Following a formal sealed bid advertisement, an infrastructure project had only one contractor submit a bid for the project. Under a sealed bid procurement process, does more than one bid need to be received before proceeding with the project?
Date Published: May 2015
When only one bid is received in response to an invitation for bids, the grantee needs to carefully review and evaluate the relevant circumstances in making a decision about how to proceed. The review should include examination of the specifications to consider if they were sufficiently clear and not unduly restrictive, the process used to solicit adequate competition so that it could have been reasonably assumed that more than one bid would have been submitted, whether the price of the bid received is fair and reasonable, and if the bid is otherwise in accordance with the invitation for bids. This determination should be placed in the project file. Based on this review, it may be concluded that the work should be re-bid, with modifications as appropriate, using the competitive proposal method of procurement, or that it is appropriate to accept the one bid received. All of the requirements of 24 CFR 85.36(d)(4) must be met for procurement by noncompetitive proposals if the one bid received is accepted. In addition, the municipality must maintain documentation on file that shows its unsuccessful attempts to conduct procurement by sealed bid and competitive proposals.
In order to determine that the price is fair and reasonable, the grantee should compare the bid price to the in-house cost estimate and past prices paid for the same or substantially similar item(s). The grantee should also try to obtain information from the marketplace if that was not already done in developing the estimate of cost. The grantee’s attorney should also review the matter to determine if one bid can be accepted under state and/or local law or if the grantee must re-bid. Additional information on procurement requirements may be found at 24 CFR 85.36 and 24 CFR 84.40-84.48.