Bid Award Procedures

Bid award procedures establish the formal process for selecting contractors and executing legally binding construction agreements. These procedures protect project stakeholders through structured evaluation, bonding requirements, and comprehensive contract documentation.

Award Notification Process

Bid Evaluation Completion

Following bid evaluation and approval by the owner, the award notification initiates the contract execution phase:

Timeline Requirements

Public projects: Award within 60-90 days of bid opening per procurement regulations
Private projects: Award timeline specified in instructions to bidders
Extension provisions: Written notice if evaluation period requires extension
Bid validity period: Typically 60-90 days from bid opening date

Award Decision Documentation

Bid tabulation sheet with all submitted prices
Evaluation criteria scoring (if applicable)
References verification results
Qualifications assessment documentation
Owner approval resolution or authorization
Justification for award recommendation

Notice of Award

The formal notice of award communicates the owner’s intent to execute a contract with the selected bidder:

Required Content

Project identification and contract number
Bid amount to be awarded
Contract execution timeline
Required submittal deadlines for bonds and insurance
Scheduled date for contract signing
Notice to proceed anticipated date
Contact information for contract administration

Delivery Methods

Certified mail with return receipt requested
Hand delivery with signed acknowledgment
Electronic delivery with read receipt confirmation
Public posting requirements for government projects

Non-Award Notifications

Unsuccessful bidders receive formal notification after award decision:

Communication Requirements

Notification within 5-10 business days of award
Statement of award decision without detailed justification
Availability of bid tabulation results
Debriefing opportunity for public projects
Return of bid security procedures
Thank you for participation

Contract Execution Requirements

Pre-Execution Submittals

Before contract execution, the successful bidder submits required documentation:

Bonding Documents

Performance bond (typically 100% of contract value)
Payment bond (typically 100% of contract value)
Surety company authorization and financial rating verification
Power of attorney for surety agent
Consent of surety for contract modifications

Insurance Certificates

Commercial general liability insurance
Workers compensation and employers liability
Automobile liability insurance
Builder’s risk insurance (as specified)
Professional liability (if design-build or design-assist)
Umbrella/excess liability coverage
Named additional insured endorsements
Waiver of subrogation endorsements

Business Documentation

Business license verification
Contractor license verification (HVAC specific)
EPA Section 608 certification documentation
Tax identification number
Certificate of good standing
Non-collusion affidavit
Equal employment opportunity certification

Contract Document Preparation

The contract administrator assembles the complete contract document set:

Agreement Forms

AIA A101 (Stipulated Sum) or equivalent
AIA A102 (Guaranteed Maximum Price) for CM projects
AIA A103 (Cost Plus Fee) when applicable
Custom agreement forms for specialized delivery methods
Signature blocks for all parties
Notarization requirements

General Conditions

AIA A201 (General Conditions of the Contract for Construction)
Supplementary conditions modifying A201
Special conditions specific to project requirements
Jurisdictional requirements and local amendments

Technical Specifications

Complete project manual with all divisions
Division 23 (HVAC) specifications in their entirety
Referenced standards and codes
Addenda issued during bidding phase
Specification amendments or clarifications

Drawings

Complete construction drawing set
HVAC mechanical drawings (all sheets)
Coordination drawings (if available)
Site plans and civil drawings
Architectural and structural drawings for reference
Electrical drawings for coordination
Addenda drawings issued during bidding

Bidding Documents

Bid form as submitted by contractor
Bid security instrument
Subcontractor list
Unit prices (if applicable)
Alternate prices accepted
Allowance confirmations

Contract Review and Negotiation

For negotiated contracts or unbalanced bids, limited negotiation may occur:

Permitted Negotiations

Clarification of scope ambiguities
Unit price adjustments for quantity variations
Allowance value refinements
Schedule adjustments for owner requirements
Payment terms within policy limits
Warranty term enhancements

Prohibited Changes

Base bid amount reduction beyond error corrections
Scope reductions to meet budget
Specification downgrades after award
Subcontractor substitutions without justification
Insurance or bonding requirement reductions

Contract Execution

The formal signing of the contract creates legally binding obligations:

Signature Sequence

Contractor signs and dates all copies
Surety executes bonds with corporate seal
Insurance broker certifies coverage
Owner representative reviews complete package
Owner executes contract with appropriate authority
Architect/engineer receives fully executed copy
Distribution of executed contracts to all parties

Execution Timeline

Contractor: Within 10 days of receiving contract documents
Owner: Within 5 days of receiving contractor-executed documents
Total execution period: Not to exceed 15 days from award notification

Performance Bonds

Performance bonds guarantee the contractor’s faithful performance of contract obligations.

