DEPARTMENT OF COMMERCE
Bureau of Public Roads
Washington 25, D. C.
October 25, 1957
TO: Regional and Division Engineers
FROM: B. D. Tallamy, Federal Highway Administration
SUBJECT: Bid Prices
Because of the greatly expanded highway construction program with a much larger share of the cost being borne by the Federal Government, it is highly important that every precaution be taken to make certain that bid prices upon which awards are made are fair and reasonable and are based on adequate competition.
Inasmuch as one of the factors taken into consideration in determining the reasonableness of bid unit prices is comparison with the unit prices in the engineer's estimate, it is obviously essential that the engineer's estimate be as accurate as possible. In the review of PS&E submitted by the State for approval, the division engineer should therefore give thorough consideration to the soundness of the unit prices in the engineer's estimate.
When a number of bids are received on a project, they serve to some extent as a check on the engineer's estimate. But this safeguard is not present when only one or two bids are received and in such cases it would be well to re-examine the engineer's estimate and project conditions when considering concurrence in recommended awards. When circumstances warrant, the State should be requested to check with contractors who took cut plans and specifications for the project but did not bid, to ascertain the reason for their failure to bid.