Mason County PUD Receives GC/CM Approval on Second Application

After being denied on February 26, 2009, Mason County Public Utilities District (PUD) #3 submitted a revised application to the Project Review Committee for approval to use the General Contractor/Construction Manager (GC/CM) method of project delivery for their Maintenance and Operations Center.

In their meeting on March 26, 2009, the Project Review Committee approved the PUD's use of GC/CM for the project.

Breakfast Meeting on Integrating Design-Build and LEED

On Thursday, April 23, 2009, at the breakfast meeting of the Northwest Region of the Design-Build Institute of America, the topic of the presentation will be "Design-Build Small Projects: The Rewards of Integrating Design Build and LEED."

The meeting will be held from 7:00 a.m. to 9:00 a.m. at the Rainier Club in downtown Seattle (820 Fourth Avenue).

Cost: $50 for members, $55 for non-members.

Click on DBIA's Northwest Region website for more information and to register.

Click here to view a calendar of other relevant training opportunities.

Job Order Contracting Presentation - PowerPoint Slides Available

At the Regional Contracting Forum held today (March 31, 2009), I gave a 15 minute introductory talk on Job Order Contracting to more than a hundred contractors and representatives from various public agencies.

If you would like a copy of this brief PowerPoint presentation, please contact me, and I will e-mail it to you.

If you are interested in more in-depth training on Job Order Contracting, please let me know.

In Washington State, Job Order Contracting in authorized by chapter 39.10 RCW as one of three alternative public works contracting procedures.

Informational Addenda

In soliciting bids for public works projects or requesting proposals or qualifications for consultant contracts, public agencies frequently issue addenda to modify the terms of the original solicitation, either because of an error, substitution of products approved, a change of the submittal deadline, added or deleted work, or in order to clarify the requirements so they are not misinterpreted, often in response to questions raised by contractors or consultants.

Generally, addenda change specific requirements of the solicitation document. However, there are situations where a public agency may want to issue an addendum that does not actually modify requirements but which contains information important for contractors and consultants.

For example, if a pre-bid or pre-submittal meeting is held, the public agency should document the questions asked and provide the official answers through some mechanism to all firms who have picked up the solicitation documents, and an addendum is the most logical vehicle to use for communicating this information. Sometimes, the questions raised at a pre-bid or pre-submittal meeting will result in the public agency actually changing a requirement of the solicitation documents, while at other times the answers provided to questions asked will be just clarifications. In addition, bidders and proposers frequently want to know the names of others who attended a pre-bid or pre-submittal meeting, and an addendum is a good way to communicate this information.

However, because the introductory language to most addenda states that the addendum modifies provisions of the solicitation document, there is a need for language that addresses what I would call "informational addenda." If the list of attendees and Q&A is being issued in one addendum, the following is language that could be used to describe the purpose of the addendum:

"This informational addendum is issued for the Invitation to Bid for the ___________________ project in order to document responses to questions raised at the pre-bid meeting held on _______________________, and to share the list of attendees at the meeting. In the event of a conflict between information in this addendum and the bidding documents, the terms of the bidding documents shall apply."

The language above would need to be adapted for RFPs and RFQs.

Checklist for Negotiating With Consultants

Here's a quick list of some items to be aware of and questions to ask when negotiating the terms of a contract or amendment with a consultant:

• Scope of Work: Does the scope of work accurately and completely reflect the work the public agency intends for the consultant to accomplish? Is it clear to someone who may not be familiar with the project? Would it be clear if there was a dispute that occurred during the contract about what the agency's expectations were for the services to be provided and the deliverables?
  
  
• Time of Performance: Does the contract reflect deadlines for performance for the consultant that are reasonable and meet the agency's requirements? To the extent that the public agency establishes a fast-track schedule, that may increase the price to the contract.
  
  
• Hourly Rates: If an amendment is being executed, are the hourly rates that are the basis of the amendment amount consistent with the hourly rates authorized in the original contract?
  
  
• Hours: Are the hours proposed by the consultant reasonable for the tasks to be performed? Are the hours proposed for some tasks too many? Has the consultant properly allocated proposed staff with different pay rates for various tasks. For example, will the public agency be paying for a principal's hours for simple tasks when that work could just as easily be done by a more junior level and lower paying position?
  
