5.1 Preparing Bids and Proposals

5.1 Preparing Bids and Proposals

A bid is not a marketing flyer. On the Business & Finance exam it is an offer that, if accepted, can bind the qualified business to a price, a schedule, and a license-scope promise. The 2026 B&F list that supports this chapter is the Contractors Manual 2025, Builder's Guide to Accounting (2001), and the American Institute of Architects (AIA) documents A201-2017 (General Conditions of the Contract for Construction), A401-2017 (Standard Form of Agreement Between Contractor and Subcontractor), and A701-2018 (Instructions to Bidders). Area B item 4 tests whether you can prepare that offer without stepping outside a Class A or Class B ticket, without forgetting the public-works bond, and without leaving overhead on the table.

Bid, proposal, and estimate are not synonyms

An estimate is an internal takeoff and cost forecast. It is not an offer. A proposal or offer of services is a communication to a customer stating the work you will do and the price or pricing method; under F.S. 489.119(5)(b) it is one of the documents that must carry the contractor's certification or registration number. A bid is a proposal submitted in a competitive process, often on a required bid form, often with bid security, and often under AIA A701-2018. Treating a napkin estimate as a bid is how contractors accidentally form contracts they cannot perform.

F.S. 489.119(5)(b) is mechanical: the registration or certification number shall appear in each offer of services, business proposal, bid, contract, or advertisement, regardless of medium. F.S. 489.119(5)(a) separately requires the number on each permit application. First-offense number failures start with a notice of noncompliance; failure to correct within 30 days, or a subsequent offense, can draw a fine or citation. Missing the number on a school-board bid form is both a board-rule problem and a responsiveness problem.

On residential repair, restoration, improvement, or construction, F.S. 489.1425 requires a written Florida Homeowners' Construction Recovery Fund notice in the agreement or contract unless the value of all labor and materials does not exceed $2,500. The statement must be substantially in the statutory form and must be followed immediately by the Construction Industry Licensing Board (CILB) address and telephone number. First violation: the board may fine up to $500. Second or subsequent: $1,000 per violation, deposited into the recovery fund. A changeout proposal that is later signed as the contract still needs that notice.

F.S. 489.126 is the companion money rule: funds received for a job must be applied to that job. A large residential down payment also starts permit-application and start-of-work clocks in that statute. Do not take a 50 percent "hold the price" deposit on a home changeout and spend it on another project's condensers.

Invitation to bid and AIA A701-2018

When the owner uses AIA A701-2018, the Bidding Documents typically include the advertisement or invitation to bid, the Instructions to Bidders, the bid form, and the proposed Contract Documents (drawings, specifications, A201 general conditions, and supplementary conditions). A701 tells bidders how to obtain documents, how to request clarifications, how addenda will be issued, how to submit and withdraw bids, and whether bid security and performance and payment bonds are required. The type and amount of bonding, when required, is established in the bidding documents and, on many AIA jobs, by AIA A312 payment and performance bond forms — not by a single HVAC percentage invented in a sales meeting.

High-yield A701 mechanics:

• Bidder's representations. Submitting a bid represents that the bidder has read the documents, visited the site and become familiar with local conditions, and based the bid on the documents as modified by addenda — not on a salesman's memory of how the shop "always does 5-ton changeouts."
• Addenda. Written or graphic instruments issued before the date for receipt of bids. They become part of the Proposed Contract Documents. Failure to acknowledge an addendum that adds stainless drain pans, a crane staging plan, or a minimum efficiency is a classic bid rejection.
• Substitutions. Requests for product substitutions are made before the bid date in the manner A701 and the specifications require. Substituting a cheaper condenser after award without a change order is not value engineering; it is a specification breach.
• Bid form, unit prices, allowances, alternates. The bid must be on the required form. Allowances are specified dollar amounts inside the bid for work that is not fully designed. Alternates are additive or deductive prices the owner may accept. Unit prices stated in the bid become the rates for extras and credits if the documents say so.
• Bid security. If the advertisement or instructions require it, each bid is accompanied by a bid bond or other security in the amount stated in the bidding documents. Bid security is forfeited if the low bidder refuses to execute the agreement or provide required performance and payment bonds.
• Modification or withdrawal. Written notice must arrive before the time set for opening. After opening, a bid is generally an irrevocable offer for the period stated in the instructions.
• Consideration of bids. The owner may reject any or all bids and waive informalities if the instructions preserve that right. Post-bid, A701 addresses contractor qualification statements and lists of proposed subcontractors.

Lump-sum, unit-price, and cost-plus

The pricing method in the offer is a risk allocation, not a synonym for how the invoice is formatted.

A cost-plus without a GMP is not a license to dump the company picnic onto the job. The offer must define loaded labor rates, material handling, equipment rental, and whether company overhead sits inside the fee or is billed as a cost. A GMP still needs an open-book job-cost ledger of the kind Builder's Guide to Accounting describes.

