UNITED STATES DEPARTMENT OF AGRICULTURE

Rural Utilities Service 

RUS BULLETIN 1780-34

RD-GD-2013-72

SUBJECT: Guidance for Using the Competitive Sealed Bids Process for the Water and 

Waste Disposal Program

TO: Rural Development State Directors, RUS Program Directors, and State Engineers 

EFFECTIVE DATE: Date of approval. 

OFFICE OF PRIMARY INTEREST: Engineering and Environmental Staff, Water and 

Environmental Programs 

INSTRUCTIONS: This is a new bulletin and does not replace any existing RUS Bulletin. The 

document does supersede guidance attached to a July 13, 2003, memo titled “Bid Opening 

Guidance for RUS Water and Waste projects”, to the extent the guidance addresses the topic of 

using the competitive sealed bid process for RUS water and waste disposal projects. 

AVAILABILITY: This bulletin, as well as any Rural Development instruction or Rural 

Utilities Service instructions, regulations, or forms referenced in this bulletin are available at any 

Rural Development State Office. The State Office staff is familiar with the use of the documents 

in their States and can answer specific questions on Rural Development requirements. 

This bulletin is available on the Rural Utilities Service website at 

http://www.rurdev.usda.gov/RDU_Bulletins_Water_and_Environmental.html 

PURPOSE: This bulletin assists Rural Development staff in providing information and 

guidance to applicants and professional consultants in appropriate procedures for using the 

Competitive Sealed Bids process described at 7 CFR 1780.72(b). 

MODIFICATIONS: Rural Development State Offices may modify this guidance when 

appropriate to comply with State statutes and regulations in accordance with the procedures 

outlined at Rural Development Instruction 2006-B (2006.55). 

 

 9/5/13 

Date

Water and Environmental Programs 

DISCLAIMER: The contents of this guidance document does not have the force and effect of law and is not meant to 

bind the public in any way. This document is intended only to provide clarity to the public regarding existing 

requirements under the law or agency policies.
RUS Bulletin 1780-34

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TABLE OF CONTENTS

1 GENERAL..........................................................................................3 

2 PURPOSE...........................................................................................3 

3 PRIOR TO BID OPENING.......................................................................3 

4 BID OPENING DAY ACTIVITIES.............................................................5 

5 EVALUATION OF BIDS AND CONTRACTORS...........................................6 

6 AWARD.............................................................................................8 

INDEX

Water and Waste Disposal Facilities

ABBREVIATIONS

CFR – Code of Federal Regulations 

OGC – Office of General Counsel 

RD – Rural Development 

RUS – Rural Utilities Service

USDA – United States Department of Agriculture

WWD – Water and Waste Disposal 
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1 GENERAL

The competitive sealed bids process is one of four procurement methods described at 

7 CFR 1780.72, which states that it is the preferred method for procurement of 

construction services in the Water and Waste Disposal Program. The process of 

competitive sealed bids includes solicitation of bids, evaluation of submittals, and award 

of a contract. The intent of this process is to ensure sufficient competition and generally 

offer lower costs on projects that can be established at a firm fixed price (lump sum or 

unit price). 

a Description. This process begins with a public advertisement inviting bidders to 

submit sealed bids which are to be received by the owner and opened publically 

at a specific time and place indicated in the invitation for bids. This event, called 

a bid opening, is normally attended by the owner, consulting engineer, owner’s 

attorney, bidders, and other interested parties. Attendance by Rural Development 

staff at every bid opening is not mandatory, although a representative of the 

Rural Developing Processing Office is encouraged to attend every bid opening, if 

possible. 

b Applicable Local Laws. State laws regarding bid openings vary depending on 

whether the owner is a public body or a not-for-profit corporation (association) 

and may place significant limits on what an owner and its engineer can and 

cannot do during the bid opening. Normally associations have more flexibility, 

but laws will vary by state. All funding recipients are subject to the requirements 

of 7 CFR 1780.72(b) in addition to any applicable state and local laws.

