Concerning A701 and the separation of Bidding Requirements and Contract

Documents, which of the following statements is true?

(which documents/agreements/instruments are considered Bidding Requirements and which are considered Contract Documents?)

Bidding Requirements:

1. Advertisement or Invitation

2. Instructions to Bidders

3. Supplementary Instructions

4. Bid Form

5. Sample Bidding and Contract Documents

Contract Documents:

1. Agreement Between the Owner and Contractor

2. Conditions of the Contract

3. Drawings

4. Specifications

5. Addenda

6. Modifications Executed After the Award

Concerning A701, which of the following statements is true?

(What is represented by a Bidder upon submitting a Bid?)

The Bidder (not Contractor) makes certain representations upon submitting a bid

Bidder has visited the site and the Work bid is based upon the Contract Documents with NO exceptions

Bidder takes responsibility for incomplete Bidding Documents

Concerning A701, which of the following statements is true?

(refers to Bidder's responsibility to "bid" what they "see" in the Contract Documents)

That does NOT mean that they cannot request a Substitution.

In fact, they should if they feel it is appropriate. But, an important thing to remember here is that the Bidder cannot simply assume that just because there is some obvious ambiguity in the documents that they can bid a  Substitution.

Their duty, in areas of obvious inconsistency or ambiguity in the Bidding Documents, is simply to notify the Architect (never the Owner).

Architect is the final authority on whether or not to accept a Substitution. In fact, a Substitution is not subject to arbitration.

Addendum or Addenda: changes to the document executed before (not subsequent to) the Award.

after award, the proper instrument is either a Change Order or a Construction Directive

Concerning A701 and Bidding Procedures, which of the following statements is true?

(important distinctions between Alternates and Separate Bids)

Alternate: an addition or deduction of Work to or from a Base Bid

Separate Bid: portion of the overall Project to be executed (i.e. specific work)

Bidders cannot prioritize which Alternates they bid. They have to bid ALL the Alternates.

 Bidder, in a Separate Bid situation, is ok to refuse the award if the amount of the award is less than the combination of all bids submitted

Surety: Insurance company

Principal: Contractor

Obligee: Owner

So, under a Surety Bond Agreement, a Surety would answer to an Obligee for the default of a Principal. In other words, the insurance company will compensate the

Owner if the Contractor defaults (fails to fulfill the Contract).

Remember, also that any forfeited amounts (money that must be paid because of the default) is never to

be constituted as a penalty.

1. Bidder will enter into a Contract with the Owner on the terms stated in the Bid.

2. Bidder, if required by the Contract, will furnish two other specific bonds--Performance Bond and Payment Bond

NOT PLEDGED: Owner will get to construct the Project at the bid price of the lowest Bidder, even if the Bidder defaults

Consider A701, a required Bid Security of 10% of the Base Bid, and the following situation:

Bidder #1 is the lowest Bidder on a subject project at X dollars. Bidder #2 is the next lowest Bidder at $X dollars. Bidder #1 fails to enter into a contract with the Owner.

What is the total amount of Bid Security forfeited by Bidder #1 and to whom?

(look at examples on flashcards 10 and 11)

On the actual exam question, I will give you figures where $X dollars are listed above. You certainly will not need a calculator, but you will need to execute the very

simple math to determine the differential between the Bid of Bidder #1 and that of Bidder #2 and make a determination as to whether or not Bidder #1 forfeits any money, and if so, to whom?

One thing to remember, is that a Bidder cannot forfeit

more money than the Bid Security that the Bidder must put at risk.

In fact, a Bidder who has a Bid Security at risk may lose less than what is at risk. 

Bid Security does not insure that the Owner gets the lowest bid.

Example:

Bidder 1: 3.2 mil bid (.32 mil at risk) - 10% bid security

Bidder 2: 4 mil bid (.4 mil at risk)

If Bidder #1 defaults and forfeits the Bid Security to the Owner, the Owner still does not get the project at the lowest Bid,

since: 4.00 - .32 = 3.68

which is still more than the 3.20 of the lowest bid

Bid Security is Only Forfeited in an Amount Not to Exceed the Differential Between the Defaulted Bid and the Next Lowest Bid

Bid Security:

1. NEVER pledges that the Owner will be able to execute the Project at the bid price of the lowest Bidder

2. Owner has the right to retain all Bid Securities of Bidder that are being conidered for the Award, BUT...

if the Owner does not furnish evidence of financial security when requested, the Bidders can withdraw their Bids and not risk the Bid Security

Example:

Bidder 1: 3.20 mil Bid (.32 mil at risk)

Bidder 2: 3.40 mil Bid (.34 mil at risk)

at risk: 10% Bid Security--all or portion

If Bidder #1 defaults and forfeits the Bid Security to the Owner, the amount would be .20 (not the entire .32) since: 3.40 - 3.20 = .20 (portion)

(details provided in next card)

This question deals with three items:

1) What the "winning" Bidder must furnish and

the what will be forfeited if the "winning" Bidder doesn't comply.

