AGC, SFAA and NASBP Joint Policy Statement
on Electronic Execution, Bidding and Filing of Bonds
in the Public Sector   

The Associated General Contractors of America (“AGC”), the Surety & Fidelity Association of America (“SFAA”) and the National Association of Surety Bond Producers (“NASBP”) seek to address the use of electronic methodologies that impact the public procurement of construction services. AGC, SFAA and NASBP acknowledge that the advent of electronic methodologies may offer unprecedented opportunities to reduce processing costs and increase efficiency for all project parties, including owners, contractors, subcontractors, design professionals, sureties and bond producers. Such electronic methodologies, however, must be open and have adequate safeguards to preserve and promote the integrity of a competitive procurement environment. At a minimum, electronic methodologies for execution, bidding and filing of bonds should adopt clear processes and procedures that reduce confusion and that allow access to all qualified bidders.

Public entities should not require the exclusive use of proprietary authentication technologies. Implementation of proprietary authentication technologies may increase costs and limit bidder access by placing an undue burden on parties to obtain and implement multiple authentication technologies to satisfy the requirements promulgated by each public entity. To avoid such a result, public entities should work toward development of an open standard for electronic authentication and bidding technologies. Ideally, such a standard would be implemented easily by any party working with any number of authentication providers who have implemented the standard.

Further, AGC, SFAA and NASBP recommend that the following be taken into consideration by public entities considering the use of electronic methodologies:

Electronic Bidding Generally: Implementation of an electronic bidding methodology and the requirement to file bonds electronically should be phased, so that parties that are not automated may submit paper documents for a period of time. This will provide a needed transition period and ensure fair and equal opportunity to all bidders.

Information Availability: Bid information, including: bid announcements, project plans and specifications, addenda and reports of bid results must be readily accessible to all interested bidders. Contractors should request plan and specification clarifications electronically in sufficient time to permit issuance of addenda.   All addenda should be issued in sufficient time to allow processing by the contractors.  Addenda should be electronically issued to each holder of bidding documents.

Reliability: The methodology for transmittal of bids must be available to all interested bidders and the probability of system failures minimized. Special attention should be given to ensure system reliability and accessibility at the critical period of high network traffic just prior to bid and bond submittal deadlines. Policy on how to deal with computer problems on bid day must be developed.

Security: Security is the most serious concern of bidders related to electronic bid submittal. Bidders must have confidence that their submittal will remain confidential to both the owner and other bidders until the designated opening time.  A lock box mechanism that prevents a third party from opening the electronic submittal until bid opening time is recommended. An accounting house or other governing legal authority shall certify the system’s security.

Documentation: Bid Documents which are required to be submitted at the critical time must be as simple as possible.  Any documentation required prior to bidding should be isolated and delivery allowed ahead of the price documentation.

Authentication/Validation: The electronic bidding methodology must be able to ensure that a message from a particular bidder can have originated from that bidder only and that the data has not been altered. The bidder must have assurance that a message goes only to the intended recipient and have a validation that it has been received.

Compatibility: The methodology should permit the use of electronic bidding software and operating systems that are generally available to the contracting community at a reasonable price, and fully compatible with the bidder’s systems. 

Bid Deadline: The methodology used should time stamp when bids are sent and when they are received. The methodology should lock out bids from being transmitted after the submittal deadline.

Modifying Submittal: Bidders must have the ability to modify their bid submittal right up to the time of bid opening deadline.

Bonds and Electronic Transfer of Funds: Providing verification of bonding or the electronic transfer of funds for bid deposit must be addressed by the owner. Particular attention must be paid to the validity of all aspects of the bond transaction, including the identity and authority of the surety’s attorney-in-fact.

Computer Malfunction: Public owners should allow hard copy delivery as an option in the event of computer malfunction as long as the bid is delivered within the time constraints required.

AGC, SFAA and NASBP are committed to ensuring that electronic methodologies benefit all parties, and are willing to work with all interested public agencies to develop appropriate standards.