Sunday, January 31, 2010

Register Now for Mike Purdy's Class on Bonds, Retainage, and Claims

Only 18 spaces remaining, so register now for this popular class to save a place and save on the registration fee. 

I will be sponsoring and teaching a 4 hour hands-on, interactive training workshop on "Public Works Contract Close-out: Bonding, Retainage, and Claims."

When and Where: February 24, 2010 (10:00 a.m. - 3:00 p.m.) in Everett, Washington


Cost:
  • $100 if registered by February 15th
  • $125 for registrations after February 15th
Register Now:

Class Description:
  • What is the purpose of obtaining a Payment and Performance Bond?
  • Why must Retainage be withheld from the contractor?
  • What should a public agency do if a subcontractor, supplier, worker, or state agency files a claim against the bond and Retainage?
  • What steps must a public agency take before they can release the Retainage to the contractor?
  • What is the impact on public agencies of Substitute House Bill 1555 on Retainage release? This bill was approved by the Legislature this spring.
  • We will address these and many other issues through a combination of lecture, class interaction, and small group exercises.
Comments from Previous Attendees at this Class:
  • "Easy to follow."
  • "Clear and concise instruction.  Keeps audience attention."
  • "Very good pace.  Really appreciate respect for all questions from all knowledge levels."
  • "Very thorough.  Very clear."
  • "Provided clarity on a very fuzzy subject."
Instructor: Mike Purdy

Attendee List: Visit http://www.mpurdy.com/everettlist.pdf for a list of who has registered

Questions - contact me at:

Legislative Hearings for the Week of Feb. 1, 2010


Steve Goldblatt, recently retired, longtime University of Washington Construction Management faculty member specializing in design and construction law, has been covering the legislative scene in Olympia for more than 25 years.

I've invited Steve to contribute a series of guest blog posts on bills under consideration in the Washington State Legislature relating to public works and contracting, architects/engineers, and contractors. 

In this entry, Steve summarizes a number of bills that will receive a hearing in Olympia for the week of February 1, 2010.

  • GC/CM Subcontractor Selection: HB 2675 would authorize an alternative selection method for electrical and mechanical subcontractors on general contractor/construction manager projects (Chapter 39.10 RCW). Hearing on Monday, February 1, 2010, at 3:30 p.m. in the House Committee on Capital Budget.
  • Off-Site Prefabrication: HB 2805 would require—on public works projects estimated to cost over $1 million—contractors to submit lists of specified information regarding certain prefabricated items produced outside WA to the awarding agency and Labor & Industries, and contractors who produce certain prefabricated items outside WA to submit certified payroll records to the awarding agency and L&I upon request of an interested party (Chapter 39.12 RCW). This bill passed out of the House Committee on Commerce and Labor last week. A virtually identical bill (EHB 1836) was defeated in the Senate last session when it failed to receive the necessary majority by a single vote. Hearing on Wednesday, February 3, 2010, at 1:30 p.m. in the House Committee on Capital Budget.
  • Wastewater Treatment Systems Designers: SHB 2589 would modify licensing provisions for on-site wastewater treatment systems designers (Chapter 18.210 RCW), including experience and experience verification requirements. This substitute bill passed out of the House Committee on Commerce and Labor two weeks ago. Hearing on Thursday, February 4, 2010, at 8:00 a.m. in the House Committee on General Government Appropriations.

Agency Denied Permission to Use GC/CM

The Housing Authority of Snohomish County was denied permission on January 28, 2010 to use the General Contractor/Construction Manager (GC/CM) project delivery method for their $3.8 million Marysville Point housing project.  

Generally, GC/CM projects in Washington State are on projects over $10 million, and this may have been one of the reasons the Project Review Committee denied the application.  The Project Review Committee is appointed by the Capital Projects Advisory Review Board (CPARB) to review applications from public agencies in the State of Washington to use GC/CM and Design-Build.

At their January 28, 2010 meeting, the Project Review Committee did approve the application of the Port of Seattle for a $47.5 million Design-Build project for renewal and replacement of 42 escalators at the Seattle-Tacoma International Airport.

Thursday, January 28, 2010

How Should a Contractor Price This Spec Requirement?