2) The Owner's right to retain the Bid Securities, and

3) the Owner's obligation to furnish evidence to the

Bidders under consideration that the Owner can fulfill the necessary financial obligations to the Project.

Further, if the Owner fails to furnish the evidence, what

happens to the Bidders with regard to their obligation to enter into the Construction Contract and what happens to the Bidders with regard to the Bid Security - will it be

at risk?

Concerning A701 and a Bid Security:

1) What the "winning Bidder must furnish and what will be forfeited if the "winning bidder doesn't comply

A701 usually requires (there are a few exceptions) that a Bid Security be furnished in the form of the Bid Bond A310 (insures the Bidder will enter into the Contract with the Owner on the terms stated in the Bid and furnish two other Bonds, the Performance Bond A312 and Payment Bond

A312)

Concerning A701 and a Bid Security,

2) Owner's right to retain Bid Securities

The Owner has the right to retain all Bid Securities of Bidder that are being considered for the Award - of course there are conditions - time

If the Owner does not furnish evidence of financial security, when requested, the Bidders can withdraw their Bids and not risk the Bid Security

Concerning A701 and a Bid Security,

3) Owner's obligation to furnish evidence to the Bidders under consideration that the Owner can fulfill the necessary financial obligations to the Project.

Further, if the Owner fails to furnish the evidence, what

happens to the Bidders with regard to their obligation to enter into the Construction Contract and what happens to the Bidders with regard to the Bid Security - will it be

at risk?

The Owner must furnish reasonable evidence of financial capabilities, if requested by a Bidder to whom award of contract is under consideration

if Owner does not - Bidder may withdraw without risk

Bids can be withdrawn and resubmitted, but the timing has certain rules.

Also, Bids can be modified, or even withdrawn by proper notice prior to the time and date designated for the receipt of Bids.

In fact, Bids withdrawn after the time and date for the receipt of Bids risk the Bid Security (After the time and date set for the receipt of Bids - Bids may not be withdrawn without risking the Bid Security)

Performance Bond assures the Owner that the project will be finished

Payment Bond assures the Owner that previous debts (labor and material) of the Contractor up to the point of the Contractor's default will be paid - at least they will be paid up to the amount of the bond penalty (i.e. the face-value or purchase-sum of the Bond).

These bonds are functionally and legally two separate Bonds. They have the same numerical designation because they are packaged together, but they are

NOT one bond.

It asks first whether or not the instrument "Combination Performance and Payment Bond" carries and AIA approval (of course it does NOT).

The combination instrument is referred to as a "one-bond" system and it is NOT preferable to a two-bond system.

Where the Contractual authority actually lies to require

Bonds in the first place - it is the General Conditions A201 that state that the Owner has the right to require that the Contractor furnish (pay for) certain Bonds.

The Second Edition of the Standard Document was published in 1915 and its importance is that it recognized the need for Supplementary Conditions.

The Standard Document eventually evolved to the

General Conditions.

Legal position of the Architect with regard to the General Conditions: interestingly, the Architect is NOT a "party" to the General Conditions, nor is the Architect a "party" to the Supplementary Conditions, but is a Participant with both responsibility and enforcement powers.

Concerning AIA revisions to the General Conditions A201, which of the following

statements is true?

1) Why are revisions made to the General Conditions (remember, revisions attempt

to reduce ambiguity in the language of the document - generality is NOT desirable).

In fact, revisions to the General Conditions are made with the objective of seeking a

language subject to only one interpretation.

2) Where are "Historical Updates" to the General Conditions found? Unfortunately, they are not found in any of the documents themselves, and certainly not in the General, Supplementary, or even Special Conditions. The "wrapper" or "diaper" (as some Architects refer to it) sometimes contains this information - but the wrapper

has no legal/contractual authority.

3) Use of the General Conditions by practitioners with regard to using only selected portions of the General

Conditions. Remember, the General Conditions A201 is a copyrighted document.

