I recently attended a Construction Contracting course where I was in disagreement with the instructor over use of a additive clause for construction. I always thought that such a clause was not to be included unless there was a question as to if sufficient funds were available for a project. The instructor said that was not the case, that such a clause could be used at any time, even if funds were available for the additive items. I still disagree. I also don't see the logic in the instructors comments. Why would you use an additive item if you have sufficient funds to cover it in the Government estimate???

By Vern Edwards on Monday, October 02, 2000 - 03:37 pm:

I don't know of any rule in FAR about the use of additive bid items, so I guess that the instructor was right that you can use them any time.

Why would you do so? You might have many minor contruction projects on your list, but not enough money for all of them. So you use additive bid items in a number of IFBs to determine the prices of each the various projects, and then award on the combination of additive bid items that gives you the most bang for the buck.

By Joel Hoffman on Monday, October 02, 2000 - 04:16 pm:

DFARS 236.303-70 discusses "Additive or Deductive Items" in construction contracts. The guidance suggests using this approach when funds are not available for all the desired construction features. I don't know why you'd need to use such a scheme when it is CLEAR that funding isn't a problem. Happy Sails! Joel

By Fred Weatherill on Monday, October 02, 2000 - 04:37 pm:

Vern,

Is it safe to assume that in a Construction RFP done on the best value trade off process that adding or deducting items to stay within the govt estimate is part of the evaluation process to select the "best value"?

By Joel on Monday, October 02, 2000 - 04:45 pm:

Fred, you didn't ask me but such practices are not uncommon in Best Value trade-off construction RFP's. Options are probably more often used, though. Happy Sails! Joel

By Anonymous on Monday, October 02, 2000 - 05:03 pm:

My point exactly, if the funds are there you shouldn't use the clause. The DFARS, DIAR, and AGAR all seem to agree with what my thinking. They read as follows:

DFARS 236.213-70(a), "If it appears that sufficient funds may not be available for all the desired construction features, consider using a bid schedule with..."

DIAR 1436.571, "If it appears that funds available for a construction project may be insufficient for all the desired features, the CO may provide in the solicitation for a base bid item covering the work as specified and for one or more additive or deductive bid items which add or omit specified features of the work in a stated order of priority."

AGAR 436.205(a), "When it appears that funds available for a project may be insufficient for all the desired features of construction, the contracting officer may provide in the solicitation for a base bid item covering the work generally as specified and for one or more additive or deductive bid items which progressively add or omit specified features of the work in a stated order of priority."

Based on the above, I would think that my instructor's advice was wrong.

Vern, I agree with your minor construction example, i.e., if project funds are inadequate then use the clause. My question was why would you use it when adequate funds are available???

By Vern Edwards on Monday, October 02, 2000 - 05:04 pm:

Fred:

I think Joel probably knows more about that than I do. I haven't seen many negotiated procurements for construction that use "additive items" in the same in which that term is used in sealed bidding.

But I don't see any reason why they couldn't be used to determine which offeror represents the most bang for the buck in various combinations of items and is thus the best value.

By Anonymous on Monday, October 02, 2000 - 05:08 pm:

My 3 examples all include the word "bid", not "offer" or "proposal", do you think that such clauses may be for sealed bidding only?

By Vern Edwards on Monday, October 02, 2000 - 05:13 pm:

Anonymous:

You're asking a very reasonable question and I don't have an answer for it. I have to admit that it doesn't make much sense to me to use additive items if you know you've got the money.

But, supposing that there is some rationale that we haven't thought of, the regulations that you cite don't prohibit using additive bid items in other circumstances, do they? It appears that they just do not contemplate any other circumstances. Maybe the rule that says its okay to do it if FAR doesn't say you can't applies in this case. If so, maybe the instructor wasn't wrong.

Maybe you can use an additive item when you know you've got the money but you don't want to commit to an award until you see the low bid for the job and can decide if the job is worth what you'll have to pay for it. Maybe if you make it an additive item in a larger bid you can decline to make an award without having to cancel the IFB or declare all bids unreasonable, which as you know is a pain. What do you think?

But I defer to you and Joel on this one.

By Anonymous on Monday, October 02, 2000 - 05:49 pm:

I think thats a lot of maybes, but yeah, you're right. There's room to consider the possibilities when the FAR isn't specific on a subject. Thanks for responding.

By joel hoffman on Monday, October 02, 2000 - 05:52 pm:

Anon and Vern, I tend to agree with Vern that including additives in cases of fully funded projects probably isn't prohibited now days, using the more liberal FAR philosophy.

However, I don't remember any situations where additives have been used when it appeared that funding was readily available for all desired features.

I've seen additives and deductives used in IFB's a lot over the years - usually in tightly budgeted (read: overscoped - the owner wants to throw in the kitchen sink) projects. However, it has sometimes been used when the Government wasn't SURE the market conditions would allow obtaining the entire (reasonable) scope of work within the budget. This is especially true in those cases when we didn't want the anticipated hastle of cancelling the IFB using the "lack of reasonableness of price" excuse, then converting the solicitation to an RFP. Those procedures involve time, extra cost for the Gov't and the bidders and ALWAYS tick off the bidders!! Happy Sails! Joel