 

c Successful Bidders. The successful bidder is that responsible contractor (see 

section 5 of this bulletin), not suspended or debarred, submitting the lowest bid 

responsive to the requirements of the bid solicitation. A responsive bid is one 

meeting the requirements of the bid solicitation. A responsible contractor is one 

capable of performing the work described in the bid solicitation. The owner, 

with support from its consulting engineer and attorney, may make award to such 

a contractor or may reject all bids. Upon selection of a contractor, the owner 

awards a contract to that bidder with concurrence of Rural Development. 

Procedures for concurrence include review of the bid tabulation and the 

consulting engineer’s recommendation for award, notification of the owner and 

engineer of concurrence, review of executed construction contracts, and signing 

of the agency concurrence in the contract. These duties are normally performed 

by the State Engineer. 

2 PURPOSE

This bulletin assists Rural Development staff in providing information and guidance to a

applicants and professional consultants in appropriate procedures for using the 

Competitive Sealed Bids process for procurement of construction services as described at 

7 CFR 1780.72(b). 

3 PRIOR TO BID OPENING

a Authorization. The owner must ensure they have authorization to solicit bids 

from the Rural Development Processing Office prior to publishing the 
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advertisement for bids. Authorization cannot be given until after the following 

steps have been completed:

 (1) The owner has provided evidence of required number of users, 

regulatory approvals, acquisitions of necessary easements and rights-ofway, and all other requirements of the Letter of Conditions;

 (2) Closing Instructions have been issued by the Regional Attorney of the 

USDA Office of General Counsel; and

 (3) 7 CFR 1780.61(b) requires Rural Development to review and concur in 

contract documents prior to award. Authorization to advertise for bids 

must not be provided to owners until the State Engineer has reviewed 

and accepted the plans, specifications, and other bidding documents.

b Invitations for Bids. The owner must publish an invitation for bids in accordance 

with state and local laws and industry practice. Notices must be placed with 

builders’ exchanges, plan holders services, and organizations that assist small, 

minority, and women-owned contractors. The length of the advertising period 

should be commensurate with the complexity and size of the project and in 

compliance with state and local laws. If bid preparation periods are too short, bid 

costs generally increase to compensate for the bidder’s perceived risk and 

competition may be reduced.

 c Bid Addenda and Copy of Published Invitation to Bid. The consulting engineer 

must provide copies of all bid addenda to the Rural Development Processing 

Office in sufficient time to allow for the Processing Office and the State Engineer 

to review and concur in the documents prior to bid opening. The owner must 

also provide the Rural Development Processing Office with a copy of the 

advertisement publication for the official file. Although the owner is responsible 

for conducting the bid opening, most of the duties are typically delegated to the 

consulting engineer.

d Receipt of Bids. Bids received prior to the bid opening time must be held 

unopened by the owner until the designated time. The time and date must be 

stamped or hand written on the outside of the bid proposal package.

e Electronic Bidding. Electronic bidding procedures are acceptable if allowed 

under state law as long as they comply with the requirements of 7 CFR 

1780.72(b) and the following: (1) the fees for the bidding process must be 

reasonable, (2) paper bids must be accepted by the owner as an option for the

bidders, and (3) the bid opening must be public. 

f Mandatory Pre-Bid Meetings. In some cases, owners or their engineers may 

wish to hold mandatory meetings for all bidders prior to bid opening to discuss 

issues related to site conditions or other matters that are important for bidders to 

understand to reduce the likelihood of conflicts or misunderstandings about 

issues that could affect their bid amounts or decisions related to whether to 

submit a bid. In industry practice it is common in such cases to hold mandatory 

pre-bid meetings and accept bids only from bidders in attendance. This does, 

however, reduce competition and generally should not be allowed due to 
RUS Bulletin 1780-34

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requirements for maximum open and free competition. At the discretion of the 

Rural Development State Office, mandatory pre-bid meetings may be allowed in 

cases when justified or necessary due to special circumstances. 

g Bid Alternates. Bid alternates may be included in bidding documents as long as 

they are in compliance with state law, regulations at 7 CFR 1780.70 (b) and (d), 

and meet the requirements of open and free competition policies. To reduce the 

likelihood of bid protests and lawsuits from bidders not receiving award, the 

Instructions to Bidders must clearly describe the procedures for making award, 

including how any bid alternates will be handled. 

