Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

Project Development 

Required Approvals

Project Advertisement, Bid Review, and Request for 

Concurrence in Award

After the environmental and design work for your 

Federal-aid project is complete and you're ready 

to bring in a contractor to 

build the project, you 

should consider the 

following questions: 

* Are there specific rules for 

advertising my project?

* How do I analyze bids in 

order to choose a contractor?

Let's focus on the answers to these questions, 

and the associated requirements you must 

adhere to before your Federal- aid construction 

contract can be awarded. These requirements 

help preserve a competitive environment for 

bidding, ensure fair and open competition, and 

ultimately maximize the use of Federal-aid 

funds. 

After your oversight agency authorizes the use 

of Federal funding for construction, your first 

step is to find a contractor to do the work. This is 

typically referred to as advertising the project, 

meaning you 

publically or 

electronically 

announce your 

intent to solicit 

bids for a 

construction 

contract. Under normal circumstances, you 

advertise the project for a minimum of three 

weeks to provide sufficient time for contractors 

to assemble and submit bids. The solicitation 

must specify the exact day and time the 

advertisement period closes in the 

announcement. All contractors must submit their 

completed bid packages to you by the official 

“close” of the solicitation period. After that date 

and time, bids can no longer be accepted or 

changed. 

Just after the close of the advertisement period, 

you open the bids and read aloud or publicly 

share the list of bidders and their bids, and 

identify which is the “apparent” low bid. 

Advertising and opening bids according to these 

requirements help to maintain credibility and 

transparency among the bidders and the public. 

Now that the bids have been opened, it's time 

for you to analyze the apparent 

low bid is acceptable and meets 

all requirements. You need to 

consider four primary factors: 

• Is the bidder considered 

responsible? 

• How do the bids compare 

to the engineer's 

estimate? 

• Is the bid considered responsive? 

• Was there adequate competition?

Awarding a construction contract to a responsible contractor is an 

important requirement of Federal-aid project
Federal-aid Essentials for Local Public Agencies

The first question to 

consider in your 

analysis is: “Is the 

bidder responsible?” 

A responsible bidder 

is one who is 

physically organized and equipped with the 

financial means to undertake and complete the 

contract. A responsible bidder is also one that is 

not suspended or debarred, or whose business 

ethics have not been otherwise determined to be 

inadequate. The Federal government maintains 

a list of all parties, called the Excluded Parties 

List System (EPLS), which have been 

suspended or debarred. You have a duty to 

ensure that the contractor is not listed on the 

EPLS before awarding a contract to that entity. 

Some agencies use a prequalification process to 

help determine responsible bidders. However, 

prequalification should not be used to restrict 

competition or discourage otherwise responsible 

bidders from submitting a bid. 

The next question to consider is: “How do the 

bids compare to the engineer’s estimate?” 

Local public agencies, or LPAs, must develop 

and use an engineer's estimate for analyzing 

bids. You use the engineer’s estimate as the 

benchmark to compare against all bids. This 

estimate reflects the 

amount you consider 

fair and reasonable, 

and are willing to pay 

for the performance 

of the work. 

As you analyze the apparent low bid, you should 

pay close attention to any irregularities 

associated with either an individual item or the 

overall bid. An irregular bid is when the apparent 

low bid differs from the engineer’s estimate in a 

manner that appears unreasonable. Irregular 

bids play a key role in the decision to reject or 

award a contract. 

Pay special attention to unbalanced bids and 

consider the potential for savings if the project is 

re-advertised. There are two types of 

unbalanced bids: 

* A mathematically unbalanced bid contains 

lump sum, or unit bid items that do not 

reasonably reflect the actual costs to construct 

the item

* A materially unbalanced bid creates 

reasonable doubt that award to that bidder 

would result in the lowest ultimate cost to the 

government. 

