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Speed Without Scramble: Managing Suspect Low Bids a Different Way

Writer: Joanne Branch
Joanne Branch
Nov 4
3 min read

In the realm of public works, managing the bidding process can be particularly challenging, especially when the lowest bid appears suspect. To navigate this, agencies can adopt several best practices to ensure a smooth transition if the lowest bidder fails to meet the requirements. Here’s an informative guide on handling such situations effectively and professionally.

A middle-aged man with a mustache and beard sits at a wooden desk in a bright office, looking thoughtfully down at an open blue binder. He wears a light blue button-down shirt and has his hand resting on his chin. Next to the open binder are two thick, closed blue binders filled with documents. In the foreground, rolled architectural blueprints and a spiral notebook are visible on the desk. In the background, there is a hard hat, books, a framed picture of a building, and a window showing a sunny day outside.

When the Low Bid is Suspect

When an agency receives bids for a public works project, the lowest bid often attracts immediate attention. However, there are times when this bid may appear questionable due to various reasons, such as the bidder overreaching, lacking experience in public works, or failing to respond adequately to bid requirements. In these situations, the agency should have a backup plan.


The Role of the Notice of Intent to Award (NOI)

Typically, the agency sends a Notice of Intent to Award (NOI) to the apparent low bidder, which asks them to submit all necessary documentation and clarifications. This may include unlisted subcontractors, proof of self-performance capabilities, and any required special certifications. The purpose of the NOI is to confirm that the low bidder can fulfill all contractual obligations, thus ensuring a smooth award process.  Until you have an awardable contract it’s hard to push the award forward in a timely manner without fear.


Engaging the Second- and Third-Lowest Bidders – A Lost Art?

When there are concerns about the lowest bid, a proactive approach involves engaging the second and possibly third lowest bidders concurrently. This practice is not explicitly mandated nor precluded by code but is a recognized best practice in the industry.

By having the second lowest bidder ready, the agency has a better chance of moving quickly to award the contract if the lowest bidder cannot meet the requirements and is deemed non-responsive or non-responsible.


Here’s how to do it:

  • Send a request with contents like the NOI to the second lowest bidder, asking them to prepare and submit their documents. Instead of a Notice of Intent to award, this is a Notice of 2nd Low Bid.  This communication should be polite and professional: “Your firm has been identified as the second lowest bidder. As such, the agency respectfully requests that you provide…”.

  • Avoid discussing the specifics of why this request is made to maintain fairness and confidentiality.

  • Yes, you can concurrently send something similar to the 3rd lowest bidder, but if you look at the 2nd lowest and think it will be fine, try to avoid asking for things you won’t likely use.


Remember, contractors and vendors can pull bonds and not invoke/pay for them until they get the award.  They & their bonding agents don’t like to, but they can.  To pull the bond they need a letter from the Owner saying they may get the award.  That’s one of the primary reasons we send NOIs and in this case a notice of 2nd low bid.


Balancing Fairness and Practicality:

It’s important not to make this routine practice.  This approach should be used judiciously, primarily when there are clear concerns about the lowest bid’s viability. It should be triggered on a case-by-case basis.  Repeatedly asking for documents from second and third bidders without eventually awarding them can lead to frustration and discourage them from bidding in the future.


Ensure that all communications and processes comply with relevant public works bidding regulations and standards. While the practice of asking for additional documents from second and third bidders is not precluded by code, it must be handled transparently and fairly.


Timing and Coordination

  • Allow Sufficient Time: Plan for at least two weeks between the bid submission deadline and the award of contract/final approval. This time allows the agency to thoroughly review the lowest bid and prepare backup options if necessary.

  • Efficient Post-Bid Management: Efficiently manage the review process for the lowest bid and coordinate the potential engagement of the second and third lowest bidders to maintain project timelines and stakeholder confidence.  Don’t wait to have the problem to talk about what to do when you have it!

  • Have a backup award date:   Put an early and planned award date into your bid schedule when you first begin.  Aim for the early award date but promise only the planned one!


Takeaways

Handling a suspect low bid effectively requires a combination of careful planning, clear communication, a strategic approach, and a backup plan. By invoking options with the second and perhaps third lowest bidders, agencies can safeguard against potential award slippage and ensure project continuity. Remember, while this process can be time-consuming for the bidders, using it judiciously and transparently will help maintain a healthy competitive bidding environment.


If this article sparked ideas relevant to your work in a California public agency, you may find value in our free Purchasing & Public Works Group, where professionals share practical experiences and lessons learned.Learn more: https://www.colbitech.com/ppwg


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