4 BID OPENING DAY ACTIVITIES

a Opening the Meeting. At the bid opening the owner should announce the 

purpose of the meeting and state the present time. This should be done several 

minutes before the scheduled bid opening time. All bid proposals received will 

be left unopened until the scheduled bid opening time. At the time specified in 

the advertisement and/or Instructions to Bidders, the owner will announce that 

the time is closed for receiving bids. It is mandatory that no more bids be 

accepted after that time.

b Opening and Reviewing Bids. Bids received prior to the specified time are then 

opened. The owner, with the assistance of the consulting engineer and owner’s 

attorney, then check each bid for the following:

(1) A signed bid acknowledging any and all addenda;

(2) A bid bond with a power-of-attorney, certified check, or other acceptable 

bid security instrument allowed as stated in the Instructions to Bidders

for the correct amount; and

(3) For each bid, the owner reads aloud to all present the name of the bidder, 

total bid amount, and any important related contents of the bid. The 

consulting engineer records the results of the bid opening for each bid on 

a bid summary sheet. Although not required, the owner may also 

announce the name of the “apparent” low bidder, but it is mandatory that 

the word “apparent” be used to clarify that the bids must still be 

evaluated further before a bidder is selected for the award. If an apparent 

low bidder is announced, the owner must remind everyone present that 

award is contingent on a detailed review of the bids. The owner may 

also remind those present of the general time frame for determination of 

award based on information in the Instructions to Bidders. 

c Claims of Bid Mistakes. A bidder must immediately notify the owner if claiming 

a mistake in a bid. Procedures of the bidding documents and any applicable state 

or local laws must be followed to address modifications or withdrawal of bids. 

Correction of major calculation errors that are not judgment errors may be 

allowed in many states. Otherwise a bid may be withdrawn with or without loss 

of bid security depending on the bidding documents and state law. The owner’s 

attorney should make a determination as to whether the bidder may withdraw its

bid and if the owner should retain the bid security associated with each bid. 
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5. EVALUATION OF BIDS AND CONTRACTORS

a Determining Responsiveness. The owner and consulting engineer with the 

assistance of the owner’s attorney check each proposal to determine whether the 

bids are responsive and submitted by a responsible bidder. A responsive bid 

meets the requirements of the solicitation for bids and a responsible bidder is one 

capable of performing the work described in the bidding documents. To 

determine responsiveness, the owner, engineer and attorney must verify the 

following:

(1) The bid is properly executed, signed, sealed and all addenda 

acknowledged;

(2) The bid is complete with prices provided for all required items and any 

required supplemental information provided;

(3) Proper bid security, such as a bid bond, has been provided and at the 

proper amount along with appropriate powers of attorney if required; and

(4) USDA Rural Development required forms are included with the bid 

submittal.

 b Minor Errors in Bids. If allowed by state law, the owner may waive certain 

minor informalities (missing or erroneous items). Submission of required USDA 

Rural Development forms may be considered a minor informality, but the forms 

must be submitted prior to issuance of any concurrence by Rural Development in 

a proposed award.

 c Non-responsive Bids. If a bid proposal is considered clearly non-responsive, the 

bid should be returned to the bidder as soon as possible with an explanation of 

the reasons for its return. Any bid irregularity providing the bidder with a 

material advantage in the bidding process also makes the bid proposal nonresponsive. 

d Verification by Consulting Engineer. The consulting engineer then verifies the 

calculations in the bids and corrects arithmetic errors. Note that in most cases 

written words govern over numbers on individual line items, but bid 

requirements and state law will govern in this matter. Bid totals are verified and

selection of bid alternates is applied in accordance with the process described in 

the Instructions to Bidders. 

e Investigation of Low Bidder. The owner and consulting engineer then check the 

apparent low bidder’s references, license, insurance, and bonding ability. The 

consulting engineer also checks to see whether the bidder or any of its principals 

are considered federally suspended or debarred. If the apparent low bidder meets 

the requirements of the Instructions to Bidders, has appropriate licenses, is 

bondable, is not suspended or debarred, has satisfactory performance on past 

contracts, and is considered capable of performing the current contract, the 

bidder is normally determined responsible. 
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f Bid Tabulation. The consulting engineer then prepares a bid tabulation. A

current project funds analysis including reasonable contingency, along with total 

funds available, must also be prepared by the engineer, owner, or Agency. 

