The Project Bidding Process
The basic structure of the bidding process in the state of Texas includes the formulation of fully detailed plans and specifications of a facility on the basis of the objectives of the owner, and the invitation of qualified contractors to bid for the right to implement the project. A contractor becomes qualified to bid only if he can offer minimal evidence of previous experience and financial stability.
State statutes impose wide range requirements on the purchase of goods and services of all kinds. Recently, the Legislature has included various alternatives to the old and inflexible requirements that can be obtained by competitive bidding. But each of the alternatives and exemption are complicated as its own requirements have to be met.
The main requirements applicable to Texas county government competitive acquisition processes and contracting focuses primarily on the state statutes applicable to purchasing and contracting, comprising alternative methods of contracting for construction projects. The general requirements for competitive bidding and proposals for Texas counties can be found mainly in Local Government Code chapter 262. There are other provisions as well that are to be found in Local Government Code Chapter 271.
The County Purchasing Act is found in TEX. LOC. GOV’T CODE §§ 262.021-.036 Section 262.023(a) and sets forth the competitive requirements for certain purchases and offers that before a county purchases one or more items under a contract that will require an expenditure exceeding $25,000,2 the commissioners court of the county must:
- Abide by the competitive bidding or competitive proposal procedure
- Employs the reverse auction procedure, as defined by Section 2155.062(d), Government Code, for purchasing
- Meets the method described by Subchapter H, Chapter 271.
The competitive bidding requirements of the County Purchasing Act are applicable to expenditures made from funds generated by forfeitures under Code of Criminal Procedure section 59.06(c) (1). OP. TEX. ATT’Y GEN. Nos. DM-246 (1993), LO-94-040 (1994). As per code TEX. LOC. GOV’T CODE § 262.0225 all bids or proposals must be received in a fair and confidential manner.
Notice for bidding should be published minimum once a week for at least two consecutive weeks before the date for the bid opens, with first date of publication occurring before the 14th day before the bid opening. TEX. LOC. GOV’T CODE § 262.025(a). The notice must include:
- Specifications describing the item to be purchased or a statement of where the specifications can be attained. TEX. LOC. GOV’T CODE § 262.025(b)(1).
- Bid specifications must be reasonably specific, so as to give all prospective bidders the opportunity to bid on a common standard. Haas v. Gulf Coast Natural Gas Co., 484 S.W.2d 127 (Tex. Civ. App.—Corpus Christi 1972, no writ).
- If bid specifications fail to mention escalation clauses, the commissioners court may not accept a bid which contains an escalation clause. OP. TEX. ATT’Y GEN. No. MW-299 (1981).
- Bid specifications which legitimately require patented articles substantially comply with the requirements of the applicable bidding provisions so long as the price is not unreasonable. Vilbig Bros. v. City of Dallas, 91 S.W.2d 336 (Tex. 1936).
- Where commissioners court solicited bids and negotiated a contract with the sole bidder for a shorter time than that contained in the bid specifications, there was substantial compliance with the relevant statutes, rendering the contract legal. Hayden v. Dallas County, 143 S.W.2d 990 (Tex. Civ. App.—Dallas 1940, no writ).
- Bid specifications cannot require materials exclusively made in the United States because this unduly restricts competitive bidding and defeats its purpose, and contributes to increased cost. Whether no harm results in fact is not the standard because the competitive bidding requirements are mandatory. Texas Highway Commission v. Texas Association of Steel Importers, 372 S.W.2d 525 (Tex. 1963).
- Where the bid specifications required the bidder to have at least five years experience, there was no evidence that such a requirement stifled competitive bidding; therefore, there was substantial compliance with the applicable statute. Anderson v. Parsley, 37 S.W.2d 358 (Tex. Civ. App.— Ft. Worth, writ ref’d).
- Where ambiguous bid specifications leave the bidding requirements to speculation and conjecture, competitive bidding is prevented. OP. TEX. ATT’Y GEN. No. MW-449 (1982).
- The commissioners court may not specify the manufacturer brand name of machinery to be purchased through competitive bidding as such operates to unduly restrict competitive bidding. OP. TEX. ATT’Y GEN. No. C-376 (1965).
