from 1951 to 1959 Dredge was a series of defining sources featuring Jack Webb as Sergeant Joe Friday. Joe was famous for a line of questioning he used: “Just the facts, ma’am!”
Surety companies are also required to collect data when an offer bond has been issued. It is an important process with implications for both safety and the contractor.
So here are the facts, lady!
Bid results are the various bid amounts submitted by contractors pursuing a particular project. Bids are submitted at a designated time and place. The low, second, third, etc. bidder list, including company name and dollar amount, are the bid results.
The first party to know this information may be the contractor. They often attend the bid opening and record the results. Remember, they have a vested interest in the outcome. They hope to acquire a new project.
It is important that you report the results immediately to the bail bond company. This is why:
Timely Issuance of Compliance Guarantee
If the contractor is a low bidder (offering the most favorable price to do the job), an award can be expected. The performance and payment bond will be required on a certain date to avoid the loss of the project. Reporting the results of the offer is the first step in this process.
Excessive bid margins
A “bid spread” occurs when there is a significant difference (>10%) between the lowest and second lowest bidder. This is a red flag for security and the contractor. All the bidders wanted the work. They invested time and money in developing their proposal. An excessive bid spread means that the low bidder has a unique advantage (better experience, previous experience, special equipment, lower material prices, etc.) over the other bidders. GOLD they made an offer calculation error and are underrated (*Why is this a concern?)
If the contractor has a special advantage, they must share this information with the surety company to get the P&P surety when needed. The bond must be sure that the project will be completed successfully.
If they made a mistake, they must notify the lender/owner of the project that they wish to withdraw their offer. If done promptly, they can avoid having a bid bond claim (for not moving forward).
restore capacity
When a bid bond is issued, underwriters consider that a portion of the contractors’ guarantee line is in use, with the expectation that they may win the project and need a P&P bond. If the contractor/bidder is not the low bidder, capacity is restored to their guarantee line to support another project – as soon as security is notified.
For all these reasons, immediate notification of the results of the offers is necessary. A tight offer is a win for the contractor and the warranty. The offeror acquires additional sales volume and the bond registers a premium. This is how we all make money.
* Why is an overbid cause for concern?
If the contractor goes ahead with a project that is priced low, you may end up losing money on the job.
It is also a problem for the bond, because they are the guarantor of the project. They must complete the work if the contractor does not comply and rely on the fact that the the amount of the contract is adequate to achieve this. If not, the guarantee could face a net loss.
Excessive bid spreads are bad for everyone, including the obligate. If they award a project below price, they may end up with poor workmanship, missed deadlines, and possibly a broken contract. lady!