g Recommendation for Award and Concurrence of Recommendation. After the 

bid tabulation, the engineer makes a recommendation for award. If award is 

based in part on consideration of bid alternates, any procedures of the 

Instructions to Bidders and requirements of state law must be followed. The 

owner and owner’s attorney evaluate the engineer’s recommendation and submit 

the following to the Rural Development Processing Office for concurrence:

(1) A written request from the owner to the Rural Development Processing 

Office stating at a minimum which bidder the owner wants to make 

award to, which bid alternates they wish to award, if any, and the 

proposed amount of the award;

(2) A copy of the Affidavit of Publication for the Bid Advertisement –

certified, dated, and signed;

(3) Certified tabulation of bids (signed and sealed by the consulting 

engineer);

(4) A complete copy of the apparent low bidder’s bid submittal, including:

(a) Bid Proposal;

(b) Bid Bond or other security and powers-of-attorney; and

(c) Executed Certifications including “Compliance Statement”

(Form RD 400-6), “Certification Regarding Debarment” (Form 

AD-1048), and “Lobbying Certification” (RD Instruction 1940-

Q, Exhibit A-1), and any other required forms;

(5) Engineer’s written recommendation to award the contract to a specific 

bidder including:

(a) An analysis of recommended contractor’s ability to perform 

successfully under the terms and conditions of the proposed 

contract. Consideration must be given to such matters as 

contractor integrity, record of past performance, and financial 

and technical resources (i.e. responsible bidder);

(b) Statement that requirements of Instructions to Bidders were met 

(i.e. responsive bid), including documentation from the owner 

that any informalities not met are waived; and

(c) Thorough documentation of any recommendation to award to 

other than the low bidder (requires submittal of all bidders’

packages from recommended bidder down to apparent low 

bidder). 
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h Owner’s Discretion. In some cases, the owner may wish to award to other than 

the apparent low bidder or to reject all bids. 7 CFR 1780.72(b)(4) states that any 

or all bids may be rejected by the owner when it is in its best interest. Since this 

is directly stated in the regulation, owners should be given discretion to take such 

actions. However, if the owner wishes to reject one or more bidders to award to a 

higher bidder, because this increases project cost, they must provide the Rural 

Development Processing Office with a justification based on the responsiveness 

and responsibility of the bidder. If the Rural Development Processing Office 

does not concur in the award, the owner may be required to readvertise, but 

cannot be forced to award to a bidder they do not wish to award to. 

i Determination of Non-responsible Bidders. Examples of reasons that a bidder 

may be determined to be non-responsible include inadequate financial resources 

to hire competent workers or obtain adequate equipment, poor references, or a 

history of poor performance of work. Examples of non-responsiveness include a 

missing bid bond, a conditional bid, or one that has not been signed. All of these 

are examples of reasons that a consulting engineer may recommend and an owner 

may choose to reject the award to an apparent low bidder. 

j Justification for Award to Bidder not Recommended by Consulting Engineer. 

Occasionally an owner will wish to award to a bidder other than the one 

recommended by their consulting engineer. This action should not be allowed 

without justification from the owner to the Rural Development Processing 

Office, but the owner has the right to take this action if they have a reasonable 

justification for taking a different action than that recommended by the engineer.

6 AWARD

a Timeliness. Within the bid hold period listed in the Instructions to Bidders, the 

owner must make a decision whether and to which bidder to award the contract. 

If a decision is not made within the bid hold period, bids will expire unless a bid 

extension is granted in writing by the bidders. Bidders making extensions 

conditional invalidate their bids and cause bids to become non-responsive. Rural 

Development must concur in awards of all contracts funded by Rural 

Development.

b Submission to Rural Development. 7 CFR 1780.61 requires that the 

consulting engineer’s recommendation for award and the bid tabulation, 

including all the items described above, be submitted to Rural Development for 

concurrence prior to award. If adequate funds are available for the project, the 

Rural Development Processing Office typically submits these documents to the 

State Engineer for review. 

c Concurrence by State Engineer. The State Engineer will then evaluate the bid 

tabulation and the consulting engineer’s written recommendation of award to 

determine whether they concur in the recommendation. In addition, prior to 

concurring in this recommendation, the State Engineer will verify that the 

recommended bidder is not suspended or debarred, as indicated at www.sam.gov. 

