View Section V for information about what you need to tell your bidders about calculating low and high bids on the contract.
When you procure supplies or services using an IFB, you award the contract to the responsive and responsible bidder who meets your quality requirements and offers you the lowest price. (Of course, when the contract requires payment from the vendor to the awarding authority, you award the contract to the responsive and responsible bidder who offers you the highest price.) This section should inform bidders how you will calculate the low/high bid on the contract.
Single Contract Award
When you are awarding a single contract from an IFB, the rule for award is simple.
Example: The contract will be awarded to the responsive and responsible bidder offering the lowest total price for all items.
Example: The contract will be awarded to the responsive and responsible bidder offering the lowest total price for all required services.
Example (with trade-in): The contract will be awarded to the responsive and responsible bidder offering the lowest total price for the copier, including any trade-in allowance.
Multiple Contract Awards
When you are awarding either multiple contracts or multi-year contracts, drafting a workable rule for award can be more complicated. You must ensure that the rule for award identifies one low bid rather than multiple low bids, and that prices can be meaningfully compared.
Some contracts, such as office supplies and janitorial supplies, are often awarded on an item-by-item or category basis. This method of bidding permits multiple contracts to be awarded from a single IFB. When you award multiple contracts, you must make sure that your stated method for determining the lowest bid will identify only one low bid per contract. If your IFB groups items by category -- such as one category for all cleaning soaps/detergents, another category for brooms, mops and other hardware -- you will award contracts to the low bidder in each category.
Example: Contracts will be awarded on an item-by-item basis to the responsive and responsible bidder(s) offering the lowest price for each item.
Example: Contracts will be awarded to the responsive and responsible bidder(s) offering the lowest total price for each category of items.
Example: The Town will award the contract(s) to a bidder based on the criteria specified in either (a) or (b):
(a) The responsive and responsible bidder(s) offering the lowest price(s) for each of the items specified, or
(b) The responsive and responsible bidder offering the lowest total price for all items specified if the administrative
cost of (a) renders (a) more expensive than (b). The administrative cost per contract is considered to be $X.
When you are bidding a limited number of items, you may want to group bids to ensure that you get the best overall price. For example, if your jurisdiction is buying three vehicles -- a bus, a van, and a car -- you may want to give vendors the opportunity to bid on one or more vehicles and award the contract(s) on the basis of the best total price. A rule for award could be as follows:
Example: Vendors may bid on one, two, or three vehicles. The school department will award the contract(s) to those bidders whose bids, in combination, offer the department the lowest overall cost for the vehicles bid.
If you use this method for determining the low bid(s), make sure that the IFB also includes the following requirement:
A vendor bidding on multiple items must state in her/his bid whether the vendor is bidding on each vehicle separately, or if the vendor's bid is for a combination of vehicles only.
When you are awarding a multi-year contract, there are three possible methods for soliciting prices that can be meaningfully compared.
You may require bidders to submit prices that will remain constant for the entire contract term.
You may require bidders to submit first-year prices that will be adjusted each succeeding year according to a set formula or published index that you specify in your IFB.
Example: One contract will be awarded to the responsive and responsible bidder offering the lowest total price for the first year of the contract. The contract price for years two and three will be adjusted on the contract anniversary date by the percentage increase, if any, during the preceding 12 month period beginning July 1, in the Consumer Price Index for all Urban Consumers-Boston SMSA, published by the Bureau of Labor Statistics.
You may permit bidders to submit different prices for each year of the contract. If you use this method, you should include a formula for calculating the present value of payments in order to realistically compare prices. The following is a sample rule for award for a three-year contract to operate a public beach concession stand, where the vendor will make single payments to the municipality on October 1 of each contract year:
Example: One contract will be awarded to the responsive and responsible bidder offering the highest total price for all three years of the contract. Each year's bid price will be recalculated by the awarding authority to determine the present value of the three payments. A discount factor equal to the prime rate, as stated in the Wall Street Journal on the bid due date, will be used to determine the present value of each bid.