Bid Rules for Informal Contracts
Contact Info: Design and Construction Services Assistant Director (919-513-0538)
Exhibit 1 Minimum Insurance Requirements
Exhibit 2 Contractor Selection Process
Exhibit 3 Flexible Group Bid Rotation
Exhibit 4 Example of Bid Rotation
Exhibit 5 Contractor Rating Form
Exhibit 6 Time and Materials
Exhibit 7 Time and Materials Process
1. Informal Contracts
An Informal Contract is defined as construction or repair work that does not exceed $500,000. North Carolina statutes and the NC Construction Manual provide a flexible methodology of receiving bids without the formal advertisement and documentation required by G.S. 143-129. For each informal project, NC State University (NC State) is empowered to solicit individual contractors for bids on an invitational basis. As such, NC State continually monitors its existing contractor pool for performance characteristics, and evaluates new contractors who indicate interest in construction work at the University.
NC State wishes to emphasize that construction work is open to any firm that desires construction work, provided it meets qualifying standards, actively participates in the bid process, and demonstrates high measures of performance on the job. The Informal Contracts process at NC State is designed to ensure that the best-qualified contractors perform construction work. This means that contractors who have worked for many years at NC State will enjoy preferred bidding status so long as an active degree of bid participation and high quality of work continues. This also means that new contractors can quickly establish the same consideration for bid work as a contractor who has worked at NC State for many years. Conversely, the process also ensures that both “old” and “new” contractors must continue to perform well and offer reasonably priced construction services in order to maintain their invitational status.
2. Historically Underutilized Business (HUB) Enterprises
NC State encourages and promotes the use of small, minority, disabled, and women contractors in state construction projects.
3. Bonding and Liquidated Damages
Generally NC State does not require bid, payment, or performance bonding for Informal Contracts. Projects up to $500,000 will be considered for performance bonds. Liquidated damages are infrequently included in contract provisions; however timeliness is a very important consideration when rating contractors for future work invitation.
4. Contractor Selection Criteria
At NC State, contractors are continually evaluated by the Design and Construction Services staff, and are invited to bid on individual projects based upon parameters that include but are not limited to:
4.1. A history of reasonable bid price submissions.
4.2. A work history that indicates specialization and quality of workmanship in a particular construction skill, including the extent to which the Contractor follows project specifications and drawings provided by NC State.
4.3. Degree of participation in the NC State bid process, i.e., demonstrating a high degree of attendance at pre-bid meetings and submitting viable, competitive bids when invited to bid. Contractor shows up for pre-bid walkthroughs after informing the project manager they will attend.
4.4. Contractor’s degree of quality control, i.e., identification and correction of deficient work or plan conflicts in a timely manner. Final inspections yield a minimal number punch list items, which are not significant.
4.5. Responsiveness to NC State project managers on a daily basis.
4.6. Decorum, conduct, and non-disruptiveness of contractor staff and subcontractors.
4.7. Cooperation with other contractors on the project and in the vicinity.
4.8. Degree to which Contractor is considerate of building occupants and the Design and Construction Services project manager with regard to notification, scheduling, and coordination of operations that will cause noise, vibrations, dust, odors, safety concerns, and other activities that can potentially interrupt the normal conduct of business.
4.9. Ease of daily coordination. Courteous and cooperative nature.
4.10. Substantive proof that a responsible, English-speaking company representative will be on-site at the NC State campus within 1 (one) hour of notice from NC State, 24 hours-a-day, for safety or emergency issues.
4.11. Degree of NC State supervision and coordination necessary before, during, and after construction. Preferred contractors require minimal supervision or progress inspection.
4.12. Material submittals and delivery: Contractor diligently researches materials and vendors that meet specifications, ability to coordinate with designers on submittal issues, and ability to deliver materials to site in a timely manner.
4.13. Responsiveness to warranty issues.
4.14. Extent to which Contractor complies with NC State general conditions, parking policies, Hot work and other permit requirements, and other policies.
4.15. Safety consciousness on the job site. Demonstrated safety measures to protect students, faculty, and workers. Existence of contractor safety plans and employee briefings. Maintaining a secured, safe site on a daily basis. Compliance with OSHA requirements.
4.16. Job site cleanliness during projects and upon leaving job sites.
4.17. Degree of familiarity with a particular building and its components, or specific knowledge of a particular client or organization’s needs.
