Section 2: LettingAnchor: #i1003263
This section addresses the steps needed for letting the project, starting with the TxDOT approval to proceed, as provided in the state letter of authority (SLOA), and ending with the bid analysis.Anchor: #i1003276
State Letter of Authority
As described in Chapter 4 – Preliminary Engineering and Design, a SLOA is required for a local government (LG) let construction project prior to initiating the Letting phase. The SLOA from TxDOT to the LG functions as the Notice to Proceed with the Letting phase and must be signed and dated prior to advertisement of the project. For projects where the LG is performing construction by force account, the SLOA must be signed and dated prior to commencement of construction by the LG’s forces. Federal-aid projects require a federal project authorization and agreement (FPAA) in addition to the SLOA.Anchor: #i1003292
An advertisement is the public announcement to invite bids for work to be performed or materials to be furnished. The Local Government Project Management Guide (LGPM Guide) contains detailed information on the process to be used by the LG for advertisement of the project.
LGs may only advertise a project after receiving TxDOT approval of the plans, specifications and estimates (PS&E) package and the execution of a SLOA and FPAA, if applicable. Refer to Chapter 4 – Preliminary Engineering and Design for information about the SLOA.
The LG’s advertising policy and practices must assure free and open competition. The policy should address issues concerning licensing, bonding, prequalification and bidding, as well as the announcement itself in relation to Title VI of the Civil Rights Act of 1964, as amended, regarding nondiscrimination with regard to age, race, religion, color, sex, national origin, disability, etc. More information on equal employment opportunity and Title VI compliance is included in Chapter 7.
On federal-aid projects, the minimum advertisement period is three weeks (21 days). With prior approval by TxDOT, exceptions are permitted when circumstances warrant (an emergency situation when an accelerated procurement is required to prevent the threat to life, health, safety and the welfare of property, or to avoid undue additional cost). For large or complex projects, the LG should consider an advertisement period longer than three weeks to permit prospective bidders adequate time to prepare a responsive bid proposal. Scheduling a pre-bid meeting to address prospective contractors’ concerns and questions may be appropriate but is not required by state or federal regulations.
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CFR 635.112 – Contains the following requirements:
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- projects may not be advertised for receipt of bids until after a FPAA is issued by FHWA [ 23 CFR 635.112(a)]; Anchor: #FUOBLSOL
- the advertisement and the approved PS&E must be available for a minimum of three weeks before bid opening [ 23 CFR 635.112(b)]; and Anchor: #RRAGSASU
- for design-build projects, FHWA’s approval of the request for proposals has the same significance as PS&E approval [ 23 CFR 635.112(i)(1)].
- Federal and state regulations may differ, but federal regulations take precedence on projects receiving federal funds.
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- Texas Local Government Code §252.041 (municipalities) – Requires a municipality to publish the advertisement at least once a week for two consecutive weeks in a newspaper published in the municipality. The date of the first publication must be prior to the 14th day before the date set to publicly open the bids and read them aloud. If no newspaper is published in the municipality, the notice must be posted at the city hall for 14 days before the date set to publicly open the bids and read them aloud. Anchor: #KIBLMNNA
- Texas Local Government Code §262.025 (counties) –Requires a county to publish an advertisement at least once a week for two consecutive weeks in a newspaper of general circulation in the county, with the first day of publication occurring prior to the 14th day before the date of the bid opening. If there is no newspaper of general circulation in the county, the notice must be posted in a prominent place in the courthouse for 14 days before the date of the bid opening. Anchor: #VQNIWPBD
- Texas Local Government Code §271.025 (municipalities, counties and other LGs) – Requires governmental entities to advertise for bids. If no legal requirement for publication exists, the advertisement must be published at least twice in one or more newspapers of general circulation in the county or counties where the work is to be performed. The second publication must be on or before the 10th day before the first date bids may be submitted. Anchor: #VMWVOVMA
- Texas Local Government Code §271.908(d)(3) – Requires design-build projects to be advertised, including the time and place of bid opening, according to any manner prescribed by law. Anchor: #MKXWCBOA
- Texas Government Code §2155.083 – Requires procurements of more than $25,000 by all state agencies to be placed on the Comptroller’s Electronic State Business Daily website for a minimum of 21 days prior to bid opening. Anchor: #MILVMRBL
- Texas Transportation Code §366.185(b) – Requires regional tollway authorities (RTAs) to adopt rules governing the award of contracts through competitive bidding. Anchor: #OYKHYUBR
- Texas Transportation Code §370.184 – Requires regional mobility authorities (RMAs) to adopt rules governing the award of contracts.