  
• Multiplier or Overhead Rate: When negotiating a contract, what is the consultant's billable hourly rate? A billable hourly rate, also known as an all inclusive rate, includes the actual hourly amount paid by the consultant to an employee, plus an amount or "multiplier" sufficient to cover the overhead and profit associated with the employee. Have you requested backup information from the consultant about how they calculated their multiplier or overhead and profit rate? Have you reviewed the overhead backup information to determine if any of the overhead costs should not be allowed to be calcuated into the billable hourly rate. Many agencies, including the federal government through the use of the Federal Acquisition Regulations (FAR), establish lists of what are considered allowable versus unallowable overhead expenses. Profit is generally a percentage and is based on the perceived risk for performing the work.
  
  
• Sub-consultant Markup: Have you negotiated and agreed upon a reasonable markup percentage for the consultant to administer various sub-consultant agreements? Have you requested and reviewed information from the consultant about how they calculated these rates?
  
  
• Accuracy: Have you reviewed the math on the consultant's proposal to make sure it is accurate?

CPARB's April Meeting Canceled

The April 9, 2009 meeting of the Capital Projects Advisory Review Board (CPARB) has been canceled.

Correction to Prevailing Wages for Clark County Roofers

The Washington State Department of Labor and Industries has corrected the overtime rate for roofers in Clark County, effective on April 26, 2009. Click here to view L&I's description of the change.

Report Cites Problems with Seattle School District's Small Works Roster Program

The Seattle School District hired a consultant, The Sutor Group, based in Bellevue, Washington, to review the district's management of its Small Works Roster program for construction projects estimated to cost less than $200,000.

The report issued by the consultant found a number of irregularities that were outlined in a letter dated January 15, 2009. As a result of the report, the district has moved the administration of the Roster program to the district's Procurement Department. Previously, it was managed by staff also responsible for the small business program.

Job Opening: NOAA - Supervisory Contract Specialist

The National Oceanic and Atmospheric Administration (NOAA) is recruiting for a Supervisory Contract Specialist.

Salary Range: $118,828 to $153,200

Filing deadline: Thursday, April 2, 2009

Job Location: Seattle, Washington

For more information, click on USAJobs

Limited position description: Responsible for planning, negotiating, leading and/or administering complex procurements of goods, systems or services with specialized, state-of-the-art, critical or scarce requirements and characterized by alack of any previous cost data, use of a wide variety of cost and fixed-price contracts, multi-year contracts and extensive use of subcontractors, frequent changes in terms, conditions or funding arrangements, and similar difficulties.

Managing Claims of Error on Public Works Projects

There are two types of errors that bidders on public works projects make in submitting a bid.

1. Clerical or administrative errors where the bidder added up something incorrectly or transposed a number.
   
2. Errors of judgment where the bidder simply didn't understand what was involved in the project.
   

Bidding documents should always describe a process for how bidders should submit a claim of error to the public agency. At a minimum, these instructions should provide for:

1. Timely notice to the agency of the error (maybe 24 hours after the bid submittal deadline)
   
2. A description of the nature of the error
3. Transmittal of original worksheets demonstrating and documenting the error
4. A request to be relieved of liability for the bid
   

In evaluating a claim of error, it is important for public agencies to realize that a claim of error should never result in negotiation of the bid price. In submitting a bid, the bidder agrees to enter into a contract for the amount of the bid, or in submitting a claim of error, requests permission to withdraw their bid and not be held to it.

When should claims of error be accepted? Generally, court cases indicate that claims of error that are filed in a timely manner and are based on a clerical error should be accepted by the public agency, without taking action against the bidder's bid guaranty. An agency does not generally have to accept a claim of error based on a judgment error.

But it is always good to remember that if a bidder is requesting permission to withdraw their bid for an error, regardless of the reason, it's probably a good idea to let them off the hook. You don't want to start a project with the bidder set to lose money and looking for change order opportunities in order to make up for the error. It's not in anyone's best interests to proceed with such a project. Also, if the bidder didn't understand the project when bidding it, there's a good chance that there may be problems with them understanding what needs to be done to perform the work of the contract.

If you find that a particular bidder regularly claims error based on judgment misinterpretations of the bidding documents, then it may be appropriate to consider taking action against the bidder's bid guaranty.

In Washington State, remember that RCW 39.04.107 prohibits a bidder who has claimed error from re-bidding the project in the event the public agency chooses to re-advertise the project.

