Newt Newbie just joined your procurement department as a Buyer I. He’s new to public procurement, and you’re spending some time with him this morning to review your procurement manual. You’ve just covered the section on contract awards when Newt stops you with a question.
“Wait a minute,” he says, “I thought you had to award contracts to the low bidder. I mean, that’s all I’ve ever heard about government contracts–it’s all about low bids! But you just said you award to the ‘lowest responsible bidder.’ What does that mean?”
Responsibility and Public Procurement
If you know anything about public procurement, you’ve probably heard the term “lowest responsible bidder.” For the uninitiated, this term refers to the traditional public bidding process, where a government is required to award a contract based on bids received from different vendors offering the product or service that the government is seeking to buy. In many (but not all) contexts, state and local governments are required to award such contracts to the “lowest responsible bidder.” This requirement of “responsibility” comes out of the recognition that lowest price too often means lowest quality. The goal of public procurement is to make the most efficient use of taxpayer dollars, and that means spending those dollars, when possible, on the item or service that will be the best value in the long term. In other words, the concept of the “lowest responsible bidder” is an attempt to strike the right balance between low price and high quality, with an admittedly stronger emphasis on price.
This is why statutes and regulations often provide for alternative procurement options for specialized procurements like architectural and engineering services contracts and purchases of information technology, where it makes more sense to place a stronger emphasis on quality over price.
I don’t mean to imply that bidding inevitably results in low-quality products or services, or that alternative bidding methods result in products or services that are too expensive. But, often, public procurement requires striking the right balance between quality and price, and the procurement method you use will help you to determine where the appropriate “sweet spot” is.
What Does “Responsibility” Mean?
So what does “responsibility” mean? The American Bar Association’s Model Procurement Code for State and Local Governments defines “responsible bidder or offeror” as “a person who has the capability in all respects to perform fully the contract requirements, and the integrity and reliability which will assure good faith performance.” (MPS Section 3-101(6).)
This definition of responsibility, with some slight variations here and there, is found in statutes and case law throughout the United States. The MPC’s definition is also similar to the much lengthier and more detailed definition of responsibility found in the Federal Acquisition Regulations (also known as the FAR). The FAR’s explanation of responsibility is actually spread over several sections and is too long to include in this post, but you can read it here.
Responsibility in the Real World
So, although there is universal agreement on the definition of responsibility, there are some intriguing questions about how to apply that definition in the real world. A few examples:
- How do you determine if a bidder is responsible?
- How can you be more objective about your assessment of a bidder’s responsibility?
- Can a bidder’s social responsibility (e.g. whether the bidder engages in fair trade, has a small carbon footprint, or is based in a country that permits child labor) figure into your determination of whether the bidder is a responsible bidder for purposes of awarding a contract?
I’ll explore these questions (and more) in future posts. Meanwhile, I hope you’ll share your own thoughts about bidder responsibility here. I look forward to your comments.
