Monday, April 17, 2017

5 New Public Works Bills Passed by Washington Legislature

As part of preparing for a two day class on Public Works Bidding and Contracting that I recently taught, I noted that the Washington State Legislature recently approved five public works related bills that do the following:
  • Increase the dollar threshold for when a payment/performance bond may be waived
  • Grant subcontractors additional rights to have retainage released early through a retainage bond
  • Add an additional criterion to the list of mandatory bidder responsibility criteria
  • Authorize Public Utility Districts to contract for on-call public works projects
  • Authorize transit agencies (public transportation benefit area authorities) to use Job Order Contracting
Waiver of Payment/Performance Bond:  For public works projects of $35,000 or less, RCW 39.08.010 currently provides that "at the option of the contractor," a public agency "may, in lieu of the bond, retain fifty percent of the contract amount..."  In order to bring Washington law in compliance with federal small works bonding requirements, Senate Bill 5734, which passed both the House and Senate unanimously, addresses the following:
  • Changes
  • Project Amount:  Increases the $35,000 threshold to $150,000.  Unlike the payment/performance bond waiver provision applicable only for Limited Public Works Projects (Small Works Roster projects less than $35,000), this provision in RCW 39.08.010 does not require that the project less than $35,000 be bid through the Small Works Roster process.
  • Retainage Amount:  Decreases the 50% retainage to 10% retainage in order to waive the payment/performance bond.
  • Individual Sureties:  Allows a public agency to accept a payment/performance bond from an individual surety or sureties for projects of $150,000 or less, increased from $100,000.  All other sureties must be from an actual bonding company.
  • Prevailing Wage Priority:  Reiterates the already existing requirement of RCW 60.28.040 (5) that unpaid prevailing wages and benefits are the first place priority in the event of multiple competing claims against the retainage.
  • GC/CM:  Adds that this provision for withholding 10% retainage in lieu of obtaining a payment/performance bond on projects of $150,000 or less also applies to a General Contractor/Construction Manager (GC/CM).  This is a curious provision as all GC/CM projects are more than $150,000 and are multi-million dollar projects.  This addition doesn't appear to accomplish anything.
  • Comments
  • Agency Discretion?  Is a public agency required to accept the 10% retainage in lieu of obtaining the payment/performance bond?  The language of the law (both current and new) suggests that it is up to the contractor to make the request, and that the public agency "may" retain the 10% retainage in lieu of a bond.  It appears to provide the public agency with discretion whether to accept the request.  Consult with your attorney regarding how to interpret this issue.
  • Time Period for Releasing Retainage:  Senate Bill 5734 fails to correct an error in RCW 39.08.010 that states that the retainage is held for 30 days "after the date of final acceptance."  Because a subcontractor, supplier, or worker can file a claim against the retainage up to 45 days following final acceptance, an agency that releases the retainage before 45 days following final acceptance is at risk for paying court ordered claims filed between day 31 and 45 following final acceptance.  If an agency intends to use this waiver of the bond/increase of retainage provision, I recommend not releasing the retainage until a minimum of 45 days following final acceptance.  
  • No State Releases for Projects Less than $35,000:  Public agencies should recognize that for projects of $35,000 or less, the three state agencies (Revenue, Employment Security, and Labor and Industries) will not issue a release even though RCW 39.08.010 suggests they will.  See RCW 60.28.
Subcontractors and Retainage Bonds:  Current law (RCW 60.28.011 (6)) allows a contractor to submit a retainage bond to a public agency in lieu of retainage being withheld.  It also provides that if a contractor has submitted such a bond to a public agency, the contractor must, upon request of a subcontractor, accept a retainage bond from them in lieu of withholding retainage.  House Bill 1538 gives subcontractors additional rights to force a contractor to submit a retainage bond to a public agency:
  • Changes
  • Subcontractor Request:  A subcontractor may request the contractor to submit a retainage bond to the public agency for the portion of the subcontractor's retainage.  Currently, the subcontractor must wait for the contractor to take this action.
  • Subcontractor Pays Bond Premium:  The contractor may withhold the subcontractor's portion of the bond premium.
  • Deadline for Contractor to Submit Bond:  Within 30 days after the subcontractor's request, the contractor must submit the retainage bond to the public agency, unless "the bond is not commercially available, or the subcontractor refuses to pay the subcontractor's portion of the bond premium and to provide the contractor with a like bond."
  • Public Agency Discretion:  The public agency shall accept such a retainage bond that meets its requirements for the content of the bond and from an acceptable bonding company, "unless the public body can demonstrate good cause for refusing to accept it."
Additional Mandatory Bidder Responsibility Criterion:  Senate Bill 5301 adds to the list of mandatory bidder responsibility criteria in RCW 39.04.350 that public agencies must check on and validate prior to awarding any public works project.  The new criterion relates to the contractor's compliance with the state's minimum wage laws.
  • Changes
  • New Responsibility Criterion:  The new mandatory bidder responsibility criterion reads as follows: "Within the three-year period immediately preceding the date of the bid solicitation, not have been determined by a final and binding citation and notice of assessment issued by the department of labor and industries or through a civil judgment entered by a court of limited or general jurisdiction to have willfully violated, as defined in RCW 49.48.082, any provision of chapter 49.46, 49.48, or 49.52 RCW."  This language should be added to bid documents of public agencies in addition to the currently existing mandatory bidder responsibility criteria.  Language for bid documents is included in the Suggested Guidelines for Bidder Responsibility published by the Capital Projects Advisory Review Board (CPARB).  CPARB will need to revise the Guidelines to add this new criterion.
  • Documentation of Compliance:  Documentation to demonstrate a bidder's compliance with this new criterion is also included in SB 5301: "Before award of a public works contract, a bidder shall submit to the contracting agency a signed statement in accordance with RCW 9A.72.085 verifying under penalty of perjury that the bidder is in compliance with the responsible bidder criteria requirement of subsection (1)(g) of this section.  A contracting agency may award a contract in reasonable reliance upon such a sworn statement."  The reference to "subsection (1)(g)" will need to be adapted by public agencies to refer to the section of the bid documents that describes the actual criterion.
  • Comments
  • Standard Sworn Statement:  Rather than have each public agency develop their own sworn statement as required in the new law, hopefully either the State Department of Enterprise Services (DES) or the Municipal Research and Services Center (MRSC) will develop a standard that all agencies can give to the low bidder to complete as part of verifying their compliance with this additional mandatory bidder responsibility criterion.
On-Call Public Works Contracts Authorized for Public Utility Districts:  For the last five years, there has been considerable controversy in the state about whether public agencies may utilize on-call public works contracts that do not have a specific project scope.  The State Auditor's Office has noted that these contracts are not specifically authorized in state law, and they have begun issuing management letters as part of their review process.  Public Utility Districts (PUDs), under the provisions of Senate Bill 5036, are now authorized to bid and contract for on-call public works contracts.  This new law provides a possible framework for other types of public agencies obtaining the important and necessary authorization for on-call public works contracting. The bill passed the Senate unanimously and almost unanimously in the House with only one opposing vote.