These are some general observations about how to manage claims of error, realizing that each case has different facts associated with it and may call for things to be handled differently depending on the circumstances.

Competitive Construction Market for Job Order Contracting

On Tuesday, March 24, 2009, the University of Washington received qualifications from contractors interested in being considered for the University's new Job Order Contract. Two years ago, only four contractors submitted qualifications. This year, eleven contractors submitted, a sign that the construction market is continuing to be tight.

The Job Order Contract will be for two years with the possibility of extending it for one additional year.

Job Order Contracting, authorized in Washington State under chapter 39.10 RCW, is an indefinite quantity, indefinite delivery type of public work contract in which the contractor bids a coefficient (markup or markdown) of a unit price book (i.e. R.S. Means). The Job Order Contractor is required to subcontract 90% of the work and may only perform 10% of each work order with their own forces. Each work order (project) is limited to $300,000 and the maximum dollar value of work orders in any contract year is limited to $4 million.

If you have any questions about Job Order Contracting or would like training on this alternative public works delivery method, please contact me. I will be speaking briefly on March 31, 2009 at the Regional Contracting Forum on Job Order Contracting.

Bidding Documents Errors and Addenda

Public agencies issue addenda to modify and correct the terms of public works bidding documents (drawings and specifications).

What happens if an error occurs in the printing of the documents and your reprographics company (or your agency if you print documents in-house) neglects to include a specification section in the bidding documents made available to bidders?

An addendum should be issued that includes the actual specification section that was not included, rather than simply directing bidders to contact the reprographics company to obtain a copy of the missing section.

This is an important distinction because the bidding documents issued, rightly or wrongly, are the only binding documents on the bidders. Simply directing bidders to contact the company for the complete set does not amend the bidding documents. That's why it is important to actually issue the missing spec section with the addendum.

Reminder: Addenda is plural referring to many, while Addendum is singular referring to only one.

President Obama Seeks to Reform Federal Contracting

President Barack Obama announced an initiative to reform federal government contracting practices. His memorandum for the development of new contracting procedures addresses the following:

• Reduce the number of sole (or limited) source contracts that are not procured through a competitive process
• Establish fixed price contracting as the preferred method of contracting instead of cost-reimbursement contracting
• Determine whether various functions should be performed by government employees instead of outsourcing them. Outsourcing has been a major trend over the last eight years.

Obama's March 4, 2009 memorandum also directs the Office of Management and Budget to provide guidance to federal agencies by July 1, 2009 about how to identify wasteful and inefficient contracts. By September 30, 2009, OMB is charged with developing guidance to address the contracting issues identified above.

The President said the following in his remarks on March 4, 2009: "It's time to end the extra costs and long delays that are all too common in our defense contracting. We need to invest in technologies that are proven and cost-effective. We need more competition for contracts and more oversight as they're carried out. If a system isn't ready to be developed, we shouldn't pour resources into it. And if a system is plagued by cost overruns, it should be reformed. No more excuses, no more delays. The days of giving defense contractors a blank check are over." For more information about President Obama's efforts to reform government contracting:

• The President's memorandum on contracting reform
  
• White House Blog on contracting reform
• Text of the President's remarks on March 4, 2009
  
• Associated Press article

Emergency Correction to Spokane County Prevailing Wages

The Washington State Department of Labor and Industries announced a correction to the prevailing wage rate for a Transit Mixer for Spokane County.

L&I originally published the wage rate effective March 4, 2009 at $23.42 per hour and has now corrected it to $31.73.

Probably because of the significance of the error, L&I determined that making the correction was an emergency per WAC 296-127-011, thus putting the higher wage rate into effect immediately, rather than 30 from publication of the corrected rate.

Enhancements to List of Debarred Contractors

The Washington State Department of Labor and Industries has enhanced the list of debarred contractors beyond those debarred for violations of chapter 39.12 RCW, Prevailing Wages.

The list now also includes contractors debarred for violations of the contractor registration law (chapter 18.27 RCW) and the industrial insurance law, also known as workers compensation (chapter 51 RCW).

The list may be viewed on Labor and Industries' website.

Transportation Projects Selected for Federal Stimulus

The Puget Sound Regional Council has selected transportation projects to receive federal stimulus money in the State of Washington. Visit their website for more details.

Job Opening: Pierce County Contract Compliance Specialist

Pierce County is recruiting for a Contract Compliance Specialist.