Bond Requirements

Coverage Amount

Standard requirement: 100% of original contract value
Includes approved change orders up to specified limit (typically 10-25%)
Bond increase required for change orders exceeding automatic coverage
Separate bonds for early release portions
Final bond amount reconciliation at project completion

Surety Qualifications

Treasury Department approved sureties only
A.M. Best rating of A- or better (minimum)
Federal projects: Listed on Treasury Circular 570
State projects: Authorized to conduct business in project state
Financial capacity exceeding 10x single project exposure
Surety company aggregate bond capacity verification

Bond Provisions

Contractor Default Triggers

Abandonment of work
Failure to complete work within contract time
Insolvency or bankruptcy filing
Material breach of contract terms
Failure to pay subcontractors or suppliers
Loss of required licenses or certifications

Surety Obligations Upon Default

Complete remaining work through completion contractor
Compensate owner for cost premium above contract balance
Pay liquidated damages if applicable
Satisfy subcontractor and supplier claims
Correct defective work discovered during default investigation
Reimburse owner for additional design and inspection costs

Surety Rights

Demand reasonable evidence of contractor default
Access to project site and contract documents
Participation in cure plan negotiations
Option to finance contractor completion
Option to tender completion to owner with payment
Subrogation rights against defaulted contractor

Bond Claims Process

Notification Requirements

Written notice to surety within timeframes specified (typically 30-60 days of default event)
Detailed description of contractor default
Documentation of attempts to cure
Current project status and percentage complete
Remaining work scope description
Estimated cost to complete
Outstanding payment obligations

Surety Investigation

Site inspection and work verification
Review of payment applications and change orders
Contractor financial condition assessment
Subcontractor and supplier claim verification
Defective work documentation
Schedule impact analysis
Cost to complete estimation

Payment Bonds

Payment bonds protect subcontractors, suppliers, and laborers against non-payment by the prime contractor.

Bond Structure

Coverage Scope

All labor provided on the project
All materials incorporated into the work
Equipment rental for project use
Subcontractor overhead and profit
Retention held by prime contractor
Multi-tier protection for sub-subcontractors

Bond Amount

Typically 100% of contract value
Matches performance bond amount
Automatic increase provisions with approved change orders
Separate bonds for phased projects

Claimant Rights

Eligible Claimants

First-tier subcontractors with prime contractor contract
Second-tier subcontractors with first-tier contract
Material suppliers (direct and indirect)
Equipment rental companies
Laborers employed on project
Third-tier subs on federal projects (Miller Act)

Notice Requirements

Federal projects (Miller Act): Written notice to prime within 90 days of last furnishing
State projects: Varies by state Little Miller Act provisions (30-90 days typical)
Notice must describe labor/materials provided
Notice delivery methods specified in bond
Owner not required to receive notice (claim is against surety)

Claim Filing Deadlines

Federal projects: 1 year after final payment to prime
State projects: 6 months to 1 year per state statute
Lawsuit filing required within deadline
Claim must be filed in proper jurisdiction
Strict compliance with statutory requirements

Prime Contractor Obligations

To minimize payment bond claims:

Payment Practices

Pay subcontractors within timeframe specified (typically 7 days of prime payment receipt)
Process change orders and approve subcontractor payment applications promptly
Maintain detailed payment records
Provide conditional lien waivers upon payment
Address payment disputes quickly
Communicate financial issues early to avoid surprise defaults

Documentation

Subcontract agreement with payment terms
Payment application log with dates
Cancelled checks or payment confirmations
Conditional and unconditional lien waivers
Change order tracking
Dispute correspondence

Insurance Requirements

Comprehensive insurance coverage protects all project stakeholders from risk exposure.

