Guest Column | February 13, 2018

WWEMA Window: How To Get What You Need With The Proper Bid Form

By Don Schwerin

How To Get What You Need With The Proper Bid Form

“Who’s in charge around here anyway?”

When designing water and wastewater treatment facilities, engineers have always struggled with the issue of ensuring owners they will get equipment that provides the highest value for the money and meets the needs of their facility.  Engineers accomplish this by evaluating technologies available in the market and clearly specifying the salient features and performance requirements needed.  Unfortunately, along the way various state and federal laws have been passed that cloud the picture by making it difficult for engineers to specify the desired equipment, not allowing proprietary equipment to be specified, requiring a minimum number of manufacturers to be named even though every supplier’s equipment is different, or requiring the infamous “or equal”.  The result can be potentially specifying or accepting products that have not been proven to be capable of meeting the facility’s needs by reputable manufacturers.  This can result in frequent equipment or process failures, increased maintenance costs, or more frequent equipment replacement.

Does it have to be that way?

A successful project can be ensured with a collaborative procurement process that includes owner, engineer, equipment supplier, and contractor during a rigorous selection process; a strong specification and the commitment to hold to its requirements; and a Bid Form selected to ensure the owner gets the equipment needed for their facility.  In 1993, the Water Environment Federation’s Engineered Equipment Procurement Procedures Committee published a document titled “Procurement Options to Ensure Project Quality”.  In that document they defined procurement characteristics that would “prevent poor quality or misapplied equipment from being included in projects by bidding contractors, and yet will maintain a high level of competition between qualified engineered equipment manufacturers and suppliers.”  These included:

  • Maintain equipment selection decisions with owner and engineer;
  • Allow and encourage price competition among qualified equipment suppliers;
  • Discourage pre-bid packaging;
  • Suppress post-bid shopping;
  • Minimize bid protests and legal delays.

As we consider these critical characteristics, let’s look at today’s more popular Bid Forms and see how they stack up against these critical characteristics.

Multiple Equipment Suppliers Named in Specification – Non-Specified, Lump Sum Bid Form – Approx. 30% of Bids (and Growing)

  • Equipment selection by owner and engineer:  Although multiple suppliers may be named in the specification, the actual selection is by the contractor after the bid, generally based upon price.  If the specification states “or equal” it gets even messier because they don’t know if the owner/engineer will accept their selection if the “or equal” was included in their Lump Sum Bid.  Typically, the owner/engineer doesn’t know who the contractor selected until the drawing submittal stage.  The submittal stage is the only opportunity the engineer will have to closely evaluate any and all exceptions taken by the selected supplier to the specifications and ensure the owner is truly getting an “equal”.
  • Price competition among qualified equipment suppliers:  Price competition is severe, but the contractor usually does not get the best price on bid day because of typical post-bid shopping activities.
  • Discourage pre-bid packaging:  Seldom occurs with this format.
  • Suppress post-bid shopping:  Post-bid shopping usually occurs with negotiations continuing until only one supplier remains.  The owner usually doesn’t benefit from supplier’s price reductions.  Bid packaging usually occurs during this time.
  • Minimize bid protests and legal delays:  Numerous delays may occur over engineer/owner approved suppliers, “or equal” debates during drawing submittals, or bid protests.  

Multiple Equipment Suppliers Named in Specifications – Manufacturer Selected Bid Form – Approx. 25% of Bids

  • Equipment selection by owner and engineer:  Owner and engineer have voice in naming of approved suppliers, but final selection by contractor on Bid Day.  Owner and engineer can somewhat influence prior to award, but as long as contractor named a selected supplier, changes are difficult.  Even though a supplier is named, they are still responsible to meet the specifications.  Therefore, the engineer can still exercise influence by ensuring no critical exceptions are approved.
  • Price competition among qualified equipment suppliers:  Healthy competition on bid day.  Last minute flurry to get contractor the best pricing on bid day can sometimes lead to mistakes in filing the bid form.  Supplier low price on bid day usually rules the day.
  • Discourage pre-bid packaging:   Packaging is prevalent.  Contractor diligence is required to assure any accepted bid package contains only specified suppliers or problems occur later.  Because various packages from different suppliers usually do not line up product-by-product, it is difficult for contractor to make a valid comparison between competing packages.  Owner can benefit from the contractor obtaining the best pre-bid package. 
  • Suppress post-bid shopping:  Post-bid shopping generally does not occur, but if contractor senses that owner or engineer would allow him to change some of his named suppliers, he still may try to do some post-bid shopping.  Owner may benefit from this shopping if they insist on a discount in the contractor’s bid price.
  • Minimize bid protests and legal delays:  These are usually minimized, but if the contractor finds he made some mistakes because of the bid day flurry, it could cause delays.  Some contractors have even found it necessary to forfeit their bid if a significant mistake is made.