Application deadline: April 3, 2009

Salary: $24.90 to $31.49 per hour

Brief description: A significant amount of time will be spent working with HUD's Community Development Block Grant and Davis-Bacon (federal prevailing wages) compliance.

For application procedures and to read the full job description, click here.

Emergency Contracting

Most public agencies have a process for waiving competitive bidding in the event of an emergency situation that doesn't allow sufficient time for going through the normal selection process. However, it is important to remember that while an emergency declaration saves time on selection, it doesn't change the need for sound project planning, implementing wise risk management strategies, negotiating diligently, nor does it waive the requirement for effective contracts.

Training: Adding Value to the Procurement Function

Training: Adding Value to the Procurement Function

When: Wednesday, June 10, 2009 (8:00 a.m. to 5:00 p.m.)

Where: Olympia, Washington (State Department of General Administration Building, 210 11th Ave. SW, Room G3)

Sponsored by: National Institute of Governmental Purchasing (NIGP)

Cost:

• $160 (National NIGP members)
• $225 (Chapter and non-members)

Content: The workshop will focus on ways the purchasing function adds value to the procurement process by illustrating how the purchaser can enhance both the process and relations with customers and suppliers.

For more information and to register, visit NIGP's website.

Mason County PUD Denied Approval to Use GC/CM

The Mason County Public Utility District No. 3 presented their application to the State of Washington's Project Review Committee on February 26, 2009 to use the General Contractor/Construction Manager (GC/CM) project delivery process for their maintenance and operations center.

The Project Review Committee rejected the application on two grounds. First, the PUD did not sufficiently demonstrate that the project would provide a substantial financial benefit over the typical design-bid-build process. Second, the PUD and their consultant, Olympic Associates, did not demonstrate a sufficient commitment of time of qualified staff with GC/CM experience. Click here to read the denial letter by the Project Review Committee.

The PUD has re-applied for approval, something that will be considered at the March 26, 2009 meeting of the Project Review Committee. Click here to read both the original and revised applications from the PUD.

Under chapter 39.10 RCW, the Project Review Committee is required to approve applications of public agencies to use GC/CM or Design-Build, or to certify that a public agency is an experienced public agency and approved to utilize either GC/CM and/or Design-Build for individual projects without going back to the Project Review Committee.

Also at the February 26, 2009 meeting, the Project Review Committee approved the application of the City of Tacoma as an experienced public owner for both GC/CM and Design-Build.

National Contract Management Association

If you belong to Linked-In, a business networking website, you might want to look into joining the group for the National Contract Management Association (NCMA).

Members post a variety of contracts administrator job openings that are available across the nation, primarily in private industry as opposed to the public sector.

NCMA's website is http://www.ncmahq.org.

NCMA's World Congress will be held in Long Beach, California from April 5-8, 2009.

Is There a Better Way to Obtain Public Sector Capital Projects than by Low Bid?

Evening Lecture: Public Sector Capital Projects: Is there a better way to buy them than low bid?

When: Wednesday March 25, 2009 - (5:00 p.m. to 9:00 p.m.)

Where: Glen Acres Golf Club, 1000 S. 112th St., Seattle, Washington

Sponsored by: Lean Construction Institute, Cascadia Chapter

For more information and to register, click here.

Speaker: Dave Bergquist, University of California

Dave Bergquist will speak on the Best Value legislation recently enacted in California and his experiences with the five year pilot program at the University of California at San Francisco. Following the presentation, there will be a discussion on the implications of Best Value for Washington State.

Upcoming Design-Build Training

The Design Build Institute of America will be sponsoring two training sessions this spring in the Pacific Northwest, one in Portland and the other in Seattle.

For registration and more information, visit the website of DBIA's Northwest Region.

DBIA's Contract & Risk Management

When: Thursday, April 16, 2009, 7:00 a.m. to 5:00 p.m.

Where: Portland, Oregon

Instructor: TBD

Cost: $475 (members); $775 (non-members)

DBIA's Principles of Design Build Project Delivery

When: Wednesday/Thursday, May 13-14, 2009 (1.5 days)

Where: Seattle, Washington

Instructor: Darlene Septelka

Cost: $475 (members); $775 (non-members)

Seminar on Managing Project Risk - Postponed

The seminar on Managing Project Risk in Uncertain Economic Times, sponsored by the Pacific Northwest Chapter of the Construction Management Association of America (CMAA), originally scheduled for March 20, 2009, has been postponed until sometime in the fall.

