1. How Low Can
You Go?
How to Handle
Unusually Low Bids
Presented by
Scott H. Campbell
Best Best & Krieger LLP
300 South Grand Ave. 25th Fl.
Los Angeles CA 90071
213-617-8100

2. DEALING WITH LOW BIDS
Pre-Award
Precautions
Award of Contract
Post-Award
Monitoring

3. DEALING WITH LOW BIDS
Pre-Award
Precautions
Award of Contract
Post-Award
Monitoring

4. Large Disparity Between Bids
EXAMPLE A
Low Bid $8,288,180
High Bid $16,439,786
Highest Bid $16,894,000
Difference of $8 Million
EXAMPLE B
Low Bid $11,955,000
High Bid $22,670, 624
Highest Bid $24,135,000
Difference of $10.7 Million

5. PRE – AWARD PRECAUTIONS
Prequalification
Project Walk and
Meeting
Disclosure of
Relevant Facts
Contractual Language

6. Special Contractual Language
• 2009 Greenbook: Mark-
Up for Contractor and
Sub-Contractor work:
“A reasonable
allowance for overhead
and profit.”

7. Liquidated Damages Provision
6-6.3. Payment for Delays. Consistent with Public Contract
Code Section 7102, the Contractor will be compensated for
damages incurred due to delays for which the Agency is
responsible. The parties agree that determining Contractor’s
exact delay damages are and will continue to be impracticable
and extremely difficult. As such for each calendar day in
excess of the time specified for completion of the work, as
adjusted in accordance with 6-6, the Agency shall pay to the
Contractor ______ per calendar day. Such amount shall
constitute the only payment allowed for any Agency caused
delays and shall necessarily include all overhead, all profits, all
administrative costs, all bond costs, all labor, materials,
equipment and rental costs and any other costs, expenses and
fees incurred or sustained as a result of such delays.”

8. Bid Evaluation &
Award of Contract
• Evaluation by
City Staff
• Decision by City
Council

9. Public Contract Code
Contracts must be
awarded to the lowest
responsible bidder.
 Lowest
 Responsible: Responsible Bidder,” as
used in this part, means a bidder who has
demonstrated the attribute of trustworthiness, as well
as quality, fitness, capacity, and experience to
satisfactorily perform the pubic works contract.
 Bidder: Bid satisfies the
bid requirements.

10. EVALUATION BY STAFF
& STAFF REPORT CONTENTS
• Bidders can withdraw
bid if calculation
mistake
• Explanation of price
difference
• References
• Bond company
assurance

11. Decision Options
• Award Contract
• Reject & Re-bid
 Will a better bid amount result?
 Time constraints?
• Reject and negotiate.

12. Rejecting and Negotiate
California Public Contract Code
Section 20167
“After rejecting bids, the legislative body may pass a resolution by
four-fifths vote of its members declaring that the project can be
performed more economically by day labor, or the materials or supplies
furnished at a lower price in the open market. Upon adoption of
the resolution, it may have the project done in the manner
stated without further complying with this chapter.”

13. POST-AWARD MONITORING
• Schedules, Schedules
Schedules
• Change Order
Procedures
• Bond Company
Notification
• Terminating the
Agreement