Sometimes, just one word can make all the difference.

Here's a blooper from a real specification:  "Pedestrian traffic around the perimeter of the construction site should be provided."

So how would a contractor price this?  Let's see, how many pedestrians need to be used and for how long do they need to be used?  Should they be lined up around the perimeter of the site or moving?  And what's the purpose of the pedestrian traffic?  Maybe just to encourage the construction workers?

What they really meant is this:  "Pedestrian access around the perimeter of the construction site should be provided."

Please contact me or comment below if you've got a good specification blooper to share.  Thanks.

The Cost of Various Construction Bonds

There are a variety of different types of bonds that are typically required on public works construction projects.  One of the common questions that many public agencies ask is how much these bonds actually cost a contractor.

The amount charged to a contractor for different bonds varies based on a number of factors including the experience, capabilities, and financial strength of the contractor, as well as the nature and risk of the project.  The size of the project is also a factor.

Generally, the following represents general guidelines for the cost of different bonds.

Bid Bond:  Most surety companies do not charge for a bid bond, since the contractor does not even know if they will be the low bidder.  Some sureties charge a minimal amount per bid bond, but generally bonding companies make their money by issuing Payment and Performance Bonds.

Payment and Performance Bond:  The amount charged to a contractor for a Payment and Performance Bond (or two separate bonds - one for payment and one for performance) varies greatly, but generally range between 1% and 5% of the amount of the contract.

Retainage Bonds:  Bonds issued in lieu of a public agency withholding a percentage from each progress payment as retainage have become more popular in recent years.  By submitting a Retainage Bond, the contractor is paid 100% of each payment application, rather than 5% or 10% being withheld as retainage for the protection of workers, subcontractors, and suppliers who have not been paid.  Generally, the cost of a Retainage Bond is in the neighborhood of 1% of the amount of retainage.  Thus, on a $100,000 project with a 5% retainage requirement, 1% of the $5,000 of retainage would equal $50 - a small price to pay for getting early access to the retainage.

Wednesday, January 27, 2010

Town Violates Competitive Bidding Laws on Construction of Outdoor Recreation Facility


The Washington State Auditor's Office issued a finding that the Town of Winthrop, Washington failed to competitively bid the construction of an outdoor recreation facility with total project costs in excess of $336,000.  

The auditor noted that town employees were not aware of the requirements to bid the work, a finding disputed in the town's response.  The town did not consider the project to be a public work because it was funded by grants and donations and volunteer efforts from the community at large.

Once a public agency receives funds from any source (grants, donations, etc.), they become public funds and the agency is subject to all of the competitive bidding laws required for that agency.

To read a copy of the audit finding, click here.

Design-Build and GC/CM Approval Sought by 2 Agencies

Two public agencies in Western Washington will make presentations to the Capital Projects Advisory Review Board's (CPARB) Project Review Committee on Thursday, January 28, 2010 in support of their applications to use alternative public works contracting procedures on two projects.

Design-Build:  The Port of Seattle is seeking approval from the Project Review Committee to use the Design-Build process for a $47.5 million Renewal/Replacement of 42 Escalators at the Seattle/Tacoma International Airport.  To review the Port's application, please click here.

GC/CM:  The Housing Authority of Snohomish County is seeking the approval of the Project Review Committee to use the GC/CM (General Contractor/Construction Manager) project delivery method for the $3.8 million Marysville Point, a 19-unit new construction project in Marysville, WA.  To view the Housing Authority's application, click here

The Project Review Committee will likely give close scrutiny to the Housing Authority's project given the small dollar amount.  While there is no minimum dollar amount for using GC/CM, the Legislature has gone on record (RCW 39.10.250) that even public agencies who are certified to use GC/CM must come back to the Project Review Committee for approval of GC/CM projects less than $10 million.

Tuesday, January 26, 2010

Mike Purdy Offers Class on Writing Effective Technical Specifications


I will be sponsoring and teaching a 6 hour hands-on, interactive training workshop on "Writing Effective Technical Specifications."