For more information, contact Allen Wycoff at AllenWycoff@hillintl.com

Join 65 Other E-mail Subscribers to This Blog

Sign up for a free e-mail subscription to Mike Purdy's Public Contracting Blog by following the simple instructions in the upper right hand corner of the Blog.

There are currently 65 e-mail subscribers to the Blog in the following states:

• Washington
• California
• Michigan

If you're a subscriber, and you're from another state, please let me know!

Article on Effectively Using Consultants

All public agencies hire consultants at one point or another to help with various tasks.

Tracey Dunlap, the Director of Finance & Administration for the City of Kirkland, has written a short and insightful article on "How to Effectively Use Consultants - The View from Both Sides."

It was published in the February 2009 electronic newsletter of the Municipal Research and Services Center entitled "In Focus."

Click here to read the article.

Training on Writing Technical Specifications

On March 11, 2009, I provided four hours of training to City of Bellingham staff on Writing Effective Technical Specifications.

The topics for the training included the following:

Why Good Specifications Are Important

• Integrity and Transparency
• Clarity in Bidding
• Cost Control
• Quality Control
• Regulatory Permitting
  

Types of Specifications

• Design
• Performance
• Standard
• Proprietary (Sole Source)
• Building Engineering Systems
  

Sources of Specification Language

• Standard Specifications
• Industry Sources
• Other Government Agencies
• Consultants
• Previous Projects
• Custom Written by Agency Staff
  

Tips in Writing Specifications

Interpretation of Specifications

• Complementary Components
• Interpret Documents as a Whole
• Order of Precedence
• Dealing with Ambiguities
  

Warranties

Bidder Responsibility Criteria

• Mandatory
• Supplemental
• Subcontractor
• Specification Qualifications
  

If you are interested in having me provide this training for your agency, please contact me.

What Should a Contractor Know About Public Works?

It's a loaded question! The short answer is that a contractor should know a lot, often more than they do.

In today's economy, we're seeing many new contractors bidding on public works projects when previously they were in either the residential or commercial markets. They are often unaware of the laws and processes affecting public works contracting.

Without such knowledge, a public agency risks obtaining bids from contractors who have not put enough money into their bid, and the project may end up being a troubled project as a result.

Public agencies are seeing a significant number of bidders for each job and the prices are very competitive as contractors pare back on profit in an attempt just to keep their workers employed.

From a public agency perspective, it is wise to develop and provide training to the contractors who bid on their projects as part of educating them on public works contracting. Agencies could partner with other agencies to provide this training to contractors. If you're interested in discussing what this training might look like, please contact me.

We are in a very different market. If contractors are bidding and attempting to perform public works projects without the knowledge of what is really required, it may have very negative impacts on the project and the agency. We want to build systems and structures so that contractors are successful on the project.

Websites for Tracking Federal Stimulus Information

The federal government has launched www.recovery.gov with complete information about the American Recovery and Reinvestment Act. Click here for information about the dollar amounts being authorized by state for infrastructure improvements.

The State of Washington has a parallel website for information about Washington's use of stimulus money. It may be found at www.recovery.wa.gov.

Other states also have similar websites. Click here for a map of the United States and click on a state to see that state's website.

Are Your Bid Receipt Procedures Clear?

Do you have clear procedures for what to do if a bidder, after having submitted a bid, requests to withdraw and modify the bid, prior to the bid submittal deadline?

• What do your Instructions to Bidders say about this subject?
• Are your staff knowledgeable about what to do if a bidder asks for their bid back?
• Do they know what to do if the contractor then wants to resubmit the bid prior to the bid submittal deadline?
  

Here are some suggested procedures to ensure clarity in the bid receipt process.

• A bidder may request withdrawal of a bid submitted prior to the bid receipt deadline, either for the purpose of making changes to the bid, or for withdrawing the bid, subject to the following conditions:
• The requester provides sufficient identification (or is known to the staff) that they represent the bidder.
• A request may be received verbally or in writing.
• The request is received prior to the bid receipt deadline.
• Public agency staff should make a photocopy of the face of the bid envelope, ensuring that the bid receipt time shows up on the copy.
• Public agency staff should have the bidder sign the photocopy with the following: "Received by: [signature, printed name, date, and time]."
• Public agency staff should keep the photocopy of the face of the bid envelope and submit it to the appropriate contracting official.
• Public agency staff should remove the bid receipt stamp or cross it out from the face of the bid envelope.
• Public agency staff should then return the bid to the bidder, notifying the bidder that if they choose to resubmit the bid, it must be received prior to the bid receipt deadline and stamped in again with a new time and date stamp.