The LGPM Guide provides additional information on the required practices to be followed by the LG and TxDOT during the advertising of a LG project.Anchor: #i1003461
Distribution of Bid Documents
For projects with federal funds, the advertisement and approved plans and specifications must be available to bidders a minimum of three weeks prior to opening of bids in accordance with 23 CFR 635.112. Shorter periods may be approved by TxDOT in special cases when justified. State requirements must be followed for projects with state or local funds with no federal funds.
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- 23 CFR 635.112(b) – For design-bid-build projects: Anchor: #ICOIGMOC
- 23 CFR 635.112(i) – For design-build projects:
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- Texas Local Government Code §262.025 (counties) – Requires the advertisement to include a statement regarding where specifications may be obtained. Anchor: #CTQIKKTN
- Texas Local Government Code §271.025 (municipalities, counties and other LGs) – Requires the advertisement to state the location where bid documents may be examined. Anchor: #VLBJYYMA
- Texas Local Government Code §271.908(d)(3) – Allows design-build projects to be advertised, including the time and place of bid opening, according to any manner prescribed by law. Anchor: #UADMLTQX
- 43 TAC §9.13 – Requires TxDOT to give bid documents to bidders meeting prequalification requirements on request of the bidder. Anchor: #STXRLPSC
- Texas Government Code §2155.083 (state agencies) – Requires part of the notice in the Electronic State Business Daily to include all of the information necessary for a bidder to make a successful bid. Anchor: #QSRDDTAY
- Texas Transportation Code §366.185 – Requires RTAs to adopt rules governing competitive bidding. Anchor: #XFBYJIND
- Texas Transportation Code §370.184 – Requires RMAs to adopt rules governing procurement of projects.
The LGPM Guide provides guidance for the LG and TxDOT to use for the distribution of bid documents during the letting process.Anchor: #i1003591
All bidders must bid the project on the same or comparable basis so no particular advantage or disadvantage accrues to any potential bidder or to the LG. Since an addendum issued during an advertisement period could have a profound impact, not just on bid prices but also on the basis for bid comparisons, all prospective bidders must be made aware of each addendum as expeditiously as possible.
The definition of “expeditious,” in terms of an adequate time frame to get an addendum out to all prospective bidders prior to the bid opening, is subjective. Each case should be judged on the complexity of the addendum. The most important consideration in an addendum process is to give all potential bidders enough time to fully evaluate the effect of the changes and to adjust their bid accordingly. The LG should develop policy guidance identifying an adequate time frame.
Since an addendum constitutes a deviation from the TxDOT-approved PS&E, the obligation of federal-aid funds may be impacted by the change. Therefore, TxDOT must approve an addendum prior to release to the prospective bidders. Any approval or concurrence will be based on the LG’s assurance that all potential bidders will receive the approved addendum.
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CFR 635.112(c) – Requires:
- addenda containing a major change to the plans and/or specifications must be approved by FHWA/TxDOT prior to release to prospective bidders; Anchor: #EBYWVEHF
- minor addenda must be identified prior to, or with the request for, concurrence in award; Anchor: #DXKOHHJN
- addenda must be sent to all bidders; and Anchor: #KLXEEWQS
- bidders must acknowledge receipt of all addenda (failure to acknowledge addenda renders a bid non-responsive).
