What is Bid Shopping?

What is "bid shopping"?

It's a common practice in the construction industry in which a general contractor attempts to convince a subcontractor to lower their bid price to a figure below what the contractor says is the current low bid they have received from another subcontractor. If the subcontractor really wants the project, they may lower their bid price, even to the point of making it financially detrimental for their business.

The Washington State Legislature has gone on record opposing the practice of bid shopping. In 2002, by amending RCW 39.30.060, the Legislature stated the legislation was "intended to discourage bid shopping and bid peddling on Washington state public building and works projects."

RCW 39.30.060 (2) includes a prohibition on the practice: "Substitution of a listed subcontractor in furtherance of bid shopping or bid peddling before or after the award of the prime contract is prohibited."

The purpose of RCW 39.30.060, also known as the Subcontractors List statute, is to reduce the number of bid shopping occurrences on public works projects. It requires contractors to list the names of the subcontractors (or the prime contractor) who will be peforming work in the following three trades: Electrical, Plumbing, HVAC. The law applies to public works projects with an estimated cost of $1 million or more. Failure by the contractor bidding the public works project to provide the Subcontractors List in a timely manner as specified in the bidding documents (either with the bid or up to one hour after bid submittal deadline) renders the bid non-responsive. The Legislature has gone on record to state that failure to submit the Subcontractors List is a material irregularity in the bid that may not be waived by a public agency, and the bid of a contractor not submitting the Subcontractors List must be declared non-responsive.

There is a common misperception among some subcontractors that a contractor is required by law to award a subcontract to them if they were the low bidder. I've had conversations with subcontractors not required to be listed on the Subcontractors List who thought the contractor had to award to them. One subcontractor was the second low bidder to the contractor. When the subcontractor with the low bid went out of business, the contractor approached the second low bidder and asked them to lower their price by a substantial sum (bid shopping). They asked for a meeting to discuss the scope. No meeting ever occurred and it is likely that the contractor awarded a subcontract to the third low bidder who may have lowered their price. The subcontractor wondered if they had any recourse against the contractor. Because the subcontractor was not named on the Subcontractors List and because it was not a protected trade, the subcontractor didn't have any recourse against the contractor.

It is only with the use of the alternative public works contracting method of General Contractor/Construction Manager (GC/CM) where the contractor is required to award to the low subcontract bid. On traditional "design-bid-build" projects, the contractor may award to any subcontractor at any price. However, if they have listed the subcontractor on the Subcontractors List as a firm they intend to use (whether they were the low bidder or not) and then attempt to substitutee that named subcontractor later for a reason not listed in RCW 39.30.060, then the substituted subcontractor "is entitled to recover monetary damages from the prime contract bidder...but not from the public entity." The burden of proof rests with the substituted subcontractor to demonstrate that bid shopping occurred.

Acceptable reasons for substitution of a subcontractor named on the Subcontractors List include the following:

• Refusal of the listed subcontractor to sign a contract with the prime contractor
• Bankruptcy or insolvency of the listed subcontractor
• Inability of the listed subcontractor to perform the requirements of the proposed contract or the project
• Inability of the listed subcontractor to obtain the necessary license, bonding, insurance, or other statutory requirements to perform the work detailed in the contract
• The listed subcontractor is barred from participating in the project as a result of a court order or summary judgment.

Audit Finding on Federal Prevailing Wage Requirements

The Washington State Auditor's Office issued an audit finding on October 27, 2008 against the City of Everett for failure to comply with federal prevailing wage requirements. On a $1.1 million federally funded transit project, neither the City nor the engineering consultant they hired collected weekly certified payroll reports from the contractor. Under the federal Davis-Bacon Act, submission and review of payrolls is required in order for the public agency to monitor whether workers on the project are being paid federal prevailing wages. The City indicated they were unaware of the requirement for payroll submission on the project.

Click here to read the three page audit finding.

Is a Release from Employment Security Dept. Required Before Releasing Retainage?

Is a Release from the Employment Security Department (ESD) required before releasing retainage? This is a question that often causes confusion because the law on retainage doesn't mention ESD.

The retainage laws (chapter 60.28 RCW) state that retainage is a trust fund for the Department of Revenue. However, ESD is not specifically mentioned in chapter 60.28 RCW, and the purpose of retainage is not to protect ESD. A public agency could therefore choose to release the retainage if all other required releases were on file except for the ESD release.