Commercial General Liability

Coverage Limits

Per occurrence: $1,000,000 minimum (HVAC projects commonly $2,000,000)
General aggregate: $2,000,000 minimum
Products/completed operations aggregate: $2,000,000 minimum
Personal and advertising injury: $1,000,000 minimum
High-value projects may require $5,000,000+ limits

Covered Risks

Bodily injury to third parties
Property damage to existing structures
Property damage to adjacent properties
Completed operations failures causing damage
Products liability for installed equipment
Contractual liability for indemnification obligations

Required Endorsements

Owner named as additional insured (ISO CG 20 10 and CG 20 37 or equivalent)
Waiver of subrogation in favor of owner
Primary and non-contributory language
Blanket contractual liability
Explosion, collapse, and underground (XCU) coverage if applicable
Deletion of construction exclusions

Workers Compensation and Employers Liability

Coverage Requirements

Workers compensation: Statutory limits for project state
Employers liability: $1,000,000 each accident minimum
Employers liability disease: $1,000,000 policy limit
Employers liability disease: $1,000,000 each employee
All-states endorsement for multi-state contractors
Waiver of subrogation in favor of owner

Compliance Verification

Certificate of insurance with current policy dates
Experience modification rate (EMR) disclosure
Safety program documentation
OSHA 300 log for prior three years (if requested)
Subcontractor workers compensation verification program

Automobile Liability

Coverage Requirements

Combined single limit: $1,000,000 minimum per accident
Coverage for all owned, non-owned, and hired vehicles
Project-specific vehicles and general business vehicles
Additional insured endorsement for owner
Waiver of subrogation

Builder’s Risk Insurance

Project Coverage

All-risk coverage for construction work in place
Coverage for materials stored on-site
Coverage for materials in transit (if specified)
Temporary structures and project facilities
Soft costs coverage (extended coverage option)
Terrorism coverage (if required)

Coverage Amount

Completed value of project (100% replacement cost)
Includes owner-furnished equipment
Includes contractor equipment incorporated into work
Excludes contractor tools and equipment
Separate limits for off-site storage

Policy Provisions

Owner as named insured (owner-purchased policy)
Contractor as named insured or additional insured
Loss payable to owner and construction lender
Deductible: $5,000-$50,000 typical (negotiable)
Waiver of subrogation among all insured parties
Testing and startup exclusions addressed

Professional Liability

For design-build or design-assist HVAC projects:

Coverage Requirements

Claims-made policy
Limits: $1,000,000 per claim, $2,000,000 aggregate minimum
Retroactive date preceding project design start
Extended reporting period (tail coverage) for 3-5 years post-completion
Coverage for design errors and omissions
Coverage for failure to supervise design work

Umbrella/Excess Liability

Coverage Structure

Follows form over primary policies
Minimum $5,000,000 limits for major projects
$10,000,000+ for high-value or high-risk projects
Same additional insured and waiver of subrogation requirements
Drop-down coverage for gaps in primary coverage

Insurance Certificate Requirements

Certificate Content

Certificate holder: Owner name and address
Description of operations: Project name and location
All required policies listed with policy numbers
Policy effective dates and expiration dates
Coverage limits for each policy
Additional insured status confirmed
Waiver of subrogation confirmed
30-day cancellation notice requirement

Ongoing Requirements

Certificate provided before notice to proceed
Renewal certificates 30 days before expiration
Updated certificates for any policy changes
Certificates for all major subcontractors
Verification of insurance throughout project duration

Notice to Proceed

The notice to proceed authorizes the contractor to commence work and establishes the official contract time start date.

Pre-NTP Requirements

Before issuing notice to proceed:

Administrative Conditions

Fully executed contract documents
Performance and payment bonds in place
Insurance certificates received and approved
Permits obtained or permit application submitted
Preconstruction meeting conducted
Baseline schedule submitted and approved
Submittal schedule provided
Project safety plan submitted

Site Conditions

Site access available
Utility connections identified
Temporary facilities location approved
Laydown areas designated
Material storage areas secured
Existing conditions documented
Environmental permits in place

NTP Issuance

Formal Notice Content

Contract commencement date
Contract completion date (based on contract duration)
Substantial completion date requirement
Interim milestone dates if applicable
Liquidated damages provisions reference
Weather day provisions (if applicable)
Working hours and restrictions
Initial progress meeting schedule

