The Bid Splitting Trap: Protecting Your Agency from a Common Procurement Mistake

Welcome, readers, to our exploration of bid splitting in California law – where transparency and fairness in contracting take center stage. Bid splitting can have significant implications in the realm of public procurement. Today, we'll unravel what bid splitting entails, why it's frowned upon, and how California's public contract codes come into play.

The bid splitting code applies to public agencies with or without adopting California Uniform Public Construction Cost Accounting Act (CUPCCAA).

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What is bid splitting?

Bid splitting is not using more than one contract to complete a public work construction project.  That’s legal and often called multi-prime contracting.

Bid splitting is when you scope and estimate your project and decide to separate or split the project up into parts just so you don’t have to do a higher level of bidding.  To prove they have not bid split agencies must keep track of their public works projects by providing each project with its own code to track the expenditures.  Here is an example using the code valid for public school districts {emphasis added}:

“20116: It shall be unlawful to split or separate into smaller work orders or projects any work, project, service, or purchase for the purpose of evading the provisions of this article requiring contracting after competitive bidding. The district shall maintain job orders or similar records indicating the total cost expended on each project in accordance with the procedures established in the most recent edition of the California School Accounting Manual for a period of not less than three years after completion of the project.”

California’s laws are so concerned with bid splitting that similar language exists for nearly every agency type.  PCC 20100 – 22178 is the Local Agency Public Construction Act and includes work, service and general purchasing references.

Bid Splitting Codes by Agency Type:

·       K-12 – PCC 20116

·       Cities – PCC 20163

·       Comm. Colleges – PCC 20657

·       & others…

Show me an example

Let’s say you have opted into CUPCCAA and need to paint a few buildings on a site.  The work includes hazardous abatement, wood rot repairs, preparation, prime and paint.  Code generally expects and CUPCCAA demands that you take the following steps in the following order.

Step 1: Your project’s scope is paint 2 buildings including all work needed

Step 2: Your best guess at cost based on previous projects and including a contingency is $90,000.  You get budget approval and you assign your unique project number.

Step 3: Then, you select the correct procurement process that applies.  This is the point where you should be careful not to bid-split.

• Perhaps you think you could get a proposals from abatement firms for $20k worth of hazardous abatement and proposals from painting firms for the rest for around $70k.  Each proposal would be under $75k so you’d be good to go, right?

No.  That way of thinking is bid splitting because you are separating the scope of the project for the purpose of avoiding an informal bid over $75k.

Note: It’s fine if you want to make separate contracts for hazardous abatement and painting. That’s multi-prime contracting.  However, the “project” as you defined and estimated it requires informal bidding for any contracts involved since the project is over $75k.

All contracts, no matter the size, must be bid using the higher bid method for this project.  Knowing this, you may just want to do a single informal bid for the whole project.

Side Note:  If you decide to provide the paint yourself, even that purchase needs to come from a properly bid source (or CMAS) because you are working a public works project over $75k and it requires bidding.  Make sure you have records and associate the materials purchased to the project’s unique tracking number.

Why does this matter so much?

The code requirements for projects over your bid limit require specific things including, but not limited to:

• Notifications which may include formal advertisements and journal notices or use of CUPCCA lists

• Bid bonds and other project-related bonds, some of which are triggered based on project (not contract) size.

• Bid rules, laws, special certifications and more!

Some of these things protect the public, public funds, and the public agency by triggering higher levels of requirements for projects over a certain size.

Some protect bidder rights to bid the project.  As the project size triggering bidding has increased, so has the scrutiny over agency’s processes by the bid community who have the right to bid those projects.  Bid splitting is viewed as avoiding what should have been a publicly advertised (or published in a journal/used of a CUPCCAA list) bid and they lost the opportunity to participate.  Getting caught isn’t good for any public agency or employee!

In conclusion

Public agencies work hard to maintain public trust, and the contracting process is one of the most visible ways that trust is demonstrated. Bid splitting rules exist to ensure transparency, fair competition, and consistent compliance with California’s Public Contract Code. When agencies clearly define their project scope, estimate the total cost up front, assign a project number, and follow the appropriate procurement process, they protect both their organization and the integrity of the bidding process.

The good news is that avoiding bid splitting is usually straightforward: treat the project as a whole when determining the bidding requirement, keep accurate project tracking, and apply the procurement rules that correspond to the total estimated cost of the work. Whether your agency operates under CUPCCAA or standard Public Contract Code thresholds, the principle remains the same—procurement decisions should be driven by the true scope and cost of the project, not by a desire to fit under a bidding limit.

By keeping these principles in mind, agencies can confidently navigate California’s procurement laws while ensuring that public projects remain fair, transparent, and fully compliant.

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