Bidding and Negotiating Procedures
Bidding and Negotiating Procedures
This domain covers how the project is priced and awarded, and how changes are negotiated after award. The exam tests the difference between competitive bidding and negotiation, the legal effect of addenda, how bid mistakes are handled, and what a contract administrator may and may not negotiate.
Core rules
- Competitive sealed bidding awards to the lowest responsive and responsible bidder. Responsiveness means the bid conforms to the invitation in form and substance; responsibility means the bidder has the capacity and integrity to perform.
- Bid documents normally include the invitation, instructions to bidders, bid form, bid security, performance and payment bonds, general and supplemental conditions, specifications, drawings, and addenda.
- Addenda are written and issued to all bidders. Oral clarifications are not binding. Bidders acknowledge addenda on the bid form; a bid that fails to acknowledge a material addendum may be rejected.
- Bid mistakes: unit prices normally govern over extensions. A bidder claiming a mistake must give prompt written notice and follow the procedure in the instructions and applicable law. The owner cannot simply negotiate a new price with the low bidder to cure an error.
- Negotiation is appropriate for a negotiated contract, a CM at-risk fee, or a change order. Price negotiation should use a schedule of values or cost breakdown, with labor, material, equipment, overhead, and profit separated.
Worked example
A bid form shows 1,250 cubic yards at $180 per cubic yard. The extension is written as $215,000 instead of $225,000. The bid is low by $10,000. Reasoning: the unit price governs, so the corrected extension is $225,000. The bidder's total changes, and the owner must reevaluate the award. If the correction changes the ranking, the owner follows the mistake procedure rather than allowing the bidder to withdraw informally after opening.
Traps that cost marks
- Accepting a late bid or a post-opening clarification that changes price or scope.
- Treating a bidder's qualifications or exceptions as responsive when the instructions require rejection.
- Allowing bid shopping, where the owner uses the low bid to pressure others after opening.
- Forgetting that an addendum must reach all bidders, not only the low bidder.
- Negotiating a change without a written breakdown and without addressing schedule impact.