BIDDING PRIVATE AND PUBLIC WORK Major Differences between Private and Public How to determine whether a project is Public or Private: "Who owns the dirt" Major Differences between Private and Public How to determine whether a project is Public or Private: "Who owns the dirt"

Private Projects Basically no rules: "Freedom of Contract" "Doctrine of Promissory Estoppel" A subcontractor can get stuck with its bid to a general contractor even though it made a mistake Leading case: Drennan v. Star Paving Co. (p.72) –General contractor must show justifiable reliance on bid Promissory estoppel applies to material suppliers –Commercial Code Section 2205 (p.74) Basically no rules: "Freedom of Contract" "Doctrine of Promissory Estoppel" A subcontractor can get stuck with its bid to a general contractor even though it made a mistake Leading case: Drennan v. Star Paving Co. (p.72) –General contractor must show justifiable reliance on bid Promissory estoppel applies to material suppliers –Commercial Code Section 2205 (p.74)

Public Projects Generally, must be competitively bid and awarded to the lowest responsible and responsive bidder Why competitively bid? –Ensure lowest price for public entity –"Level" playing field for bidders Generally, must be competitively bid and awarded to the lowest responsible and responsive bidder Why competitively bid? –Ensure lowest price for public entity –"Level" playing field for bidders

Responsiveness (p.86) Generally, bid must conform to the material terms of the invitation of bids Agencies almost always reserve the right to waive " immaterial variances " What is material variance v. immaterial variance Key case: Menefee v. County of Fresno (p.87) –The Menefee doctrine If the variance (mistake) would allow the bidder the opportunity to withdraw its bid that, in and of itself makes the bid non- responsive Generally, bid must conform to the material terms of the invitation of bids Agencies almost always reserve the right to waive " immaterial variances " What is material variance v. immaterial variance Key case: Menefee v. County of Fresno (p.87) –The Menefee doctrine If the variance (mistake) would allow the bidder the opportunity to withdraw its bid that, in and of itself makes the bid non- responsive

Responsibility (p.88) Public contract code section 1103 (supplement p.35): defines responsible bidder as… –"responsible bidder " means a bidder that has demonstrated the attribute of trustworthiness as well as the quality, fitness, capacity and experience to satisfactorily perform the public works contract. Use of Prequalification process –Public contract code section (supplement p.32-33) Public contract code section 1103 (supplement p.35): defines responsible bidder as… –"responsible bidder " means a bidder that has demonstrated the attribute of trustworthiness as well as the quality, fitness, capacity and experience to satisfactorily perform the public works contract. Use of Prequalification process –Public contract code section (supplement p.32-33)

Other issues in public bidding Alternate bids (supplement p.35-36) Affirmative action/outreach programs (main text 91-94) And (supplement p.36-41) Bid withdrawals and mistakes (p.85-86) –Can't negotiate with public entity regarding price "either you're in or your out" –"Bidders remorse" doesn’t work –Mistake must be arithmetic not due to error in judgment –Written notice needs to be given within five days after bid opening Alternate bids (supplement p.35-36) Affirmative action/outreach programs (main text 91-94) And (supplement p.36-41) Bid withdrawals and mistakes (p.85-86) –Can't negotiate with public entity regarding price "either you're in or your out" –"Bidders remorse" doesn’t work –Mistake must be arithmetic not due to error in judgment –Written notice needs to be given within five days after bid opening

Subcontractor Listing Law (p.82) Designed to prevent bid shopping and bid peddling Only applies to public work Subcontractors who are going to perform more than one-half of 1% of the project must be listed on bid form If no subcontractor listed it is presumed general contractor will do the work itself Designed to prevent bid shopping and bid peddling Only applies to public work Subcontractors who are going to perform more than one-half of 1% of the project must be listed on bid form If no subcontractor listed it is presumed general contractor will do the work itself

Subcontractor Listing Law (p.82) Substitution of listed subcontractors –Grounds are listed on page 83 of main text and pages 24 –25 of supplement (2) Bankruptcy or insolvency -- Don’t rely on these (4) Failure to meet bonding requirements (5) Inadvertent clerical error –Short time fuse to make claim of inadvertent error – only 2 days after bid opening (1) Refusal to execute a written contract Substitution of listed subcontractors –Grounds are listed on page 83 of main text and pages 24 –25 of supplement (2) Bankruptcy or insolvency -- Don’t rely on these (4) Failure to meet bonding requirements (5) Inadvertent clerical error –Short time fuse to make claim of inadvertent error – only 2 days after bid opening (1) Refusal to execute a written contract