Distribution

Original to contractor
Copy to surety
Copy to architect/engineer
Copy to owner’s project manager
Copy to owner’s legal counsel
Copy to construction lender (if applicable)

Limited Notice to Proceed

For projects where full NTP is premature:

Limited Scope Authorization

Mobilization activities only
Long-lead equipment procurement
Submittal preparation
Site logistics planning
Permit expediting
Defined cost limit for limited work

Contract Time Treatment

Limited NTP typically does not start contract time
Full NTP starts contract time clock
Limited NTP duration specified (30-60 days typical)
Clear statement of contract time start in full NTP

Contract Document Assembly

Master Contract Document Set

The official contract consists of organized, complete documentation:

Document Hierarchy

Agreement form (highest precedence)
Supplementary and special conditions
General conditions (AIA A201 or equivalent)
Technical specifications
Drawings
Addenda (in reverse chronological order)
Bid form and accepted alternates
Other contract documents as listed

Assembly Requirements

Consecutively numbered pages
Table of contents with section references
Cover sheet identifying parties and project
Signature page with original signatures
Corporate seals where required
Notarization if specified
Professional engineer seal on technical documents

Electronic Document Management

Modern projects utilize electronic contract management systems:

Document Control

Cloud-based project management platform
Version control for all documents
Access permissions by role
Audit trail for all downloads and revisions
Electronic signature capabilities
Integration with submittal and RFI workflows

Security Requirements

Encrypted transmission and storage
Multi-factor authentication
Regular backups with redundancy
Disaster recovery protocols
Compliance with owner IT security policies

Distribution Requirements

Required Recipients

Owner (3 copies typical: project manager, legal, accounting)
Contractor (2 copies: project manager and field superintendent)
Architect/Engineer (2 copies: project manager and specifications writer)
Surety (1 copy with bonds)
Construction lender (1 copy if applicable)
Owner’s insurance broker (summary documents)

Distribution Timing

Within 5 days of full execution
Acknowledgment of receipt required
Electronic distribution with download confirmation
Physical copies via courier with tracking

Post-Award Compliance

Preconstruction Obligations

Following award and before substantial work begins:

Contractor Submittals

Detailed construction schedule (CPM format)
Submittal schedule with lead times
Schedule of values for payment applications
List of major subcontractors and suppliers
Project safety plan and OSHA compliance program
Quality control plan
Environmental compliance plan
Traffic control plan (if applicable)
Erosion and sediment control plan

Administrative Setup

Project communication protocols
RFI procedures confirmation
Change order process review
Payment application procedures
Testing and inspection coordination
Document control procedures
Meeting schedules (weekly, monthly, etc.)

Regulatory Filings

Government Project Requirements

Contract award posting (public record)
Prevailing wage rate publication
DBE/MBE participation plan filing
OSHA 300 posting requirements
EPA stormwater permit (if required)
Local business license applications
Right-of-way permits

Financial Administration

Payment Processing Setup

Schedule of values approval (AIA G703)
Stored materials procedures
Retention percentage confirmation (typically 5-10%)
Change order approval thresholds
Payment application submittal dates
Payment processing timeline
Lien waiver requirements by jurisdiction

Accounting Integration

Project cost code structure
Budget allocation by CSI division
Commitment tracking for subcontracts
Purchase order procedures
Contingency management protocols
Cash flow projections

Award Documentation Archiving

Permanent record retention ensures legal defensibility:

Essential Records

Executed contract with all attachments
Bonds with surety documentation
Insurance certificates and policies
Award notifications and correspondence
Bid evaluation documentation
Preconstruction submittals
Permit applications and approvals
Financial setup documents

Retention Period

Active project: Readily accessible digital and physical copies
Post-completion: Minimum retention per statute of repose (6-10 years typical)
Government projects: May require permanent retention
Electronic records with backup redundancy
Indexed for rapid retrieval during disputes or audits

Proper execution of bid award procedures establishes a solid contractual foundation, allocates risk appropriately through bonding and insurance, and creates clear obligations for all parties. The administrative rigor applied during award directly correlates with reduced disputes and successful project delivery.