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, I will be accepting limited consulting and training opportunities on a case-by-case basis.

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

Tuesday, February 24, 2015

Is It a Bid or An RFP?

What's the difference between a Bid and a Proposal, or between an Invitation to Bid and a Request for Proposals (RFP)? 

Invitation to Bid:  Public agencies that issue an Invitation to Bid (or a Request for a Quote) have defined a specific scope of work for which they are requesting bid prices.  Making the decision of award will be based on price alone.  In other words, the bidder with the lowest price, who has submitted a responsive bid (on time, signed, bid on all items, bid guaranty included if required, etc.) will be awarded the contract. 

Request for Proposal:  On the other hand, in an RFP price is part of the evaluation criteria that will determine which firm is awarded the contract, but the evaluation criteria also include experience, qualifications, and approach to the work.  The firm submitting the lowest price may not have the highest number of overall points and may not be the one awarded the contract.  Conversely, in an RFP a firm submitting a high price may end up being awarded the contract based on receiving more points for the evaluation criteria for experience, qualifications, and approach.  

How much is price worth?  In an Invitation to Bid, price is the only factor considered in making an award decision, while with an RFP price is one of many factors.  To the extent that the scope of work in an RFP is very clearly defined, price should be worth a higher percentage of the overall points available as this begins to look more like a bid.  To the extent that the scope of work in an RFP is less clearly defined and the public agency is relying more heavily on the judgment of the firm selected, it becomes more important that qualification, experience, and approach have more evaluation points assigned to them.  Click here for a blog that I wrote explaining this in more detail.  Click here to read about the misguided efforts of Jefferson Parish, Louisiana setting price at 25% on all RFPs. 

Evaluation criteria: It takes time to develop appropriate evaluation criteria that reflect the actual values and concerns of a public agency and that will result in the most qualified firm being selected.  Evaluation criteria must be clear to firms submitting a proposal so they understand what the expectations are for what is most important to the public agency.  In establishing evaluation criteria for an RFP, the following should be part of what is published in the RFP:
  • Title for the criteria
  • Detailed description of the criteria
  • Number of points possible for each criterion
  • Documentation that should be submitted to demonstrate compliance with the criteria
Transparency is important:  If a public agency issues an Invitation to Bid (or a Request for a Quote), and price is the only thing requested, the expectation is that the agency will make an award decision based only on price.  An agency may not, after bids have been received, then disclose subjective evaluation criteria they will use to make an award decision.  If this seems obvious to many of you, it's important to bring this up because I have seen this improper practice occur.


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

Thursday, February 19, 2015

New Prevailing Wages Effective March 4, 2015

The Washington State Department of Labor and Industries published updated prevailing wages on February 2, 2015.  According to WAC 296-127-011, the new prevailing wages will become effective 30 days later, or on March 4, 2015. 

Effective Date for Projects:  For any public works project with a bid submittal deadline of March 4, 2015 or later, the new wage rates will be in effect.  For projects advertised prior to March 4, 2015, but which have a bid submittal date of March 4, 2015 or later, public agencies should issue an addendum with the revised prevailing wage rates.  To look up the new wage rates, visit Labor and Industries' website. 

Current Prevailing Wages:  Projects with a bid opening date of March 4, 2015 or earlier are governed by the current prevailing wage rates dated August 31, 2014.  Labor and Industries publishes corrections to prevailing wages on their website. 

Notifying Contractors of Applicable Wages:  It is important for public agencies to make sure that the correct prevailing wage rates are either included in the bidding documents for any public works project bidding on or after March 4, 2015, or that the bidding documents reference L&I's website and include other information.  See my previous blog entry on incorporation of the prevailing wage rates by reference. 

No Incorporation by Reference of Federal Wages:  For federally funded projects, the actual federal prevailing wage determination must be physically included in the bidding and contract documents, and may not be just included by reference.  In order to eliminate confusion on federally funded projects, the best practice is to also physically include the state prevailing wages in the bidding and contract documents, even though it is permitted that Washington state prevailing wages may be incorporated by reference.