4.18. Maintaining adequate insurance coverage. (Exhibit 1)
4.19. Adequate bonding capacity.
4.20. Not exceeding license limitations.
4.21. Submission of change orders in timely fashion with adequate cost breakdowns.
4.22. Flexibility and cooperation when resolving delays.
4.23. A track record of timely project completion.
4.24. Ability to meet project schedule, given size of full-time staff and the ability to subcontract quickly.
4.25. Extent to which contractor requires subcontractors to conform to these parameters.
4.26. Work load at the time of a project solicitation.
4.27. Contractor’s technological capability, with regard to mobile telephone, email address, and fax machine.
4.28. Other qualitative or quantitative factors that may apply to particular situations.
5. Types of Bids and Contracts
NC State utilizes two separate methods to obtain bids for Informal construction work, both of which are available to every contractor. The first is the Group Bid, and the second is the Time and Materials Bid . At its sole discretion, NC State may choose which method to use for a particular construction project.
6. Group Bid: Up to $500,000
“Group Bid” contracts occur as the result of a competitive bid between a limited number of contractors who are invited to bid on a particular project. Interested, qualified contractors are “pooled” into several bid groups, which then bid for projects on a rotating basis between the groups. See flowcharts on the Contractor Selection Process (Exhibit 2), Informal “Flexible Group Bid Rotation” Process for an Individual Project (Exhibit 3), and Example of a “Flexible Group Bid Rotation.” (Exhibit 4)
As previously mentioned, NC State is empowered to solicit bids on an invitational basis. Because many contractors have indicated interest in doing work, NC State Design and Construction Services (DCS) maintains a “pool” of qualified contractors for each construction specialty. For example, a list of general contractors is maintained, as well as lists of interested mechanical, electrical, plumbing, and painting contractors, etc. Over the years, NC State has developed a practice of bidding work in small groups, rather than the entire “pool” bidding at one time for each job. This practice offers contractors the obvious advantages of bidding in small groups, and also offers NC State the advantage of smaller, more manageable groups for pre-bid coordination and design issues.
To maintain small bid groups and ensure fairness among contractors, Design and Construction Services maintains a “Flexible Rotation Pool”(refer to Exhibit 4). The Flexible Rotation Pool classifies each contractor into one of two categories: “A” and “B” list contractors. Contractors on the “A” list are considered to be qualified, proven firms that do quality work, actively participate in the bid process, and otherwise perform favorably in accordance to the factors listed in the Contractor Selection Criteria. Contractors on the “B” list are still qualified to do work, but quality of work, bid participation, and other factors (as listed in the Contractor Selection Criteria) may be questionable to NC State Design and Construction Services. This uncertainty may be a result of direct project relations with the contractor or because NC State has not had the opportunity to evaluate the contractor’s work on a regular basis.
Once a contractor passes basic qualification for licensure, insurance, geographic proximity, etc., the firm is further evaluated for work history and references. If the contractor demonstrates a good work history and/or solid references, complies with NC State policies, and actively participates in bidding, then the contractor is listed on the “A” list for the relative specialty group. If NC State is uncertain about the contractor, then it will be listed on the “B” list for the specialty. Marginal or poorly rated contractors will not be invited to bid. During the course of a year, a contractor might start out as a “B” contractor and finish the year on the “A” list. Conversely, an existing “A” list contractor might be downgraded to “B” status or may not be invited back to bid.
Contractors are generally invited to bid in groups of 5 to 8. Projects are bid on a rotating basis between groups, with allowances made for contractor substitution into bidding groups. Contractors on the “A” list are preferentially grouped for bidding, and have first right to bid. Grouping occurs at random, with adjustment to ensure that HUB contractors are equitably scattered throughout groups. If a substitution needs to be made, then contractors from the “B” list are offered the opportunity to bid and win work. Contract award is generally made to the lowest responsible bidder, subject to funding, scheduling constraints, unit prices, and relative nearness of the low bid to internal estimates.
NC State desires to provide equitable contractor access to bidding, therefore it will monitor the number of projects that each bid group has the opportunity to bid on. Future rotations will depend on maintaining equitable access to bid on work. Group members will be reshuffled at minimum on an annual basis, with ongoing substitutions, deletions, or additions of “A” List or “B” List contractors to the Bid Group, at the discretion of NC State.
Design and Construction Services rates all contractors who win and perform work. This rating will have a direct impact on the firm’s consideration for future work. The contractor rating considers parameters listed under Contractor Selection Criteria. Generally, good contractors are invited to bid on future projects. Lesser performing contractors are not.
