12.2 Bidding Practices, Bid Documents, and Competitive Bidding Law

Bidding Practices, Bid Documents, and Competitive Bidding Law

Quick Answer: An estimate is your internal cost calculation. A bid is a binding offer at a price. A contract exists only on acceptance. Write every roofing bid with a defined scope, explicit exclusions, unit prices for the unknowns (deck replacement is the classic), and an expiration date. On California public works, the Subletting and Subcontracting Fair Practices Act requires the prime to list every subcontractor performing work in excess of one-half of 1 percent of the total bid, or $10,000, whichever is greater — and then generally forbids substituting them without the awarding authority's consent. That listing requirement exists to kill bid shopping.

Contract Requirements and Execution is 21 percent of the Law and Business exam, the single largest content area, and bidding is its first sub-topic.

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1. Four Words That Are Not Synonyms

The consumer-facing consequence: in California, a written "estimate" handed to a homeowner must still carry the contractor's license number, and a homeowner who signs a document that recites a price, a scope, and the parties has probably signed a contract regardless of the heading. If it is not meant to be a contract, say so on its face.

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2. What a Roofing Bid Must Contain

Scope, stated affirmatively. Squares, slope, system and manufacturer, product line and color, underlayment type and plies, ice barrier where required, flashing metals and gauges, ventilation type and quantity, tear-off layers included, and the number of inspections coordinated.

Exclusions, stated explicitly. These are the lines that decide whether a change order is collectible:

• Structural framing repair or reinforcement
• Deck replacement beyond a stated allowance, priced per sheet or per square foot as a unit price
• Dry rot, termite, or fascia repair
• Asbestos or lead abatement, and testing of unknown materials
• Solar panel detach and reset
• HVAC curb, duct, or equipment modification
• Interior repairs, painting, or drywall
• Gutter replacement, unless included
• Permit fees, if not carried in the price

Unit prices. A roofing bid without a unit price for plywood replacement is an argument waiting to happen. State it as a number — "$X per 4×8 sheet of 15/32-inch CDX, installed" — so the change order is arithmetic rather than negotiation.

Commercial terms. Price and payment schedule, a statement that the deposit complies with the statutory residential cap, the schedule window, the workmanship warranty term, the manufacturer warranty being provided, and an expiration date — 15 or 30 days is typical, because material prices move.

Attachments. License number, workers' compensation and general liability certificates, manufacturer product data, and the sample contract.

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3. The Competitive Bid Package on Public and Commercial Work

A public works or large commercial bid usually requires:

• The bid form, completed exactly as issued — deviations get bids rejected as non-responsive
• Bid bond or bid security, commonly 5 to 10 percent of the bid
• Subcontractor listing per the Fair Practices Act
• Non-collusion declaration
• DIR public works contractor registration number
• Acknowledgement of every addendum — a missed addendum acknowledgement is a classic disqualification
• Prequalification statements, licensing certification, and any required small-business or DVBE documentation

Responsive vs. responsible. A bid is responsive if it conforms to the solicitation's material requirements. A bidder is responsible if it has the capacity, integrity, and licensure to perform. A public entity may reject a non-responsive bid outright; declaring a low bidder non-responsible requires notice and an opportunity to be heard.

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4. The Subletting and Subcontracting Fair Practices Act

The Legislature found that bid shopping (a prime disclosing a sub's number after the bid to get it beaten) and bid peddling (a sub offering to undercut a listed number after award) produce poor quality, deprive the public of fair competition, and cause insolvencies. The Act, at Public Contract Code § 4100 and following, addresses both.

The listing requirement. A prime bidder on a California public works project must list in its bid the name, location of the place of business, license number, and portion of work of each subcontractor who will perform work or render service in an amount in excess of one-half of 1 percent of the prime contractor's total bid, or $10,000, whichever is greater.

The substitution restriction. After award, the prime generally may not substitute a listed subcontractor without the awarding authority's consent, and consent is available only on statutory grounds — for example, the listed sub refuses to execute a written contract, becomes insolvent, fails to perform, fails to obtain a required bond, or is not licensed. Unauthorized substitution exposes the prime to penalties and possible cancellation of the contract.

Failure to list. A prime that performs work itself in excess of the threshold without listing anyone for it is generally deemed to have agreed to perform that portion with its own forces.

For a roofing subcontractor, the Act is protection: once you are listed, your number cannot be shopped, and you cannot be swapped out simply because someone later offered less.

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5. Bid Mistakes

A bid is an offer, and an offer that has been accepted is a contract. California nonetheless provides relief for genuine mistakes on public works bids.

The elements of relief. The bidder must show that a mistake was made; that it gave the public entity written notice within five working days after the bid opening, specifying in detail how the mistake occurred; that the mistake made the bid materially different from what was intended; and that the mistake was a clerical or mathematical error, not an error in judgment or in reading the plans and specifications.

What is not relief-eligible: deciding you underpriced the labor, misjudging productivity, or failing to read an addendum. Those are business errors, and the bid stands.

Prevention beats relief. Use a takeoff checklist, have a second person verify quantities and the extension arithmetic, lock sub and supplier quotes in writing with their own expiration dates, review exclusions out loud before submitting, and never let a bid go out in the last five minutes without a check.

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6. Deciding Whether to Bid At All

Not every invitation deserves a response. Screen for: work inside your classification and competence; a realistic schedule; bonding and insurance requirements you can actually meet; an owner or general contractor with a payment history you can verify; contract terms you can live with — pay-if-paid clauses, broad indemnities, no-damages-for-delay clauses, and liquidated damages all price the risk; and the opportunity cost of the crews and cash the job will consume. A bid you cannot profitably perform is worse than no bid.