Split a public job into bid packages by checking governing subdivisions, small-branch thresholds, restrictions on dividing work and any contractor self-performance requirement.
Key takeaways
- Identify the law and contract documents that govern the job.
- Tag scope items before grouping them into packages.
- Document branch estimates and the reason for each boundary.
- Check the contractor's required share after scope changes.
If you estimate public work for long enough, you reach a point where the owner's documents are complete and you still have to decide how the job gets bid. The owner may publish one set of drawings and specifications, but the work can be sold in pieces, each called a bid package. Every package you draw affects who can bid it, how much of the risk each bidder carries, and where the lines fall between one contractor's work and the next.
The four rules below come from three official sources: a North Carolina statute on separate bids, a Washington statute on dividing work, and a federal acquisition clause on self-performance. Each rule says where it applies.
Read the rules as tests to run on a split you already have in mind, not as a recipe. Every public job has its own owner, its own contract documents, and its own governing law. Start by finding the law that governs your project, then use these four tests to check your package list against it. This post is general information, not legal advice, so take questions about your specific job to the people who can review the documents.
Rule 1: Sort the work into the subdivisions the statute names
Under North Carolina's statute, the work is sorted into listed subdivisions, including heating and cooling, plumbing and gas fittings, and general work. The statute is G.S. 143-128.
The first subdivision covers heating, ventilating, air conditioning and accessories, whether they are combined into one conductive system or kept separate. It also covers refrigeration for cold storage where the cold storage cooling load is 15 tons or more, along with all related work. Because the statute sets that 15-ton line for the refrigeration item, a smaller cold storage system needs to be checked against the rest of the statute rather than assumed to fall under this item.
The second subdivision covers plumbing and gas fittings and accessories, and all related work. The fourth covers general work that is not included in the first, second and third subdivisions, relating to the erection, construction, alteration or repair of any building. The third is dual bidding under subsection (d1) of the same section, and this post does not cover it.
Both the first and second subdivisions end with "all related work," so a related item may belong with the trade it supports even when it does not look like that trade. Before you move such an item to another package, ask where it sits in the statute's list. Do not decide by which package is easiest to price.
The general work subdivision is defined by what is left over. An item that is not in the first three subdivisions falls under it, so an item you think of as simple building work still needs a check against the trade subdivisions first. Check it before you accept it as general work.
A practical method is to write the subdivision name next to every line on your scope list before you group anything. Lines that will not sort cleanly should stay open until you have an answer from the owner or from counsel. Once every line has a home, you can test the packages you want against those homes. A package that cuts across two subdivisions needs a reason written down, and the reason should come from the statute and the work, not from your preferred bidder list.
Splits along subdivision lines also create interfaces, the places where one package's work meets another's. Mark those meeting points on the drawings and in the bid documents so that each bidder knows where its responsibility starts and stops.
Illustrative example: Tag scope before grouping it
Suppose a job governed by the North Carolina subdivision requirements has 10 scope items: 5 heating items and 5 plumbing items. Tag the heating items under the first subdivision and the plumbing items under the second. Check related work before drawing package boundaries. These illustrative counts organize the scope list; they do not establish whether a branch qualifies for inclusion in another contract.
Rule 2: Fold small branches into a larger contract
Under G.S. 143-128, when the estimated cost of work in a single subdivision or branch for which separate bids are required by that subsection is less than $25,000, it may be included in the contract for another subdivision or branch, irrespective of total project cost.
The word that does the work is "may." The statute permits the folding; it does not require it. Deciding to combine a small branch into another contract is therefore your decision, and you should record the reason in the file. A reason such as the work being too small to justify a separate bid is a judgment you can explain. Write it down in the terms you would use if someone asked you about it.
The threshold is measured by estimate. The test is the estimated cost of the work in one subdivision or branch, so the number in your estimate is the number the rule uses. If an estimate sits close to $25,000, go back through its line items, document the basis for each, and be ready to explain how the total was reached. A number you cannot defend is a weak basis for any decision that depends on it. Use a construction estimate audit when reviewing the estimate behind your package decision.
Keep the limits of the rule in mind. It applies to branches for which separate bids are required. If a branch is not one of those, the sentence does not come into play, and you should not treat the $25,000 figure as a general cutoff for dividing work.
Choosing the receiving branch has its own consequences, and you should make that choice on the scope of the work, not on which bidder you hope will win it.
Your job is to show that the estimate is sound, that the receiving branch is a sensible home for the work, and that your record explains both choices.
Estimate timing also matters. The threshold turns on the estimated cost, so an estimate prepared to test a package plan should be kept separate from the estimate you bid on. Keep the dates on your estimates so you can show which came first and why it was revised.
Finally, this is a North Carolina rule. Other states and agencies may set different thresholds, or none at all. Do not carry the $25,000 figure to another job without checking the rule that governs it.
Rule 3: Do not divide work to avoid a restriction
Under Washington's statute, the restrictions in that subsection do not permit dividing a project into units of work or classes of work to avoid the restriction on work that may be performed by day labor on a single project. The statute is RCW 35.23.352.
