Responsive or Non-Responsive?

Responsive or Non-Responsive Bid?  How do you determine if an irregularity in a bid makes the bid responsive or non-responsive.?

• A bid with a material irregularity must be rejected as non-responsive.

• A bid with an immaterial irregularity may be rejected as non-responsive or deemed responsive, at the discretion of the public agency.

Material or Immaterial Irregularity in Bid?  So what makes an irregularity material or immaterial?

"The test as to the materiality of a variance is whether it gives a bidder a substantial advantage or benefit not enjoyed by other bidders."

[Gostovich vs. City of West Richland, WA, March 1969, quoting Duffy v. Village of Princeton 240 Minn. 9 60 N.W.2d 27, 29 (1953)]

Whether an irregularity provides a bidder with substantial advantage or benefit not enjoyed by other bidders is a question that must be dealt with on a case-by-case basis, and is very much dependent on the specific facts relating to the bid.

Do You Have to Take the Low Bid?

I will be giving a brief talk on "Bidder Responsibility: Balancing the Interests of Owners and Contractors" on April 1, 2010 in Bellingham, Washington, at the Spring Workshop of the Pacific Northwest Public Purchasing Association (PNPPA).  

I will discuss how public agencies are using the Supplemental Bidder Responsibility Criteria permitted by RCW 39.04.350, and how some contractors are concerned that some of the criteria are overly restrictive of the bidding pool and limit competition.  

I will also update the group on the March 24, 2010 meeting of a task force established recently by the Capital Projects Advisory Review Board (CPARB) to address the issue of bidder responsibility.

Integrated Project Delivery Presentation

When:  April 8, 2010 ((5:30 p.m. to 9:00 p.m.)

Speaker:  Lindsey Pflugrath, Attorney at Skellenger Bender, P.S.

Topic:  Integrated Project Delivery (IPD) - its origins, principles of IPD, standard IPD contract terms, and comparing the advantages of IPD to traditional delivery.

Where:  Doubletree Guest Suites (16500 Southcenter Parkway, Seattle, WA)

Sponsored by ACEC Washington

Information:  For more information and to register, click here.

Cost:  

• $30 (ACEC members by April 5, 2010)
• $35 (ACEC members after April 5, 2010)
• $40 (non-ACEC members by April 5, 2010)
• $45 (non-ACEC members after April 5, 2010)

Contracting Controversy in Pennsylvania

Montgomery County, Pennsylvania is embroiled in a controversy over professional service contracting selection procedures.

In a contentiously divided vote, the County's three commissioners recently voted to repeal a 1998 law requiring at least five solicitations to be sent out.  In its place, they have adopted a new law requiring the commissioners to approve all new contracts.

One commissioner, Bruce L. Castor, Jr. challenged previous commission actions that he maintains did not follow proper solicitation procedures.  In response, commissioner James R. Matthews asserted that "I will never admit there was any illegality in securing contracts." 

Commissioner Castor also chided the county for not enforcing an ethics ordinance approved in April 2009 that requires elected officials to publish financial campaign reports on a website, as part of a government transparency initiative.

Click here to read an article about this issue from The Times Herald.

What Contractors Must be Registered?

The Washington State Department of Labor and Industries registers contractors in accordance with the provisions of Chapter 18.27 RCW.  

They register both general contractors and specialty contractors. According to L&I:

• A general contractor can perform or supervise numerous building trades or crafts
  
• A specialty contractor can perform one building trade or craft

L&I has published a list of specialty contractors to help contractors and public agencies determine when a contractor must be registered.  

You may view the list of specialty contractors on L&I's website by clicking here.

Governor Gregoire Signs 6 Bills

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.

In this guest blog entry, Steve summarizes six bills that passed the Legislature and have been signed by Governor Chris Gregoire.

Underground Economy Subpoenas: SHB 2789 (Chapter 22, 2010 Laws) authorizes subpoenas for investigations of underground economic activities by Labor and Industries (RCW 51.04.040), Employment Security (RCW 50.12.130), and Revenue (Chapter 82.32 RCW) effective June 10, 2010.

