Methods of Contractor Selection

Volume 5, Chapter 1

INTRODUCTION

The evaluation and selection of contractors leading to the award of construction contracts is a vital part of the construction process. State law requires the University to publicly advertise for competitive bid certain construction contracts; however, when a contract is valued below the dollar limit established for competitive bidding, the contract may be awarded through an informal competitive bidding process or by negotiated contracting. (Negotiated contracting, a process during which a contractor is selected without competition, is sometimes referred to as "direct selection.")

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1.1 COMPETITIVE BIDDING

STATUTES AND BACKGROUND

Public Contract Code secs. 10500 - 10506 require that University construction contracts in excess of $50,000. be competitively bid, and be awarded to the lowest responsible bidder or, on the refusal or failure of such bidder to execute a tendered contract, be awarded to the second-lowest responsible bidder or, on that bidder's refusal or failure to execute a tendered contract, be awarded to the third-lowest responsible bidder, unless it is determined that the acceptance of a responsible bid is not in the best interests of the University, in which case all bids shall be rejected.

[Editor's Note: Beginning on January 1, 1978, the California Education Code was amended to impose competitive bidding requirements on The Regents where formerly such bidding was required as a matter of self-imposed Regents' policy. Before the code was amended, The Regents did have the right to negotiate and award sole-source contracts of any dollar amount. The right to negotiate contracts is now restricted by the Public Contract Code, Sections 10500-10506, which superseded the California Education Code in 1984 as the competitive bidding law applicable to the University (see text of Public Contract Code)]

References:

- Constitution of the State of California, Article IX, Section 9.

- Long Form, Instructions to Bidders, Article 6.

- Public Contract Code, State of California, Sections 10500, 10502-10506.

- Bid and Award Process Flow Chart Competitive Bidding.

According to the California Constitution, the University is subject to "competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services."

The requirement for competitive bidding shall not be avoided by splitting a project into smaller units of work or by the use of change orders to authorize substantial additional work (see 3.2.7, Guidelines for Substantial Change Orders.)

The sanctions for not complying with competitive bidding requirements are very strict. Any person or entity may protest the award of a contract at any time during the term of the contract. If the courts find that the competitive requirements were not followed, the University official signing the contract may be fined, imprisoned, or both. In addition, the contractor would be required to refund the amount of money paid to the contractor by the University, even if the Work had been completed and accepted.

The requirement of competitive bidding determines the type of construction documents used (see FM4).

State law requires University projects to be publicly advertised and awarded to the "lowest responsible bidder" in accordance with Public Contract Code §10500.  "Responsibility" refers to a prospective bidder's ability to satisfactorily perform the Work. Selection of the lowest responsible bidder does not require an award to the bidder submitting the lowest dollar bid unless that bidder is qualified and thus deemed to have the ability to satisfactorily perform the Work. Refer to the Public Contract Code and the following sections of the Facilities Manual for detailed advertising requirements.

1.1.1 Formal vs. Informal Competitive Bidding

- Sample Advertising Schedule 

The Public Contract Code requires formal competitive bidding for projects with estimated contract sums over $640,000 and permits informal competitive bidding (see 1.2) for projects between $50,000 - $640,000. The University has established procedures for negotiated contracting (see 1.3) for projects under the dollar limit for competitive bidding. 
When utilizing formal competitive bidding, the University (1) advertises for bids in accordance with Public Contract Code§ 10502; (2) receives sealed bids on or before the Bid Deadline; (3) publicly opens all such bids; (4) prepares a Bid Summary of all such bids; and (5) awards the contract to the lowest responsible bidder submitting a responsive bid or rejects all bids. 

When utilizing informal competitive bidding, the University (1) requests bids from at least three qualified bidders on the basis of identical sets of bidding documents issued to the bidders at approximately the same time, (2) prepares a Bid Summary (see 7.3.1) of all bids, and (3) awards the contract to the lowest responsible bidder submitting a responsive bid or rejects all bids. See section 1.2 for procedures

1.1.2 Federally Funded Projects

For projects funded in whole or in part by the federal government, the rules of the funding agency should be reviewed for competitive bidding and public advertising requirements. Normally, federal agencies require competitive bidding with public advertising only for projects with estimated construction costs exceeding $10,000. If federal requirements are more restrictive than “Public Contract Code”, the more restrictive requirements must be followed.