Transit Agencies Authorized to Use Job Order Contracting:  House bill 1395, which passed the Senate unanimously and the House with only two opposing votes, adds "every public transportation benefit area authority as defined under RCW 36.57A.010" to the list of agencies and agency types authorized to use Job Order Contracting, one of three alternative public works contracting methods authorized in RCW 39.10.

Effective Date:  As of the most recent information, none of the bills have yet been signed by the governor, but it is anticipated he will sign them.  The new laws will be effective sometime in June or July.  This website may be used to obtain up to date information about the bills.

Mike Purdy in the News:  I was recently interviewed by and quoted in the following publications:
Mike Purdy's Public Contracting Blog
© 2017 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Sunday, October 9, 2016

Not All Piggyback Contracts Are Created Equal

Piggybacking off of the solicitation and subsequent contract of another public agency can be an efficient process that saves time and effort.  

What to Look for in a Piggyback Contract?  It is important that the other agency's solicitation meet your agency's competitive requirements, including, but not limited to the following:
  • Was the solicitation advertised at least as long as your agency requires?
  • Did they bid the same product you want to obtain?
  • Did they bid roughly the same quantity you need?
  • Did they include mandated federal requirements, if you will be paying the vendor with federal funds?
  • Was the other agency's solicitation bid recently?
  • Is the other agency's contract still current or has it expired?
  • Did they receive more than one bid?
  • Did they award to the lowest bidder?
Police Body Camera Controversies:  Many police departments across the country are moving quickly to equip their police officers with body cameras to help diffuse tension with the communities they serve and to act as an accountability tool.  Some agencies are using piggybacking to obtain the cameras and related storage of the videos in an expedited manner. 

