Bind Bond Amount and Alternates

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Author Message Ronald L. Geren, RA, CSI, CCS, CCCA, MAI Senior Member Username: specman Post Number: 319 Registered: 03-2003 Posted on Tuesday, August 29, 2006 - 12:06 pm:    Okay, I thought I had the answer, but now I don't know. We have a project that includes a complicated set of alternates (both deductive and addititve, possibly). I've been asked how the amount of the bid bond is calculated based on this complicated set of alternates. My immediate response was that the amount of the bond is determined using the base bid amount. The PM came back with, "Show me where it states that." Well, I looked in A701, Instructions to Bidders, and found that it really doesn't address the issue; and the instruction sheet glances right over it. I then looked to AIA Document B310, Bid Bond, and it, too, doesn't shed any light on this. I then went to our trusty PRM-MOP, and, to my surprise, found that it doesn't cover this particular issue either. Now, to my question: what is typically done to clarify this? Is there an "industry standard," or does it need to be addressed in a Supplementary Instructions to Bidders? Sheldon Wolfe Senior Member Username: sheldon_wolfe Post Number: 210 Registered: 01-2003 Posted on Tuesday, August 29, 2006 - 02:32 pm:    We ask for a bid security based on the maximum amount of the bid, i.e., base bid plus add alternates. Ruppert Rangel, AIA CCS Intermediate Member Username: rangel Post Number: 4 Registered: 08-2006 Posted on Tuesday, August 29, 2006 - 03:24 pm:    I suggest the cost of the bonds be included in each alternate proportionally. Otherwise, if the owner doesn't accept the alternates, they will pay for the higher bond cost if they only accept base bid. We include instructions describing this in Supplemental Instructions to Bidders. Since bond costs are determined by percentage of contract amount, it isn't difficult for contractors to know what their bond costs are for each alternate at bid time. Wayne Yancey Senior Member Username: wyancey Post Number: 173 Registered: 05-2005 Posted on Tuesday, August 29, 2006 - 03:41 pm:    Ronald, I perfer to keep it simple and the bid bond is based on the bid price before alternates. I use the following language in my Alternates section successfully without issue. AWARD/SELECTION OF ALTERNATES A. Indicate variation of Bid Price for Alternates described below and listed in Alternates Form which forms an integral part of the Bid Form. Note that this form requests a 'difference' in Bid Price by adding to or deducting from the base bid price. B. Bids shall be evaluated on 'base bid' price. After determination of preferred bidder, consideration will be given to Alternates and Bid Price adjustments. Like anything, ask 10 people and get 20 opinions. Wayne David R. Combs, CSI, CCS, CCCA Senior Member Username: davidcombs Post Number: 161 Registered: 08-2004 Posted on Tuesday, August 29, 2006 - 05:29 pm:    Our Instructions to Bidders requires the Bid Security to be either 5% or 10% (as determined by Owner) of the amount of the Base Bid. Keep in mind what the Bid Security is for: To defray the Owner's added costs to either 1) rebid the project, or 2) go to the next lowest bidder - in the event the apparent low bidder fails to enter into an agreement with the Owner. So what is the likelihood that the difference between the Base Bid only, and the Base Bid plus Add Alternates is so great as to make or break the amount as being adequate for the Owner's purposes in the event of a default? I think a percentage of the Base Bid only is sufficient.