7. “Freelance” Exemptions
Contractors currently on the “A” List who demonstrate a record of good work and good bid participation can, with prior notice to NC State, bid as an “extra” contractor for up to two projects in a fiscal year’s time frame (from July 1 to June 30). In this event, the normal rotational group (with substitutions, if applicable) will bid on a project, and the requesting contractor can bid as an “extra” contractor. If a contractor wishes to use one of the two annual “Freelance” bids, then the Assistant Director for Construction at Design and Construction Services must be contacted in advance. As long as the Manager is contacted a week prior to the next pre-bid walkthrough, the contractor will be allowed to bid on the NEXT Group Bid project in that contractor’s specialty group, regardless of price or scope of work (i.e., no “shopping” for jobs is allowed).
8. Bid Participation
NC State tracks bid participation of contractors as a factor in the continual determination of “A” or “B” List status. Those contractors who participate in a high percentage of bids to which invited, and who continually submit viable, competitive bids, will receive continued consideration for the “A” List, pending the execution of quality work, coordination, and other factors. Contractors not actively participating in the bid process may be downgraded in status.
9. Contractor Ratings
NC State regularly rates its contractors for performance on a project (Exhibit 5). Contractor ratings play a direct role in determining whether a contractor is invited back for future construction work.
10. Contractor Downgrades
NC State will notify a contractor if its status is “downgraded” from either the “A” or “B” lists to not being invited back to bid for future work. If notified of a future non-invitation to bid, a Contractor has a right to appeal to the Director of Design and Construction Services, whose decision is final.
11. Contractor Specialty Groups
The following is a list of current construction specialty groups FOR which NC State maintains current contractor lists. Contractors wishing to be considered for work in a particular specialty area must request for the classification, in writing, to the Design and Construction Services Department. One contractor may qualify to be classified in several specialty areas.
Major Groups that use a Flexible Rotating Pool in the Group Bid Process:
- General Contractors
- Telecommunications Raceways
- Telecommunications Ductbanks
Specialized Contractors and Vendors
All construction disciplines not listed in the Major Groups are considered to be “specialized” types of construction work. At the University, these construction specialties are required less frequently than the major groups for which rotation pools are used. The list below provides several examples of these disciplines. In the case of specialized contractors, NC State reserves the right to directly solicit these contractors from various sources without regard to maintaining a rotation pool.
|Environmental||Power Cable and High Voltage|
|Erosion Control||Power Cleaning|
|Fire Protection or Restoration||Roofing|
|Landscape||Windows and Doors|
From time to time, projects may arise within the Major Groups wherein specialized expertise and/or adequate contractor resources are required for a successful project outcome. In addition, the project may present special circumstances such as: time constraints, a combination of licenses and/or construction skills, specialized construction techniques, relevant prior experience, or other relevant considerations. In such cases and in the best interests of the University, NC State reserves the right to directly solicit contractors and/or vendors possessing these specialized qualifications.
12. Specialty Subcontractors and Vendors
Specificity of project requirements may require the skills of a particular subcontractor or grouping of subcontractors who are known for specialized skills and a high quality of craftsmanship/work. These contractors might enjoy a solid reputation within the construction community, at NC State, or otherwise offer advantage to the University in their use. In certain instances, therefore, NC State reserves the ability to dictate that the prime contractor must use specific subcontractors for various subtasks.
13. Time and Materials Bid:
A Time and Materials Bid is defined as a two-phased bid process whereby a contractor submits a one-time, open-end bid that pre-establishes labor rates and mark-up percentages for undetermined future work, and then applies those rates to a second project-specific bid at a later date. Time and Materials contracts directly compensate a contractor for labor, material, and subcontractor costs to perform the specified work. See Flowcharts on ” Time and Materials” Contractor Selection Process (Exhibit 6) and the Informal ” Time and Materials” Bid Process for an Individual Project (Exhibit 7). A Time and Materials bid is reserved for selected projects whose scopes are recurring, fairly simple in nature, present short completion deadlines, or are minor in terms of cost. T&M bids are by no means intended to replace established procedures for competitive bidding through the “Group Bid” process.
Time and Materials contracts are typically valid for a two-year period. The contracts can be extended at the discretion of NC State, after incorporating an inflationary adjustment (per the annual National CPI data released by the Bureau of Labor Statistics).
Only contractors on the “A” list, if established for a particular construction specialty, may bid on an open-end Time and Materials solicitation. The same contractor may bid for multiple-specialty Time and Materials contracts, but only if listed on the “A” list, if applicable, for those specialties.
