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MEMO #1073 Second and Flat Bid Submission
As you are well aware, when the ML 2002-10 guidelines went into effect, HUD began requiring second bids on all overallowable debris removals and estimates to repair. These second bids and estimates generate a great deal of bid work, but the second bid estimate itself is not a claimable expense. Safeguard has been unable to bill our clients for these second bids and has therefore been absorbing this cost for years.
HUD's position on this issue has, and continues to be, that no payment should be made for giving a contractor the opportunity to submit a competitive bid. If the bids are truly competitive, the contractor should be awarded the bid. This is a standard procedure in obtaining bids for any repairs to be performed.
Therefore, effective March 1st, Safeguard Properties will no longer reimburse contractors for second bids and bid estimates.
Flat Bid Procedure Change
On a related topic, Safeguard has until now required all debris bids to be submitted in cubic yards at the FHA allowable rate/cubic yard. In recent months, however, it has been brought to our attention by HUD M&Ms that these bids are often excessive, because contractors are automatically bidding the FHA maximum cyd allowable.
The FHA allowable rate/cubic yard is the maximum FHA will reimburse, not the required rate. If the work can be performed for less than the maximum, FHA believes our contractors should do so. The M&Ms have been able to support their position on this by obtaining significantly lower bids than those provided at the FHA per allowable cyd rate. These lower bids were submitted as a total bid, with a line item description of the debris to be removed, as opposed to just bidding the maximum cyd allowable.
In order to stay competitive with the M&M contractors bids, Safeguard will require that all bids for debris removal over $2000 include a flat fee bid in the following format.
Example
BID TO REMOVE EXTERIOR DEBRIS
Consisting of:
| 75 cyds wood paper trash metal junk |
@ $ 35.00 cuyd |
$ 2625.00 |
| 2 old generators |
@ $ 25.00 |
$ 50.00 |
| 2 rear axels |
@ $ 35.00 |
$ 50.00 |
| 12 tires |
@ $ 10.00 |
$ 120.00 |
| 15 gallons paint |
@ $ 10.00 |
$ 150.00 |
Flat bid for the removal of all of the above $1,500.
** Please note - the flat bid pricing is only valid if all work is approved as indicated above. If line item approval is received the work will be done per the line item pricing that is quoted above.
It is our responsibility to insure that the bids we are submitting to our clients (HUD) are reasonable and truly reflect t he cost of performing the required work.
We thank you for your continued cooperation with our efforts to provide our clients and HUD with the finest and most competitive field services in the industry.
If you have any questions about the foregoing, please direct them to your Regional Coordinator, or send your inquiries to:
vm .alertresponse@safeguardproperties.com
To view additional Contractor Alerts please link on the following:
Contractor Alert Memos |
