Proper Use of Bid Alternates

 

What Are Bid Alternates?

Bid alternates are specific components of a construction project that are not included in the base price of a bid or proposal.  Alternates are called out separately on the request for proposals or bid form, along with a request for pricing aside from the contractor’s base bid.  In most cases, the owner’s decision to include an alternate in the project is not determined until the time of the contract award.

How And Why Should Alternates Be Used?

Bid alternates can be used by an owner to price out various options it has in mind for a project.  Examples include different or additional materials, equipment or systems, construction methods, or completion dates.  A bid alternate may also be simply a defined expansion of the project scope.  Similarly, on a private project, and unless otherwise specifically instructed by the owner not to provide alternates, a contractor may propose alternates as a means to value engineer or otherwise add value to the project.

An Owner who asks for alternates should be careful to provide clear instruction to bidders, so that the owner can compare bids on an “apples to apples” basis.  Contractors should take care to follow the instructions to bidders, and seek clarification if necessary to ensure its bid is responsive to the owner’s requests.  On the other hand, owners should take care to ensure that information provided to bidders to price alternates is as detailed as the information provided for the base scope of work.

On public projects, providing the same opportunity to all bidders is the general measure to assess the legitimacy of the bid and award.  Indeed, and misuse of alternates is a common reason for bid disputes.  For example, in Mechanical Contractors Assn. of Cincinnati. v. Univ. of Cincinnati, through its representative, the University encouraged bidders to propose their own alternates for materials or design work, which was not shared with the other bidders.  Mechanical Contractors Assn. of Cincinnati, 153 Ohio App.3d 466, 2003-Ohio-1837, ¶ 27 (10th Dist.). Further, some, but not all of the bidders were allowed to clarify, or revise and amend their initial bids.  Id. The court held that the bids could not have been judged on an “apples to apples” basis, thereby falling short of the public bidding requirements in Chapter 153 of the Ohio Revised Code.  Id. at ¶ 13, 27.

Application Of Bid Alternates After Contracting

An owner may also elect to ask for alternate pricing for likely change orders during the competitive bidding process, which would leverage the owner’s pre-contract position to obtain better pricing.  The owner can reserve the right to reinstate alternates at the contractor’s bid price.  Depending on the contract language, the alternate work would then be added to the contractor’s scope through the change order process.

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