TxDOT Procedure for Evaluating Unbalanced Bids

1. Unit bid price data for specific items of work is first compared against the corresponding engineer’s estimate using a computer program. The program also makes interest calculations to determine potential interest losses. This is done to determine projects that need closer examination. The items of work that are reviewed are those that have been abused based on past experience.

2. For projects identified in step one, the unit price bid for each item is compared to the estimated unit price on the engineer’s estimate. For those items that vary from the estimate outside a specific range, a further evaluation is made. The range is 100% above or 50% below the estimate for major items and 200% above or 75% below the estimate for minor items. Major items are defined as 5% of the contract or $100,000 whichever is less.

3. For items identified in step 2, the estimated quantity is verified. If the quantity is found in error, the unit bid price is extended with the quantity to determine if it changes who is low bidder. If the low bidder is not affected, the contract may be awarded. If the low bidder is affected, all bids will be rejected and the project re-let.

4. If quantities are found to be accurate, the bid may be either mathematically unbalanced or materially unbalanced. To determine whether a bid is mathematically or materially unbalanced, TxDOT calculates monthly payout during the life of the contract based on an assumed schedule. This payout is compared to the estimated payout of the second bidder. If earlier payout to the low bidder results in loss of interest to the State in an amount greater than the difference in low and second bid, the bid is determined to be potentially materially unbalanced, as it may not result in the overall lowest cost to the State. With this scenario, the low bidder is invited to meet with TxDOT and present his/her schedule, including revised monthly payout. If the contractor can show a reasonable expectation that loss of interest is less than the difference in low and second bid, the low bid is considered mathematically unbalanced and may be awarded. If the contractor cannot show that loss of interest is less than the difference, the bid is considered materially unbalanced. All bids will be rejected and the project re-let.