Do you need a pre-audit of your contracting practices?

I've started reading through the 334 page performance audit report issued by the Washington State Auditor's Office on December 20, 2007. The report includes a number of critical and recommendations on the Port's construction management program. My sense is that many public agencies probably have similar practices that would subject them to similar findings.

The audit of the Port of Seattle can be instructive in helping public agencies understand what types of practices do not meet the test for good public contracting practices.

If you are interested, I would be glad to talk with you about conducting a pre-audit of your contracting practices. Such a pre-audit can help a public agency make necessary corrections to their contracting practices, but without the public scrutiny and adverse publicity that comes from a formal audit. E-mail or call me if you're interested in chatting further about this concept.

Roster, On-Calls, and Consultant Selection

Rosters, On-Calls, and Consultant Selection - Sponsored by APWA (Washington State Chapter)

$37 (includes dinner)

Wednesday, January 23, 2008
4:45 pm to 7:45 pm
Rock Salt On Latitude 47
1232 Westlake Avenue North, Seattle

For more information and to register: http://www.apwa-wa.org/training/training_schedule.aspx?cid=95

Selecting the best consultant for engineering or architectural services is one of the most critical tasks for a successful project. However, the process is often costly and can take significant time for both agencies and consultants. Many agencies have gone to a roster or on-call format to simplify the process. Other agencies rely on published requests for proposals or qualifications to meet their needs. A few years ago, several agencies banded together to share a roster managed by the City of Lynnwood. This process was intended to reduce workload for agencies and consultants, but the City of Lynnwood has since decided to discontinue the shared roster program. So what’s happening now?

• Municipal Research and Services Center (MRSC) is taking over the Lynnwood Shared Roster Program. John Carpita will speak about the MRSC shared small works and consultant rosters and what is in store for agencies and consultants.
• The Shared Procurement Portal includes an Architects and Engineers Consultant Roster and Small Works Roster. Doug Jacobson will speak about this program that was by the eCityGov Alliance, a group that was formed by nine Cities in 2002 to create a regionally coordinated portal(s) for the delivery of public sector services via the Internet such as on-line building permits, GIS data, and parks & recreation class registration.
• Agencies and consultants expend considerable energy and time in the selection process. This translates to higher project costs through a combination of additional agency staff time, increased consultant overhead, and extended project completion. Craig Stampher will lead a discussion on efficient use of the roster and on-call processes from a consultant perspective. Rosters and on-calls should reduce these costs when compared with the typical request for proposal process, but only if they are used effectively. This discussion will focus on making the process more efficient, so bring your ideas!

Critical Audit of Port of Seattle Construction Management

On December 20, 2007, the Washington State Auditor's Office released a 334 page performance audit of the Port of Seattle's Construction Management program.

Six major findings in the audit are summarized as follows:

1. Port construction management lacks cost controls and accountability.
2. The Port circumvents competition requirements in violation of its own policies and sometimes in violation of state law.
3. Port policies and Port management’s interpretations of its policies result in a lack of transparency and thwart Commission oversight of construction management activities.
4. Port construction management records are incomplete and disorganized.
5. The Port fails to enforce basic contract requirements, resulting in delays, extra costs, and an inability to defend against claims.
6. Port construction management is vulnerable to fraud, waste and abuse.
   

The audit was part of the State Auditor's Office was conducted under the authority of citizen-approved Initiative 900.

A copy of the audit report may be found at the following website address: http://www.sao.wa.gov/Reports/AuditReports/AuditReportFiles/ar1000008.pdf

Basics of Public Works Contract Administration - Training

Basics of Public Works Contract Administration, February 13, 2008.

8:30 a.m. to 4:30 p.m. Sponsored by the Washington State Chapter of NIGP.

Olympia (Washington State Transit Insurance Pool, 2629 12th Ct. SW, Olympia, WA 98502)

Instructor: Charlotte Walther, CPPB, Contracts Administrator, Port of Everett. Charlotte is a very knowledgeable and effective teacher.

For more information, visit: http://www.wanigp.org/insidepages/meetings.cfm

Fees for this event:

Non-members:	$180.00
Chapter Only Member:	$150.00
National Members:	$150.00
Chapter & National Member:	$150.00

Legal Aspects of Public Purchasing - Training

Legal Aspects of Public Purchasing, Sponsored by the Washington State Chapter of NIGP. Registration deadline is December 21, 2007

January 14-16, 2008, 8:00 a.m. to 5:00 p.m., at Bellevue City Hall.

Seminar Fees: NIGP National Member - $575; Nonmember - $750 (includes Chapter members)

Instructor: Ken Babich, CPPO, Director of Purchasing Services, University of Victoria, BC

For more information, visit: http://www.wanigp.org/insidepages/meetings.cfm#M24

General Description: Designed to be an educational exploration of the Legal Aspects of Public Procurement, this course will provide a foundation of the principles and general concepts of the law as it applies to public procurement. Course content will address issues such as the UCC, the Model Procurement Code, Sale of Goods Act and the legal implications surrounding solicitations, contracting and post award issues. Attention will be given to the ethical issues facing the profession relevant to the law. Taught by a procurement professional, not an attorney, this course will focus on actual procurement situations with actual procurement implications.

Construction Claims Training

Construction Claims in Washington - March 6, 2008, 8:00 a.m. to 4:30 p.m.

Washington State Convention & Trade Center, Seattle, WA
$349, sponsored by Lorman Education Services

• RCW 64.55 in Action - From the Condominium Association to the Developer and Back
• Using Mock Jury or Focus Group Research in Construction Defect Cases
• Insurance Coverage and its Critical Role in Construction Defect Claims
• Defect Liability in Condominium Projects
• Changes in Defect Claims over the last five years

"Best Value" Conference

Best Value is a procurement tool, specifically for obtaining public works, that is getting some discussion now in Washington State. Instead of focusing solely on the low bid, it focuses on which contractor provides the best overall value for the public agency. There may be legislation introduced in the 2009 legislative session on this subject.