When: Wednesday, March 3, 2010


Time Schedule:
  • 9:00 a.m. to 12:00 p.m. (class)
  • 12:00 p.m. to 1:00 p.m. (lunch break)
  • 1:00 p.m. to 4:00 p.m. (class)
Where: Educational Service District 112 (2500 NE 65th Avenue, Vancouver, WA)

Cost:
  • $100 if registered by February 22nd
  • $125 for registrations after February 22nd
Register by March 2, 2010
Attendance: Limited to 35 students, so register early. The class is open to anyone.

Instructor: Mike Purdy

Class Description: Well-written technical specifications can make a difference in the success of a public works project, and are especially important in the event of contract disputes. Whether you write specifications or review specs prepared by others, this hands-on, interactive class will cover key principals to consider in writing and reviewing technical specifications.

Agenda:

  • State Law Requires Specifications
  • Why Good Specifications Are Important
  • Tips in Writing Specifications
  • Tips of What NOT to Write
  • Sources of Specification Language
  • Types of Specifications
  • Interpretation of Specifications
  • Warranties
  • Tools for Obtaining Qualified Contractors and Subcontractors
Attendee List: Visit http://www.mpurdy.com/vancourverlist.pdf for a list of who has registered

Questions - contact me at:

Contracting Out Work vs. Performance By Government Employees

Should government agencies be permitted to contract work out to the private sector, or should work be required to be performed by public employees?  It's a fairly common tension in many states with different interests at stake:

  • Unions generally favor having public employees perform work and often promote legislation to prohibit certain work from being contracted out.

  • Contractors favor having as much work as possible put out for open competitive bidding, and oppose attempts to raise bid limit thresholds that permit more work to be done by government employees..

  • Government agencies generally favor flexibility in figuring out how to accomplish the work, and seek to raise bid limits, the amount at which they are required to seek competitive bids.
In Washington state, legislation approved in 2009 increased the bid limits for a variety of types of government agencies.  ESSB 1847 increased many thresholds that had not been increased for years.

A new bill just introduced in the Nebraska Legislature would allow contracting out for work on personal service contracts of $50,000 or more, only if the private sector was at least 10% cheaper than having the work performed by state employees. The Nebraska Legislative Bill 980 was introduced on January 19, 2010.

Washington State Legislative Hearings for January 28-29, 2010

Steve Goldblatt, recently retired, longtime University of Washington Construction Management faculty member specializing in design and construction law, has been covering the legislative scene in Olympia for more than 25 years.

I've invited Steve to contribute guest blog posts on bills under consideration in the Washington State Legislature relating to public works and contracting, architects/engineers, and contractors. 

In this entry, Steve summarizes a number of bills that will receive a hearing in Olympia on Thursday and Friday, January 28-29, 2010.
  • School District Bidding: HB 2868 would (a) increase school districts' bidding thresholds to $100,000 for public works and $50,000 for non-book purchasing, and (b) allow school districts' public works and purchasing contracts to be awarded to any responsible bidder "submitting a bid within five percent of the lowest responsive bid." (RCW 28A.335.190). Hearing on Friday, January 29, 2010, at 1:30 p.m. in the House Committee on State Government and Tribal Affairs.

Monday, January 25, 2010

2010 Regional Contracting Forum

The Regional Contracting Forum will be held on March 30, 2010 at the Washington State Trade and Convention Center in downtown Seattle.  The Forum is an opportunity for businesses to meet with a variety of government agencies and find out how to do business with them. 

Brundage-Bone Files for Bankruptcy

Founded in 1983, Brundage-Bone Concrete Pumping, a major concrete pumping firm, filed for Chapter 11 bankruptcy on January 18, 2010.

Click here to read a story from The Denver Post.

Sunday, January 24, 2010

Legislation Would Allow Award to Other Than Low Bidder

A bill under consideration in the Washington State Legislature would constitute a major shift in philosophy of public bidding by allowing award of a contract to any responsible bidder whose bid was within five percent of the lowest responsive bid.