However, ESD does have statutory authority in RCW 50.24.110 for making claims on funds held by a government agency for unpaid unemployment compensation taxes. RCW 50.24.110 basically states that if a government agency is holding money that is due to any company owing money to ESD, that ESD can issue a "Notice and Order to Withhold and Deliver Property" to the government agency who is required to pay ESD the funds they are holding within 20 days.

Here's what the law states:

"The commissioner is hereby authorized to issue to any...political subdivision...a notice and order to withhold and deliver property of any kind whatsoever when the commissioner has reason to believe that there is in the possession of such...political subdivision...property which is due, owing, or belonging to any person, firm, or corporation upon whom the department has served a benefit overpayment assessment or a notice and order of assessment for unemployment compensation contributions, interest, or penalties. The effect of a notice to withhold and deliver shall be continuous from the date such notice and order to withhold and deliver is first made until the liability is satisfied or becomes unenforceable because of a lapse of time."

A public agency receiving such a Notice from ESD would be obligated to follow chapter 60.28 RCW which regulates release of retainage. In reading chapter 60.28 RCW as a while, the order of priority, in the event there are more claims than funds retained, is as follows:

1. Workers for payment of prevailing wages
2. State Department of Revenue for unpaid taxes
3. Subcontractors, suppliers, and materialmen
4. Other taxes due
5. The public Owner

A Notice and Order to Withhold and Deliver from ESD, assuming the retainage had not yet been released, would fall under item 4 above, other taxes due.

However, once the public agency releases retainage (upon receipt of all statutory releases - Revenue, and prevailing wage froms, etc., except for the ESD release), they would no longer have funds of the contractor in their possession should ESD file with the public agency a Notice and Order to Withhold and Deliver. And unlike the Department of Revenue which has statutory authority for requiring public agencies not to release retainage until their release is received, there is no such requirement to obtain the ESD release prior to release of retainage.

While I have generally advised public agencies to obtain the ESD release as a matter of policy prior to releasing retainage, I think it is really up to each agency to decide how to proceed in this area, perhaps on a case-by-case basis.

Please contact me know if you have any questions about this subject, or if you would like to schedule me for providing training on the close-out process for public works projects, release of retainage, and managing claims filed against the Payment Bond and retainage.

Sustainable Design and Construction - Training

Integrating Sustainability into Design and Construction of Capital Projects - Training Workshops

When: October 30, 2008 (8:30 a.m. to 5:00 p.m.)

Where: Hilton Hotel & Conference Center at SeaTac Airport

Cost: $699 ($449 for members of NWCCC)

Sponsored by: Northwest Construction Consumer Council

Topics include:

• The Future of Architecture: The Living Building Challenge, Sustainable Design, and the Direction of the Industry
• Sustainable Healthcare Facilities
• Sustainable Communities: Density and Sustainability
• Waste into Glass: the Hanford Waste Project
• Sustainability Policy in Washington State
• Sustainable Design and Construction for Industrial Construction
• Life Cycle Assessment in Sustainable Buildings
• Sustainability Integration the Smart Way: Case Studies and Lessons Learned
• Leading Change toward a Sustainable Future

For more information call: (206) 281-4201

Register online at www.nwccc.org

Training: Construction Planning & Bidding Practices in a Troubled Economy

Construction Planning & Bidding Practices in a Troubled Economy - Training

When: December 3, 2008 (8:30 a.m. to 4:30 p.m.)

Where: Washington State Convention and Trade Center (800 Convention Place, Seattle)

Cost per individual: $199 for government entity; $259 for private firm

Sponsored by: Contract Solutions Group

To register and to view the course brochure: Go to the website of Contract Solutions Group

For more information, contact Jeri Jennings at (206) 463-7487 or by e-mail at jjenings@contractsolutionsgroup.com

Instructors include:

• Ron Leaders
• Peter De Bolt
• Bill Ott
• Michael E. Purdy

I will be teaching in the morning on two subjects:

• Implementing Bidder Responsibility Criteria
• Using Alternative Project Delivery Methods (with a focus on Job Order Contracting)
  

When Should Bids Be Opened When Subcontractors List is Required?

Under Washington State law, RCW 39.30.060, bidders must submit a subcontractors list as part of the bidding process for any project where the public agency has estimated the cost of the project at $1 million or more. The subcontractors list must include the names of the subcontractors who will perform the HVAC, plumbing, and electrical work, or for the bidder to name themselves if they will perform this work. By choice of the public agency and as described in the bidding documents, the subcontractors list may be submitted either with the bid or up to one hour after the bid submittal deadline.