License scope is part of the bid

F.S. 489.105 is not a trade-exam-only topic. Class A air-conditioning contractors have unlimited capacity. Class B is limited to 25 tons cooling and 500,000 Btu heating in any one system. Class B does not pick up boilers, unfired pressure vessels, or pneumatic control piping that sit in the Class A statutory scope. Class B candidates still need the theory of larger systems for the broader B&F and business-practice questions, but they do not bid those installs. F.S. 489.105(6) treats the attempted sale of contracting services and the negotiation or bid for those services as contracting. F.S. 489.128 then makes a contract entered into by an unlicensed contractor unenforceable in law or in equity by the unlicensed contractor, and it kills that contractor's lien or bond claim. A business organization is unlicensed if it lacks a primary or secondary qualifying agent for the scope of the work to be performed under the contract.

So: do not bid a 40-ton rooftop unit on a Class B license. Do not relabel it "maintenance" or "equipment only" to dodge the tonnage cap. Do not bid statewide on a registered (not certified) ticket outside the county of registration. Certified Class A or B may contract statewide, but still pull local permits and local business tax receipts.

F.S. 489.128(1)(c) dates licensure to the effective date of the original contract (or last signature, or first furnishing if the contract is silent). Getting licensed after you already signed a 40-ton Class B contract does not cure the original unlicensed contract. Other parties' rights, and a surety's obligations, are not destroyed — but you, the unlicensed contractor, cannot enforce.

A joint venture, including a joint venture of two qualified HVAC firms, is itself a separate organization that must be qualified (F.S. 489.119(2)(e)). Pairing a Class B company with a Class A friend on a handshake does not create a legal 40-ton bidder.

Public work and F.S. 255.05

You cannot lien public property under Chapter 713. Payment protection on public buildings and public works is the payment and performance bond in F.S. 255.05. Before commencing (or recommencing after default), the contractor executes and records the bond in the county where the improvement is located and gives the public entity a certified copy of the recorded bond. The public entity may not pay until that copy is delivered. The bond amount equals the contract price, except the mega-project exception above $250 million, which a 40-ton rooftop bidder will not see.

Thresholds the exam actually uses:

• Work done for the state and the contract is $100,000 or less: no payment and performance bond is required.
• County, city, political subdivision, or public authority: the awarding official may exempt a contract of $200,000 or less.
• For the state, the Department of Management Services may delegate authority to exempt contracts more than $100,000 but less than $200,000.

If an exemption is granted, 255.05(1)(f) points to retainage-up-to-5-percent procedures on contracts of $200,000 or less. None of this substitutes for CILB licensing insurance under Rule 61G4-15.003 ($100,000 public liability and $25,000 property damage). A 255.05 bond is a three-party surety product, not an insurance policy you use up.

A claimant not in privity with the contractor must serve a written notice of intent to look to the bond before commencing or not later than 45 days after commencing, and a sworn notice of nonpayment no earlier than 45 days after first furnishing and no later than 90 days after final furnishing. Suit on the bond is generally within 1 year after performance of the labor or delivery of materials. Those clocks belong in the bid and subcontract file even when you are the HVAC sub, not the prime.

How to write the offer

A complete HVAC offer identifies the parties (the qualified business name as it appears on the CILB certificate and Sunbiz, not a nickname on the truck), the qualifying agent's license number, a scope that matches the plans and addenda, inclusions and exclusions (high-voltage beyond HVAC exceptions, gas piping, ceiling repairs, building-automation integration), price and pricing method, allowances and alternates, time of commencement and substantial completion, payment terms (deposits, progress, retainage), permit responsibility, equipment brands or "or equal" language, warranty, and, on residential work over $2,500, the 489.1425 recovery-fund statement.

Review the invitation for liquidated damages, no-damage-for-delay, pay-if-paid (stricter than pay-when-paid), additional-insured demands above your CILB floor, and whether you must furnish performance and payment bonds. If you cannot obtain the bond, do not bid. If the drawings show a 40-ton rooftop unit and you hold Class B, do not bid.

Florida HVAC scenario

Coastal Air, Inc. is qualified by a certified Class B agent. A county issues an invitation to bid, using AIA A701-2018, to replace a 40-ton packaged rooftop unit on a public library, with bid security and a 255.05 payment and performance bond. Addendum 1 raises the specified efficiency and adds a crane-and-curb alternate. Coastal's estimator prices a 20-ton unit "because that is what we usually hang," skips the addendum, and submits a lump-sum bid without the license number on the bid form.

Three independent failures: (1) the 40-ton unit exceeds Class B's 25-ton / 500,000 Btu per-system cap, so the bid is unlicensed contracting under 489.105(6) and an unenforceable contract under 489.128 if awarded; (2) failure to acknowledge Addendum 1 is a responsiveness defect under A701; (3) missing the certification number violates 489.119(5)(b). The county job is public work, so there is no Chapter 713 lien on the library; if the contract exceeds the 255.05 exemption, Coastal would also have needed bonding capacity equal to the contract price. The correct Class B response is to decline, or to participate only through a properly qualified joint venture in the proper category. A Class A firm can bid the 40-ton unit, acknowledge the addendum, put the license number on the bid form, include general-conditions costs for crane, curb, dumpster, and occupied-building labor productivity, and recover company overhead in the lump sum.