Bidding on Public Works Projects in Washington State

BASIC INFORMATION ON THE FORMAL BIDDING PROCESS FOR PUBLIC WORKS IN WASHINGTON STATE – RCW 39.04

by Rita F. Amer ramer@ameryounglaw.com

Public works in Washington State have been and are slated to continue receiving funds from the Federal Stimulus Program. Public works include schools, hospitals, fire stations and many other facilities that you may not think of as public institutions. Because of the influx of funding, contractors who have not previously considered bidding for public works contracts may want to consider it now.

Below is a basic introduction to the mechanics of bidding on public works. This explanation is not comprehensive. There are many issues you must also consider including, the payment of prevailing wages and the use of apprentices. Please consult the applicable statutes and administrative regulations regarding these and other issues relevant to contracting for public works.

What is a Bid Invitation?

Step 1: A governmental entity issues a bid invitation. The invitation must be in writing and include all specifications for the project, including such information as bonding requirements and experience requirement for the subs to be employed on the project. These specifications must be complete and detailed so that all bidders are on notice as to the requirements and can file a responsive bid. The governmental entity must publish the invitation in the county’s official newspaper at least 13 days prior to the date the bids are due. Bid specifications will also be posted at the clerk’s office and on the entity’s website.

The invitation must also state the time and place where bids will be opened. The statute requires that the bids be opened in the presence of the bidders or their agents, should they choose to be present. At the time of the opening, the project will be awarded to the lowest responsible bidder. Bidders can, at that the time of the opening, examine the bids and lodge a protest if a bidder believes the project has not been awarded to the lowest responsible bidder.

Recommendation: Do not miss the chance to be present at the bid opening. The owner or the person who prepared the bid should attend. Realistically, if you have to file a bid protest you must be present at the opening because bid protests must be filed within two working days of the opening. RCW 39.04.105. This means that you are very unlikely to meet the deadline if you are not present at the opening.

What is a responsible bidder?

RCW 39.04.350 lays out the basic criteria for a responsible bidder.

Responsible bidders:

(a) At the time of bid submittal, have a certificate of registration in compliance with chapter 18.27 RCW;

(b) Have a current state unified business identifier number;

(c) If applicable, have industrial insurance coverage for the bidder’s employees working in Washington as required in Title 51 RCW; an employment security department number as required in Title 50 RCW; and a state excise tax registration number as required in Title 82 RCW;

(d) Not be disqualified from bidding on any public works contract under RCW 39.06.010 or 39.12.065(3); and

(e) If bidding on a public works project subject to the apprenticeship utilization requirements in RCW 39.04.320, not have been found out of compliance by the Washington state apprenticeship and training council for working apprentices out of ratio, without appropriate supervision, or outside their approved work processes as outlined in their standards of apprenticeship under chapter 49.04 RCW for the one-year period immediately preceding the date of the bid solicitation.

In addition, entities will look at whether the bidder and its subs have a) the ability to fulfill the requirements set out in the bid invitation; b) a reputation for integrity; c) the required experience, and efficiency of the bidder; d) a reputation for meeting deadlines; e) how well the bidder performed on any previous contracts with the entity; f) bidder’s compliance with laws applicable laws; and g) any other facts that will have an impact on the bidders’ ability to fulfill the contractual requirements.

These are only the basic statutory requirements. Any governmental entity can add requirements, which will be delineated in the bid invitation.

Should I seek to pre-qualify as a responsible bidder?

For projects initiated by the Washington State Department of Transportation, the bidder must “pre-qualify.” If the bidder does not satisfy the pre-qualification requirements, its bid will not be considered.

Even though many entities do not require pre-qualification, it is a good idea for two reasons:

(1)    A contract, unless there is an exception, must be awarded to lowest “responsible” bidder. Pre-qualification establishes you as a responsible bidder even before you submit your bid.

(2)    In the event you are not the awarded the contract and bid protest ensues, you may possibly awarded the contract as the next lowest responsible bidder.

(3)    If your bid is accepted but you are not pre-qualified, the qualification process will delay your ability to accept the bids of your subs and will delay the payment for your work.
If a bidder is determined to be not responsible, the agency must provide a written basis for this determination. The bidder then has an opportunity to appeal the “not responsible” determination by “presenting additional information. The agency must consider the additional information before making a final determination regarding the responsibility of the bidder.  If the agency decides after considering the additional information that a the lowest bidder is not responsible, the entity cannot enter into a contract with any other bidder until two days after the not responsible bidder received notification of the final determination.

Remember that your subs must also meet the responsible bidder criteria.

What else must I know about bidding?

A bid must be responsive to the specifications listed in the bid invitation. The bid must be based on the materials and labor reasonably required to fulfill the contract. ALL FORMS in the bid packet must be filled out entirely and included in the bid.  Bids that do not contain all the required forms are non-responsive. Bids that do not list subs with the required credentials are non-responsive. Bids that are significantly lower than the entity’s estimate of the cost or are significantly lower than the next highest bidder may be considered non-responsive.

What kind of bonding will I need?

Other than the bond required of registered contractors ($12,000 for generals and $6,000 for subs), Bid Bonds and Performance Bonds are usually required.

Bid bonds must be included with the responsive bid. By submitting a bid you have made an offer to the entity. If the entity accepts, you are contractually bound to fulfill the contract. If for some reason you cannot enter into the contract after your bid has been accepted, you are liable for breach of contract. The bid bond, which must be for five percent of the bid amount, acts as a remedy for the entity. The entity keeps the bonds amount and does not sue the defaulting bidder.

Performance Bonds are required, except for projects of $35,000 or less where entity can opt instead to retain 50% of the contract price for up to 30 days after the project is complete.

What if I make a mistake on my bid? Do I have any recourse?

You may be able to rescind or correct a bid when you have made a clerical error. If you have made an error in judgment, such as making an error as to cost of materials or labor, you will probably not be able to rescind your bid without forfeiting the amount of your bid bond.

If you have made rescindable error, alert the entity as soon as possible. You must communicate that you made a mistake before your bid has been relied on. To be eligible to rescind or correct your bid you will have to show that  you acted in good faith, without gross negligence, gave reasonably prompt notice of the error, and that you may suffer substantial damages if you are not permitted to rescind or correct the bid.

This summary is not intended to be legal advice. You should consult an attorney in regard to your particular situation.