Let's look at a potential scenario. If the public agency requires bids to be submitted by 2:00 p.m. on a certain day and the subcontractors list by 3:00 p.m. on the same day, the question comes up as to when the bids should be opened and read. The better practice is to receive the bids by 2:00 p.m., receive the subcontractors lists by 3:00 p.m., and then open the bids and subcontractors list at 3:00 p.m.

The problem with opening the bids at 2:00 p.m. is that it invites bidders to bid low on a project, knowing that if they believe their bid is too low they can choose to simply not submit the subcontractors list by 3:00 p.m. thus automatically rendering their bid non-responsive. State law is very clear that failure to submit the subcontractors list by the deadline results in a non-responsive bid.

Thus, to prevent bidders from potentially manipulating the bidding process and obtaining an unfair advantage over other bidders by having the choice of whether to accept the bid or not, it is better to open all bids and the subcontractors list at 3:00 p.m. (or whatever time the public agency sets - this is just the time noted in this example).

29 Years in Public Contracting!

On October 23, 1979, I started working for the City of Seattle, Board of Public Works, in a position that was eventually titled Assistant Executive Director. It was the start of what marks 29 years for me in public contracting in the Seattle area.

A lot has changed in the last 29 years, especially my looks! From a 25 year-old recent MBA graduate with black frame glasses and a healthy crop of black hair, I am now 54 years-old with a mainly white beard and a head of hair that has thinned and grown lighter in color! How the times change!

I worked for the City of Seattle for 21 years, managing construction and consulting contracting and was the City's Contracting Manager when I left at the end of 2000. I then spent five years as Contracting and Procurement Manager at the Seattle Housing Authority. For the last three years, I have been the Contracts Manager at the University of Washington's Capital Projects Office.

In the spring of 2005, I started Michael E. Purdy Associates, a consultant business offering strategies, solutions, and training to government agencies and businesses in the area of public contracting. Please contact me if you'd like to talk about how I might assist you.

Asking for the Right Price for Alternate Bid Work

If you include an Alternate Bid on the bid form for a public works construction project, it is important to make sure you are clear in your instructions to bidders for what price to include on the bid form.

There are potentially two different kinds of Alternate Bids. In one case you may be simply asking for the price for a body of work above and beyond the work described in the base bid. Technically, this should be called an Additive Bid, but some public agencies call them Alternate Bids. In a situation where the work is above and beyond the base bid work, it's okay to just ask for the price of the Alternate Bid.

If, however, the Alternate Bid is a request for pricing to provide a different material or method in lieu of what is described in the base bid, it is important to specify that what you what bidders to note on the bid form is the differential price between the cost included in the base bid and the cost to provide the Alternate Bid work.

If you don't specify that you want the differential price, you may get bidders submitting bids on an unequal basis. Some will interpret that you want the differential price, while others may include the complete price of the Alternate Bid, thereby double charging for the work (some cost in the base bid and all costs in the Alternate Bid).

90 Minute Web Conference on Design-Build

5 Principles for Successful Design-Build Projects - A 90 minute Web Conference

When: December 9, 2008 (10:00 a.m. to 11:30 a.m. Pacific Time)

Where: Your office with your computer

Cost: $219

Sponsored by: Lorman Education Services

For more information and to register, click here.

Outline of Class:

• What is Design-Build?
• Potential Advantages of Design-Build
• Organization of the Design-Build Entity
• Potential Risks
• Situations Where Design-Build May or May Not Be the Best Choice
• Design-Build in the Public Sector
• Contract Provisions
• Available Standard Design-Build Contract Forms
  

Faculty: W. Samuel Niece (Thelen Reid Brown Raysman & Steiner LLP)

Note: Design-Build in Washington State is governed by chapter 39.10 RCW. The training noted above appears to be a general introduction to some of the main concepts of Design-Build, but Washington State law may vary from some of the concepts presented.

Additional Design-Build Resources:

• Design-Build Institute of America
• Design-Build Institute of America - Northwest Region
• Training on Design-Build in Washington State by Michael E. Purdy Associates

Claim, Renewal, and Release Forms Available

I have developed the following standard forms that subcontractors, suppliers, and workers may use in filing the following with public agencies:

• Claim of Lien against the Payment Bond and Retainage
• Renewal of Claim of Lien against the Payment Bond and Retainage
• Release of Claim of Lien against the Payment Bond and Retainage
• Pre-Claim Notice for suppliers

Public agencies often get questions from subcontractors, suppliers, and workers about how to file a claim against the Payment Bond and Retainage, and these forms provide a structure for doing so. If you would like a copy of the forms, please contact me and I will e-mail them to you

I have also developed a training class on contract close-out, release of retainage, and the filing deadlines and processes for claims against the Payment Bond and Retainage - all things that both public agencies and subcontractors and suppliers need to be aware of. Please contact me if you are interested in discussing having me provide this training for you.