CFR 635.112(i)(4) – For design-build projects, requires:
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- addenda resulting in major changes to the request for proposals must be approved by FHWA/TxDOT prior to release to offerors; Anchor: #JAYDGEYJ
- addenda must be sent to all offerors; and Anchor: #HTWHATJG
- the LG must provide assurance that all offerors received all addenda prior to requesting concurrence in award.
- 23 CFR 635.114(b) – Requires FHWA must formally concur in the award of all federal-aid contracts. This is a prerequisite to federal participation in construction costs and is considered as authority to proceed with construction, unless specifically stated otherwise. Concurrence in award shall be formally approved and shall only be given after receipt and review of the tabulation of bids.
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- Texas Local Government Code §271.0065 – Requires all bidders to have the opportunity to bid on the same items on equal terms. Applies to municipalities, counties, and other LGs. Anchor: #MQUSMSMF
- Texas Transportation Code §366.185 – Requires a RTA to develop competitive bidding procedures to award contracts to the lowest responsible bidder complying with the authority’s criteria. Anchor: #VPAAYIHB
- Texas Transportation Code §§370.184 and 370.185 – Requires a RMA to adopt rules governing award of contracts. A contract may be let by a competitive bidding procedure to the lowest responsible bidder complying with the authority’s criteria.
In general, TxDOT must approve addenda prior to award of the contract. The LGPM Guide provides practices that must be followed by the LG and TxDOT for approval of major and minor addenda for various types of projects.Anchor: #i1003736
Bid Opening and Tabulation
The bid opening is a public forum for the announcement of all bids and is the point in time where the bids are opened and read aloud. Bid tabulations provide a means of evaluating bids and a mechanism for tracking construction costs.
While FHWA does not have specific policies on how a bid opening should be conducted, the competitive bidding policy relies on the phrase in 23 CFR 635.113(a) that “… all bids … shall be publicly opened and announced.” In common terms, “publicly opened” means being opened in front of the “public,” particularly those people who are stakeholders in the letting. The specific details of the advertisement and bid opening procedures are governed by state statute. Texas Transportation Code §223.004 requires all bids must be opened in a public meeting allowing attendance by all interested bidders. All bids must be opened in the presence of any interested bidders.
Reasons for not reading a bid include the bid itself being unresponsive, often called “irregular,” or the bidder is determined to not be responsible. The differences between a responsive bid and responsible bidder are:
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- a responsive bid meets all the requirements of the advertisement and proposal; and Anchor: #RIVRYBBY
- a responsible bidder is physically organized and equipped with the financial wherewithal to undertake and complete the contract.
The LGPM Guide provides a detailed discussion of the procedures and practices associated with the bid opening.
As a basis for tracking current construction costs and forecasting future construction costs, the LG must provide bid tabulation data to TxDOT.
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CFR 635.113(a) and (b) – For design-bid-build projects:
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- requires all bids received be publicly opened and read (if a bid is received and not read, the bidder’s name must be identified and the reason for not reading the bid must be announced); Anchor: #BLKTVPNM
- prohibits negotiating with contractors between the bid opening and the contract award; and Anchor: #MVPDXELI
- requires a tabulation of bids to be submitted to FHWA.
- 23 CFR 635.113(c) – For design-build projects: Anchor: #FDNOOXUV
- 23 CFR 635.114 – Requires bids shall be evaluated for conformance with the engineer’s estimate. Extreme variations and obvious unbalancing shall be thoroughly evaluated to assure good competition and the lowest possible price was received.