There are two primary things that House Bill 2868, which applies only to school districts, would accomplish:

  1. Award to Other Than the Low Bidder:  HB 2868 would, for both the purchase of "furniture, equipment or supplies" and for "every building, improvement, repair or other public works project" allow a contract to be awarded to any responsible bidder "submitting a bid within five percent of the lowest responsive bid."  In the bill, responsible bidder for purchases is defined in RCW 43.19.1911 (which currently only applies to state agencies), and responsible bidder for public works is defined in RCW 39.04.350.  The bill offers no guidelines as to how a school district would make the decision to award to other than the low bidder.  As long as the bid was within 5% of the lowest responsive bid, the school district could award the contract.  Public bidding has historically required public agencies to award to the responsible bidder with the lowest responsive bid.  While this bill would provide flexibility for school districts in awarding contracts, it is flexibility without controls that could open up districts to charges of favoritism and even potential fraud.

  2. Bid Limit Increase to $100,000:  HB 2868 would also increase the bid limit for school districts for "building, improvement, repair or other public works projects" from the current threshold of $40,000 to $100,000, meaning that for any project less than $100,000, the school district could perform the work with its own forces without giving any public notice.  
2009 Bid Limit Legislation:  In 2009, the Legislature approved ESHB 1847 that increased the bid limits for a variety of different types of government agencies.  School districts were not included in that legislation.  Under ESHB 1847, there were different bid limit thresholds established for public works projects based on whether a single trade or multiple trades were involved in the project.  The highest bid limit under current law for any type of agency is for first class cities and for counties with a purchasing department and a population greater than 400,000.  The bid limit for these cities and counties for multiple trade projects is $90,000.

By comparison, HB 2868 would establish $100,000 as the bid limit for all school districts, without regard to whether the project was a single or multiple trade project.

Weighing the Pros and Cons:  Thus, HB 2868 would provide school districts with significant flexibility in the award of contracts and the highest bid threshold for any type of public agency in the State of Washington.  The Legislature should carefully evaluate whether all school districts, regardless of size, have the internal procedures and controls in place to appropriately utilize these tools, and whether these changes are in the public's best interests.

Public Hearing:  There will be a public hearing on HB 2868 on Friday, January 29, 2010 before the House Committee on State Government and Tribal Affairs.  The hearing is scheduled for 1:30 p.m.

No Indictments in Port of Seattle Contracting Fraud Investigation


Two years ago, the Washington State Auditor's Office issued a scathing performance audit on the Port of Seattle's contracting and construction management practices.  That audit led to the U.S. Attorney's Office launching a two year probe into whether any Port of Seattle employees broke federal laws and should be indicted.

Last week, the Port announced that the feds have concluded their corruption and fraud investigation and will not be issuing any indictments. 

The December 2007 performance audit led to the resignation of two employees and to seven employees being disciplined. 

The Port has since created a Central Procurement Office headed by Nora Huey to make necessary changes in the Port's contracting practices.

Resources:

Thursday, January 21, 2010

NIGP's Presidential Award

I was very pleased and honored to receive the Presidential Award from the Washington State Chapter of the National Institute of Governmental Purchasing (NIGP) at their annual meeting on January 12, 2010.

The award was presented in recognition of my "outstanding and valuable contributions made to the procurement profession."  Thanks, everyone!


Wednesday, January 20, 2010

Former Tulsa Employee Sent to Jail in Bribery Case


Albert Martinez, a former field engineering manager with the City of Tulsa, who pleaded guilty in August 2009 to accepting bribes from a contractor in exchange for approving inflated invoices, was sentenced to three and a half years in federal prison.  He was also ordered to pay $341,000 in restitution to the City of Tulsa.

Martinez is the third of six individuals who pleaded guilty in this contracting scandal to be sentenced to prison.  The contractor, Max E. Wolf, who paid some of the bribes to Martinez, was earlier sentenced to four years and nine months in prison for his role.  Another businessman, Harlan Eugene Yocham, was sentenced to five months in prison for paying a $7,000 bribe to Martinez.

More information about this story may be read by clicking here.

Tuesday, January 19, 2010

Training on Bonding, Retainage, and Claims

I will be sponsoring and teaching a 4 hour hands-on, interactive training workshop on "Public Works Contract Close-out: Bonding, Retainage, and Claims."