There will be a conference on the subject from February 11 - 15, 2008 in Arizona. See the following website for more information:

http://www.pbsrg.com/seminars/conferences/bvconf2008/index.html

Emergency Declaration for A/E Contracts

Washington State law requires that four disciplines (architects, engineers, landscape architects, and land surveyors) be selected based on which firm is the most qualified, without considering price as an evaluation criterion. Chapter 39.80 RCW does provide, however, that in the event of an emergency, a public agency may waive the selection procedures outlined in state law. RCW 39.80.060 states that a public agency may waive the selection procedures in chapter 39.80 RCW "when the contracting authority makes a finding in accordance with this or any other applicable law that an emergency requires the immediate execution of the work involved."

There are, of course, separate laws that apply for waiving the competitive bidding requirements for execution of a public works project in the event of an emergency.

Questions on Public Contracting?

If you have any questions related to public contracting, feel free to use this Blog as a means to communicate with me, or you can e-mail me directly (http://mpurdy.com/contact/).

Tools to Reduce Change Orders

A couple of fairly simple steps can help reduce the number and size of change orders on your public works projects.

1. Have clear plans and specifications. Review the bidding documents you receive from the architect or engineer before advertising for clarity, consistency, and comprehensiveness.
2. Conduct pre-bid site inspection meetings. The bidders who attend can be a valuable tool in pointing out areas of ambiguity in the bidding documents.
3. Issue addenda to clarify or revise any problem areas in the bidding documents. This will all help ensure that the bidders are bidding on the project with a common understanding.
4. Consider a claim of error. If, after receipt of bids, the low bidder submits a claim of error asking to be relieved of liability for the bid due to an error they made in preparing the bid, think carefully about the request. Generally, it is not in the best interests of a public agency to award a contract to a bidder who has requested out of its bid due to an error. If you award to them, they will look for every opportunity to make up the difference through change orders.
5. Hold a partnering session after award of the contract. A partnering session is an opportunity for the contractor, owner, and designer to spend a couple of hours, a half day, or a full day together talking about communications protocol on the project and developing a sense of teamwork and how they all intend to cooperate on the project.
6. Ensure that your contract has clear provisions for change orders and payment procedures.
7. Make sure you know your contract. A good contract for an owner offers many helpful tools to effectively manage the project and to reduce the number of change orders.

More on Bidder Responsibility

The Industry-Wide Subcommittee of the Capital Projects Advisory Review Board (CPARB) met on Friday (December 7th) to continue its discussion of additional supplemental bidder responsibility criteria to be included in the Suggested Guidelines for Bidder Responsibility. No decisions were made at the meeting. There are still some issues to discuss regarding the language for three proposed criteria: lawsuits, prevailing wages, and safety. Hopefully, the issues will be resolved before the January meeting and these can then be added by CPARB to the existing list of suggested supplemental bidder responsibility criteria in the Suggested Guidelines.

Washington State Bar Association Newsletter

The Washington State Bar Association's Summer 2007 newsletter is available online at http://www.wsba.org/lawyers/groups/constructionlaw/0607constrnews.pdf.

It includes articles on the following recent court cases:

• Contractor Prevails on Prevailing Wage Issue - Court Holds L&I to its Pre-Bid Interpretation of Administration Regulations (Silverstreak, Inc. v. Department of Labor and Industries, 3129/2007, Docket Number 76695-9)
  

• Washington Supreme Court Abandons the Completion and Acceptance Doctrine (Davis v. Baugh Industrial Contractors, Inc.)
  

• Liability for Utility Company Delays (Scoccolo Construction, Inc. v. City of Renton)

Shared Procurement Portal

A number of public agencies in Washington State have recently launched a Shared Procurement Portal in cooperation with eCityGov.net. The first phase of the implementation includes a shared roster program for the following:

• Small Works Roster
• Professional Services/A&E Roster
• Legal Services
• General Services Roster
• Vendor Roster

For more information, visit the website at www.WaGovBiz.net or contact Mayvis Schwab at mschwab@bellevuewa.gov.

GC/CM Training

The Associated General Contractors (AGC) is sponsoring a two day training session on the new law (effective July 1, 2007) on the use of the General Contractor/Construction Manager (GC/CM) project delivery system for public works construction projects.

The training will be held on January 31, 2008 and February 1, 2008 at the AGC Building (1200 Westlake Avenue North, Seattle). Cost is $350 per person and includes lunch on both days.

For more information visit this website: http://www.agcwa.com/Public/education/gs_class_flyers/GCCM2Day.pdf

Minority Business Awards

I attended the 9th annual UW minority business of the year awards dinner tonight. Sponsored by the UW's Business and Economic Development Center, the awards recognized a variety of businesses including Apollo (minority business of the year award), Marpac Construction (distinguished business achievement award), Synergy Systems (emerging business award), Warrior Electric (rising star award), Woodburn Co. (business of tomorrow award).

For more information about the UW Business and Economic Development Center, visit their website at: http://foster.washington.edu/bedc/

Managing Construction Projects - Training

Managing Construction Projects - training

December 11, 2007
Holiday Inn Seattle Center, 211 Dexter Avenue North, Seattle
$369 per person

For more information and registration: http://www.lorman.com/seminars/seminar_details.php?pid=181357

To maintain control and minimize the risks inherent in the construction process, you must stay current on construction issues and trends. Whether you're new to the profession or very experienced, this seminar will provide you with the critical information and updates you need to succeed on your next project.

In One Day, You'll Learn To:

• Recognize the top 10 key contract provisions
• Handle project closeout and warranty issues
• Design a recordkeeping system to record the project history
• Resolve project disputes and claims
• Create change in turning the job around

Washington State Chapter NIGP - Annual Meeting and Training

Annual Business Meeting, Training, Honors and Awards for the Washington State Chapter of NIGP (National Institute of Governmental Purchasing).

