INTRODUCTION

The evaluation and selection of contractors leading to the award of construction contracts is a vital part of the construction process. State law and Regents' policy require 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 by negotiated contracting. (Negotiated contracting, a process during which a contractor is selected without competition, is sometimes referred to as "direct selection.")

1.1 COMPETITIVE BIDDING

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

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."

University policy also requires competitive bidding. The policy reads:

The Regents reaffirm their policy that construction contracts be competitively bid, as required by law, 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 interest of the University, in which case all bids shall be rejected.
University policy: "Competitive Bidding."

The process continues until all bids have been exhausted.

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 [II]: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[I]).

(See RD1.1, Bid and Award Process Flow Chart Competitive Bidding.)

The state Public Contract Code requires University projects exceeding a cost of $100,000 to be publicly advertised and awarded to the "lowest responsible bidder." "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

The Public Contract Code and University policy require formal competitive bidding for projects with estimated contract sums over $100,000 and permit informal competitive bidding for projects between $50,000 - $100,000, but does not state what award process is required for projects below the $50,000 dollar threshold. The University has established procedures for negotiated contracting (see [I]:1.3) for projects under the dollar limit for competitive bidding.

When utilizing formal competitive bidding, the University (1) advertises for bids twice in the 60-day period preceding the date set for receiving bids in one newspaper of general circulation published in the county where a major portion of the project is located AND one trade paper circulated in the county where a major portion of the work is to be done; (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. See RD1.2 for sample advertising schedule.

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 [I]:7.3.1) of all bids, and (3) awards the contract to the lowest responsible bidder submitting a responsive bid or rejects all bids.

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” or University policy, the more restrictive requirements must be followed.

1.2 NOT USED

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.

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.

1.4 DURATION OF THE BIDDING PERIOD

During a project's design phase, the Facility decides which contracting mode to use (see FM3[I] and FM4[I]). 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.

1.5 EQUAL OPPORTUNITY POLICY

References:

- University policy: "Equal Opportunity in University Business Contracting" [Interim policy] (see FM1:5.1).
- Public Contract Code, State of California, Sections 10500.5.
- University of California Business Information Form (see RD2.44).
- "Administrative Guidelines to Ensure Equal Opportunity in University Business Contracting," University of California, Office of the President, Oakland, CA, January 1, 1996 (see RD6.2)

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.
Interim University policy: "Equal Opportunity in University Business Contracting."

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.

Because Public Contact Code Section 10500.5 calls for voluntary action by The Regents, policies, programs, and activities using race, religion, sex, color, ethnicity, or national origin as criteria in business practices shall, except as directed above, be discontinued. Pursuant to The Regents' Policy to Ensure Equal Opportunity in University Business Contracting [interim policy], the University will do the following: (1) continue to set goals and timetables for small disadvantaged, women-owned, and disabled veteran business enterprises where such goals and timetables are required as a condition of federal or state funded contracts or grants; (2) maintain statistics on utilization of such businesses; and (3) return to self-certification. In addition, the University will continue to utilize outreach programs to assure equality of opportunity.

The definitions for DBE, WBE, and DVBE may be found in the University of California Business Information Form, (see RD2.44).

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.

Additional guidelines regarding outreach programs may be issued by the Office of the President. (See also RD6.2.)

1.5.2 Certification

For purposes of statistical reporting, the University will return to a program of self-certification by businesses as to their status as SBE, DBE, WBE, or DVBE. The University Business Information Form (UAA 101) should be used to obtain such self-certification of status as well as to prequalify contractors. (See RD6.2.)

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 containing at a minimum:

• Total dollars expended to all businesses.
• Dollars expended, by category, to SBE, DBE, WBE, and DVBE firms.
• Dollar expenditure 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.

Change No. 06-078-P (December 20, 2006)

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