Subcontractor Listing Law (p.82) Public entity determination of substitution of subcontractor does not prevent subcontractor from seeking damages for wrongful termination from general contractor –Key case Southern California Acoustics v. C.V. Holder (p.84) Public entity determination of substitution of subcontractor does not prevent subcontractor from seeking damages for wrongful termination from general contractor –Key case Southern California Acoustics v. C.V. Holder (p.84)

Construction Contracts Many contractual relationships in a construction project –Owner/Lender –Owner/Architect –Owner/General Contractor –General Contractor/Subcontractor For owner and general contractor consistency and conduit effect is critical Contract essentially is risk allocation agreement –Example: differing site conditions clause Many contractual relationships in a construction project –Owner/Lender –Owner/Architect –Owner/General Contractor –General Contractor/Subcontractor For owner and general contractor consistency and conduit effect is critical Contract essentially is risk allocation agreement –Example: differing site conditions clause

Owner/Contractor Relationship Use of AIA documents Basic Owner/Contractor Agreement (p ) –Identity of the parties –Description of the work –Time for performance –Contract price –Payment terms General Conditions (p.104 – 117) –The good, the bad and the ugly Use of AIA documents Basic Owner/Contractor Agreement (p ) –Identity of the parties –Description of the work –Time for performance –Contract price –Payment terms General Conditions (p.104 – 117) –The good, the bad and the ugly

The Contractor shall not be liable to the Owner or Architect for damage resulting from errors, inconsistencies or omissions in the Contract Documents unless the Contractor recognized such error, inconsistency or omission and knowingly failed to report it to the Architect

Shall carefully study and Compare… …shall take field measurements … …shall observe any conditions at the site…

3.2.3 If the contractor believes that additional cost or time is involved because of clarifications or instructions issued by the Architect in response to the Contractor's notice or requests for information pursuant to Subparagraphs and 3.2.2, the Contractor shall make Claims as provided in Subparagraphs and If the Contractor fails to perform the obligations of Subparagraphs and 3.2.2, the contractor shall pay such costs and damages to the Owner as would have been avoided if the Contractor had performed such obligations.

1. Damages incurred by the Owner for the rental expenses, for losses of use, income, profit, financing, business and reputation, and for loss of the management or employee productivity or of the services of such persons; and 2. Damages incurred by the Contractor for principal office expenses including the compensation of personnel stationed there, for the losses of financing, business and reputation, and for the loss of profit arising directly from the work Nothing contained in this Subparagraph shall be deemed to preclude an award of liquidated direct damages

…along with reasonable overhead and profit on the work not executed.

General Conditions Other Key Provisions –Interpretation of contract documents(p.104) –Indemnity (p ) and insurance (p ) –Delays and time extensions (p.112) –No damages for delay (p.113) –Notice requirements (p.117) Other Key Provisions –Interpretation of contract documents(p.104) –Indemnity (p ) and insurance (p ) –Delays and time extensions (p.112) –No damages for delay (p.113) –Notice requirements (p.117)

Design-Build Contracts Perceived advantages of design-build method of project delivery –Faster than traditional Design-Bid-Build –Eliminates many claims based on "errors and omissions“ – No “Spearin” liability –Open exchange of ideas at every stage of the project –Choices are product of collective wisdom of team –Cost efficiency Perceived advantages of design-build method of project delivery –Faster than traditional Design-Bid-Build –Eliminates many claims based on "errors and omissions“ – No “Spearin” liability –Open exchange of ideas at every stage of the project –Choices are product of collective wisdom of team –Cost efficiency

Design-Build Contracts Perceived Disadvantages –Owner loss of control –Requires sophistication/experience –Are we building a "Chevy or Cadillac" ? –Aesthetic considerations How much information/detail should the owner give the design-build team pre- contract? Perceived Disadvantages –Owner loss of control –Requires sophistication/experience –Are we building a "Chevy or Cadillac" ? –Aesthetic considerations How much information/detail should the owner give the design-build team pre- contract?

General Contractor/Subcontractor Relationship Flow-down provisions Pay-if-Paid and Pay-when-Paid clauses (p ) Obligation to continue work clauses (p ) Flow-down provisions Pay-if-Paid and Pay-when-Paid clauses (p ) Obligation to continue work clauses (p )