January 23, 2008

Seattle City Hall, 600 5th Avenue, Seattle, WA

$40 per person

Training sessions on:

1. Prevailing Wages for Maintenance, Repairs, and Service Contracts
2. Sustainability

Register online at www.wanigp.org
Deadline for registration: January 16, 2008

Training - Building Codes in Washington

Building Codes in Washington training on February 13, 2008
9:00 a.m. to 4:30 p.m.
Holiday Inn Seattle Center, 211 Dexter Avenue North, Seattle
$359 per person
Lorman Education Services
www.lorman.com

Topics include:
Structural Provisions
Interaction with the Mechanical Codes from the Perspective of Design
Significant Impacts of the Current Ventilation Code
Significant Impacts of the Current Energy Code
Fire Life Safety Issues from an HVAC Perspective
Working Better with your local Building Department
Liability from Noncompliance

Green Building Seminar in February

Green Building: Benefits and Opportunities for Developers and Communities
February 5, 2008, Washington State Convention and Trade Center, Seattle, WA,

For more information, visit: http://www.theseminargroup.net/seminar.lasso?seminar=08.GRNWA#overview

Construction Defects Seminar

"Construction Defects: Water Intrusion & Other Calamities" Seminar
December 13, 2007, 9:00 a.m. to 5:00 p.m.
Washington State Convention & Trade Center - Seattle, WA

. Owner's Perspective on Construction Defects
. Contractor's Perspective on Construction Defects
. Current Insurance Products and Strategies
. On-Site Inspectors
. Pursuing Insurance Coverage
. Defending the Developer/Contractor Under an Insurer Reservation of Rights
. Making or Breaking Your Defect Case

For more information: http://www.theseminargroup.net/seminar.lasso?seminar=07.CDEFWA

APWA Forum: Going Green - Understanding the Complexities

Going Green - Understanding the Complexities

Wednesday, December 12, 2007
4:45 p.m. to 7:45 p.m.
Rock Salt on Latitude 47
1232 Westlake Avenue North, Seattle

A presentation on how Sustainable Design is actually being implemented in the Northwest and the complexities of going green. Our discussion will explore questions such as:

How can agencies respond to the market while protecting Public safety and the environment?

What of leadership strategies are needed to assist smaller groups managing volunteer projects?

How to effectively review green projects and why it’s not business-as-usual.
How do we consider life-cycle costs vs. capital costs on sustainable projects?

Can we use multiple scenarios during project selection to identify potential weaknesses in plans?

The speakers will draw from project and professional experience to discuss these topics, with an emphasis on storm water management and lessons learned. They will discuss present and future green drainage design guidance, associated regulatory framework, relationships between agencies and private partners, retrofitting of existing facilities with green features, and components for successfully completing a Low Impact Development (LID) project from planning through the operations and maintenance phases.

Peg Staehili, president SvR Design Company

Christopher W. May, Ph.D, Seattle Public Utilities

Registration Fee (includes dinner): $37.00

Please register by Wednesday, December 5, 2007.
Refunds: No refunds for cancellations after noon on Monday, December 10, 2007. “No shows” that have not pre-paid will be billed.

Register and pay by mail at http://www.apwa-wa.org/committees/mpac/MPAC%20Mtgancmt%20Dec%202007.pdf or online at http://www.apwa-wa.org/committees/mpac.htm and follow the direction for registration and prepayment.

Payment and Performance Bonds

Public agencies in the State of Washington contracting for public works projects are required by RCW 39.08 to obtain a payment and performance bond, usually in the amount of 100% of the contract amount. There are three exceptions to obtaining a payment and performance bond:

1) Cities and towns may, by ordinance, require a lower percentage bond, but not less than 25% of the contract amount. The public agency picks up additional liability in doing so, but it may be helpful in encouraging smaller businesses to bid on the project.

2) For a public works contract less than $35,000, upon the contactor's request, a public agency does not have to require a payment and performance bond. Under such a situation, the public agency is then required to retain 50% of the contract amount for a) 30 days after the date of final acceptance, b) or until receipt of all releases from the Department of Revenue, prevailing wage forms approved by the Department of Labor and Industries, and settlement of any claims filed against the bond, whichever is later.

3) For a public works contract less than $35,000 using the "limited public works process" under the Small Works Roster requirements of RCW 39.04.155, the public agency may waive the requirement for the payment and performance bond. Under such a situation, the public agency assumes liability for non-payment of workers, subcontractors, and suppliers with valid claims.

Happy Thanksgiving!

Thanksgiving is a holiday tradition with deep roots in our country - starting with the early Thanksgiving celebrations by colonists in Massachusetts and Virginia. In the middle of the Civil War, Abraham Lincoln issued a presidential proclamation declaring a national day of thanksgiving, a tradition that presidents since then have followed.

As 2007 begins to wind down, we pause during this season of the year to remember the many gifts in our lives during the year. Despite the bumps and struggles we all face in life, we do indeed have much to be thankful for - family, friends, housing, food, jobs, peace, safety, health. The list could go on.

As we celebrate Thanksgiving on Thursday with family and friends, I want to wish you the very best. May it be a time of rest, joy, satisfaction, and reflection on the many things we have to be thankful for.

Insurance Documentation

When you contract for either construction or consultant services, it's very important to make sure that you have your agency named as an additional insured. But what kind of documentation should you accept as evidence that your agency has been named as an additional insured?

Many insurance brokers will routinely only provide you with a certificate of insurance that will state that your agency is named as an additional insured. But such evidence does not really protect you. The most common form used for a certificate of insurance is called an "Acord" form. If you read the language in the upper right hand corner of the certificate, it states that "This certificate is issued as a matter of information only and confers no rights on the certificate holder."

As the certificate holder you want rights. In fact, you want to be named as an additional insured, because if there is a property damage or personal injury claim on the project and you are sued, you want to make sure that the contractor's or consultant's insurance policy will cover you - that you are an additional insured, in addition to the contractor or consultant being covered. Without being an additional insured, you have no protection.

So how do you ensure that you are, in fact, an additional insured? You should insist of receiving an endorsement issued by the contractor's or consultant's insurance broker. An endorsement, by definition, is an amendment to the insurance policy. The endorsement is the only proof that your agency has been named as an additional insured.