- The county purchasing agent is not authorized to rewrite or, in the alternative, refuse to advertise bid specifications approved by the commissioners court but which, in the purchasing agent’s judgment, are so narrowly written as to deny competitive bidding. OP. TEX. ATT’Y GEN. No. JM-208 (1984).
- The county may not restrict its bids to local merchants and businessmen. OP. TEX. ATT’Y GEN. No. H-1086 (1977).
- The county may not restrict its bids for the purchase of vehicles to exclude foreign models. OP. TEX. ATT’Y GEN. No. MW-139 (1980).
- The county may not restrict the award of printing jobs to union printers. OP. TEX. ATT’Y GEN. No. H-1219 (1978).
- The time and place for receiving and opening bids and the name and position of the county official or employee to whom the bids are to be sent. TEX. LOC. GOV’T CODE § 262.025(b)(2).
- Whether the bidder should use lump sum or unit pricing. TEX. LOC. GOV’T CODE § 262.025(b)(3). While either a lump-sum or unit price method may be used, if the unit price method is used, the county must specify the approximate quantities estimated on the best available information. TEX. LOC. GOV’T CODE §262.028.
- The method of payment by the county. TEX. LOC. GOV’T CODE § 262.025(b)(4).
- The type of bond, if any, required by the bidder. TEX. LOC. GOV’T CODE § 262.025(b)(5).
- If payment is to be made through time warrants, the notice must also include a statement indicating the maximum time warrant indebtedness, rate of interest, and maximum maturity date of warrants. TEX. LOC. GOV’T CODE § 262.025(c).
- In a county with a population of 3.3 million or more, the commissioners court may require that a minimum of 25 percent of the work be performed by the bidder and, notwithstanding any other law to the contrary, may establish financial criteria for the surety companies that provide payment and performance bonds. TEX. LOC. GOV’T CODE § 262.025(d).
Bids are to be opened publicly on the date specified in the notice as per TEX. LOC. GOV’T CODE § 262.026(a). Opened bids can be available for inspection as per TEX. LOC. GOV’T CODE § 262.026(b). Bidders require present the bid to the commissioners court. TEX. LOC. GOV’T CODE § 262.027(a). Commissioners court shall award contract to the bidder who submits the lowest and best bid. TEX. LOC. GOV’T CODE § 262.027(a)(1). The Commissioners court is capable of rejecting all bids and can publish a new notice altogether according to TEX. LOC. GOV’T CODE § 262.027(a)(2). Besides, the commissioners court will decide between the two by drawing lots. TEX. LOC. GOV’T CODE § 262.027(b), if two responsible bidders submit lowest and best bid.
According to TEX. LOC. GOV’T CODE § 262.027(c) it is possible that the contract may not be awarded to a bidder who is not the lowest bidder, provided each lower bidder is given notice of the proposed award and has appeared to present evidence concerning responsibility. The commissioners court may award contracts to multiple bidders if each selected bidder submits the lowest and best bid for a particular location or type of material. TEX. LOC. GOV’T CODE § 262.027(e).
Competitive Bid (Design/Bid/Build) is a traditional method of construction, although the award is based on best value and not on lowest bid. If a county is required by statute to award a contract for the construction, repair, or renovation of a structure, road, highway, or other enhancement or addition to real property on the basis of competitive bids, and if the contract requires the expenditure of more than $25,000 from the funds of the entity, the bidding on the contract must be accomplished in the manner provided by Subchapter B of Chapter 271. TEX. LOC. GOV’T CODE § 271.024. Its method includes:
- The county selects an architect/engineer (“AE”) to design the project and develop construction documents [the county would normally make its selection through a Request for Qualifications (“RFQ”).]
- The county then advertises for bids based on the AE documents
- The county selects the bidder as the contractor based on the selection criteria for the bid price offered by that contractor
- If bids exceed the estimated/budgeted cost of project, county and AE have to modify design and rebid
The various advantages of the Competitive Bid method are:
- It’s a familiar system for many counties
- The scope of the project is well-defined through the A/E process
- There is competition for the contract price
- The method is best suited to new projects that are not schedule sensitive or subject to potential change.