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1.2 INFORMAL COMPETITIVE BIDDING PROCEDURES

- Informal Bidding Chart (pdf)

- Informal Form Contract Templates

Informal Competitive Bidding is a direct bid solicitation to 3 or more contractors able to perform the applicable work. The contract is awarded to the lowest responsible bidder submitting a responsive bid, or all bids are rejected.

While selecting bidders repeated awards to a single contractor must be precluded; an impartial method must be used for selecting contractors who are to receive bid solicitations. Suggested methods include:

  1. Regularly solicit bids from all responsible contractors who have expressed interest in receiving informal bids, or
  2. Select contractors on a rotating basis from a pool of responsible contractors able to perform such work. “See Sheltered SBE/DVBE Informal and Negotiated Bidding Pool below:”

Identical sets of bidding documents must be issued to all bidders at approximately the same time.

When using Informal Competitive Bidding under Public Contract Code 10504.5 and when construction value exceeds $300,000 but does not exceed $640,000 General Contractors and if using, Mechanical, Electrical and Plumbing subcontractors must be qualified. In order for a Bidder to become “Base Qualified”, the Bidder must conform to the requirements of the OP approved template (hereinafter referred to as “Base Qualification Questionnaire”). The Base Qualification Questionnaire may not be modified without approval from Office of the President and Office of General Counsel. If a Facility wishes to add to the qualification criteria, it may perform a second level of qualification assessment consisting additional criteria.

The Facility may prequalify contractors in advance, or qualify bidders at the time of bid. A Base Qualified bidder will maintain the Base Qualified status for up to a year from the date of the signed Base Qualification Questionnaire form. The Facility must maintain a pool of qualified contractors. The pool of qualified contractors must be available to all bidders. The Facility must bid to a minimum of three or more qualified contractors who are invited on a rotating basis.

1.2.1 SHELTERED SBE/DVBE INFORMAL AND NEGOTIATED BIDDING POOL:

Sheltered bidding is a program whereby a portion of contracts are designated, before solicitation of informal (competitively bid $50k - $640K) or negotiated (under $50K) bids, for competition from Small Business Enterprises (SBE) and/or Disabled Veteran Business Enterprises (DVBE). The goal of sheltered markets is to provide greater bidding opportunities to small and disabled veteran businesses in UC capital programs. For these contracts, a minimum of three (3) qualified SBE/DVBE firms must be invited to bid.

SBE or DVBE Firms must be registered with the campus as follows:

  • For Negotiated Contracts with construction value less than $50,000, when contractors submit a Contractor Profile form they will automatically be entered into the Sheltered SBE/DVBE Bidding Pool.
  • For Informal Competitive bidding with construction value less than $300,000, when contractors submit a Contractor Profile form they will automatically be entered into the Sheltered SBE/DVBE Bidding Pool.
  • For Informal Competitive Bidding when construction value exceeds $300,000 but does not exceed $640,000, contractors must submit the Base Qualification and they will automatically be entered to the Sheltered SBE/DVBE Bidding Pool.

Contracts awarded under the Sheltered Bidding program require 51% of the work to be performed by an SBE or DVBE that has completed and submitted UC’s Confirmation of Certification form. This performance requirement will be verified on the project bid form,  and then again with the Final Distribution of Contract Dollars form submitted with project closeout material.

Campuses will have the discretion to rebid the contract outside of the Sheltered Bidding Program if prices are not competitive.

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1.3 NEGOTIATED CONTRACTING

A contract may be negotiated with a contractor if the construction cost of the project does not exceed $50,000. The contract sum is negotiated between the University and the contractor.

For negotiated contracts, the contractors must be selected on a rotating basis from a pool of contractors able to perform the type of project work required. “See Sheltered SBE/DVBE Informal and Negotiated Bidding Pool at Section 1.2 above.”

A memorandum stating the conditions warranting such an award, and a justification of the accepted price as being reasonable (such as an independent estimate), must be written by the University's Designated Administrator and placed in the project file.

Examples of further conditions when negotiated contracting might be appropriate include, but are not limited to, the following:

  • A contractor is already working near the project site on other work. If this contractor were selected, mobilization costs would be saved, and congestion and coordination problems would be avoided.
  • The Work must be performed immediately to protect the health, safety, and welfare of University personnel or the general public.