There are two types of additional insured endorsements. First, there is a blanket additional insured endorsement. In this type, the endorsement states that anyone that the contractor or consultant contracts with who requires by contract that they be named as an additional insured is automatically named as an additional insured. Second, there is a specific additional insured endorsement. In this type, the endorsement will specifically name your agency and state that you are an additional insured.


Review your contracts to make sure you have language requiring your contractors and consultants to name your agency as an additional insured. Then establish a procedure so that you collect an additional insured endorsement, in addition to a certificate of insurance.

Being named as an additional insured does not apply to professional liability insurance policies (also known as errors and omissions) generally issued to cover the work of architects and engineers and similar professions.

MBE, WBE, MWBE, DBE

The State of Washington has an office dedicated to helping encourage public agencies in the state to use minority and women owned businesses on their contracts. The Office of Women and Minority Business Enterprises (OMWBE) certifies businesses as being owned and controlled by women and/or minorities. There are a number of categories they certify businesses in, as noted below:

MBE: Minority Business Enterprise. Owned and controlled 51% by a minority or minorities.

WBE: Women's Business Enterprise. Owned and controlled 51% by a woman or women.

MWBE: Minority Women's Business Enterprise. Owned and controlled 51% by a minority woman.

CBE: Combination Business Enterprise. Owned and controlled 50% by a non-minority woman and 50% by a minority male. There are only a handful of such businesses certified in the state.

DBE: Disadvantaged Business Enterprise. A certification category based on social and economic disadvantages and used primarily on contracts through the Washington State Department of Transportation (WSDOT).

Programs to encourage the use of such firms are generally referred to collectively as MWBE programs or WMBE programs.

OMWBE also publishes an online search engine of the businesses it has certified.

Forum: Bridge Failures: Are We Next?

Sponsored by APWA - Washington State Chapter

Wednesday, November 14, 2007
4:45 p.m. to 7:45 p.m.
Rock Salt on Latitude 47
1232 Westlake Avenue North, Seattle

Program Panel
Tim Lane, P.E., Supervising Engineer, King County Bridge Operations
John Buswell, Interim Director. Bridge Maintenance & Operations, City of Seattle DOT
Harvey Coffman, S.E., Director of Bridge Preservation, Washington State Dept. Of Transportation
Moderator: Einer Handeland, P.E.,Parsons-Brinckerhoff

Program Description
The I-35 bridge disaster in Minnesota brought attention to the condition of infrastructure in this country. How does Washington State and our local area compare with the rest of the nation? What are we doing to prevent a I-35 bridge disaster here? A panel of public sector leaders, who are responsible for infrastructure maintenance, will talk about bridge preservation issues and steps taken to protect the public from infrastructure failure in the Pacific Northwest. Topics will include: Infrastructure Status, Inspection Process, and Infrastructure Management.

To Register: http://www.apwa-wa.org/training/training_schedule.aspx?cid=89

Now Online - Bidder Responsibility Guidelines

The Capital Projects Advisory Review Board (CPARB), which adopted the Suggested Guidelines for Bidder Responsibility on October 11, 2007, published the Suggested Guidelines on their website today. Click on CPARB's website to view the Suggested Guidelines.

Project Delivery Systems

Public works construction projects in Washington state are procured through a variety of project delivery systems. Not all public agencies in the state are authorized to use all of the methods listed below. If you would like more information about any of these contracting mechanisms, please let me know and I would be glad to either talk with you or write more information about it on this blog.

Design/Bid/Build: The traditional method of contracting for public works project is often referred to as "Design/Bid/Build." The agency hires a separate firm to design the project (usually an architect or engineer). The agency then publicly bids the project, and contracts with the contractor submitting the low responsive bid to build the project. RCW 39.04. Small Works Rosters are a subset of Design/Bid/Build as are Limited Public Works projects (39.04.155).

Design/Build: The agency hires one firm to design and build the project. RCW 39.10.

General Contractor/Construction Manager (GC/CM): The agency hires a contractor early in the design phase to help with constructability reviews, estimating, and value engineering, based on qualifications and some bid prices with the bulk of the contract amount being negotiated. RCW 39.10.340 through 39.10.410.

Job Order Contracting: This method involves hiring a contractor to do work orders based on pricing in a unit price book. RCW 39.10.

Energy Service Companies (ESCO): This method involves hiring a contractor to propose energy savings equipment in public buildings that the contractor guarantees will save energy costs over a specific period of time. RCW 39.35.

Building Engineering Systems: Limited design/build types of projects are permitted for certain work under this law. RCW 39.04.290.

Contracting Training

There are a number of organizations that regularly sponsor training applicable for government employees responsible for contracting and procurement issues. I've included links to a number of them on my website (www.mpurdy.com) and have listed a few of them below.

APWA (Washington State Chapter)
WSDOT (Local Technical Assistance Program)
Nahabit & Associates, Inc.
NAHRO (National Association of Housing and Redevelopment Officials)
Lorman
American Purchasing Society

In addition, I'm available to provide training either for one agency or a group of agencies on a variety of topics related to procurement, construction and consultant contracting.

GC/CM Training

The AGC and others will be sponsoring another training session on the new Washington State law dealing with General Contractor/Construction Manager (GC/CM) public works contracting. It is tentatively set for January 31st and February 1st next year and is a two day session. Keep an eye on the AGC website for further details.

CPARB Adopts Guidelines for Bidder Responsibility

On Thursday, October 11th, the Capital Projects Advisory Review Board (CPARB) met in Olympia and voted to approve the Suggested Guidelines for Bidder Responsibility. The Guidelines were developed to assist public agencies in Washington State implement the provisions of SHB 2010, regarding mandatory bidder responsibility criteria, subcontractor responsibility criteria, and optional supplemental bidder responsibility criteria.

CPARB will be posting the Suggested Guidelines to their website soon so they will be available to all.

If you have any questions about the Suggested Guidelines, please feel free to contact me.