New Online Calendar for Training Classes

Since there are a lot of training classes on public contracting issues that I frequently post on my blog, I thought it would be useful to also consolidate this information into a handy reference calendar.

Click on the link on the right side of this blog with the title "Calendar of Training Classes."

Please contact me if you have other training opportunities that you would like posted on my blog and the calendar.

Two Large Housing Authorities Join Shared Small Works Roster Program

Effective March 2, 2009, the Seattle Housing Authority and the King County Housing Authority dropped maintenance of a separate Small Works Roster for small construction projects.

Instead, the two housing authorities began using the Small Works Roster managed by eCityGov.net's Shared Procurement Portal.

The Shared Procurement Portal is a partnership between eCityGov.net and various local jurisdictions that eliminates the need for individual agencies to staff and maintain separate Rosters.

Under Washington State law (RCW 39.04.155), public agencies may utilize Small Works Rosters as a streamlined method of selecting contractors for construction projects estimated to cost less than $200,000. One of the benefits of using a Small Works Roster program is that projects do not need to be publicly advertised in the newspaper. Instead, competition is limited to those contractors on the Small Works Roster. Contracts are still awarded to the low responsible bidder submitting a responsive bid.

Tools for Selecting Qualified Contractors

Under the traditional Design-Bid-Build project delivery system, public agencies often complain about the requirement to accept the low bid, and low bid jokes abound in our society.

But surprisingly, not all projects are Design-Bid-Build and there are a variety of tools available for certain public agencies, even within Design-Bid-Build, that permit selection of contractors or subcontractors based, at least partially upon their qualifications.

Here's a list of some of these tools:

• Supplemental Bidder Responsibility Criteria: Under Design-Bid-Build, a public agency may establish Supplemental Bidder Responsibility Criteria to help ensure that the low bidder is capable of performing the work. This tool is not intended to unduly limit the bidding pool or to establish a "most qualified" standard, but to define a capability or responsibility standard. Supplemental Bidder Responsibility Criteria is authorized in RCW 39.04.350. The determination of responsibility is made prior to award.
  

• Qualification Requirements: Under Design-Bid-Build, a public agency may include in the technical specifications qualification requirements for certain subcontractors. Unlike supplemental bidder responsibility criteria that are enforced prior to award of a contract, these qualification requirements are enforced prior to performance of the work.
  

• Small Works Roster Qualifications: Under a Small Works Roster, a public agency may establish certain qualification requirements prior to placing contractors on the Roster to ensure that the contractors are responsible and capable of performing the specific work contemplated under the Small Works Roster. RCW 39.04.155 (2)(a) states that "the small works roster or rosters shall consist of all responsible contractors who have requested to be on the list...A state agency or local government establishing a small works roster or rosters may require eligible contractors desiring to be placed on a roster...to keep current records of any applicable licenses, certifications, registrations, bonding, insurance, or other appropriate matters on file...as a condition of being placed on a roster or rosters." And, of course, a public agency may establish Supplemental Bidder Responsibility Criteria for a Small Works Roster project as well.
  

• Job Order Contracting: Under Job Order Contracting, the contractor is selected based on a combination of qualifications and experience through a Request for Qualifications process, as well as their price for managing this indefinite quantity indefinite delivery contract in which they must subcontract out 90% of the work to subcontractors. Their price is bid as a "coefficient" or mark-up or mark-down of an established unit price book, such as R.S. Means. Job Order Contracting is authorized by chapter 39.10 RCW.
  

• General Contractor/Construction Manager (GC/CM): GC/CMs are also selected based partially on qualifications and partially on their price for certain elements of work. Typically, the price is a lower percentage of points in the selection process. The price they bid is only for their Percent Fee (overhead and profit) and Fixed Amount for Specified General Conditions work. The bulk of the construction cost, the Maximum Allowable Construction Cost (MACC) is actually negotiated between the public owner and the GC/CM. GC/CM is authorized by chapter 39.10 RCW.
  