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1.4 DURATION OF THE BIDDING PERIOD

During a project's design phase, the Facility decides which contracting mode to use (see FM3 and FM4). Both the contracting mode chosen and the type of bidding used will affect the duration of the bidding period. Clients and users should be made aware of the length of the required bidding period.

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1.5 EQUAL OPPORTUNITY POLICY

References:

- University policy: Equal Opportunity in University Business Contracting (see FM1:5.1)
- Public Contract Code, State of California, Sections 10500.5.

It is the policy of The Regents of the University of California consistent with State and Federal law, that race, religion, sex, color, ethnicity, and national origin will not be used as criteria in its business contracting practices. Every effort will be made to ensure that all persons regardless of race, religion, sex, color, ethnicity, and national origin have equal access to contracts and other business opportunities with the University.
University policy: University Business Contracting (see FM1:5.1)

California Public Contract Code Section 10500.5 requests The Regents to adopt policies and procedures to facilitate the participation of small businesses, particularly small disadvantaged business enterprises (DBE), women-owned business enterprises (WBE), and disabled veteran business enterprises (DVBE) in business contracting with the University.

In unison with the 25% SBE/DVBE goal set for the procurement of products and services, the President of the University and Regents established a 25% goal for Small Business Enterprises (SBE) and Disabled Veteran Business Enterprises (DVBE) participation in design and construction contracts.

1.5.1 Outreach

Each Facility must use a broad range of outreach activities designed to improve the University's access to qualified small businesses, including DBE, WBE, and DVBEs (D/W/DVBEs) and to build goodwill in the community toward the University's construction programs. Existing outreach programs should be continued, and new ones designed as needed. Such activities could include, for example:

  1. Publishing a brochure or other instructional material designed to convey information to all small businesses about the University's construction programs; the material should contain a directory of key personnel and information on how to access the University's construction projects.
  2. Participating in trade fairs for the purpose of enabling small businesses to demonstrate their abilities.
  3. Attending trade fairs and business opportunity events presented by others for the purpose of meeting new small businesses, including DBE, WBE, and DVBEs, and discussing common problems and solutions with other organization's construction staff.
  4. Presenting seminars for groups of small businesses, including DBE, WBE, and DVBEs for the purpose of instructing them on how to do business with the University.
  5. Meeting small business contractors on an individual basis to understand their capabilities and qualifications.
  6. Visiting small business locations for the purpose of inspecting their facilities, understanding their capabilities and prequalifying them as University contractors.
  7. Participating in local organizations that support small businesses, including groups oriented toward D/W/DVBEs.

Each University location must designate a coordinator knowledgeable in its facilities contracting systems who will be responsible for

(1) informing small businesses, including DBE, WBE, and DVBEs, of appropriate contracting procedures;

(2) referring them to appropriate project contracting staff;

(3) coordinating outreach activities; and

(4) maintaining statistical records.

In 2022, UCOP led a coordinated effort to increase SBE/DVBE participation by undertaking an extensive outreach and training program. Material from the trainings is available online.

1.5.2 Certification

For purposes of statistical reporting, the University will require businesses to certify their status as SBE, DBE, WBE, or DVBE. The  Confirmation of Certification form shall be used to obtain this information for all Contractors, Subcontractors, Designers, and Consultants.

1.5.3 Statistical Records

As a federal contractor, the University is required, periodically, to produce statistics on its utilization of DBE, WBE and DVBEs. Each facility should maintain records, taken from each consultant's or contractor's Self-Certification Form and the Report of Subcontractor Information forms provided by each contractor immediately after award, containing at a minimum:

  • Total dollars awarded to all construction contractors.
  • Dollars awarded, by category, to SBE, DBE, WBE, and DVBE contractors and subcontractors.
  • Dollar awards expressed as a percentage of the total for each business category.

The above annual statistical information shall be submitted to the Office of the President not later than August 15 each year.