2007 Legislative Changes Now Codified in RCWs

The legislation approved by the State Legislature this last spring has now been codified into RCWs and is available online. Rather than incorporate the changes into the existing law, there is a separate section on the RCW web page entitled 2007 RCW Supplement.

Bidder Responsibility Guidelines Approved by Subcommittee

The Industry-Wide Subcommittee of the Capital Projects Advisory Review Board voted on Friday, October 5th to recommend that the draft Suggested Guidelines for Bidder Responsibility be adopted by CPARB at their upcoming meeting on October 11th.

Status Update on Guidelines for Bidder Responsibility

The Task Force for Bidder Responsibility Guidelines met on Tuesday to discuss the draft appendices to the guidelines. It was a productive session. The Task Force concluded that there were a couple of issues that required more discussion, and made a note of the issues as placeholders in the guidelines. This was done in the interest of moving the guidelines forward for consideration to the Industry-Wide Subcommittee on Friday and CPARB next Thursday. The current plan is to ask CPARB to adopt the guidelines at their meeting next week.

Use of Mandatory Pre-Bid Meetings

Should you ever use a mandatory pre-bid meeting for a public works project? What are the advantages and disadvantages of such a meeting?

Generally speaking, there may be occasions where it is appropriate to use a mandatory pre-bid meeting. For example, you may have a particularly complex project or one where there the access to view the project is restricted or secure. However, use mandatory pre-bid meetings with caution as they can cause unintended consequences.

If you decide to dictate a mandatory pre-bid meeting, make sure you state very clearly in the bidding documents and advertisement the time and place of the meeting. You should also be very clear what the word "mandatory" means: you will not accept bids from bidders who did not attend the meeting. You may also want to consider mentioning in the bidding documents your business reasons for making the meeting mandatory; this could end up being helpful in the event there is a protest related to your acceptance or non-acceptance of a bid.

If possible, try to schedule more than one mandatory meeting in order to give bidders with a scheduling conflict the opportunity to attend. This not only may reduce the possibility of a protest, but may also be beneficial to the bid prices received. If only one bidder shows up to just one mandatory pre-bid meeting, they will then know that they have no competition, and their bid price will not be as competitive. On the other hand, if you have more than one mandatory pre-bid meeting, make sure you communicate the exact same information to the attendees at each meeting, and document the issues raised and addressed through an addendum.

It will be critical to keep an accurate sign-in list of those attending the mandatory pre-bid meeting so that you will know who bids may be accepted from.

To my knowledge, no courts in Washington State have addressed a situation in which a public agency refused to accept the bid of a bidder who didn't attend the mandatory pre-bid meeting, so it is somewhat uncertain how such a case may turn out. Some people may argue that having a mandatory pre-bid meeting restricts the bidding pool in a manner not permitted by public bidding laws. However, if you have valid business reasons for doing so and manage the process appropriately, it may be beneficial to your project to have a mandatory pre-bid meeting.

The decision of whether to have a mandatory pre-bid meeting should be made separately for each project, based on the particular circumstances of the project, and then the process should be managed very carefully.

Draft Bidder Responsibility Guidelines Online for Comment

The Capital Projects Advisory Review Board (CPARB) has posted to their website the draft Guidelines for bidder responsibility, in response to the requirements of SHB 2010. Comments will be received until October 3rd. There are also appendices to the Guidelines that have not been posted yet as the Task Force on Bidder Responsibility has not finalized these yet. The Task Force will meet next on October 2nd, and CPARB's Industry-Wide Subcommittee on October 5th. The goal is for CPARB to adopt the Guidelines at their October 11th meeting.

If you have any questions or comments about the Guidelines or what to do in order to implement the new legislation, please let me know. I would be glad to provide complimentary assistance on this issue.

Certificate Awarded

On Tuesday, September 18th, I received a certificate from the APWA/MRSC training program for attending more than 30 hours of training. I've also enjoyed teaching a number of the classes for this program. Here's a picture of me receiving the certificate.

Checklist for Mandatory Bidder Responsibility

Part of the draft Suggested Guidelines for Bidder Responsibility that are being developed by the Capital Projects Advisory Review Board (CPARB) includes a checklist to help agencies monitor compliance of a bidder with the mandatory bidder responsibility criteria of SHB 2010. If you'd like a copy of the checklist, please e-mail me and I'd be glad to send it to you.

CPARB will consider the Suggested Guidelines at their Thursday meeting this week. I hope they will adopt the Guidelines, but the appendices still need additional work and won't be considered this week by CPARB. The appendices will need to wait until CPARB's meeting next month.

Change in Dept. of Revenue Release Threshold

Substitute House Bill 1328 was approved by the Legislative in the spring. One of the things this new law does is to increase the dollar threshold for when public agencies must obtain a release from the Washington State Department of Revenue. The Revenue release verifies that the contractor on a public works project has paid state excise taxes, and must be obtained by public agencies prior to release of retainage to the contractor. The legislation increases the threshold from $20,000 to $35,000. SHB 1328 went into effect on July 22, 2007.

According to the Department of Revenue, for any public works contract awarded prior to July 22, 2007, the $20,000 threshold applies. The new $35,000 threshold only applies for public works projects awarded on or after July 22, 2007.

Update on Bidder Responsibility Guidelines

The Task Force on Bidder Responsibility Guidelines will meet on Wednesday, September 5th, as part of trying to finalize its recommendations for the Guidelines. The Guidelines will be a helpful tool to public agencies in implementing the recently passed State law (SHB 2010).

On Friday, September 7th, the Industry-Wide Subcommittee of the Capital Projects Advisory Review Board (CPARB) will meet to consider the recommendations of the Task Force.

Then next Thursday, September 13th, CPARB will meet, hopefully to review and approve the Guidelines. Once approved, the Guidelines will be published on CPARB's website.

Showcase 2007 - Business Conference and Opportunity Fair

The Northwest Minority Business Council's "Showcase 2007" will be held on Monday, September 24th, 2007 at the Washington State Convention Center in downtown Seattle.