Note: The forms do not represent legal advice and claimants and others are advised to consult with appropriate legal advisors.

Managing Infrastructure - Training

Managing Infrastructure: Planning, Development and Maintenance in Washington

When: November 14, 2008 (9:00 a.m. to 4:30 p.m.)

Where: Washington State Convention & Trade Center (800 Convention Place, Seattle)

Sponsored by: Lorman Education Services

Cost: $379 per person

For more information and to register, click here.

Outline of Training and Faculty:

• Developing Infrastructure Under Washington's New Alternative Procurement Statutes (W. Gregory Guedel)
• Infrastructure Funding - Maintenance and Repair (Peter McMillin)
• Key Elements of an Effective Asset Management Program (Elizabeth S. Kelly, P.E.)
• Business Case Fundamentals: Theory and Practice (Tim Skeel)
• Risk Management at Seattle Public Utilities (Terry Martin, P.E.)
• Reliability-Centered Maintenance (Neil Thibert, P.E.)
• Control Cost and Duration to Build Project Control System (Edward Claxton)
• Infrastructure and Climate Change (Eric S. Laschever)
  

Availability of Bidding Documents

There are three major ways that public agencies use to make bidding documents available to the contracting community: hard copy, online, plan centers. Each has advantages and disadvantages and some options are more beneficial to contractors and others for subcontractors.

Hard Copy: Generally, prime or general contractors prefer obtaining a hard copy of the bidding documents so they can have in front of them all of the requirements for bidding the project.

Online: There are a variety of online services, some of which charge public agencies and others which charge the user, to access the bidding documents. One of the most popular is Builders Exchange which public agencies pay to post their documents. Builders Exchanges has a contract with the Office of State Procurement (OSP) that local public agencies can piggyback on if they are members of the cooperative with OSP. Online access to bidding documents is generally preferred by subcontractors since they only need to access certain portions of the specifications and drawings that are applicable to their portion of the work. Builders Exchange also has an online take-off estimating tool available. Other online services include www.PlanWell.com and www.PlanCenter.com.

Plan Centers: These are membership based organizations in which contractors and subcontractors pay to belong and to review bidding documents. Plan centers are valuable for both contractors and subcontractors to review hard copies of many projects to determine if they are interested in bidding the project. Plan centers in the Puget Sound area include the following: Valley Plan Center (Kent), McGraw-Hill Construction (Seattle, Tacoma), Builders Exchange (Everett), Contractor's Resource Center (Seattle).

I think it's important for public agencies to make their bidding documents available through all three methods (hard copy, online, and plan centers) in order to reach the broadest market and ensure competitive bids. While some agencies have moved toward just usining one method (typically gravitating toward online access), I think this is doesn't serve all of the contracting community well, and ultimately doesn't serve the public well.

Payment and Performance Bonds on GC/CM Projects

Typically, on a public works project, a public agency will obtain from the contractor a Payment and Performance Bond for the full contract award amount, including sales tax (RCW 39.08.030).

However, for a GC/CM (General Contractor/Construction Manager) project, the Payment and Performance Bond should be only for an amount equal to what is termed the Total Contract Cost, which does not include sales tax. GC/CM is, of course, one of three alternative public works contracting procedures authorized by the Washington State Legislature (chapter 39.10 RCW).

RCW 39.10.370 (1) states that "The maximum allowable construction cost shall be used to establish a total contract cost for which the general contractor/construction manager shall provide a performance and payment bond."

RCW 39.10.010 (4) defines what composes the Total Contract Cost: "The total contract cost includes the fixed amount for the detailed specified general conditions work, the negotiated maximum allowable construction cost, the negotiated support services, and the percent fee on the negotiated maximum allowable construction cost."

Prior to July 1, 2007 when the Legislature amended the GC/CM law (SSHB 1506), the definition of what was then called the Guaranteed Contract Cost (instead of Total Contract Cost) included sales tax as a component. That has now changed so that a public agency managing a GC/CM project should obtain a Payment and Performance Bond for the Total Contract Cost - not including sales tax.

