W. Va. Code R. § 157-14-11

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 157-14-11 - Bid analysis

11.1. The evaluation of the proposals must also include a bid analysis. This requires a thorough and comprehensive bid analysis, and the Division must examine the unit bid prices for reasonable conformance with the Engineer's estimate. If extreme variations exist, the bid must be thoroughly evaluated. Where obvious unbalancing exists, the Division must provide written justification to accept or reject the bid. The bid analysis is the tool to detect whether collusion or bid rigging is occurring, whether the Division has received a fair price for the work, and if any unbalancing of the bids may result in a windfall for the contractor and corresponding disadvantage to the Division.

11.2. The Division may scale the level of scrutiny provided by the bid analysis to be commensurate with the complexity and value of the project. The Division is more likely to expend more effort on the bid analysis for projects of significant value or risk, complex projects, and projects with limited competition.

11.3. A mathematically unbalanced bid means the bid contains unit prices for items of work that do not reflect reasonable actual costs plus a reasonable proportionate share of profit, overhead and other indirect costs. The contractor may still be the lowest bidder, with the lowest total cost, but how they distributed the costs to the pay items is mathematically incorrect. For example, a contractor that bids one penny as unit price for an item of work has placed the cost for that work in other items. A mathematically unbalanced bid is an acceptable bid provided the result of the unbalancing does not result in a windfall for the contractor and a corresponding increase in cost to the Division.

11.4. A materially unbalanced bid means a bid which generates a reasonable doubt that award to the bidder submitting a mathematically unbalanced bid will result in the lowest ultimate cost to the Division. The contractor has shifted the costs between items of work anticipating a potential windfall from doing so. For example, a contractor believes the quantity of a specific item of work is likely to overrun, so they add money to the unit price above the true cost of performing the work. The overrun in actual work performed and corresponding inflation of the price, result in a windfall for the contractor. In some situations, the increased cost to the project is large enough it would change who the low bidder is, if the proposal included the correct quantity of work. In this situation, the bid may be declared materially unbalanced and rejected.

11.5. The Federal Highway Administration (FHWA) provides guidance on bid analysis in their publication "Guidelines on Preparing Engineer's Estimate, Bid Reviews and Evaluation" (Guidelines). The guidelines provide direction regarding the factors the Division will use during the bid analysis. These factors include:

11.5.a. Comparison of the bids against the Engineer's estimate.

11.5.b. The number of bids submitted.

11.5.c. The distribution or range in price of bids received.

11.5.d. The identity and geographic location of the bidders.

11.5.e. The potential for savings if the project is re-advertised.

11.5.f. The bid prices for the project under review versus bid prices for similar projects in the same letting.

11.5.g. The urgency of the project.

11.5.h. The current market conditions and workload.

11.5.i. If there is evidence of any unbalancing of bids.

11.5.j. Any large variances in bid prices compared with the Engineer's estimate and the other bids.

11.5.k. Is there justification for the variance in pricing?

11.5.l. Any other factor the Department deems important.

11.6. The bid analysis begins by tabulating the bid item detail for at least the three lowest responsive bids and includes the total bid amount for all remaining bidders. The bid item detail reflects the unit price bid for each pay item, extended by the estimate of quantities, for a line item total and project total. The tabulation is generated from the contractor's electronic bid.

11.7. The Division uses proprietary software and expert knowledge to perform the bid analysis. This is investigative work where answers to the bid analysis factors described above, are only indicators of potential problems, and that professional judgement must be applied when processing the findings. Any single finding on its own may not raise a concern, but collectively, several indicators may indicate a trend, or a need for more in-depth analysis. The opposite is also true, such that one indicator does not prove there is a problem with the bid, and the analyst must be able to reason why the contractor priced the work the way they did, or if there is a potential risk for the Division.

11.8. The results of the bid analysis are presented to the Award Committee at the Award Meeting.

W. Va. Code R. § 157-14-11