In unusual circumstances, award may be made to a suspended or debarred party 

if a waiver has been issued in accordance with 2 CFR 417.137. 
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d Case File Documentation. In accordance with RD Instruction 1940-M 

(1940.606(b)(1)), the case file should be documented that the suspension and 

debarment status of the contractor was checked prior to concurrence in award and 

a copy of the Form RD 1048, “Certification Regarding Debarment, Suspension, 

Ineligibility and Voluntary Exclusion – Lower Tier Covered Transactions” filed. 

e Justification for Recommendation to Higher Bidder. If award is recommended to 

other than the lowest responsive and responsible bidder, the Rural Development

Processing Office should coordinate with the owner to obtain additional 

justification. The State Engineer should review this material and determine if 

they concur with the recommended award. The Regional Attorney of OGC may 

be contacted for guidance if necessary. 

f Notice of Award. If Rural Development concurs in award, the owner signs and 

issues the Notice of Award and notifies all other bidders of the award. The 

owner must sign the Notice of Award, not the consulting engineer. The Notice of 

Award announces award of the contract and requires the selected contractor to 

provide executed contracts, surety, and required insurance within a set time 

frame. The owner may retain the bid security of bidders who may have a 

reasonable chance of winning the award if the apparent low bidder does not 

provide adequate executed contracts, surety, and insurance within the required 

time frame. Bid security of all other bidders is then returned. 

g Reassessment of Funding Needs. Additionally, if bids come in lower than 

expected and there is a significant reduction in project cost as a result, then the 

applicant’s funding needs will be reassessed by Rural Development in 

accordance with 7 CFR 1780.44(e). Excess loan or grant funds will be 

deobligated by Rural Development if they are not needed to complete the 

proposed project. 

h Inadequate Funds. If funds are inadequate for the project, 

the Rural Development Processing Office will work with the owner, consulting 

engineer, and other funding partners to determine the best course of action. One 

of the following approaches may be considered:

(1) Obtain additional funds. Award the project as-is; 

(2) Restructure the project by redesign, phasing of the project, or value 

engineering. Re-advertise the project for new bids;

(3) Reject all bids and use either competitive negotiation (7 CFR 

1780.72(c)) or non-competitive negotiation (7 CFR 1780.72(d)) if 

applicable; 

(4) Re-advertise the existing project without changes in anticipation of lower 

bids; 

(5) In unusual circumstances, award the contract as advertised with a change 

order issued immediately after award to reduce cost; however this 

approach should only be used upon advice of the owner’s attorney. 
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i Bid Protests: Note that a bidder not receiving the award may challenge 

award of the contract to another bidder. Here are some important points about 

bid protests:

(1) There are no bid protest procedures in 7 CFR 1780. In fact, 7 CFR 

1780.68 states “The owner is responsible for settlement of all 

contractual and administrative issues arising out of procurement entered 

into in support of a loan or grant. These include, but are not limited to: 

source evaluation, protests, disputes, and claims.” Though the owner is 

responsible for the settlement of these issues, Rural Development is still 

interested in the outcome. Rural Development will become involved or 

refer issues to appropriate federal or state agencies if there are matters of 

federal or state laws or requirements with OGC consultation as needed;

(2) The owner’s attorney must be familiar with any state or local bid protest 

procedures or requirements and must determine if a formal bid protest 

procedure exists. If a contractor files a protest in accordance with such 

procedures, the owner with the assistance of their attorney responds to 

the protest according to the applicable procedure; 

(3) Where no formal protest process exists, a bidder wishing to contest a bid 

protest may attempt to file a case against the owner in a court of 

appropriate jurisdiction. The owner, not the government, is responsible 

for defending against such a lawsuit.