This Business Conference and Opportunity Fair includes business seminars and and opportunity for minority businesses to interact with major corporations and public agencies.

If your public agency is looking for opportunities to explain to the minority business community how to do business with your agency, this is a great opportunity to explore. Visit the Northwest Minority Business Council's website for more details.

Regional Small Business Development Program

The Seattle Public Schools and Sound Transit are launching a Regional Small Business Development Program designed to help train small contractors and provide them with the tools to be competitive in the marketplace. The training is free. The categories of training include contracting, management, finances, marketing, and human resources, with specific classes under each of these areas. The introductory class is on September 11th. The classes are scheduled from September through February 2008. For questions about the program, call (206) 252-0561 or email egraves@seattleschools.org. There is a printed brochure available with more detailed information about the training offered.

Plans & Specs for the Low Bidder

Do your contract documents clearly state how many copies of the plans and specifications you will provide, free of charge, to the successful bidder versus what the contractor must pay for themselves? Without clear specification language you may find yourself either in a fight with the contractor (not a good way to start a project) or paying for additional plans and specifications for the contractor that you didn't budget for.

Here's some suggested language that you may want to consider including in your bidding documents:

"After award of the Contract, the Owner shall make available to the Contractor, without cost to the Contractor, any sets of Contract Documents that have been returned from plan holders. All other sets of Contract Documents required by the Contractor for the Project shall be obtained by the Contractor at the Contractor's sole cost."

Determining the Low Bidder with Additives and Alternates

If your bid form includes Additives, Deductives, or Alternates (see previous blog post from August 28th for more information), it is very important to make sure that you award the contract the bidder with the lowest bid of the combination of the base bid and Additives, Deductives, or Alternates that you choose to exercise.

Even if one bidder is the low bidder on the base bid, they may not be the low bidder when you add an Additive, Deductive, or Alternate bid. You should be comparing all bidders against the same combination of bids to determine who the low bidder is. In other words, if you choose to exercise Additive number 1 and 3, you should do a comparison of the price from all bidders on the base bid and Additives 1 and 3 to determine who is the low bidder on that combination.

Your decision of which Additive, Deductive, or Alternate bids to exercise should be based on funding availability and sound business reasons related to the project, and not on who your favorite bidder is. Not managing this part of the process correctly may subject you to both protests and/or audit findings.

In addition, you should not do a change order for any of the Additive, Deductive, or Alternate bids if such a decision, made at the time of bid submittal, would have changed the order of who you awarded the contract to.

Additives vs. Alternates

What's the difference between an Additive bid and an Alternate bid? What's a Deductive bid? Or an Additive Alternate bid? Different public agencies use the terms differently, but in my mind, here's what they mean.

An Additive bid is a body of work that the owner may award with the base bid if there is sufficient funding after the bids are received. By contrast, a Deductive bid is a body of work that the owner may delete from the base bid if there is insufficient funding to award the full base bid. The purpose of both Additive and Deductive bids is to build flexibility into the bidding process so that the owner can award the maximum amount of the project possible dependent on funding available. Additive and Deductive bids are often termed as bid protection tools.

The following is a potential bid form structure for requesting Additive bid prices:

Additive No.:	Description of Additive Bid:	Additive Bid Amount:
1		$
2		$
3		$

By contrast, an Alternate bid is a bid in which the owner asks for prices for an alternate method of constructing something in the base bid or using alternate materials. The alternate price would be the differential between the price included in the base bid and the price for the alternate method or material. In developing your bid form, it's important to make sure that you're clear that the alternate bid amount should be the differential price. An Alternate bid may be either an increased dollar amount or a reduction in dollars, depending on the nature of the alternate. In this sense, some people will refer to an Alternate bid as either an Additive Alternate (if the differential price is an increased amount), or a Deductive Alternate (if the differential price is a decreased amount). Personally, however, I think such terminology confuses the difference between Additives/Deductives and Alternates.

The following is a potential bid form structure for requesting Alternate bids:

Alternate No.:	Description of Alternate Bid:	Additive or Deductive	Alternate Bid Amount:
1			$
2			$
3			$

More later on determining the low bidder when you have Additive and/or Alternate bids, and things to avoid.

Supplemental Bidder Responsibility Criteria

I have recently written language for the University of Washington's "Instructions to Bidders" that provides a framework for how to handle the use of supplemental bidder responsibility criteria. If you recall, SHB 2010 defines bidder responsibility in Washington state.

The following is the language I've written for both mandatory and supplemental bidder responsibility criteria. Note that you need to fill in the supplemental criteria based on your specific project. The Task Force for Bidder Responsibility, part of CPARB, is working now to finalize suggested guidelines for implementing this new law.

The following is the language from the "Instructions to Bidders" for both mandatory and supplemental criteria:

A. It is the intent of Owner to award a contract to the low responsible bidder. Before award, the bidder must meet the following bidder responsibility criteria to be considered a responsible bidder. The bidder may be required by the Owner to submit documentation demonstrating compliance with the criteria. The bidder must:

1. Have a current certificate of registration in compliance with chapter 18.27 RCW, which must have been in effect at the time of bid submittal;

2. Have a current Washington Unified Business Identifier (UBI) number;

3. If applicable:

a. Have Industrial Insurance (workers’ compensation) coverage for the bidder’s employees working in Washington, as required in Title 51 RCW;

b. Have a Washington Employment Security Department number, as required in Title 50 RCW;

c. Have a Washington Department of Revenue state excise tax registration number, as required in Title 82 RCW;

4. Not be disqualified from bidding on any public works contract under RCW 39.06.010 or 39.12.065(3).

Specifier – If no supplemental bidder responsibility criteria will be applied in the evaluation of the low bidder, delete paragraphs B, C, and D below.

