Contractor selection: qualification and bid evaluation

Abstract

Historically the selection of contractors in North America was almost exclusively based on the lowest tendered price. Owners utilized competitive tendering for its simplicity and fairness in the award process. More recently, owners have reconsidered the use of low price as the basis for selecting contractors and therefore have attempted to modify the traditional low bid system with qualification and evaluation clauses. Qualification and evaluation clauses have caused considerable controversy in the public sector, where contractors are concerned about the legitimacy of tendering procedures when public funds are used. Although contractors agree that the system needs improvement, there are conflicting views on what should be done. This paper provides a summary of traditional tendering procedures and illustrates two possible modifications to the contractor selection process. The intended audience is practicing professionals, particularly those in the public sector where the objectivity of the tendering process is under such scrutiny. Evaluation is selected as the direction with the most potential for improvements. The evaluation option is analyzed by examining its legal implications through a discussion of recent case law. Finally, recommendations for implementing an evaluation system are discussed to address the issues identified through the legal discussion and from the opposing views in the construction industry. Key words: construction, contract law, competitive bidding, contractor qualification, bid evaluation.