Bid/Post bid Procedure to minimize subcontractor risk
The following are bullet points describing the methods that can be used to minimize risk to our company during the bidding process and prior to award of subcontracts;
Bid Process:
1. During the development of the bidders list, if you are inviting subcontractors that do not have a master agreement in place, send them a prequalification form. 2. During the spy calling phase of the bid process, as new subcontractors are discovered send them a prequalification form to fill out, find out their bank and bond company references and have our legal department review them. 3. Prior to or on bid day have the subcontractors issue a bid bond. We will accept a fax copy on bid day with the original to follow. (If their subcontractors we know about prior to bid day ask for a bid bond prior to bid day). 4. Perform due diligence on subs we invite to bid by asking for the following; (see Jeanne’s list of bank references, bonding companies, insurance companies etc.). In addition run a D&B report on them. 5. Have someone in the legal department on standby during bid day to review low subs that we are not familiar with. Ask them the questions contained in the list in item number 4 above. Determine the risk level of using them. 6. Ask the subs if they are bondable and what their rate is. In addition ask who their bonding company is. 7. In lieu of adding the cost of the bid bond to the project cost, verify if we are willing to reduce our profit component the cost of the bond so we can stay competitive. 8. Ask what their current work load is.
Post bid prior to award Process:
1. If the subcontractor is new to the Leopardo, check their references in item number 4 above in the Bid Process section. 2. Confirm work load and schedule requirements. 3. Only if the information comes back unfavorable, try and negotiate with a preferred subcontractor. 4. Verify that the subcontractor is in good standing with the unions. 5. Check past project references. 6. Have them fill out a prequalification form. 7. Agree that we will reduce the fee for them to provide a bond. 8. During the construction/billing process implement the following; A. The accounting and construction departments need to have a heightened awareness of the risk involved with using the subcontractor. B. Closely review the subcontractor’s schedule of values to prevent front end loading of costs.
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