When: Wednesday, February 24, 2010


Time Schedule:
  • 10:00 a.m. to 12:00 p.m. (class)
  • 12:00 p.m. to 1:00 p.m. (lunch break)
  • 1:00 p.m. to 3:00 p.m. (class)
Where: City of Everett - Public Works Building (3200 Cedar Street, Everett, WA)

Cost:
  • $100 if registered by February 15th
  • $125 for registrations after February 15th
Register by February 23, 2010
Attendance: Limited to 24 students, so register early. The class is open to anyone.

Instructor: Mike Purdy

Class Description:

  • What is the purpose of obtaining a Payment and Performance Bond?
  • Why must Retainage be withheld from the contractor?
  • What should a public agency do if a subcontractor, supplier, worker, or state agency files a claim against the bond and Retainage?
  • What steps must a public agency take before they can release the Retainage to the contractor?
  • What is the impact on public agencies of Substitute House Bill 1555 on Retainage release? This bill was approved by the Legislature this spring.
  • We will address these and many other issues through a combination of lecture, class interaction, and small group exercises.
Attendee List: Visit http://www.mpurdy.com/everettlist.pdf for a list of who has registered

Questions - contact me at:

Feds Reject Bid as Non-Responsive for Lack of Original Surety Signature on Bid Bond



The U.S. Army Corps of Engineers (USACE) rejected as non-responsive the bid of TJ's Marine Construction LLC of Belhaven, North Carolina because their bid bond for a breakwater replacement project contained only a photocopy of the surety's signature. 

TJ's Marine appealed the decision to the U.S. Government Accountability Office (GAO) which affirmed the non-responsive determination.

The January 7, 2010 GAO decision rejecting TJ's Marine's appeal stated that "The determinative question in judging the sufficiency of a bid guarantee such as a bid bond is whether it could be enforced if the bidder subsequently fails to execute required contract documents and to provide performance and payment bonds."

The GAO concluded that "The bid bond submitted with the protester's bid did not contain the surety's agent's original signature.  Without referring, after bid opening, to the document containing the surety agent's original signature, the USACE cannot ascertain whether or not there had been alterations to which the surety had not consented and could use as a basis to disclaim liability.  Accordingly, TJs' Marine's bid guarantee cannot be viewed as enforceable based on the information in the possession of the contracting officer at the time of bid opening."

To read a copy of the GAO denial of the bid protest, visit the following website:  http://www.gao.gov/decisions/bidpro/402227.htm

Training on Apprenticeship Utilization Requirements


I provided training on Tuesday, January 19, 2010 for a number of school districts on the apprenticeship utilization requirements on pubic works projects, as required by RCW 39.04.320

The training was sponsored by the Washington Association of School Business Officials (WASBO) and was held in at the Edmonds School District offices with a number of other school districts participating in the training through teleconferencing technology.

RCW 39.04.320 affects all school districts in the State of Washington, the Washington Department of Transportation (WSDOT), the Department of General Administration, and all institutions of higher education in the state, and requires, when fully implemented, that 15% of all labor hours on a public works project estimated to cost $1 million or more be performed by apprentices enrolled in a state approved apprenticeship and training program. 

Monday, January 18, 2010

Washington State Legislative Hearings - Week of January 18, 2010


Steve Goldblatt, recently retired, longtime University of Washington Construction Management faculty member specializing in design and construction law, has been covering the legislative scene in Olympia for more than 25 years.

I've invited Steve to contribute guest blog posts on bills under consideration in the Washington State Legislature relating to public works and contracting, architects/engineers, and contractors. 


In this entry, Steve summarizes a number of bills that will receive a hearing in Olympia for the week of January 18, 2010.




  • Prevailing Wages: HB 1992 would apply prevailing wage requirements (RCW 39.12.020to construction projects that involve tax incentives, loans provided by a public entity, or public land or property that is sold or leased. This bill didn't come to a vote in committee last session. Hearing on Friday, January 22, 2010, at 8:00 a.m. in the House Commerce and Labor Committee.



Training: Developing and Managing RFPs in the Public Sector


Developing and Managing RFPs in the Public Sector

When:  February 10-12, 2010

Where:  Portland, Oregon


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

Thursday, January 14, 2010

When Bad Things Happen to Good Contracts


I spoke on Thursday night (January 14, 2010) on the topic of "When Bad Things Happen to Good Contracts: Bid Protests, Claims of Error, and Contracting Scandals."  The audience was the monthly dinner meeting of the Construction Specifications Institute's Puget Sound Chapter.