Chicago Police Department:  The Chicago Police Department is piggybacking off of an older State of New Jersey contract for which it appears that body cameras were added to the contract as an amendment, raising questions about whether it is appropriate to piggyback off of a contract for which prices were not competitively obtained. 

Media Attention:  Not only is the Chicago Police Department under scrutiny for their process in obtaining body cameras through piggybacking, but so are other agencies across the country. Even if your agency is not buying police body cameras, some of the issues that have been raised about piggybacking as a process for these cameras is relevant for other products you may procure.  The following are links to three media sources that I've been interviewed by and quoted in about this hot topic:
Presidential History Blog:  Check out my Presidential History Blog at PresidentialHistory.com and sign up for a free email subscription to it.

Presidential History Interviews:  Here is a partial listed of the media I've been interviewed by and quoted in about presidential history and the 2016 presidential campaign (articles in which I'm quoted by Time Magazine and Voice of America should be published soon):






Mike Purdy's Public Contracting Blog
© 2016 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Sunday, April 10, 2016

New Book on Procurement Methods

A new reference book entitled "Procurement Methods: Effective Techniques" by Lourdes Coss, MPA, CPPO, will be published on April 25, 2016. Ms. Coss is one of the most highly respected and preeminent public procurement professionals in the nation.

About the book:  "I decided to write the book I had been looking for," Coss notes.  "It's a desk reference for procurement professionals."  The book is applicable for both the manager searching for a tool to train procurement staff and professionals seeking to expand their knowledge. The book serves a resource for procurement professionals providing guidance on method selection and techniques. It provides examples to aid in the development of critical sections of the procurement document and explains the logic that should be followed in order to optimize the process. 

Procurement Methods: Effective Techniques by Lourdes Coss
Table of contents:  Here's the table of contents for the book:
  • Bids or Competitive (Sealed) Bids
    • Objective and Application
    • Invitation to Bid (ITB) or Invitation for Bid (IFB) Development
    • Bid Evaluation
    • Summary
  • Request for Qualification (RFQ)
    • Objective and Application
    • RFQ Development
    • RFQ Evaluation Process
    • Summary
  • Request for Proposals (RFP)
    • Objective and Application
    • RFP Development
    • RFP Evaluation Process
    • Summary
  • Alignment & Consistency
    • Achieving Alignment
    • Consistent Terminology
    • Standardization
    • Criteria and Submittal Requirements Alignment
    • High Level View of Evaluations
  • Conclusion
Lourdes Coss, MPA, CPPO
About Lourdes Coss:  In her distinguished career that has spanned more than 25 years, Lourdes Coss has secured support for new procurement legislation, achieved over $150 million in savings in the last several years through strategic sourcing and negotiations, automated routine processes, significantly reduced procurement cycle times, and implemented strategies to maximize available resources.She has has led procurement improvements and transformations for many large public agencies:
  • City of Chicago
  • Public Building Commission of Chicago
  • University of Illinois at Chicago
  • Cook County, Illinois
  • City of Houston
Buying the book:  The book may be ordered online in paperback or in an electronic edition through either of the links below:
My semi-retirement:  As most of you know, I am not writing regular public contracting blogs now, but I will periodically post when important things come up.  I think the publication of Lourdes Coss' book is one of those important events that people should be aware of.  I know Lourdes and think very highly of her.  I am still doing some consulting and training, but am trying not to take on too many commitments so I can focus on my interest in writing and speaking on presidential history.

In the media:  I've been contacted by the media a lot recently to comment on presidential history and the current campaign.  In addition to being quoted in The Wall Street Journal and by Reuters over the last month or so, last week I had two television interviews that you can watch by clicking the links below:
Presidential History Blog:  If you're interested in presidential history, you can sign up for a free email subscription to my Presidential History Blog at PresidentialHistory.com.



Mike Purdy's Public Contracting Blog
© 2016 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Monday, March 7, 2016

The Perils of Piggybacking

I was interviewed by and quoted in The Wall Street Journal on March 7, 2016 about some of the questionable practices that have been used by various public agencies across the country in piggybacking off of contracts for the purchase of police body cameras.  

Click here to read the article: "For Cities After Ferguson, a Body-Camera Dilemma."
Presidential History Blog:  Check out my Presidential History Blog at PresidentialHistory.com and sign up for a free email subscription to it.


