Awarding a construction contract using the bid process is based primarily on cost. Program directors and members of the program's facilities planning team can use this resource in their bidding process. Quality of work, references, and the ability to complete on time and within budget play a significant role in awarding a construction contract. This tip sheet provides pointers for conducting a successful bidding process, as well as rating criteria for selecting contract professionals.
Prior to hiring a contractor, a bid package and process must be developed. Minimum package requirements include:
- Advertisement for Bid Form (or solicit selected contractors, using pre-qualifying criteria)
- Bid Forms
- Instructions to Bidders Form, including the method for award of contract (e.g., to the lowest bid or the lowest base bid in combination with alternates)
- Bid Bond Form (five percent bid security)
- Contract Form
- Performance and Payment Bond form (100 percent)
- Contractor's Application for Payment
- Construction Contract General Conditions and Supplemental Conditions
- Equal Employment Opportunity (construction contracts exceeding $10,000)
- Bonding and Insurance Requirements
- Construction Contract Completion Time and Closeout Documents necessary for Substantial Completion
- Current Wage Determination rates according to the Davis-Bacon Act. To find out more about the Davis-Bacon Act go to the law https://www.dol.gov/whd/govcontracts/dbra.htm and other related compliance issues https://www.dol.gov/whd/govcontracts/dbra.htm.
Tips for a Successful Process
- When hiring professional services, a program should develop a set of questions important to the program and the project as a basis of the proposal. Each professional, firm, or entity must provide detailed answers. Sample questions:
- Are you licensed?
- Describe your previous experience working for this agency/program.
- Describe your previous experience designing and constructing Head Start or early educational facilities.
- Have you a certificate or specialized training in Head Start or early educational facilities design and construction?
- Describe your design team that will work on this specific project, including degree type, individual experience, and years with the firm, certificates or specialized training in Head Start design and construction, and number of projects currently in process.
- List all current projects and projects for the last three years. Provide contact names, phone numbers, dates of completion, budget, and the number of approved construction change orders.
- Develop rating criteria by giving different possible top weights for the questions. The rating criteria are the opportunity to establish priorities and to hire the type of professional that best fits the project and the agency. Question weights vary according to what is considered the most important qualifications of the professional, firm, or entity. For example:
- A licensed local architect may be worth 15 points
- Previous experience working with the agency may be worth 20 points
- Experience designing and constructing other Head Start or early education facilities may be worth 25 points
- Having a certificate or formal training in the design and construction of Head Start or early education facilities may be worth 30 points
- The qualifications of the design team, their experience, and their knowledge may be worth 35 points. Previous experience may be the most important factor to the agency and may be worth 40 points.
- If price is included as an evaluation factor and there is a request for cost information, it may be used as a screening factor to pre-select or screen out applicants that have a high cost-per-hour fee.
- The next step is to develop an evaluation panel consisting of three to five people. Each person will read, grade, and rank each proposal. Each member of the panel should have a professional understanding of the project and the construction industry, and knowledge of what it takes for such a project to be successful. Some members should not be affiliated with the agency or the project.
- Total the scores and ensure that all applicants are given the same opportunity to score the maximum points available. In the criteria mentioned above (item two), the total is 165 points. A scale of 100 or 200 points may be developed. The most important factor is that all the applicants are given the same opportunity and that no applicant is given special treatment.
- After scoring, average the grades for each proposal to produce a final score and place the top proposals in priority order.
- The negotiation process begins after the proposals are opened, read, and graded according to the weighted criteria. The top three to five proposals are notified that they are selected as finalists and will be contacted by phone for an appointment and presentation. Presentations are optional but recommended. They give everyone an opportunity to meet the people they will be working with, establish a person-to-person relationship, and personalize the proposals. After all the presentations have been made, a final score is tallied. The top firm is then notified of its selection to negotiate a contract.
- The cost of professional services can vary greatly—from an hourly rate to a total cost based upon meeting specifically measured goals and objectives. However the contract is set up, the federal government requires a Firm Fixed Price Contract. An hourly rate should be included as an addendum in the event additional work is requested during the course of the project.
Awarding a construction contract using the bid process is based primarily on cost. However, cost may not be the only factor in awarding a construction or renovation contract. Quality of work, references, the ability to complete on time and within budget, and bonding are other factors that could play a role in awarding a construction contract.
A construction contract does not have to be given to the lowest bidder. It must, however, be awarded to the lowest and best bidder. If the lowest bidder is not awarded the contract, it is very important that a detailed explanation is provided to the funding agency and that documentation be filed with the agency's council for any legal challenges that may be brought against the agency/program.
The architect and/or project manager play a key role in documenting the reasons for awarding a contract to the lowest best bidder rather than the lowest bidder.
Resource Type: Article
National Centers: Program Management and Fiscal Operations
Audience: Directors and Managers
Last Updated: August 8, 2023