On several publicly funded projects, the award of a construction contract to the general contractor is based on   competitive sealed bidding , also called   open bidding . This refers to the process by which qualified contractors are invited to bid on the project. The invitation is generally issued through advertisements in newspapers, trade publications, and other public media.

The advertisement for bids includes a description of the project, its location, where to obtain the bidding documents, the price of the bidding documents, the bid opening date and location, and other important information. The purpose of the advertisement is to notify and thereby attract a sufficient number of contractors to compete for the construction contract.

The general contractor’s bid for the project is based on the information provided in the bidding documents . The bidding documents are essentially the construction document set with such additional items as the instructions to bidders, requirements with respect to the  financial and technical status of bidders (see the information on surety bonds in the box  “Expand Your Knowledge”), and the contract agreement form that the successful bidder  will sign when the contract is awarded. Because these additional items are text items, they  are bound together as a project manual, Figure 1.8.

  FIGURE 1.8  The project manual in the bidding document set includes specifications and
  Division 00. After the general contractor has been selected, the project manual (in the contract
document set) generally excludes Division 00.

In the competitive sealed bidding method, the bidding documents are generally given only to contractors who are capable, by virtue of their experience, resources, and financial standing, to bid for the project. Therefore, the architect (as the owner’s representative) may prescreen the bidders with respect to their reputation and ability to undertake the project.

An exception to prescreening for the release of bidding documents involves projects funded by the federal, state, or local government, for which almost anyone can access the bidding documents. However, even in this kind of project, the number of contractors who can actually submit the bids is practically limited. This limitation is generally the result of the financial security required from the bidders, known as a   bid bond . The bidder must obtain a bid bond from a surety company in the amount specified in the bidding documents. This bond is issued based on the contractor’s experience, ability to perform the work, and financial resources required to fulfill the contractual obligations.

Whether or not the release of the bidding documents is restricted, the procedure stated earlier ensures that all the bidders are similarly qualified with respect to financial ability, experience, and technical expertise. Because all bidders receive the same information and are of the same standing, the competition is fair; therefore, the contract is generally awarded to the lowest qualified bidder.    

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