By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
California competitive bidding laws are intended to eliminate the awarding local agency from showing favoritism or in some cases trying to commit fraud and preventing the misuse of public funds. Contracting by local agencies laws are addressed in the California Public Contract Code (PCC), in sections 20100 through 22178. The PCC addresses many specific specifications of the laws surrounding public contracting and should be reviewed if you plan to bid public works projects. For this article, we will focus on the process. One important note, any contractor who bids on or enters into a contract to perform public works projects is required to register with the Department of Industrial Relations.
We’ll start off with some clarification; there are some categories of work that are in some cases, excused from competitive bidding depending on the type of agency. These categories can include specialized personal services, emergency work, maintenance and new projects that don’t reach the local agencies force account limit or bid threshold (dollar amount) that is specified in the PCC, in the city bylaws or charter of the city.
Advertising for Bids
Once a public agency reviews and approves an estimate received by the agency’s City Engineer or a project-engineering consultant, their governing board will vote to give their Public Works Director or designee the authority to advertise for bids. This is one of the major components that creates transparency in this process and allows contractors and the public to view the specifications of the project. Depending on the agency’s own advertising requirements, this can be done in newspapers, centralized community notification boards, and electronic bid-boards online. Contractors submit sealed bids based on the project specifications outlined in the engineers’ estimate. The bids will be publicly opened on a date set by the agency.
Award of Contracts
There are a couple of methods the awarding agencies use, depending on the requirements of the agency, to award a contract. The first, and the most commonly used method, is to award the contract to the lowest responsible and responsive bidder.
Here is what that means; a responsible bidder must be a licensed contractor who has not been barred from government contracts for prior misconduct. In addition, a responsible bidder must have the equipment and skills necessary to perform the work in question or have a sub-contractor who has those particular skills. If the bidder is deemed not responsible because they do not meet the above criteria, the public agency need not award the contract to the lowest bidder.
The next requirement in the first method is that the bid be responsive. Quite simply, the bid must be an offer to provide the goods and services that are being bid upon and the bid must comply with all procedures that are set forth in the requirements of the bid documents. For example, a bid, which excludes a portion of the work, which was outlined in the specifications, is deemed non-responsive.
The second, less commonly used method to award a contract is to use the “best value system.” Best Value means a value determined by objective criteria, including, but not limited to, price, features, functions, life cycle costs, and other criteria deemed appropriate by the entity. The use of “best value” is limited. CIFAC currently see it used in relationship to design-build projects and lease leaseback contracts but it may be used with design-bid-build delivery.
The public agency has authority and discretion to reject all bids and to re-advertise. This usually takes place when all bids exceed the amount the agency has budgeted for the work. The public agency may reject any bids presented, if the agency, prior to rejecting all bids furnishes written notice to bidders. The notice shall inform the bidders of the agency’s intention to reject the bid and shall be mailed at least two business days prior to the hearing at which the agency intends to reject the bid.
Finally, CIFAC can help contractors review the bidding process if they feel that the agency is not complying with their own competitive bidding regulations. If a protest to the awarding agency is require, the contractor should draft a letter immediately as to the reason for the protest. The contractor protesting should go before the agencies governing body at the time they will vote on awarding or rejecting the bid to argue their case. If the protesting bidder is unsuccessful, it may want to consider seeking court intervention. Such court intervention should be sought within a few days of the public entity voting to award the contract to another bidder.