• Subcontractor Eligibility on GC/CM: Under RCW 39.10.400, a public agency and GC/CM have the ability to essentially pre-qualify certain subcontractors prior to the GC/CM issuing the subcontract bid packages for public bidding. There is a process outlined in the law for holding a public hearing about the proposed criteria for subcontractor eligibility and also an appeal process for a subcontractor found not to meet the eligibility criteria.
  

• Design-Build: This is one of three alternative public works contracting methods authorized in the State of Washington, but it is used much less frequently than GC/CM and Job Order Contracting. A Design-Builder is selected based on qualifications, proposal, and price. Design-Build is also authorized under chapter 39.10 RCW.
  

• Pre-Qualification: Most observers will note that the Legislature, by specifically mentioning only certain agencies to pre-qualify contractors, has restricted pre-qualification to only those agencies. The Washington State Department of Transportation (WSDOT) has authority to pre-qualify its contractors under RCW 47.28.070. Cities and towns owning an electrical utility are required to pre-qualify contractors for electrical work as authorized by RCW 35.92.350. Public Utility Districts also have a similar requirement related to electrical work, as authorized in RCW 54.04.085. In pre-qualification, a public agency makes a determination ahead of time as to who is qualified to even bid the project.

Training: Basic Principles of Construction Insurance

Teleconference Training: Basic Principles of Construction Insurance

When: April 21, 2009 (10:00 a.m. to 11:30 a.m., Pacific time)

Where: Your office with your telephone

Sponsored by: Lorman Education Services

Cost:

• $199 (if registered by March 17, 2009)
• $248 (for registrations after March 17, 2009)

Content:

• Builders Risk Insurance - Coverage, exclusions, and endorsements
• General Liability Insurance - Coverage, exclusions, and endorsements

Instructor: Michael S. McNamara, Stephen D. Palley, Howrey LLP

For more information and to register, visit Lorman's website.

Sales Taxes to Increase on April 1, 2009

The Washington State Department of Revenue has posted on their website the official word that the sales tax rate for King, Snohomish, and Pierce counties will increase effective April 1, 2009.

It will go up a half a cent for each dollar spent, or five-tenths of one percent (.005). The increase will be used by Sound Transit to expand and coordinate light-rail, commuter-rail, and express bus service, and improve access to transit facilities in the three county region.

For the City of Seattle, the sales tax rate will increase from 9.0% to 9.5%.

Should Retainage Be Withheld on Preconstruction Services Contracts?

Under the General Contractor/Construction Manager (GC/CM) project delivery method, one of three alternative public works contracting procedures authorized in the State of Washington under chapter 39.10 RCW, a public owner selects a GC/CM early on in the design process to help with preconstruction services such as constructability reviews, cost estimating, scheduling, value engineering, etc.

But the Maximum Allowable Construction Cost (MACC) is not established until much later, when the construction documents are at least 90% complete, at which time the public owner and the GC/CM negotiate the MACC.

Prior to negotiation of the MACC, the GC/CM is under contract with the public owner to perform preconstruction services. Oftentimes, preconstruction services will involve activities that go beyond consultant-type services and include construction related work that is subject to prevailing wages and for which retainage should be withheld. Rather than try to divide which portions of the preconstruction services contract are subject to retainage being withheld and which portions aren't (an accounting nightmare!), it is much easier for public owners to simply withhold the 5% retainage on all preconstruction service contract payments.

While contractors may not be enthusiastic about such an action, public owners should be clear about their retainage process in the RFP for selection of the GC/CM so that all contractors know how the owner will administer the project. By failing to withhold retainage on preconstruction services that constitutes a public work and that is subject to prevailing wages, public owners may be subject to audit findings.

Preconstruction services are one of the portions of chapter 39.10 RCW that are not very clearly defined. In fact, these services are not even considered to be part of the Total Contract Cost for a GC/CM contract as defined in the law.

Mock Bid Scheduled for March 16th and 18th

The Utility Contractors Association of Washington (UCAW) will be sponsoring it annual Mock Bid on March 16 and 18, 2009. The Mock Bid is intended to provide observers (primarily government agencies and design consultants) with an inside view into what occurs during the bidding process. The Mock Bid helps to foster more understanding and cooperation by helping all parties see first hand some of the issues a contractor faces in developing and submitting a bid.