Mike Purdy's Public Contracting Blog
© 2016 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Wednesday, March 4, 2015

My Last Regular Blog Posting

Dear Friends and Colleagues,

As I wrote in my blog of January 11, 2015, I have decided to stop writing regular blog postings as part of scaling back my consulting and training work, and to give me more time to focus on other interests such as writing.  After March 5, 2015, the day of my last regular blog posting, I will still be accepting consulting and training opportunities.

Last Blog:  This will be my last regular posting on Mike Purdy's Public Contracting Blog.

Blog will remain online:  My Public Contracting Blog will remain online at http://PublicContracting.blogspot.com where you can still search by keywords and research topics based on the subject index.

Focus on Presidential History:  I will be writing more frequently for my Presidential History Blog.  
  • Blog:  If you’re interested in this, you can sign up for a free email subscription to my Presidential History Blog at www.PresidentialHistory.com.  
  • Video:  Be sure to watch the entertaining and educational 6 minute "Presidential History News" video that my son and I developed that is on the www.PresidentialHistory.com website.  It delivers "live" news coverage of key moments in presidential history. This first video tells the surprising story of the presidential election returns for 1916 between incumbent Woodrow Wilson and challenger Charles Evans Hughes.
I hope that my Public Contracting blogs over the last almost eight years have been helpful for you in managing the important work of public procurement and contracting. 

All the best,
Mike
Mike Purdy's Public Contracting Blog
© 2015 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Monday, March 2, 2015

Free Webinar: How To Pick The Right Contractor For Your Construction Project

Webinar:  How To Pick The Right Contractor For Your Construction Project

When:  April 2, 2015 (2:00 - 2:30 pm, Pacific Time) 

Cost:  Free 

Speaker:  Greg Guedel, Attorney at Foster Pepper 

Information and Registration:  Click here.  Register by March 27, 2015.

Mike Purdy's Public Contracting Blog
© 2015 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Wednesday, February 25, 2015

Avoiding Closed Door Selection of a GC/CM Contractor

GC/CM (General Contractor/Construction Manager) is one of three alternative public works contracting methods authorized in the State of Washington.  It is a form of what is generically known in the industry as Construction Manager at Risk.  Some states refer to it as CM/GC (Idaho and Oregon), or CM at Risk, or CMAR, or CMR.  There are differences in how this form of public works contracting is implemented. 

3 step selection process for GC/CM:  In Washington, the GC/CM is selected based on a combination of their scores for their proposal, their interview (not required by state law but highly recommended), and their price for their Percent Fee and Specified General Conditions costs.  At each stage of this three step process, a public agency may further reduce the number of firms who will move to the next step.  In some states, such as Idaho, price may not be used as part of the selection process for the CM/GC. 

Previous scores must be disclosed at bid opening:  By state law, finalist contractors who are asked to submit their price for the Percent Fee and Specified General Conditions must be told the number of points they have received for the proposal and interview at the bid opening for their prices.  RCW 39.10.360 (4) states (in part) the following: "At the time and place named, these bids must be publicly opened and read and the public body shall make all previous scoring available to the public."  This provision in the law is intended to prevent public agencies from modifying scores for the proposals and interviews in order to have their favored contractor win the most number of points.  The law is intended to ensure that the GC/CM selection process is a fair and transparent process.

Don't disclose scores early:  Some public agencies using the GC/CM process have made a different mistake and that is to publicly disclose the scores for the proposals and interviews to the finalist contractors before bids are due.  This practice enables contractors to determine how low their price must be to win the project.  This may result in a contractor bidding the project so low in order to get the highest number of points that there is not enough money in the project for them to make money, be successful, and complete the project.

Complexities of GC/CM:  GC/CM is a great project delivery tool, but it must be carefully developed and managed by the public agency.  Without being aware of some of these issues and how the different cost categories for GC/CM work, a public agency may be at a significant disadvantage in using this process. 

Presidential History:
  • Presidential History Blog:   While I will discontinue writing this Public Contracting Blog on March 5, 2015, you can sign up for a free email subscription to my Presidential History Blog at www.PresidentialHistory.comOn a case-by-case basis, I will only be accepting limited consulting and training opportunities after March 5, 2015.
Mike Purdy's Public Contracting Blog
© 2015 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com