Base Bid Bid Form with or without Alternate Deducts – Base Bid Supplier Selection is Basis of Award – Approx. 20% of Bids

  • Equipment selection by owner and engineer:  Bid format allows the owner/engineer complete control over which products/suppliers can be considered for their project.  If their format allows for alternate deducts, they also have the opportunity to evaluate others post-bid if desired.  
  • Price competition among qualified equipment suppliers:  Price competition is assured among base bid suppliers, through pre-bid quoting by desired equipment suppliers or through comparisons with suppliers offering alternate deducts. 
  • Discourage pre-bid packaging:  Pre-bid packaging is minimized by controlling multiple base bid items by one equipment supplier.
  • Suppress post-bid shopping:  With equipment selection by the owner and engineer, post-bid shopping is minimized.
  • Minimize bid protests and legal delays:  The more clarity in the bid process regarding owner/engineer desires, along with ensuring all contractors are bidding on the same basis, minimizes protests and legal delays.  Legal delays caused by suppliers not selected as the base bid supplier can result, but those are usually resolved quickly if the engineer exercises his authority in defining what does or does not meet their requirements. 

Preselection of Equipment/Evaluated Bid – Approx. 20% of Bids

  • Equipment selection by owner and engineer:  Owner/engineer selection is maximized.  Encourages more collaboration with all involved parties.  All aspects of value can be evaluated (first costs, maintenance costs, operational costs such as energy, chemical usage, etc., performance, and risks).
  • Price competition among qualified equipment suppliers:  Competition occurs during the evaluation stage.  For alternative delivery formats (design-build, construction manager at risk, progressive design), prices are negotiated in collaboration with all critical parties to ensure the owner gets the best value.  In design-bid-build projects, price is negotiated and typically published in the bidding documents.    
  • Discourage pre-bid packaging:  Pre-bid packaging can only occur if the same supplier is selected for multiple evaluated items.  This packaging can be evaluated during the evaluation stage to ensure the owner receives complete benefit. 
  • Suppress post-bid shopping:  Post-bid shopping cannot occur on preselected items.
  • Minimize bid protests and legal delays:  Protests and legal delays related to the preselected items are minimized because all parties are collaboratively involved in a partnership and transition to construction can be seamless with the rules of engagement known ahead of time.  Prices are known prior to bid and there is no confusion.

Sole Source Specification – Award Based Upon Sole-Source Supplier – Approx. 5% of Bids

  • Equipment selection by owner and engineer:  Owner/engineer selection is maximized.  Encourages collaboration between owner/engineer and equipment supplier.  All aspects of value can be evaluated (first costs, maintenance costs, operational costs such as energy, chemical usage, etc., performance, and risks).
  • Price competition among qualified equipment suppliers:  Competition occurs during the evaluation stage.  Final pricing is negotiated and known to contractor before bid day.  Fair prices can be determined through presentation of price history comparisons.    
  • Discourage pre-bid packaging:  Pre-bid packaging can only occur if same supplier is selected for multiple sole-sourced items.  This packaging can be evaluated during the evaluation stage to ensure owner receives complete benefit. 
  • Suppress post-bid shopping:  Post-bid shopping cannot occur on sole-source items.
  • Minimize bid protests and legal delays:  Protests and legal delays related to the sole-source items are minimized because all prices and conditions are known prior to bid and there is no confusion.

Admittedly, there is no one Bid Form format that is ideal for every situation.  For that reason, many different formats are used.  However, the key to a successful project is clear specifications that state the desired salient features and desired performance outcome, engineers enforcing specifications, fair competition, as well as active, collaborative procurement discussions between owner, engineer, equipment supplier, and contractor. 

Don Schwerin is Sales Support Manager, Evoqua Water Technologies LLC and a member of the Water and Wastewater Equipment Manufacturers Association (WWEMA) Board of Directors. WWEMA is a non-profit trade association founded in 1908. WWEMA’s vision is to be the “voice of water and wastewater technology providers” and its mission is to promote the advancement of technology solutions for clean water that ensures a future sustainable environment and to improve its members’ economic viability. More information about WWEMA can be found at www.wwema.org.

Image credit: “Plumb Beach Coastal Storm Risk Reduction Work in Brooklyn - 10-22-12 (protecting the Belt Parkway),” USACE NY, 2012, used under an Attribution 2.0 Generic license: https://creativecommons.org/licenses/by/2.0/