Method of Construction (or Method of Bidding)

General
Construction contracts are to be awarded by competitive bid. One of the most basic tenets of federal-aid contracting is that construction contracts are to be awarded competitively to the responsible contractor submitting the lowest responsive bid. This mandate is set forth in
23 U.S.C. §112
and reinforced by
23 CFR §635.114(a)
, which requires that:
“Federal-aid contracts shall be awarded only on the basis of the lowest responsive bid submitted by a bidder meeting the criteria of responsibility as may have been established by the STD (TxDOT)…”
The act of a LG negotiating with an apparent low bidder prior to award is defined as “bid rigging in reverse” and is expressly prohibited by
23 CFR §635.113(a)
.
Alternative Construction Contracting
There may be situations supporting the use of a contracting method other than competitive bidding. Noncompetitive construction contracting or other unusual methods of construction may be approved under one of two conditions:
  1. the option is proven to be more cost effective; or
  2. an emergency exists and time is a critical factor.
23 CFR Part 635 Subpart B
allows that “rare” circumstances may justify the use of force account, negotiated contract or other unusual method of construction. The regulations clearly indicate, in the absence of an emergency, situation circumstances are unlikely to justify the use of other methods of construction. Therefore, the consideration of any noncompetitive construction contract method requires a cost effectiveness determination as well as an evaluation that demonstrates the circumstances are unusual and unlikely to recur.
A cost effectiveness finding is required for the TxDOT approval of any LG proposal to use a non-competitive method of contracting.
23 CFR §635.205
cites the following situations as possible reasons for the use of noncompetitive construction contracting.
  • When the rights or responsibilities of the community are so affected as to require a special course of action, including situations where there is a lack of competition or unreasonable bids, it may be determined to be cost effective to use force account.
  • When by reason of the inherent nature of the operation, it is deemed cost effective to do minor adjustments of railroad and utility facilities (major work still to be accomplished by competitive bidding) by force account.
Under the first circumstance, the use of force account may be found cost effective when properly documented. Under the second circumstance, FHWA has determined the use of force account is always cost effective and, therefore, no additional documentation is required.
Force account work using LG forces is discussed in
23 CFR Part 635 Subpart B
and is defined as:
“…the direct performance of highway construction work by (a LG) by use of labor, equipment, materials, and supplies furnished by them and used under their direct control.”
Force account contracts with a private contractor are an exception to normal construction contracting procedures and should rarely be approved.
Circumstances justifying a negotiated construction contract should be even more of an exception, making approvals of such contract methods extremely rare.
Federal Requirements
  1. 23 CFR §635.104
    – Requires construction work to be performed by competitive bids unless some other method is more cost effective or an emergency exists.
  2. 23 U.S.C. §112(b)(3)
    – Allows design-build as an acceptable contracting method for certain “qualified” federally funded projects as defined in the regulation.
  3. 23 CFR Part 636
    – Provides implementing language on design-build contracting.
State Requirements
  1. Texas Local Government Code §252.021
    – Requires municipalities to use competitive sealed bids for contracts in excess of $50,000.
  2. Texas Local Government Code §262.023
    – Requires counties to use competitive bidding procedures for purchases over $50,000.
  3. Texas Local Government Code §271.006
    – Requires a municipality to comply with the requirements of Chapter 252 and a county to comply with the requirements of Subchapter C, Chapter 262.
  4. Texas Government Code §2269.360
    – Requires the LG to select a design-build firm for a design-build project using a combination of technical qualifications and cost.
  5. Texas Transportation Code §223.201
    – Allows TxDOT to enter into a comprehensive development agreement with a private entity to design, develop, finance, construct, maintain, repair, operate and extend roadways.
  6. Texas Transportation Code §366.185
    – Requires for contracts let by a RTA to be let by a competitive bidding procedure.
  7. Texas Transportation Code §370.185
    – Requires for contracts let by a RMA to be let by a competitive bidding procedure.
  8. Texas Transportation Code §370.302
    – A RMA may negotiate and enter into a “development agreement” with a public or private entity.
Required Practices
The LG must obtain TxDOT approval for its competitive bidding process as described in required practices and responsibilities contained in the
LGPM Guide
.