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1.6 BEST VALUE CONTRACTOR SELECTION

Public Contract Code Section 10506.4 et seq. in effect January 1, 2012 provides for a pilot program for the Regents of the University of California for projects over one million dollars ($1,000,000) and allows an award to the lowest responsible bidder selected on the basis of the “best value” to the university, as defined in Section 10506.5. In order to implement this method of selection, the Regents of the University of California has adopted and published the following procedures and required guidelines for evaluating the qualifications of the bidders that ensure that best value selections by the university are conducted in a fair and impartial manner. These procedures and guidelines conform to the requirements of Sections 10506.6 and 10506.7 and shall be mandatory for all campuses of the university when using best value selection.  These Procedures and Required Guidelines are applicable to Bidder Qualification only.  For guidance to all other facets of the Best Value Program consult the Best Value Best Practices Manual and with members of the Office of the President should you have any questions or concerns.

1. Best Value Bidder Selection Process

All bidders shall be pre-qualified for the subject project.  Each pre-qualified bidder must submit a Best Value Evaluation Questionnaire, with supporting documentation, verified under penalty of perjury. The bidders shall be evaluated on the five (5) statutory criteria by each member of the Evaluation Committee and on no others to determine their Qualification Points.
The total bid price (Bid$) is divided by the bidder’s average Qualification Points (QP) resulting in a unit of measurement indicating dollars per quality point ($/QP), Formula: Bid$ /QP = $/QP, also known as the Best Value Score (BVS). The bidder with the lowest BVS is the apparent lowest responsible bidder.
The BVS for each bidder shall be calculated based on the total bid price, including alternates.
The maximum qualifications points for any bidder shall be 1000 points.  Each campus, as appropriate for the project, shall determine how the total available points should be distributed among the five categories for each bidder evaluated. However, no category shall be assigned less than 150 points without prior approval from the Office of the President. 

2. Required Guidelines for Evaluation of Bidder Qualifications

The Best Value selection method can be used for any project with a construction cost over $1,000,000. It does not change the bidding processes in any respect other than those addressed in these Guidelines. This is not a project delivery method. Best Value is an evaluation process of contractors’ bids that allows consideration of price and five specific statutory bidder qualification criteria in determining which bid offers the best value to the University. The process compares strengths, weaknesses, risks, performance and price of each bid in accordance with published bidder qualification selection criteria.

When developing the evaluation criteria, in addition to price, bidder qualification factors must include:

  1. Demonstrated management competency,
  2. Financial condition,
  3. Labor compliance,
  4. Relevant experience and
  5. Safety record.

The criteria must always reflect the requirements of the specific project and shall never be utilized to unfairly disadvantage any prospective bidder. All the allowable bidder qualification criteria identified above must be published in the Best Value Questionnaire and all available point totals and all subcriteria within the five criteria above must be approved in advance by the Office of the President.  

The use of the Best Value procedures authorized below is contingent upon conformance with the statutory authority of the Public Contract Code and the specific requirements of these Procedures and Required Guidelines. No modifications to the requirements herein may be made without the prior written concurrence of the Office of the President.

3. Procedures for Evaluation of Bidder Qualifications  

All documents listed below can be found on the Facilities Manual Best Value page. For every project using the Best Value selection method, the campus shall submit the following to the Office of the President, Construction Services, for approval:
Prior to Advertising:

  1. Proposed Evaluation Committee Roster including job title, a very brief description of duties and professional affiliation.
  2. Best Value Questionnaire with the points allocated to each major category as relevant to the project. The template should be modified to meet the specific needs of the Project.
  3. List of pre-qualified contractors with criteria used for prequalification.

After Bid opening and Evaluation Committee Results

  1. Evaluation Committee Roster.
  2. Summary Analysis of all bidders identifying lowest responsible bidder on the Best Value Score Analysis (showing the total qualifications score for each bidder along with its bid price and the calculated Best Value Score).
  3. Summary of all campus Best Value results to date on the Best Value Campus Summary.

Every campus shall keep a permanent record of all Best Value projects, including all completed copies of the Best Value Score Analysis together with the Questionnaire Scorecard, and shall make the records available to the Office of the President upon request. Every campus shall maintain an updated record of all Best Value projects on the Best Value Campus Summary form. This updated form shall accompany the Best Value Rating Analysis when submitted to the Office of the President for approval. A final copy of the Best Value Campus Summary shall be submitted annually to Construction Services at the Office of the President on or before December 10th. 
Each campus, for every project, shall, at a minimum, collect all of the information contained in the Best Value Campus Summary.

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Revised December 22, 2016 (Change No. 14-015-C)

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