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Section 3: Contract Award

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Overview

The contract award follows the bid analysis and includes the award of the contract to the selected bidder. Contract award is the commitment to go forward with the project. The Letting phase of the project includes the selection of the bidder for the award of the contract by the local government (LG) and the concurrence in the award by TxDOT. The actual execution of the contract is included at the beginning of the construction phase of the project and is described in Chapter 9 – Construction.

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Concurrence in Award

General

Concurrence in contract award is not just a formality, it is the authorization from TxDOT to the LG to proceed with construction. The LG must formally request concurrence by TxDOT in the award of contracts. The basic policy is explained in 23 CFR 635.114(a):

“Federal-aid contracts shall be awarded only on the basis of the lowest responsive bid submitted by a bidder meeting the criteria of responsibility as may have been established by the STD [LG] in accordance with 23 CFR 635.110. Award shall be within the time established by the STD [LG] and subject to the prior concurrence of the Division Administrator [TxDOT].”

Regulation 23 CFR 635.114(b) further states:

“… concurrence in award … is a prerequisite to federal participation in construction costs and is considered as authority to proceed with construction, unless specifically stated otherwise.”

TxDOT’s concurrence of an award shall be formally documented in writing and shall include any qualifying statements concerning the concurrence. Verbal concurrence in the award must be avoided and should only be used in unusual circumstances. Verbal concurrence must be documented and should be followed by a written concurrence in award reflecting the date of verbal concurrence.

When the LG determines the lowest bidder is not qualified, 23 CFR 635.114(f) requires:

“If the STD [LG] determines that the lowest bidder is not responsive or the bidder is not responsible, it shall so notify and obtain the Division Administrator’s [TxDOT’s] concurrence before making an award to the next lowest bidder.”

23 CFR 635.114(h) covers the situation when the LG makes a decision to reject all bids.

“Any proposal by the STD [LG] to reject all bids received for a federal-aid contract shall be submitted to the Division Administrator [TxDOT] for concurrence, accompanied by adequate justification.”

To ensure the sanctity of the low-bid system, FHWA’s Contract Administration Core Curriculum states, “the act of a contracting agency negotiating with an apparent low bidder prior to award is defined as ‘bid rigging in reverse,’ and is expressly prohibited by 23 CFR 635.113(a).”

Post-bid

After the bids are opened and the apparent low bidder identified, the district will be advised of the cost of the bid items. The TxDOT district engineer will be asked to verify the bid prices are acceptable to the LG. If the district engineer indicates the bid amounts are not acceptable to the LG, the contract will not be awarded.

The LG must evaluate the bids as described above and make a recommendation to TxDOT for award of the bid to the selected bidder. The LG also has the option to reject all bids or to cancel the project.

Add Alternates

Many architectural projects use the concept of “add or deductive alternates.” This concept allows the owner to maximize the available funding. While the concept is not normally associated with federal-aid highway projects, it may be used if the alternates are listed in the proposal in priority order, with an explanation to all bidders of how the alternates will be used to determine the low bidder and contract award.

Federal Requirement

  1. 23 CFR 635.113(a) – Prohibits the negotiation with contractors during the period following the opening of bids and before the award of the contract.
  2. 23 CFR 635.114 – Requires that:
    1. Contracts be awarded only on the basis of the lowest responsive bid submitted by a bidder meeting the criteria of responsibility as may have been established in accordance with Sec. 635.110.
    2. The award is subject to the prior concurrence of FHWA (TxDOT may act on behalf of FHWA on certain projects). Prior concurrence is a condition of federal participation.
    3. The request to concur in award of an unbalanced bid must be supported by written justification.
    4. Decisions to either award to someone other than the low bidder or reject all bids must be have prior FHWA (TxDOT) concurrence.
  3. 23 CFR 635.114(k) – Requires design-build contracts shall be awarded in accordance with the request for proposals.
  4. 23 CFR Part 636 – Provides that, for design-build projects:
    1. subpart B lists acceptable procedures for selection and award of design-build projects; and
    2. the award is based on “best value” evaluated using the criteria established in the request for proposals.

