TABLE OF CONTENTS

10.2 Procurement Requirements for Construction Services

10.2.1 General

Construction, modernization, and major A&R activity usually is carried out through one or more contracts under the grant. Therefore, the circumstances of the procurement are critical to the successful completion of the grant-supported project. Recipient procurement must comply with the requirements specified in 45 CFR Parts 75.327 through 75.335, as applicable. Recipients must use only those contracting methods that will:

• Ensure that all qualified contractors are given an opportunity to bid or propose and to have their bids/proposals fairly considered.
• Ensure that the contract(s) will result in the completion of a facility-ready for occupancy-that conforms to the design and specifications approved by NIH (or any appropriate modification thereof also approved by NIH), at a cost that is within the owner's ability to pay.

Unless otherwise authorized by NIH, all work associated with NIH grant-supported construction, modernization, or major A&R must be procured by formal advertising, resulting in lump-sum, fixed-price contracts using the Design-Bid-Build model. NIH may authorize other procurement methods and other types of contracts when sealed bidding is impractical (see Construction-Alternate Contracting Methods). The recipient must obtain NIH approval of final construction documents both before bids or proposals are solicited and prior to the award of the contract. The recipient must ensure that the project is completed in accordance with the approved plans and specifications or secure NIH approval of any changes that materially alter the scope or costs of the project, use of space, or functional layout.

The two basic means of ensuring that a contract can be awarded at, or very near, the budgeted amount are accurate cost estimating and the use of bid alternates.

A precise description of the scope of work, specifications, materials, and construction techniques will facilitate accurate cost estimating by the recipient and, ultimately, the responsive bidders. The description of the scope of work is especially important when multiple contracts will be awarded in support of the same project, because each contractor must know exactly what is involved in the portions of the job being bid.

Where practical, the recipient may request in the invitation for bids, alternates to the base bid which are keyed to specified, and explicitly stated, changes in the project scope, materials, or construction techniques. The invitation may contain either additive alternates (adjustments increasing the amount of the base bid), or deductive alternates (adjustments reducing the amount of the base bid), or both. Additive alternates will make it possible to incorporate necessary features that otherwise would not have been included in the project as long as the features do not expand the scope of the peer reviewed and approved project. Alternates that are selected may be included in determining the low aggregate bid.

If, notwithstanding the use of deductive alternates, all bids exceed the funds available, the recipient may:

• Decline to award the contract(s) and instead, after NIH approval, issue a revised invitation for bids containing changes in the bid documents or other factors affecting price.
• Negotiate with the low bidder. All changes in design and specifications resulting from such negotiations must be approved by NIH. If the low bidder refuses to negotiate, negotiations may be entered into with the next lowest bidder. If efforts to negotiate are unsuccessful, all bids must be cancelled and the project rebid.

If the NIH-supported project is less than the entire facility or project, the recipient must obtain bids or proposals that provide the costs for that portion of the total job that will be paid by NIH funds and any required matching. This may be done in one of the following ways:

• If the project consists of more than one building or site and can be divided for purposes of obtaining a price or cost estimate and for carrying out the construction or modernization, showing the cost for each building or site, or
• If the project is a single site or contains common space and cannot be divided for pricing and construction or modernization purposes, identifying or prorating the applicable costs or price.

10.2.2 Liquidated Damages

Invitations for bids must stipulate a time for completion of the project, expressed either in calendar days or as a fixed date, for each prime contract to be awarded under the project.

At the option of the recipient, a liquidated damages provision may be included in the contract, allowing for assessment of damages when the contractor has not completed the construction by the date specified in the contract. Liquidated damages must be realistic and justified and must be approved by NIH before solicitation. Where damages are assessed, any amounts paid belong to the recipient.