Contractor Selection

• Author: Carol J. Patterson - Ross J. Altman - Stephen A. Hess - Allen Overcash
• Pages: 225-253

CHAPTER

225

8

8.01 IntroductIon

Perhaps the most signicant differences between construction in the public

and private sectors lie in the area of procurement. Unlike private projects, pub-

lic procurement is extensively regulated and generally requires that contrac-

tors be selected through a competitive, sealed bidding process.1 In addition to

securing for the general public the lowest price for a project, the competitive

bidding process is perceived to be the best means for “giv[ing] all qualied

contractors the opportunity to compete for government contracts while, at the

same time, avoiding favoritism, collusion or fraud.”2 As discussed in the sec-

tion that follows, private owners enjoy considerably more freedom when pro-

curing design and construction services.

1.

PhilliP l. Bruner & Patrick J. O’cOnnOr, Jr., Bruner and O’cOnnOr On cOnstructiOn law,

§2:31

(2016).

2. Id. §2:22, n.4 (quoting

w. nOel

keyes, GOVernMent cOntracts under the federal acQuisitiOn

reGulatiOn

14.1, at 153 (1986), 48 C.F.R. §14.1 (2017)) §2:31.

Contractor Selection

R. HARPER HECKMAN

pat54645_01_b01_001-282.indd 225 6/28/19 2:04 PM

CONSTruCTiON LAW

226

8.02 prIvate procurement generallY

Procurement of construction services on private projects typically is character-

ized by “offer and acceptance” negotiations, which negotiations leave owners

free to contract for their project in whatever manner and with whichever con-

tractor they choose. Many private owners elect to contract rst for the project’s

design and then for its construction on a “Design-Bid-Build” basis. However,

many means exist by which a private owner may contract for the construction

of a project; they include:

❒Design-build projects

❒Construction management (agency)

❒Construction management (at-risk)

A detailed discussion of the various project delivery systems available to the

private owner can be found in Chapter 4. A private owner also may elect to

construct its project using some or all of the following pricing mechanisms:

❒Lump sum, or “xed price” contracts

❒“Cost plus fee” contracts (with or without a guaranteed maximum

price)

❒“Unit prices”

For more information regarding these pricing mechanisms, please refer to

Chapter 9.

Private owners select their contractors in a variety of ways. Indeed, own-

ers hire contractors based upon the same criteria on which they hire lawyers,

including the contractor’s marketing efforts, reputation, and references. It is

not uncommon for a private owner to send a request for proposal to two or

more contractors, review their written submissions, and then meet with the

nalists before deciding which contractor to engage. While price is an import-

ant factor in the owner’s decision making, price is not the only criterion.

Even when an owner elects to solicit competitive bids, he or she still is

allowed considerable freedom to negotiate privately with each bidder before

deciding which bid to accept. For this reason, most competitively bid projects

in the private sector are considered “closed bidding” projects, as distinguished

from the “open bidding” protocol found in the public sector, in which all bids

are opened simultaneously with the contract awarded to the lowest bidder.

Nevertheless, much of the discussion concerning public bidding that fol-

lows, particularly those sections having to do with the bid advertisement and

package, is applicable to the private sector as well. In reviewing these concepts,

however, the reader should be cognizant of the fact that private procurement

is signicantly less structured than its public counterpart. For example, private

pat54645_01_b01_001-282.indd 226 6/28/19 2:04 PM