Before you rely on this rule, read the full section, confirm which work the restriction covers, and confirm which bodies the statute binds.
The answer to that purpose question should be visible in your records, which is why the records matter so much here.
Keep notes on every boundary. For each package line, write down the scope, the trade, the schedule and the kind of bidder you expect, and note the reason the line falls where it does. If a reviewer asks why a package was drawn a certain way, your notes should answer with the work itself.
Save the drawings and scope lists in the versions you used when you drew each boundary. A file that shows the sequence of decisions is far easier to explain than one that has been rebuilt after the fact. If a boundary moved, the file should show whether it moved because the scope changed or for some other reason, and it should say so plainly.
Think about the problem as a reviewer would. A package that sits just under a restriction, with a boundary that happens to move the work below the limit, invites the question the statute asks. Even a boundary drawn in good faith can look like an avoidance move, so the record is your protection.
Show the work, the trade and the schedule that justify the split, and check the full text of the statute before you decide.
This rule is Washington's. Other jurisdictions may write their rules differently, and a split that is acceptable in one place may not be acceptable in another. Check your own state's law and your owner's rules before you borrow this reasoning.
Rule 4: Check how much work the contractor must perform itself
Under the federal clause FAR 52.236-1, the contractor must perform, on the site and with its own organization, work equivalent to a stated percentage of the total amount of work under the contract. The clause is at acquisition.gov.
The percentage is filled in where the clause is used; take it from the contract you are bidding rather than from an example.
The clause also allows a change during performance. The percentage may be reduced by a supplemental agreement, if the contractor requests a reduction during the work and the Contracting Officer determines the reduction would be to the advantage of the Government. A reduction is not automatic, so it should not be a planning assumption in your package list.
For packaging, the clause matters because of the words "with its own organization." Work given to a subcontractor is not, on the face of the clause, work the contractor performs with its own organization. If your job is under a contract that includes this clause, track the share of total work that stays with the contractor and measure it against the stated percentage as you draw packages. A split that looks sensible on the drawings can leave the contractor short of its required share once the packages are priced.
Do the math early and re-run it after every scope change. Keep the count in your bid file so the team can see where the percentage stands at each stage.
Suppose your first package plan has the contractor keeping a share well below the stated percentage. The fix is to adjust which packages the contractor keeps before bids go out.
This clause is federal. It does not tell you what a state or city requires for its own work, so check the rule that governs your job.
Mistakes to avoid when you draw packages
Three mistakes are worth guarding against: drawing a boundary with no reason on record, moving small work without an estimate you can defend, and carrying one jurisdiction's rule into another.
A line that is only a guess is hard to defend if the owner or a bidder asks about it. The North Carolina subdivision list, the $25,000 figure, the Washington restriction and the federal percentage each belong to their own source, and none of them transfers on its own.
A fourth point concerns the interfaces between packages. Each boundary creates a place where one bidder's work meets another's, and gaps and overlaps can show up there. Ambiguity at an edge can turn into a dispute later.
Packages also matter after award. The lines you draw during estimating can become the lines the owner, the contractor and the subcontractors manage during construction. Draw them as if you may have to explain them later, because you may.
Finally, do not let the package list drive the scope. The scope comes from the project. The packages should be drawn to carry that scope under the governing rules, not the other way around.
How to apply the four rules to a job
The short answer is to list every scope item, tag each one with the subdivision or branch its governing rule uses, and then test the package list against each rule that applies to the job.
- Find the governing law and documents. Note which of the four rules, if any, applies. A rule from one state does not apply to another, and the federal clause applies where the contract includes it.
- Tag every scope line. Use the subdivisions from the governing rule. If no list in these sources governs your job, tag each line by trade and note that no statutory list was applied.
- Test every small branch against any threshold. Use an estimate you can defend, and document the basis for it.
- Explain every boundary. Write down why each line falls where it does. A boundary whose only purpose is to get below a limit needs a second look under any anti-division rule that governs your job.
- Measure the self-performance share. If the contract includes the clause, count the work the contractor keeps and compare it with the stated percentage.
- Re-check after every change. A small addition can move a branch across a threshold or change a share.
Keep the file. The notes you write now are the record you will need if the split is questioned during bidding or afterward. A short memo that lists the governing rule, the subdivision for each line, the basis for each small-branch decision, and the self-performance count will help you answer the questions the owner asks. Before you finalize the packages, ask the owner for the governing rules in writing, so your file rests on the owner's own text rather than on memory. Once the package list is settled, use the sealed bid submission checklist to review the submission.
Today, take your current scope list and write the governing subdivision or branch beside each item; mark unresolved items for review before grouping them.
What these sources do not settle
How should you price a package?
Price it from the job's scope, estimate and contract documents. Review the line items and keep the basis for the estimate in the project file.
Which firms should you invite?
Use the project's governing rules and owner documents to determine who may bid. Do not draw package boundaries around a preferred bidder list.
How should you divide risk between packages?
Define responsibility at each interface in the drawings and bid documents. Take unresolved questions about the owner's requirements to people who can review the project file.