In Time and Materials, it is not possible to pre-identify an outright “low bid” contractor for a project. Even if two contractors submit the same unit prices, they may differ in their own estimate of hours to complete the job, in subcontractor price, in materials cost, and in mark-up percentages. Furthermore, a particular contractor may enjoy a reputation as the highest quality craftsman for a particular construction skill, and may therefore be selected due to special skills. Because of the many different, project-specific factors involved with the nature of Time and Materials contracts, NC State may therefore invite contractors to bid on a project-by-project basis according to the particular advantage that a contractor brings to the University. Therefore, under Time and Materials contracts, there is no guarantee that a contractor will receive work. Even an apparent low-bid T&M contractor may not be offered the opportunity to bid on all projects, due to the many other parameters listed in the Contractor Selection Criteria.
NC State will solicit Time and Materials bids that include but are not limited to: labor rates, subcontractor mark-up percentage, materials mark-up percentage, unit costs, and contingency unit costs. Once bids are received, the contractor bids will be compared against each other for reasonableness. Those contractors judged as having reasonable prices shall be secured as Reasonably Priced Contractors, and a two-year contract signed with each. Those contractors judged to be unreasonably priced will not be contracted with for Time and Materials work for the solicited contract period and any extensions thereof. If a Time and Materials bid solicitation results in poor contractor participation, then NC State reserves the right to solicit additional contractors for prices (while maintaining confidentiality of existing proposals).
Once a Reasonably Priced T&M Contractor accepts solicitation to bid on a specific Time and Materials project, the Design and Construction Services project manager will invite the contractor to review plans, visit the site, and prepare a “Not to Exceed” Time and Materials bid. The bid will reflect estimated hours, subcontractor costs, material costs, any unit costs, if applicable, and a commitment to a specific project schedule. Once received by NC State, the bid will be compared against an internal estimate for reasonableness. Once the bid is judged to be reasonable and funding is approved, the contract will be awarded. If the bid is determined to be high, then both the internal estimate and bid will be scrutinized based upon such reasons as: contractor concerns, NC State assurances, further defining of project scope, discussion about unknown conditions, establishment of unit prices, etc. At this point, based upon discussions, the Contractor may choose to alter or to uphold the original bid. If after scrutiny this bid is judged to be reasonable, then award will be given. If NC State still feels that the first bid is too high relative to internal estimates, then NC State may elect to solicit the project to other T&M contractors for bid, (maintaining confidentiality of the first bid), may elect to bid the project in the Group Bid process, may redesign the project, or take other appropriate action based on the particular situation.
14. Other Considerations
14.1. Not all construction specialties will be pre-grouped for bids.
14.2. NC State reserves the right to directly solicit contractors for “specialized” types of construction work, even for specialized work within a construction discipline. (Examples: Wood floor revarnishing or fume hood installations within the “Mechanical” construction specialty).
14.3. NC State may elect to not use the “Flexible Rotation Pool” when it is advantageous to the University to solicit directly with contractors.
14.4. NC State is not obligated to select the apparent low-bid contractor for a project, and may furthermore select another bidder based upon unit costs.
14.5. If a low bid exceeds the $500,000 threshold for informal contracts, NC State reserves the right to negotiate scope and fees with the contractor.
14.6. NC State will not open a bid if less than three bids are received, unless justifications exists for the bid opening for such reasons that may include but are not limited to: seasonal constraints, lack of contractor interest or availability, lack of specialty contractors, short time frame to complete the project, limited access window to construct the project, a second project advertisement, etc.
14.7. NC State may continually substitute contractors in and out of Bid Groups for reasons outlined in the section on Contractor Selection Criteria.
14.8. No contractor is guaranteed to receive any work under T&M contracts.
14.9. Warranty requirements may dictate direct selection of a specific warranty contractor.
14.10. NC State reserves the right to directly solicit work from a contractor with prior knowledge of a particular building or site. (Example: Rehiring a roofer to patch a particular building he/she has worked on before).
14.11. Contractors who voluntarily participate in design activities are not guaranteed an opportunity to bid when the project moves from design to the construction phase.
14.12. Contractors who bid on a project that is subsequently not awarded are not assured of an opportunity to bid on the project if it is again solicited for bids at a later date.
14.13. Contracting specialties which do not have an “A” or “B” list established represent a situation in which NC State may elect to solicit any contractor in this specialty area for a T&M contract.
14.14. Projects located off of Main and Centennial Campus are not required to comply with this policy.
14.15. Any items or situations that are not mentioned in this rule shall be remedied using the best judgment of NC State Design and Construction Services.
14.16. These rules are subject to change by NC State Design and Construction Services without notice.