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Chapter 15
Some construction law textbooks for engineering students do not devote a
separate chapter to public contracts. Given the large amount of public works that
takes place on the federal, state and local levels, we believe this topic deserves
greater attention.
It is important to set the stage for discussion. Stress the theory of competitive
bidding, its objectives, and its requisites. Place a student in the position of
someone who wishes to obtain a simple (“off the shelf”) product such as
envelope mailers, move toward a more complex product, such as a garage or
carport and then to even more complex projects such as a house or nuclear
This chapter, like Chapter 14, to a large degree focuses upon operational
aspects of the construction process rather than legal issues. Nevertheless, as
has been emphasized in earlier chapters, without an appreciation of the legal
aspects it is difficult to make a proper organizational judgment.
The instructor who wishes to go into Section 15.1 in greater detail has a wide
field for class discussion. Because of time constraints we have tended to
minimize or reduce the amount of material in the book dealing with the problems
discussed in that subsection. One reason, in addition to time, is the changing
The advantages are the need to use all mechanisms to obtain these
objectives. If the government had not barred discrimination or required affirmative
action, many of the advances made by minorities would not have occurred or
under pressure of market consideration would have happened more slowly. In
addition it can be argued that the greater the pool for contractors and workers,
the more likely the prices will be competitive. For example, if many skilled
minority persons were barred from entering construction trades, it clearly would
reflect itself in higher prices. Finally, the need for fairness is even more important
where public money is spent.
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asides, this, in addition to the unfairness to those who cannot qualify, can raise
the price of procurement by barring persons who are otherwise qualified from
doing the work and narrowing the pool of those who can do the work. In addition
there are administrative costs involved in policing such a program. If such a
program is not policed carefully, abuses can develop, such as the use by white
contractors of minority companies as figureheads. Another disadvantage is the
demeaning attitude such preferential programs can develop toward persons
protected by such programs. They can also denigrate those within those groups
who are quite capable of competing.
We want to note the discussion in Section 15.3 on corruption. We think that
corruption potential is an important aspect of construction. What is important is
that the students be aware of the changing attitude toward corruption, particularly
at the international level. It was simply tolerated as something endemic to
construction, particularly when the competitive bidding process was used even
But now the public recognizes the evils more clearly, such as projects that
should never be built, blown up costs and poor work. We think that this issue
should be discussed in class.
Competitive bidding raises a host of policy issues. Superficially, the premise is
that a mechanistic approach—in contrast to giving local authorities discretion—is
the best way to protect against corruption and to ensure the taxpayer is getting
the most work for its money. This superficial understanding is often wrong.
Section 15.7 distinguishes between the responsiveness of the bid (where minor
errors can result in bid rejection) and bidder responsibility (where the public
agency is given more discretion).
Are these approaches consistent with competitive bidding? If not, when should
each method be used?
1.) How are both design contracts and construction contracts usually obtained in public
works projects?
2.) What is the primary function of the Brooks Act?
3.) If a design professional is drafting specifications for public works projects, what
restrictions are made on her freedom of design?
4.) What are the three primary items that are the template of competitive bidding?
and (3) the initial award of the public contract is made on the basis of price
alone.
5.) What is included in an Invitation for Bids?
6.) In public contracts, how are bids opened?
7.) What is a nonconforming bid?
8.) What are five factors that the owner can take into account to determine whether a
company is a responsible bidder?
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a. Five factors are (1) expertise in type of work proposed, (2) financial
capability, (3) organization, including key supervisory personnel, (4)
reputation for integrity, and (5) past performance.
9.) If an owner decides that all bids that have been submitted for a project are too high,
what may that owner do?
10.) What is the purpose and the effect of the Federal False Claims Act?