For more information and to register, contract UCAW's Executive Director, Mike Myette at mike@ucaw.org, or call (206) 510-6536.

New Prevailing Wages Effective March 4, 2009

As a reminder, the Washington State Department of Labor and Industries has published updated prevailing wage rates for use on public works projects.

The new rates become effective on March 4, 2009.

The specifications for any public works project with a bid submittal deadline of March 4, 2009 or later must include the applicable prevailing wages. The wages must physically be included in the bidding documents. It is not sufficient (or legal) for the bidding documents to simply reference L&I's website.

Since L&I published the wage rates, they have made a number of corrections to the rates. These may be viewed on L&I's website. Thus, it is very important that the prevailing wage rates be printed from the website just prior to publishing the bidding documents in order to ensure they are the most up to date wages.

The rates may be viewed and printed by clicking here on the Labor & Industries website.

Subcontractors List Legislation Moving Ahead

Substitute SB 5969 was approved on February 25, 2009 by the Senate Committee on Government Operations & Elections. The substitute bill represents a significant improvement from the unworkable SB 5969 (and HB 1837) that was originally introduced. Public agencies should be able to support the substitute bill.

Substitute SB 5969 would amend RCW 39.30.060 that requires public agencies to include in public works bidding documents estimated to cost $1 million or more a requirement that the bidders list the electrical, plumbing, and HVAC subcontractors, or to list themselves if they are performing the work. The statute is specifically written as an anti-bid shopping law.

Here is a summary of the changes that the Substitute SB 5969 would make, most of which relate to the relationship between the contrator and a substituted subcontractor (one who is named on the bid form but subsequently not used):

• Would eliminate the standard that substitution "in furtherance of bid shopping or bid peddling" is prohibited. The reason for deleting the language "in furtherance of bid shopping or bid peddling" goes back to a recent case in which the substituted subcontractor was not able to prove that the substitution was "in furtherance of bid shopping or bid peddling" - a very difficult standard to meet. Thus, the proposed bill would simply state that substitution, except for the reasons noted in the bill, is prohibited.
  

• Would add three new reasons for substituting a subcontractor:
  

• 1.) If the subcontractor failed to meet the subcontractor responsibility criteria of RCW 39.06.020. Actually, the bill incorrectly lists RCW 39.04.350 which is for bidder responsibility, not subcontractor responsibility which is found in RCW 39.06.020. I've been letting key individuals and legislative staff know that this needs to be corrected, and think that this change should get into a new substitute bill.
  

• 2.) "For any other reason that an arbitrator or court determines to be good cause for substitution such as, but not limited to, clerical errors or misinterpretation of the scope of the project."
  

• 3.) For a subcontractor being found in violation of prevailing wage laws in accordance with RCW 39.12.065 (3).
  

• Would add language entitling the prevailing party in a dispute between a contractor and substituted subcontractor to recover damages from the other party. The bill also provides that disputes under this law may be resolved through binding arbitration or in superior court in the county where the public work is located.

• There are also a number of stylistic and editorial changes in the bill.

Impact of Federal Stimulus on Construction

For an interesting article entitled "Impact of the Federal Stimulus Legislation on the U.S. Construction Industry," by John H. Kinney, an attorney with the law firm of Baker Donelson, click here.

Job Transitions...

Julianna Marler is the Senior Manager of Contracts for the Port of Vancouver, Washington. She joined the Port in the fall, leaving her previous position as Procurement Services Manager for the City of Vancouver, Washington.

Rocky Brannan was appointed Purchasing & Contracts Division Manager for the City of Bellevue. He starts in the position on March 2, 2009.

Sherry Arciniega, formerly with KBA Construction Management, recently joined the Port of Seattle Construction Contract Services group as a Contracts Administrator.

Judy Giniger is the new Contracts Administrator at the University of Washington's Capital Projects Office. She began the job on February 26, 2009

Terri Coe was hired by Tacoma Power (Tacoma Public Utilities) as their Contracts and Reporting Specialist in the Transmission and Distribution Engineering Section. Formerly with the City of Poulso, she begins the new job on March 2, 2009.

Carroll Bernard is working as a Purchasing Agent for the U.S. Department of Veteran's Affairs. He was previously with the City of Vancouver, Washington in procurement.

Aleanna Kondelis joined the City of Seattle's Contracting Division in January 2009 as a Senior Program Administrator.