State Requirement

  1. 43 TAC §9.15(e) – Requires TxDOT to examine low bids for reasonable conformance with TxDOT’s estimate. Bidders found to have submitted a materially and mathematically unbalanced bid will not be allowed to submit future bids on the same project.
  2. 43 TAC §26.33(g) – Requires a RMA to use TxDOT specifications or approved alternate specifications for projects connecting to or on the state highway system.
  3. 43 TAC §27.56(c)(3) – Requires requestors to use TxDOT specifications or approved alternate specifications for toll projects including state funds. TxDOT may consider alternative specifications, including if a project is not intended to become part of the state highway system or otherwise under TxDOT jurisdiction.
  4. Texas Transportation Code §223.0041 – Establishes TxDOT contracts shall be awarded to the lowest bidder.
  5. Texas Local Government Code §252.043 – Requires a municipality to award a contract to the bidder providing the best value. Includes factors that may be considered in the “best value” determination.
  6. Texas Local Government Code §252.0435 – Allows a municipality to consider a bidder’s safety record if:
    1. the governing body has adopted a written definition and criteria for accurately determining the safety record of a bidder;
    2. the governing body has given notice to prospective bidders in the bid specifications that the safety record of a bidder may be considered in determining the responsibility of the bidder; and
    3. the determinations are not arbitrary and capricious.
  7. Texas Local Government Code §252.0436 – Allows a municipality to refuse award of a contract to a bidder indebted to the municipality.
  8. Texas Local Government Code §262.027 – Requires a county commissioner’s court to award the contract to the “lowest and best” bid or reject all bids and publish a new notice.
  9. Texas Local Government Code §262.0271 – Allows a county to give preference to a bidder who provides health insurance comparable to health insurance for county employees.
  10. Texas Local Government Code §262.0275 – Allows a county to take into account the safety record of the bidder if:
    1. the commissioner’s court has adopted a written definition and criteria for accurately determining the safety record of a bidder;
    2. prospective bidders are given notice in the bid specifications; and
    3. the determinations are not arbitrary and capricious.
  11. Texas Local Government Code §262.0276 – Allows a county to refuse award of a contract to a bidder indebted to the county.
  12. Texas Local Government Code §262.0305 – Allows a county to negotiate modifications after award if in the best interest of the county.
  13. Texas Local Government Code §271.0065 – Requires a county to provide potential bidders the opportunity to have their bid judged to the same standards.
  14. Texas Local Government Code §271.027 – Requires a county to award contracts to the lowest responsible bidder, but “the contract may not be awarded to a bidder who is not the lowest bidder unless before the award each lower bidder is given notice of the proposed award and is given an opportunity to appear before the governing body of the governmental entity or the designated representative of the governing body and present evidence concerning the bidder’s responsibility.”
  15. Texas Local Government Code §271.908(d)(3) and Texas Government Code §2269.360 – Requires the LG to select a design-build firm using a combination of technical qualifications and cost for design-build projects.
  16. Texas Transportation Code §366.185 – A regional tollway authority must award contracts by a competitive bidding procedure where the contract is awarded to the lowest responsible bidder meeting the authority’s criteria.
  17. Texas Transportation Code §370.184 – A regional mobility authority (RMA) must adopt rules governing award of contracts.
  18. Texas Transportation Code §370.312 – A RMA must adopt rules governing selection of private partnerships.

Required Practices

The LGPM Guide describes the required practices for the concurrence in award and also provides the LG and TxDOT responsibilities during the process.

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Review of Financial Obligation

After concurrence of the award, TxDOT will compare the bid amount to the authorized financial obligation to determine whether a request for an adjustment of the obligation is appropriate. TxDOT will submit such requests to FHWA for all federal-aid projects.

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