If supplemental bidder responsibility criteria relevant to the project will be applied in the evaluation of the low bidder, the following paragraphs B, C, and D should also be included. The criteria should be included in paragraph B, and the documentation to be submitted by the bidder must be stated in paragraph C. If the A/E and/or UW Project Manager believe that supplemental bidder responsibility criteria should be used on the project, consult with the Contracts Manager in the UW Capital Projects Office [(206) 221-4235] as soon as possible for discussions and development of the criteria.

B. In addition to the bidder responsibility criteria above, the bidder must also meet the following relevant supplemental bidder responsibility criteria applicable to the project:

1.

2.

3.

C. As evidence that the bidder meets the bidder responsibility criteria in paragraph B above, the apparent low bidder must submit the following documentation to the Owner within 48 hours of the bid submittal deadline. The Owner reserves the right to request such documentation from other bidders also.

1.

2.

3.

D. If the Owner determines the bidder does not meet the bidder responsibility criteria in paragraph B above and is therefore not a responsible bidder, the Owner shall notify the bidder in writing with the reasons for its determination. If the bidder disagrees with this determination, it may appeal the determination within 24 hours of receipt of the Owner’s determination by presenting additional information to the Owner. The Owner will consider the additional information before issuing its final determination. If the final determination affirms that the bidder is not responsible, the Owner will not execute a contract with any other bidder until two business days after the bidder determined to be not responsible has received the final determination.

Two New Training Opportunities

Strategic Procurement Skills and Techniques:

• Date: September 26th (Seattle)
• Sponsored by: NIGP Washington State Chapter
• Teachers: Darin Matthews, CPPO, C.P.M.
• Cost: $190
• Information at: http://www.wanigp.org/insidepages/meetings.cfm#20

GA Annual Training Conference and Trade Show:

• Date: October 24-25, 2007 (Tacoma)
• Sponsored by: State Department of General Administration (GA)
• Information at: http://www.ga.wa.gov/Events/TSVendorHome.htm

Incentive Payments for Early Completion

In addition to including liquidated damages in your bidding documents for a public works project, you may find it beneficial to include an incentive clause in your documents for early completion of the project, especially if early completion will earn you more revenue or inconvenience the public less, or for other good reasons.

If you do this, it's really important to manage the project in the field effectively. Downsides of including an incentive clause include the following:

• The contractor may cut corners in an effort to complete the work early. You'll need to watch to ensure this doesn't occur and that the contractor meets the requirements of the specifications.
• The contractor may allege that the owner has delayed the project and that without such delays, the contractor would have received the incentive.
• The contractor may have bid the project and been the low bidder based on his/her assumption that they would earn the incentive payment.

If you've been reading the newspapers, you'll see that the contractor on the I-5 project in downtown Seattle is, at this point, scheduled to finish about five days early, earning $100,000 a day for every day they finish the work before the deadline.

Bid Protests

Just a reminder that RCW 39.04.105, which applies to municipalities (cities, counties, towns, districts, other public agencies - See RCW 39.04.010 for definition), establishes a procedure for how to deal with bid protests on public works projects.

• Protest must be submitted in writing no later than two full business days following bid opening.
• Municipality can't execute contract with any other bidder than the protesting bidder without providing at least two full business days' written notice of the intent to execute a contract for the project.
  

It's a good idea to make sure you have protest procedures in your bidding documents that are consistent with the State law.

New Laws Require Changes in Contracts

A number of new laws passed by the Legislature this last session will require that public agencies modify their bidding and contract documents.

For example, SHB 2010 on bidder responsibility has mandatory requirements for what constitutes a responsible bidder (this will also change each agency's practice on determining the responsible bidder) and on subcontractor responsibility (requiring language in every public works contract).

The other area, of course, relates to alternative public works. All existing GC/CM documents will need revision including the contract with the GC/CM, the architect/engineer, etc. There are specific reporting requirements for the contractor, architect/engineer, and public agency for these contracts and these requirements should be made into contractual terms.

CPARB Meeting Canceled

I was scheduled to brief the Capital Projects Advisory Review Board (CPARB) today on the draft Suggested Guidelines for Bidder Responsibility. However, due to the fact that they could not muster a quorum, the meeting was canceled. The plan from here is to try and finalized the guidelines, especially the appendices, and then have the task force review them, report back to the Industry-Wide Subcommittee, and then CPARB at their September meeting.

Upcoming Training Opportunities

Purchasing, Bidding, and Contract Management:

• Dates: September 13th (Vancouver), October 9th (Spokane), November 14th (Shoreline), January 17th (Renton)
• Sponsored by: WSDOT and MRSC
• Teachers: Mike Purdy and John Carpita
• Cost: $75
• Information at: http://www.wsdot.wa.gov/TA/T2Center/Training/PBBrochure2

Prevailing Wage Workshop:

• Dates: Seven dates from September 13th through October 9th at various locations throughout the State
• Sponsored by: State Department of Labor and Industries
• Teachers: L&I and State Auditor's staff
• Cost: Free
• Information at:
• http://www.lni.wa.gov/TradesLicensing/PrevWage/AwardingAgencies/Training

Implementing 2007 Legislative Changes for Public Works Projects:

• Dates: Sept. 12th (Camas), Sept. 18th (Everett), Sept. 27th (Renton)
• Sponsored by: APWA and MRSC
• Teachers: Nora Huey (King County), Gretchen Johnson (KBA), John Carpita (MRSC), Laura Herman (L&I), others
• Cost: Free
• Information at: http://www.apwa-wa.org/training/training.aspx

Washington Construction Law:

• Dates: Sept. 20th and 21st (Washington State Convention and Trade Center - Seattle)
• Sponsored by: The Seminar Group
• Teachers: Various
• Cost: $625 for government employees
• Information at: http://www.theseminargroup.net/seminar.lasso?seminar=07.COLWA
  

Type of Bonds

For public construction contracting, there are a variety of bonds to be aware of:

1) Bid Bond. A guaranty by a bonding company that the bidder will enter into a contract with the owner if awarded the project. Normally, these bonds are in the amount of 5% of the amount bid, and they serve to compensate an owner if a bidder fails to enter into a contract if awarded the contract.