I spoke about the role and purpose of contracts, the primary and secondary purpose of public bidding, and then told a number of stories from across the nation about some of the more interesting bid protests, claims of error, and contracting scandals - all examples from 2009.

Wednesday, January 13, 2010

Proposed Legislation Affecting CPARB

The following bills have been introduced in the Washington State Legislature that would affect the Capital Projects Advisory Review Board (CPARB).
  • Elimination of CPARB:  HB 2617 and SB 6426 would eliminate CPARB and transfer its duties and those of the Project Review Committee (PRC) to the State Department of General Administration.

  • Transit Membership on CPARB:  HB 2575 and SB 6278 would add one member to CPARB representing regional transit authorities.

APWA/MRSC Free Training for 2010

The Contract Administration Subcommittee (CASC) of the Washington State Chapter of the American Public Works Association (APWA) and the Municipal Research and Services Center (MRSC) have announced the lineup for the free classes they will offer in 2010.

All classes will be held in four separate locations around the state: Renton, Everett, Camas, and Yakima, and normally run from 10:00 a.m. to 2:30 p.m.

The following represents the tentative schedule with the month for the training. For details about specific dates, visit the APWA/CASC website.
  • Records Management (February)
  • Prevailing Wages, Industrial Insurance, and Davis-Bacon (May)
  • 2010 Legislative Updates (June)
  • Bonds, Liens, and Retainage (September)

Tuesday, January 12, 2010

Changes to Washington State Prevailing Wage Forms

The Washington State Department of Labor and Industries announced three changes to the required "Statement of Intent to Pay Prevailing Wages" and the "Affidavit of Wages Paid Form":
  1. All Intents and Affidavits must have the following two fields completed: "Agency Contact Name" and "Agency Contact Phone."  Completion of these fields will become mandatory for all contractors and subcontractors, effective the evening of January 21, 2010.

  2. The "Industrial Insurance Acct ID" field must be completed when employees and/or apprentices are used and referenced on the Intents and Affidavits.  Industrial Insurance is another term for Workers Compensation premiums.

  3. The Intent and Affidavit forms now includes the following question about federal funding from stimulus or recovery money:  "Does this project utilize American Recovery and Reinvestment Act (ARRA) funds?"  
As a reminder, if ARRA funds are involved, the contractor will need to pay either State prevailing wages or federal Davis-Bacon prevailing wages, whichever is higher for an applicable classification.  Federally funded projects also require the contractor to submit weekly payrolls for their firm and all subcontractors, which the public agency is required to review and monitor.
Most contractors are now filing the Intents and Affidavits online with L&I.  Anyone can check the online database to see if an Intent or Affidavit has been filed and approved by L&I.  To view the database, which is searchable by a number of fields, visit L&I's website at https://fortress.wa.gov/lni/pwiapub/SearchFor.asp.

The Intent form is required prior to work being performed by the contractor or subcontractor, or at the latest before the public agency makes any payment for the work.  The Affidavit must be filed before the public agency may release retainage to the contractor.

California Construction Law Update - Seminar

The Southern California Chapter of the Construction Management Association of America (CMAA) will hold a January 28, 2010 morning seminar at The Grand Conference Center in Long Beach, CA.

The agenda for the Construction Law Update will include a review of 2009 case law and legislation relating to the following:
  • California's Right to Repair Law
  • Arbitration
  • Contractors State License Law
  • Prevailing Wage Law
  • Construction Defects
  • Design-Build
  • Mechanic's Liens
  • Governmental Design Immunity
  • Subcontractor Insurance
  • Wage and Hour Claims
Speakers:
Times:
  • 8:00 - 8:30 a.m. - Registration and Continental Breakfast
  • 8:30 - 10:30 a.m. - Seminar
Cost:
  • $60 per person - CMAA Members (before January 22, 2010)
  • $100 per person - Non-Members (before January 22, 2010)
  • $75 per person - CMAA Members (after January 22, 2010)
  • $125 per person - Non-Members (after January 22, 2010)
Registration: Visit the website of CMAA's Southern California Chapter for either online registration or a flyer to register by mail.