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- Texas Local Government Code §252.041 – Requires a municipality to publish a notice containing the time and place bids will be publicly opened and read. Anchor: #POCISJUW
- Texas Local Government Code §252.0415 – Allows a municipality to receive bids electronically if the municipality adopts rules to assure confidentiality until opening. Anchor: #BEEOHBOB
- Texas Local Government Code §262.025 – Requires a county to publish a notice containing the time and place bids will be received and opened (does not mention a public opening). Anchor: #OHDAIOXX
- Texas Local Government Code §262.026 – Requires a county official to open bids on the date specified in the notice. All bids must be opened at the same time. Anchor: #TGWYVESK
- Texas Local Government Code §271.026 – Restricts a county to open bids only at a public meeting or in a county office. Anchor: #JYCBWNWI
- Texas Local Government Code §271.908(d)(3) – Requires design-build projects to be advertised, including the time and place of bid opening, according to any manner prescribed by law. Anchor: #RRPEGADP
- 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. Anchor: #GPLLULUG
- 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. Anchor: #TMTLKJCE
- 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 if a project is not intended to become part of the state highway system or otherwise under TxDOT jurisdiction. Anchor: #VUDDAWRF
- Texas Transportation Code §223.004 – Requires TxDOT to open bids at a public meeting. Anchor: #IXQFKRVB
- Texas Transportation Code §223.154 – Requires TxDOT to open proposals in a manner that does not disclose their contents to competing offerors during negotiations. Anchor: #DIXEULWU
- Texas Transportation Code §366.185(b) – Requires RTAs to adopt rules governing award of contracts through competitive bidding. Anchor: #QOPKVVFP
- Texas Transportation Code §370.184 – Requires RMAs to adopt rules governing award of contracts. Anchor: #HISNTDAK
- Texas Transportation Code §370.185 – Allows RMAs to award contracts using a competitive bidding. Anchor: #YJEQIOHK
- Texas Transportation Code §370.306 – Requires RMAs to evaluate proposals for comprehensive development agreements based on criteria in the notice.
In general, the LG must open the bids in public and provide the post-award tabulation to TxDOT for concurrence in the award. The LGPM Guide describes the required practices and the LG and TxDOT respective responsibilities for bid opening and tabulation.Anchor: #i1003986
The engineer’s estimate is part of the PS&E. One of the purposes of the estimate is to serve as a guide to analyze bids. The estimate should be accurate, credible and based on realistic data. TxDOT maintains written procedures for justifying the award of a contract or for rejection of the bids when the low bid appears excessive or rejection is being considered for other reasons (the LG should refer to Chapter 6: Letting of TxDOT’s Project Development Process Manual for more information).
The bid analysis process is an examination of the unit bid prices for reasonable conformance with the engineer’s estimated prices. The LGPM Guide provides other factors that may be considered in the bid analysis.
The LG should perform an analysis of the tabulations and the project estimate to determine the presence of unbalanced bids. As defined in 23 CFR 635.102, the two types of unbalanced bids are listed below.
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- A mathematically unbalanced bid is a bid containing lump sum or unit bid items that do not reasonably reflect the actual costs (plus reasonable profit, overhead costs and other indirect costs) to construct the item. Anchor: #UTRWKGUB
- A materially unbalanced bid is a bid generating reasonable doubt that an award to a bidder would result in the lowest ultimate cost to the government. A materially unbalanced bid should not be awarded.
The LG must obtain TxDOT concurrence on the determination of whether or not a bid is unbalanced. Information related to unbalanced bid determination is available in the LGPM Guide and in TxDOT’s Project Development Process Manual, Chapter 6: Letting.
The award of a contract must be made to the lowest bidder. This award is, however, subject to the federal Buy America provisions.
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- 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.
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- Texas Transportation Code §223.0041 – Stipulates the award of the contract must be made to the lowest bidder. Anchor: #SPBNIPKU
- Texas Transportation Code §223.045 – Requires federal Buy America provisions to be applied to contracts awarded by TxDOT for improvement of the state highway system, regardless of whether federal funds are being utilized.
Related regulations, the required practices and a description of the LG and TxDOT responsibilities for the bid analysis process are included in the Concurrence in Award section below and in the LGPM Guide.