2) Payment Bond. A bond issued by a bonding company guaranteeing that the bonding company will ensure that a contractor will pay its subcontractors and suppliers. This bond is normally in the amount of 100% of the amount of the contract award. RCW 39.08.

3) Performance Bond. This bond is often issued in conjunction with a Payment Bond and thus the bond serves a dual purpose guaranteeing both payment (see above) and that the contractor will perform and complete the work. If the contractor fails to perform and complete the project, an owner may turn to the bonding company to have them complete the work through hiring a contractor. RCW 39.08.

4) Retainage Bond. This bond may be submitted by a contractor in lieu of the owner withholding 5% of each progress payment to the contractor for retainage. The bonding company guarantees to pay any claims that would otherwise be due under actual retainage withheld by the owner. RCW 60.28.

5) Contractor's Registration Bond. Every contractor registered as a contractor in the State of Washington is required to post with the Department of Labor and Industries a bond. A general contractor must post a $12,000 bond, and a specialty contractor (one trade only) must post a $6,000 bond. RCW 18.27.

Construction Court Cases - Resources

A professor at the University of Washington, Steve Goldblatt, has a great website that provides links to key court cases dealing with the construction industry in Washington State. You can find it at this website address. There is also a link to this website on my website at www.mpurdy.com under the Resources page.

When to Get Contractor's Registration Number

SHB 2010 (bidder responsibility) requires that before a public agency awards a public works project, they must verify that the bidder has a Washington State contractor's registration number issued by the Department of Labor and Industries. The registration must have been effective as of the bid submittal deadline, but an agency does not need to check that each bidder has the number before they submit a bid. It is only after bid opening and prior to award that the agency must check to make sure that the bidder not only has a current contractor registration number, but had one in effect as of the bid submittal deadline. it is against the law for an unregistered contractor to submit a bid.

There are other mandatory bidder responsibility criteria that public agencies must also check prior to award of a public works contract. SHB 2010 became effective on July 22, 2007 and is thus the law now.

Update - Bidder Responsibility Guidelines

The Industry-Wide Subcommittee of the Capital Projects Advisory Review Board (CPARB) had been scheduled to meet today, but with everyone's vacation schedules and other conflicts the meeting was canceled due to a lack of a quorum. The plan had been for the subcommittee to review the draft of the Suggested Guidelines for Bidder Responsibility that a task force has developed. The guidelines are not complete but are coming together nicely.

I will be in Olympia on Thursday to brief the full CPARB on the draft guidelines as they exist today and getting feedback from the CPARB members. The hope is that the task force can complete its work this month and have CPARB adopt the Guidelines at their September meeting. CPARB will publish the adopted guidelines to their website and the Municipal Research & Services Center (MRSC) has also indicated their intent to publish the guidelines on their website once they are adopted.

Insurance & the Minneapolis Bridge Collapse

The tragedy of the collapse of the bridge in Minneapolis raises interesting questions about liability and insurance issues. While investigators are still sifting through the facts of what happened and why, the collapse is a reminder of how different types of insurance work.

Professional Liability insurance is what covers designers (engineers and architects primarily) for their negligent errors and omissions in designing a structure or building. It appears that since the bridge was designed and built a number of years ago, the professional liability insurance may not still be applicable, even if it is ultimately proven to have been a design flaw. Perhaps the collapse was related more to lack of maintenance of the structure.

Builder's Risk insurance covers newly added construction work to a project in the event of damage while under construction. The classic case would be that Builder's Risk insurance would cover a fire at a new building under construction. Since it appears that the bridge was only being repaired, Builder's Risk insurance may not have even been required, nor would it necessarily cover such a collapse.

General Liability insurance covers damage to property and bodily injury as a result of an accident on the project. Presumably, the contractor on the bridge project had General Liability insurance which would help cover some of the losses in this case.

However, given the complexity and magnitude of the bridge collapse, it is sure to be investigated for a long time before insurance and liability issues are finally sorted out.

The Minneapolis Star Tribune had a good article on August 3rd on some of the details involved with liability issues. You can view the article at the following website address: http://www.startribune.com/535/v-print/story/1343465.html.

Revising GC/CM Contract

I've recently been working on revising the University of Washington's GC/CM construction contract to accommodate changes to the GC/CM law recently passed by the Legislature (SSHB 1506). There are some provisions in the new law that impact how an agency administers these projects.

Training on WA Construction Law

There will be a two day training session on Washington state construction law issues offered in Seattle on September 20th and 21st at the Washington State Convention and Trade Center. It will be taught by 18 well-respected professionals in the industry, primarily attorneys, including Paul Cressman, John Ahlers, Christopher Soelling, Bruce Babbitt, and Greg Guedel. The cost is $695 ($625 for government employees). It is sponsored by The Seminar Group. For more information, visit their website.

New Draft of Responsibility Guidelines

Based on the July 24th meeting of the Task Force on Bidder Responsibility Guidelines (part of CPARB's Industry-Wide Subcommittee), I revised the draft of the suggested guidelines onFriday and sent it to the task force members for review. The Industry-Wide Subcommittee will meet on Monday, August 6th to review the guidelines. We still need to fill in the details of the appendices to the guidelines.

Bid Opening

On Thursday, I conducted a bid opening at the University of Washington Tacoma for a $6.3 million new assembly hall building. With five minutes before the bid receipt deadline, we had received no bids. Then two bids came in. With one minute to go, another bid was clocked in. With nine seconds before the deadline, another bidder raced in. The final bidder, who had been madly filling in the final figures in a chair just steps from the bid counter, slapped their sealed bid on the counter with a nail-biting three seconds before the clock struck the 2:00 p.m. deadline. Interestingly, the low bidder was the first one to submit its bid. My effort in Tacoma was part of training the staff there on receiving and conducting bid openings on their own. I've developed a set of written guidelines and procedures, laying out issues to be aware of in managing bid receipt and opening. If you'd like a copy of the guidelines as part of thinking about your own practices, please let me know and I'd be glad to e-mail you a copy.