Know the rule of this special copyright. Selective use of selected portions is certainly

discouraged.

In accordance with the General Conditions A201, which of the following statements

is true?

"reasonably inferable"

Work which is not shown in the Contract Documents, yet "reasonably inferable" from the Contract Documents as being necessary to produce the intended results must be furnished by the Contractor at no change in the Contract Sum or the Contract Time.

If the Contractor performs Work with beforehand knowledge

of an error in the Contract Documents for that Work, the Contractor has liability. In fact, the Contractor has liability in this situation EVEN IFIthe Work is constructed strictly in accordance with the Contract Documents

This concept extends also to the Contractor's responsibility to inspect portions of the Work to determine if these portions are ready to receive subsequent Work.

This specific inspection is a very important responsibility of the Contractor's. The Contractor cannot simply claim that the Work that is exposed to view at any given time is properly installed - the Work that is "covered" by subsequent Work is also the Contractor's responsibility to

inspect.

Finally, this concept extends to the Contractor's responsibility for the Work of Subcontractors AND employees. The Contractor is responsible for their Work - all their acts and omissions.

In accordance with the General Conditions A201, which of the following statements

is true?

A201 takes this position; if the Contractor performs

Work knowingly in violation of an applicable Code, then the Contractor assumes responsibility for this Work.

Remember, the Contractor must be knowledgeable of the violation in order to be held responsible here.

EVEN if the Work is drawn or specified in violation of Code by the Architect, if the Contractor knows it is wrong and installs or constructs the Work EXACTLY like the Architect shows, then STILL the Contractor is responsible.

One last thing to remember here to help keep things in perspective. It is NOT the Contractor's responsibility to verify that the Contract Documents are in compliance with Codes. It is simply the idea that IF the Contractor knows there is a violation, there is responsibility to make it known.

In accordance with the General Conditions A201, which of the following statements

is true?

This question is focused on the very important relationship of Shop Drawing, Product Data, and Samples to the Contract Documents.

First, these items NEVER become part of the Contract Documents under any circumstances. Even if they are "approved" by the Architect. The Owner has no opportunity to "approve" - so the Owner's desires here are somewhat irrelevant.

Another item addressed by this question is the burdensome duty and responsibility of the Contractor to maintain at the site one record copy of the Drawings,

Specifications, Addenda, Change Orders, and other modifications to the Contract.

This is quite a management burden on a larger project. The General Conditions make it clear that the maintenance and storage of this information is for the

OWNER, not the Architect.

First, the potentially libelous situation of royalties and license fees (a royalty essentially results in a license fee). The General Conditions state that the Contractor

is the party responsible for paying all royalties and license fees.

The challenge here is to identify all the Work that may indeed be associated with a royalty or license fee.

The Contractor is responsible for the fee and any costs that may be involved for violating a royalty.

Patents are inherently more dangerous with regard to liability. A patent is a protected idea that simply may NOT be for sale or lease. They usually are not. 

Since it is difficult to make sure all Work has been performed with no violation of patents, the General Conditions state that "the Contractor shall indemnify the Owner and Architect against loss for any patent infringement if the Contractor has beforehand knowledge of such an infringement before proceeding with the Work."

Finally, this question deals with negligent acts of the Contractor. If the Contractor performs negligently (and you can bet there will be litigation) the Contractor agrees to indemnify (hold harmless, cover any losses, etc.) the Owner, the Architect, the Architect's Consultants, and their agents and employees. Basically everybody.

This question tests your knowledge as to the period of time that the Architect provides administration of the Contract (the Construction Contract).

Keep in mind: question is asked in the context of A201, not B141. The point here is that the Architect is defined by certain rights, responsibilities, and powers from the perspective of the Contractor (think A201)

which may differ from that of the Owner (think B141).

Specifically, the Architect under A201 provides administration of the Contract during construction and to the date Final Payment is due. The Architect also provides administration from time to time during the Correction Period (at the Owner's concurrence).

A201 between the Architect and Contractor, whereas

B141 focused on the relationship between the Architect and the Owner.

Think of it this way, the Contractor could actually have an advantage over the Owner if the A201 document included language stating that certain aspects of the Architect's "powers" diminished 60 days after Substantial Completion.

Under A201, the Contractor simply is not privy to the information and agreements under B141 - so from the A201 perspective (which is the Contractor's perspective) the Architect is an Architect with full powers UNTIL Final Payment is due.

In fact, the Architect can, if the Owner requests, even provide administration from time to time during the Correction Period (aka Punch List).