non-procurement Programs."

Contractor's Debarment and Suspension Certification is part of Exhibit 12-H: Sample Bid.

15.4.2 Procedures

The LPA must follow its own procedures for bid opening, provided such procedures include:

• As bids are received, they must be logged in and stamped with the time and date
• Bids must be retained in a secure place until the designated time and place for public opening
• All bids received in accordance with the terms of the advertisement must be publicly opened and announced either item by item or by total amount
• If any bid is not read aloud or posted, the name of the bidder and the reason must be publicly announced or noted
• Negotiation with contractors, during the period following the opening of bids and before the award of the contract, must not be permitted

No discrimination against any qualified bidder regardless of political boundaries. No bidder must be required to obtain a license before submitting a bid or before the bid is considered for award. However, a state contractor's license must be obtained upon award. The LPA may withhold payment until the contractor furnishes proof of proper license. The LPA must not bid in competition with or enter into a subcontract with private contractors.

Required retention for the successful bidder:

• Exhibit 15-G: Construction Contract DBE Commitment
• List of bidders and total amounts bid with an item-by-item breakdown of the three lowest bidders (Exhibit 15-D: Bid Tabulation Summary Sheet)
• Non-collusion Affidavit (Exhibit 12-H)
• Exhibit 15-I: Local Agency Bid Opening Checklist

Where the lowest bid exceeds the engineer's estimate by an unreasonable amount as defined by established agency procedures, or where competition is considered to be poor for the size, type, and location of project, bids may be rejected unless an award of contract is justified as being in the best interest of the public.

Addenda certification statement must be completed: "Addenda – This bid is submitted with respect to the changes to the contract included in addendum number/s_ (Fill in number/s if addenda have been received). Warning – If an addendum or addenda have been issued by the LPA and not noted above as being received by the bidder, this Bid may be rejected."

The 10% rule, the engineer's estimate, and the unbalanced-bid distinction

The bid analysis is required for projects on the NHS and recommended for all others. It justifies the award or rejection of bids and assures that good competition and the lowest possible cost were received. A proper bid analysis better ensures that funds are being used effectively. It also assists the agency in preparing accurate engineering estimates on future projects.

Factors considered in bid analysis: number of bids; distribution or range of bids; identity and geographic location of bidders; urgency of the project; unbalancing of bids; current market conditions and workloads; potential for savings if re-advertised; comparison of bid prices with similar projects in the letting; justification for significant bid price differences; other factors as warranted.

The Caltrans Contract Cost Database is available at https://sv08data.dot.ca.gov/contractcost/ to assist LPAs in preparing accurate engineer's estimates.

Some projects are so essential that deferral, even for 60 days, would not be in the public's interest. Examples include: safety projects to correct extremely hazardous conditions where the traveling public is in danger; emergency repairs or replacement of damaged facilities; projects to close substantial gaps in otherwise completed facilities; projects critical to staged or phased construction where delay would significantly impact completion.

Unbalanced bids — two flavors

To detect mathematical unbalancing, unit bid items should be evaluated for reasonable conformance with the engineer's estimate and compared with the other bids received. There are no definitive parameters (e.g., a percent of variance) that constitute an unbalanced bid. The degree may depend on the reason for the unbalancing.

Care must be exercised to ensure that unit bids for mobilization do not mask unbalancing. Token bids (bids with large variations from engineer's estimate) should be considered mathematically unbalanced and further evaluation should occur.

If the quantity of an item could vary due to inaccuracies in estimating, errors in plans, changes in site conditions, etc., bids should be further evaluated to determine if the low bidder will ultimately yield the lowest cost. If unbalancing creates reasonable doubt that award would result in the lowest ultimate cost, the bid is materially unbalanced and should be rejected.

15.5.2 Award Procedures

The LPA must follow its normal procedures for award. The LPA is delegated the authority to determine the lowest responsive/responsible bidder without concurrence to award by Caltrans or FHWA. Written justification must be included in the project file for all projects that are not awarded to the lowest bidder.

The LPA must retain the executed contract, document the award date, and the preconstruction conference minutes. The State must not participate in resolving disputes between the LPA and its bidders.

It is the responsibility of the LPA to verify with the DLAE and RTPA/MPO that the appropriate amount of federal funds is authorized before the project is awarded. Once awarded, notify the DLAE that the 'Notice to Proceed' has been given.

15.5.3 Post-Award Reviews — bid rigging surveillance

The LPA should conduct post-award bid evaluations to assure against bid rigging. An adequate number of projects awarded over a sufficient time period should be evaluated. A period of approximately 5 years should be selected for an initial evaluation.

Information to consider in post-award review for abnormal bid patterns:

• Number of contract awards to a specific firm
• Project bid tabulations
• Firms that submitted a bid and later became a subcontractor on the same project
• Rotation of firms being the successful bidder
• Consistent percentage differential in the bids
• Consistent percentage of available work in a geographic area to one firm or several firms
• Consistent percentage differential between successful bid and engineer's estimate
• Location of successful bidder's plant versus location of other bidders' plants
• Variations in unit bid prices submitted by a bidder on different projects in the same bid opening
• Number of plans/proposals taken out vs. number of bids submitted
• On re-advertised projects, whether the eventual successful bidder was also low bidder on the first letting

The $10,000 NHS provisions clause and the federal participation limits

All NHS contracts exceeding $10,000 must contain suitable provisions for termination by the LPA, including the manner by which the termination will be affected and the basis for settlement. The contract must describe:

• Conditions under which the contract may be terminated for default
• Conditions where the contract may be terminated because of circumstances beyond the control of the contractor

References: 2 CFR 200 Subpart D and Appendix II; 23 CFR 635.125; 49 CFR 18.

Prior to termination of a Federal-aid contract subject to FHWA Full Oversight, the LPA must consult with and receive the concurrence of the Caltrans DLAE. For all other Federal-aid contracts the LPA must notify the DLAE of the termination.

The extent of Federal-aid participation in contract termination costs depends on the merits of the individual case. Under no circumstances shall federal funds participate in anticipated profit for work not performed.

Award for completion of a defaulted contract. When the LPA awards a contract for completion of a federal-aid contract previously terminated for default, the construction amount eligible for Federal participation should not exceed whichever is the lesser, either:

1. The amount representing the payments made under the original contract plus payments made under the new contract, or
2. The amount representing what the cost would have been if construction had been completed as contemplated by the plans and specifications under the original contract

If the surety awards a completion contract or completes by some other acceptable means, FHWA considers the terms of the original contract in effect and that the work be completed in accordance with the approved plans and specifications. No further FHWA approval or concurrence action is needed.

Five exhibits to the DLAE before the first construction invoice

Prior to submitting the first invoice for the construction phase, and within sixty (60) days of contract award, the LPA must forward the following information as one package to the DLAE:

The DLAE will review the documents for completeness and accuracy. The DLAE will provide the project's construction contract award date and Exhibit 15-B to the Construction Oversight Engineer (COE).

Deficiencies in contract administration procedures that cannot be corrected may result in withdrawal of federal and/or state funds from the project. If the award amount is more or significantly less than the amount estimated at construction authorization, the Award Package submitted to the DLAE will be used to update the project agreements. The E-76 and state-issued Finance Letter will be revised to reflect updated project costs.

If additional federal funds for the project's construction phase are needed, the LPA must submit written approval from the MPO/RTPA (for STBG, CMAQ, etc.) or pertinent DLA Office (for HSIP, HBP, ATP, etc.) as part of the Award Package.

For full administration after award, see LAPM Ch 16: Administer Construction Contracts.