Differences Between Federal and State Wages:  On federally funded projects, both federal and state prevailing wages apply and the contractor is required to pay the higher of the two wages for any classification of labor.  Public agencies should ensure that language to this effect is reflected in their bid and contract documents.

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

Wednesday, February 18, 2015

Court Rejects Owner's Claim Against Bonding Company

After repeated performance deficiencies by a contractor, a public agency in Pennsylvania terminated the contract and filed a claim against the surety that issued the performance bond.  

Owner didn't provide notice and opportunity to cure:  After multiple court motions by both the Milton Regional Sewer Authority (MRSA) and Travelers Casualty & Surety Co. (Travelers), the U.S. District Court ruled in favor of the surety, affirming that MRSA had failed to provide the contractor with proper notice of the performance deficiencies and give them an opportunity to cure the problems prior to termination.  

Owner argues material breach the contract:  MRSA argued unsuccessfully that they were not required to provide the notice and give the opportunity for the contractor to cure the deficiencies because the contractor's lack of performance constituted a material breach of contract that would have allowed them to terminate without the notice and cure processes.   

Court rules no material breach of contract:  The Court disagreed with MRSA, ruling that the deficiencies cited by MRSA did not constitute a material breach of contract.  The contractor was guilty only of "poor performance of the contract, which is precisely within the contemplation of the cure provision in the contract." 

More information:  
Lessons learned:  If a contractor is not performing consistent with the contract documents, public agencies should:
  • Document:  Thoroughly document deficiencies and the contractor's actions that are at variance with the contract documents.
  • Keep surety informed:  Communicate clearly and often with the bonding company about the deficiencies.
  • Abide by notice and cure provisions:  Follow the notice requirements of the contract for providing the contractor with the opportunity to cure deficiencies.


Presidential History:
  • Presidential History Blog:   While I will discontinue writing my 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

Tuesday, February 17, 2015

Using Volunteers on Public Works Projects

In Washington state, RCW 35.21.278 addresses the question of when volunteers from a community service organization may be used on a public works project. 

Do competitive bidding requirements apply?  This state law enables certain types of public agencies to contract with certain community service organizations for certain public works projects without going through a competitive bidding process to select the community service organization.

What public agency types are covered?  The state law gives authority only to the following public agency types:
  • County
  • City
  • Town
  • School district
  • Metropolitan park district
  • Park and recreation district
  • Port district
  • Park and recreation service area
Other types of public agencies are not covered by this law.

What is a community service organization?  The law states that an authorized public agency may contract with the following types of organizations:
  • A chamber of commerce
  • A service organization
  • A community, youth, or athletic association
  • Other similar association located and providing service in the immediate neighborhood
What type of work can be performed?  The law provides that an authorized public agency can contract with an authorized community service organization for the following services:
  • Drawing design plans
  • Making improvements to a park, school playground, public square, or port habitat site
  • Installing equipment or artworks
  • Providing maintenance services for a facility or facilities as a community or neighborhood project
  • Environmental stewardship project
Can volunteer expenses be paid?  The authorized public agency may reimburse the contracting association its expense.  "The contracting association may use volunteers in the project and provide the volunteers with clothing or tools; meals or refreshments; accident/injury insurance coverage; and reimbursement of their expenses." 

How much can the public agency reimburse for expenses?  "The value of the improvements, artworks, equipment, or maintenance shall have a value at least equal to three times that of the payment to the contracting association."  In other words, if the reimbursable expenses to be paid by the public agency for an improvement was $2,000, the value of the actual improvement would have to be at least $6,000. 

Are there other dollar limitations of how much can be reimbursed?  On an annual basis (not on a per project basis or community service organization basis), an authorized public agency may reimburse all community service organizations only up to a maximum of $25,000, or $2 "per resident within the boundaries of the public entity, whichever is greater."



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