From the perspective of protecting a public agency, it seems to me that the amount of the Payment and Performance Bond should include sales tax, and perhaps the GC/CM law should be amended accordingly. We do know there are various inconsistencies in the law that need to be corrected and perhaps this is one of those areas.

Prevailing Wage Underpayments

One of the ways that contractors and subcontractors on public works projects make it look like they are paying prevailing wages, when in fact they're not, is to report fewer workers and/or fewer hours on weekly certified payrolls. The payroll reports (required on all federally funded public works construction projects) reflect the correct prevailing wage rate for the classification used, but do not reflect all of the hours worked. Unreported hours and workers is a difficult problem to enforce. It requires that the public agency have sufficient field staff to monitor what workers are present and for how long. There are a number of union sponsored prevailing wage monitoring organizations such as REBOUND that often provide resources in monitoring and investigating prevailing wage violations.

Many of the contractors and subcontractors who do not pay prevailing wages have not actually been debarred by the Washington State Department of Labor and Industries. If you suspect that prevailing wages are not being paid or you have received a complaint about wages, it is best to immediately contact the Department of Labor and Industries who will assign an investigator to help.

If the project is federally funded, make sure you are collecting the weekly certified payrolls from the contractor and all subcontractors and that you are interviewing a sufficient number of workers on-site each week about their wages. You should take this interview information and compare it with the information on the payrolls. There are standard interview and payroll forms that should be used.

Please contact me if you'd like assistance in investigating prevailing wage underpayments or to discuss strategy for how to approach prevailing wage issues.

GC/CM Training in January 2009

GC/CM: General Contractor/Construction Manager - training

When: January 29-30, 2009 (8:00 a.m. to 5:00 p.m)

Where: AGC Building - 1200 Westlake Avenue North, Seattle

Cost: $350 per person (lunch included for both days)

Sponsored by: AGC Education Foundation, University of Washington, Mechanical Contractors Association - Western Washington

Online registration at www.constructionfoundation.org, or contact me and I'll e-mail you the one page flyer describing the class in more detail.

Questions: E-mail: jodland@agcwa.com or call (206) 284-4500

Outline:

• Day 1: "The New Law" & What Does It Mean to You?
• Day 2: Instruction & Team Activities

L&I Continues to Violate Their Own Regulations

The Washington State Department of Labor and Industries is still in violation of their own regulations that requires that any corrections to prevailing wage rates be published, but not effective until 30 days after publication.

On October 10, 2008, L&I announced corrections to the prevailing wage rates for truck drivers for the following counties: Adams, Asotin, Benton, Columbia, Ferry, Franklin, Garfield, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman. The announcement noted that the wages were corrected as of October 10, 2008 and that the changes were effective August 31, 2008.

Making such changes effective retroactively not only is inconsistent with L&I's regulations in WAC 296-127-011, but it also creates an administrative and enforcement quagmire for both public agencies and contractors. For any public works project with a bid submittal deadline from August 31, 2008 through October 9, 2008, the public agency would have published wage rates effective as of August 31, 2008. By their "correction" L&I is now stating that the wage rates they originally published on August 1, 2008 and made effective on August 31, 2008, and that everyone relied upon, are not, in fact, the actual prevailing wage rates. The actual prevailing wage rates are those published on October 10, 2008 - rates that no one bidding from August 31st through October 9th would have had any idea existed.

L&I has recently added a note to their website that states the following: "During the period between August 1st, 2008 and August 31st, 2008 the wage rates for 8/31/08 are subject to correction and are valid on August 31st. If you have printed, viewed or relied upon the rates for 8/31/08 prior to the 31st, please reprint and review those rates."

While it's somewhat helpful for L&I to add this note, the practice of correcting wage rates even during August and still maintaining an August 31st effective date is inconsistent with WAC 296-127-011. In addition, what the note on their website doesn't say is that they plan to continue to correct wage rates even after August 31st but will still make those corrected wages effective as of August 31st.

From an administrative and enforcement effort, L&I's failure to follow their own regulations has made practical compliance with corrected prevailing wage rates next to impossible. In addition to being more careful in the future with publishing the correct prevailing wage rates in the first place, L&I should change their correction practice to be consistent with WAC 296-127-011.