You should consider rejecting an unbalanced bid 

when it cannot be reasonably explained, or if 

you have a reasonable doubt that it would result 

in the lowest overall cost to the government. If 

you detect an unbalanced bid, contact your 

State for assistance, as these issues are 

typically handled case by 

case. 

Also, if at any time you 

believe collusion or bidrigging among bidders 

has occurred, report concerns directly to your 

nearest U.S. Department of Transportation 

Office of Inspector General. 

Your next question should be: “Is the bid 

responsive?” A responsive bid is one that meets 

all the requirements of the advertisement and 

proposal, meaning all bid-related paperwork or 

electronic forms are completed and signed. Your 

solicitation must clearly identify these 

requirements, which the bidder must comply 

with in order for the 

bid to be deemed 

responsive. Among 

the reasons a bid 

may be considered 

non-responsive are:

* Not signing the bid in ink or not supplying a 

valid electronic signature where electronic 

bidding is used

* Failing to include the required certification 

statements

* Not meeting specified prequalification, or 

bonding and insurance requirements

* Failure to commit to the project Disadvantaged 

Business Enterprise, or DBE, goals or failure to 

demonstrate good-faith efforts in attempting to 

commit to DBE goals
Federal-aid Essentials for Local Public Agencies

Your last bid review-related question to consider 

is: “Was there adequate competition?”

Receiving only one or two bids may or may not 

justify re-advertising the project. The number of 

bids received is a complex issue that depends 

on many factors, including bidder interest in the 

work, location of the work, and current market 

conditions. When you have concerns with the 

adequacy of competition or the number of bids 

for your project, contact your State department 

of transportation (State DOT) to help you 

determine if re-advertising the project is 

appropriate. 

At the conclusion of the analysis, your goal is to 

confirm the apparent low bid is a responsive bid, 

submitted by a responsible bidder for contract 

award. 

You must obtain 

concurrence for 

your decision 

from your 

oversight agency 

before officially 

notifying a 

contractor that its bid was either selected for 

contract award or rejected. Submit your written 

request for concurrence in award to the State 

DOT, which will either act on your request or 

forward it to the Federal Highway Administration 

for approval, depending on who has oversight of 

the project. 

In support of your request, you must summarize 

the results of your bid analysis and highlight any 

irregularities that may be identified. Your 

summary must include the bid tabulations of the 

project, showing bid item details for at least the 

low three acceptable bids and the total amounts 

of all other acceptable bids. 

Don't forget to include a statement that identifies 

which bid you are recommending for contract 

award. 

Once you have received the written concurrence 

in award, this becomes your authorization to 

notify the contractor of award and enter into a 

contract for construction. If you enter into a 

contract before receiving written concurrence in 

award, the result can mean losing all Federal 

funds for the project.

Awarding a construction contract to a 

responsible contractor who submits the lowest 

responsive bid is one of the most basic tenets of 

Federal-aid contracting. These requirements 

help preserve a competitive bidding environment 

to provide the lowest cost to the government for 

projects. Contact your State DOT if you have 

questions about advertising, analyzing bids, or 

requesting concurrence in award of your a 

Federal-aid contract. 
Federal-aid Essentials for Local Public Agencies

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• Federal guidelines on preparing engineer's estimate, bid reviews,

and evaluation (2004) 

http://www.fhwa.dot.gov/programadmin/contracts/ta508046.cfm

• FHWA guidelines on preparing engineer's estimate, bid reviews and 

evaluation

http://www.fhwa.dot.gov/programadmin/contracts/ta508046.cfm

• FHWA policy memo on performing a bid analysis and evaluation of 

unbalanced bids (1988)

http://www.fhwa.dot.gov/programadmin/contracts/051688.cfm

• FHWA memo providing reasons for rejection of unbalanced bids 

(1987)

http://www.fhwa.dot.gov/construction/contracts/870729.cfm

• FHWA guidance covering online based letting and evaluation for 

contracts

http://www.fhwa.dot.gov/programadmin/contracts/interbid.cfm