Cities in Iowa are required to follow proper bid and quote procedures when contracting for public improvement projects. Many of the rules, including the thresholds for when a project must be bid or quoted, are subject to change, and cities need to continually check to make sure they are in compliance. Chapter 26 of the Code of Iowa details most of the laws on bid and quotation procedures for cities.
Horizontal and Vertical Infrastructure
City officials need to first determine what type of project they will be completing then review the bid and quote thresholds for their project. Below are the Iowa Administrative Rules definitions of horizontal and vertical infrastructure:
- Horizontal Infrastructure – Publicly owned roads, bridges or culverts.
- Vertical Infrastructure – Buildings, all appurtenant structures, utilities, incidental street improvements including sidewalks, site development features, recreational trails and parking facilities. Vertical infrastructure does not include any work constructed in conjunction with or ancillary to highway, street, bridge or culvert projects, including but not limited to utilities and sidewalks.
Bid and Quote Thresholds
Chapter 26 of the Code of Iowa details the thresholds that require a city to receive bids or quotes for public improvement projects. The thresholds differ between the type of project (horizontal or vertical) and city population (less than or greater than 50,000). The Iowa Department of Transportation (IDOT) is charged with updating the bid and quote thresholds when necessary; a table of the various thresholds can be found at their website. The thresholds are often changed on an annual basis, and cities should be sure they are using the latest information before seeking bids or quotes.
Current Thresholds (Effective January 1, 2022)
|2022||Horizontal Projects||Vertical Projects|
|Cities Less Than 50,000||Cities More Than 50,000||Cities Less Than 50,000||Cities More Than 50,000|
If the project cost is less than the quote thresholds, cities are allowed to use their own policies to determine how to get competitive pricing.
If a city is required to use the competitive bid process for a project, it must have an architect or engineer prepare plans and specifications as well as calculate the estimated total cost of the project. The city must prepare a notice to bidders, which includes the time and place for filing sealed bids, time and place the bids will be opened, general nature of the public improvement, general timeline of the project, and detail the requirements of the bid security. The notice might also include other pertinent information and that the city reserves the right to reject any and all bids. It is often beneficial to prepare a bid packet that includes all of the information on the project, including specifications, the notice to bidder, bid form and form of contract.
*Effective July 1, 2016 cities are no longer required to publish the notice to bidders. Instead, governmental entities are required to post notice in three separate places (as detailed below) no less than 13 and no more than 45 days before the bid filing deadline. The notice must be posted in the following places:
- A relevant contractor plan room service with statewide circulation
- A relevant construction lead generating service with statewide circulation
- An Internet site sponsored by either a governmental entity or a statewide association that represents the governmental entity
To satisfy the first two components, cities may work with a plan room service to ensure required bid information is properly posted. See our Project Plans And Specifications Guidance page for additional information on plan room services.
To satisfy the third component, cities may either use their city Web site or the Iowa League of Cities online bid notice system (or both). Please view our Changes to Notice to Bidders video for additional guidance and information.
The city council must also hold a public hearing on the plans, specifications, form of contract and estimated cost of the project before entering into a contract. The notice of the public hearing must be published (or posted for cities with population of 200 or less) not less than four and no more than 20 days before the date of the hearing and include a description of the public improvement and its location. Following the hearing, the council can decide to move ahead with the project.
Depending on the scope of the project, a city may find that a pre-bidding meeting is necessary to give potential contractors a chance to ask questions about the project. The city can then formally open bids at the time and place specified in the notice to bidders. The city must record on the envelope containing the bid the time it was received and the name of the person who received it. Any bid received after the deadline cannot be considered and must be returned to the bidder unopened (Code Section 26.10).
After the bids have been opened, the city can award the contract, by resolution, to the lowest responsive, responsible bid or reject all bids and set a new date for receiving bids.
Many cities require contractors to provide proof of insurance to be considered for a project. Cities should also keep in mind that Code Section 573.2 requires them to get a performance or payment bond for any contracts that equal or exceed $25,000.
Responsible Bidder/Responsive Bid
The responsible bid requirement focuses on the bidder, which means the bid is submitted by a bidder who has the financial and technical ability to perform and complete the required work. The responsive bid requirement focuses on the bid and is a check to ensure the bidder agrees to all that is required in the plans, specifications and other requirements of the project.
If a city is required to use the competitive quotation process for vertical infrastructure projects (no quotes for horizontal infrastructure projects), it must make a good faith effort to obtain quotes from at least two contractors regularly engaged in the required work before awarding a contract. Quotes may be obtained after the city provides a description for the work to be completed, including plans and specification prepared by an architect or engineer, and allows all potential contractors and opportunity to inspect the project site.
The city must also designate a time, place and manner for filing quotations, which may be received by mail, fax, email or in-person delivery. The contractor must include in the quote the price for labor, materials, equipment and supplies required to perform the work and should show proof of insurance. The city may award the contractor to the lowest responsible, responsive quotation or reject all quotes, similar to the bid provisions detailed above.
If the work can be performed by employees of the city, the city may file a competitive quotation for the work to be performed in the same manner as a contractor. For purposes of comparing the city’s quotation to perform the work with city employees to a contractor’s quotation to perform the work, the amount of estimated sales and fuel tax which a contractor identified in its quotation must be deducted from the contractor’s quotation. If no quotations are received to perform the work or if the city’s estimated cost to do the work with its employees is less than the lowest responsive, responsible quotation, the city may authorize its employees to perform the work.
The city is required to record the approved quotation in the minutes of the council meeting where it is approved, or if approved outside of a meeting, recorded in the minutes of the next meeting of the council.
Cities using the competitive quotation process should also review the IDOT rules for use of this procedure, found in 760 Iowa Administrative Code, Chapter 180.
State law does not identify any procedures if the estimated total cost of the work is less than the competitive quotation or bid thresholds. In these situations, a city can use city employees to construct the public improvement, or it can contract to have the public improvement constructed without using either the competitive quotation procedure or the competitive bidding procedure. A city contemplating the use of city employees to perform what is believed to be repair and maintenance work should consult with its city attorney, architect or engineer to make sure that the work is repair and maintenance work and not construction work.
If a city is not required to receive bids or quotes, it should still use a process that is fair, equitable, open and reasonable, and it should only enter into a contract with a responsible contractor who can perform the required work.
Exceptions to Bid or Quote Process
The Code of Iowa identifies several types of projects and scenarios that would not require a city to use the bid or quotation process. These include:
- Emergency repairs
- Construction, repair or maintenance work performed by a city utility
- Donated funds (and the city makes no contribution to the project)