Free Workshop on Green Purchasing

Free Workshop on Green Purchasing: "Purchasing for Climate Protection"

When: Monday, October 27, 2008 (9:00 a.m. to Noon)

Where: Snohomish County Campus, Robert J. Drewel Building, 3000 Rockefeller, Everett, WA

For more information and to register, click here, or contact Ginger Metz at ginger.metz@snoco.org or by calling (425) 388-6483.

Description: This workshop will highlight specific actions government agencies and businesses can take to reduce their carbon footprint by changing their purchasing policies and practices. These actions include but are not limited to:

• Establishing energy efficiency standards for all lighting equipment, appliances and computers used in their facilities
• Improving the fuel efficiency ratings of their fleets
• Installing renewable energy technologies
• Buying recycled-content and remanufactured products
• Reducing paper and water consumption
• Sourcing food and other goods from local producers
• Switching to concentrated "green" cleaners for office buildings, schools and other buildings.

Presenter: Alicia Culver, Executive Director of the Green Purchasing Institute

Owner Sophistication Needed for GC/CM Contracts

In negotiating the Maximum Allowable Construction Cost (MACC) on a GC/CM (General Contractor/Construction Manager public works construction contract, it is important that the owner's personnel have a good understanding of the process, particularly of how the different cost elements of a GC/CM project fit together.

GC/CM contracting is authorized for public agencies in the State of Washington under chapter 39.10 RCW.

The MACC is the negotiated amount for the contractor to perform the construction work. Included in the MACC (most of which is bid by the GC/CM through public bidding with individual subcontract bid packages based on trades) is what is referred to as Negotiated Support Services, items that are typically not bid, and therefore the owner and GC/CM negotiate these items that the GC/CM will perform. Also included in the MACC is what is termed the Risk Contingency account, a percentage of the MACC, minus the Negotiated Support Services.

The MACC, plus two other cost categories, constitute what is known as the Total Contract Cost. The other two cost categories are actually bid by the competing GC/CMs as part of the selection process. One is the Percent Fee, which is the GC/CM's overhead and profit. The other is a fixed amount for Specified General Conditions work which is to cover the contractor's costs for managing the project and covering general conditions type of work which is not bid.

In developing a GC/CM project, one of the most critical elements is the clearly define what types of work are covered in the MACC that is to be bid, what is in Negotiated Support Services, what is in the Percent Fee, and what is in the Specified General Conditions. Without clear definitions for these categories, an owner risks paying for items twice or impacting the selection process by permitting a contractor to bid low on the Percent Fee and Specified General Conditions and then trying to make up those costs as Negotiated Support Services costs.

Using the GC/CM process requires a sophisticated owner who understands how GC/CM works and who has clear definitions of what types of work is covered in what cost categories. Management of these costs during the project is also important.

Job Opening: Contracts Supervisor, King County

Position Open: King County - Contracts Supervisor

Closing Date: Open until filled

Salary: $81,895 - $103,806

Description: The incumbent in this position supervises professional staff responsible for all county design, architecture and engineering and professional service and construction procurements. Ensures compliance with all county, federal, and state procurement laws and King County policies and procedures.

For a complete job description, minimum requirements, and to apply online, click here.

Public Agencies Should Sign Contracts Last

When executing or signing contracts for construction or consultant services, it is important that the public agency sign the contract last, after the contractor or consultant has signed.

If the public agency signs first, it can lead to an ambiguous contract. Here's what can and does often happen when the public agency signs the contract first. The contract then goes to the contractor or consultant, who not only signs the contract, but makes handwritten or typed additions, deletions, or changes to existing language in the contract, maybe initialing the changes and maybe not initialing them.

If the public agency, upon review of the changes, decides they disagree with the modifications, both parties are faced with an ambiguous contract. There are signatures on the contract and maybe the initials of one party, but there has been no meeting of the minds if the public agency is not willing to initial the changes, or if the contractor or consultant has not initialed the changes. The parties have not mutually agreed to the terms of the contract.

What needs to happen next is negotiation and agreement on the language. Meanwhile, the contractor or consultant may have begun work based on the fact that they've signed the contract, even though it has changes to it that the public agency has not agreed to.

My advice is to always have the contractor or consultant sign the contract first. If they have changes they make to the contract, the parties can negotiate acceptable terms without leaving the status of the contract is such doubt since the public agency would not have signed the contract.

If the contractor or consultant hand-writes or types in changes that the public agency agrees with, those changes must be initialed by both parties in order to be effective. If there are too many changes, it is a much better idea to re-do the contract and incorporate the changes into the contract, rather than rely upon a marked-up contract.