Electrical Trainee Classroom Training: SHB 2546 (Chapter 33, 2010 Laws) requires electrical apprentices and trainees to take 48 hours of approved classroom training biennially (RCW 19.28.161) effective July 1, 2011.

L&I Electrical Subpoenas: SHB 2555 (Chapter 55, 2010 Laws) authorizes Labor and Industries to issue subpoenas to enforce Chapter 19.28 RCW effective June 10, 2010.

Higher Ed Group Purchasing: HB 2858 (Chapter 61, 2010 Laws) authorizes institutions of higher education to participate in group purchasing agreements (RCW 28B.10.029) effective June 10, 2010.

Architects: ESSB 5529 (Chapter 129, 2010 Laws) updates the Architects Act (Chapter 18.08 RCW) for the first time since 1985 to reflect modern practices by modifying applicants' requirements, exam procedures, practice exemptions, professional development, business entity registration, and out-of-state firm requirements effective June 10, 2010, July 1, 2011, and July 1, 2012.

GC/CM Subcontractor Selection: SB 6401 (Chapter 163, 2010 Laws) authorizes an alternative selection method for electrical and mechanical subcontractors on general contractor/construction manager projects (Chapter RCW 39.10) effective June 10, 2010.

Hospitals Approved to Use GC/CM

The State of Washington's Project Review Committee (PRC) approved applications from two public hospital districts to use the GC/CM (General Contractor/Construction Manager) project delivery method.  

Island Hospital (Anacortes, Washington) and Mason General Hospital (Shelton, Washington) were given approval at the PRC's meeting on March 25, 2010.

Houston Loses $850,000 in Ethics Settlement

The Houston Independent School District has forfeited more than $850,000 to the federal government.  

Employees Accepted Gifts:  A settlement agreement between the school district and the U.S. Department of Justice was reached after a federal probe charged the district had a tainted bid process, and that district employees accepted dinners and gifts from vendors associated with the "E-rate" program.  

According to the Houston Press, under the E-rate program, the district uses "money generated by fees from telephone users for computer equipment and connection fees."

More Information:  Here are links of the settlement announcement from the perspective of each party:

• U.S. Department of Justice
• Houston Independent School District

Consequences of Ethical Lapses:  Acceptance of meals and gifts by government employees is a fairly common ethical lapse that can have serious consequences, not only for the public agency, but often for public employees who accepted them.

Training Available: Please contact me if you are interested in the class I have developed and taught on "The Ethics of Public Contracting."

2 Public Hospitals Apply to Use GC/CM

The State of Washington's Project Review Committee (PRC) will consider the application of two public hospital districts to use GC/CM (General Contractor/Construction Manager) for upcoming hospital construction work.

The PRC will meet on March 25, 2010 to review the applications from:

• Mason General Hospital ($29.1 million).  Click here to read their application.
• Island Hospital ($8.8 million)  Click here to read their application.

Project Labor Agreements on the Rise

Project Labor Agreements (PLAs) that require the use of union labor on public works projects are being considered and approved by more public agencies across the nation.

What is a PLA?  PLAs are a mechanism employed by unions that have the effect of limiting competition to only union contractors on public works projects.  PLAs are promoted by unions to public agencies by arguing that a PLA helps ensure quality construction (union workers perform the work better than non-union workers).  Furthermore, the reasoning goes, a PLA will prevent any labor disruptions (strikes by the union).

White House Support of PLAs:  President Obama has directed the use of PLAs on major federal construction projects.  According to a report by the White House Middle-Class Task Force, PLAs "help ensure compliance with laws and regulations governing safety and health, equal employment opportunity, and labor and employment standards." 

PLAs Not in Public's Best Interests:  From my perspective, PLAs are detrimental to the public's interests in that they restrict competition and favor union contractors.  Public contracting should be blind to the union or non-union status of contractors.  Compliance with laws is an issue that should be enforced through contractual terms, not by restricting competition to only union contractors, who may or may not comply with various laws any better than merit contractors.

California:  In California, the Port of Long Beach recently approved a PLA for the development of its Middle Harbor Project.

Illinois:  Union County recently approved a PLA for county public works projects costing more than $100,000.  The immediate use of the PLA will be on the construction of a new county courthouse.

Maryland:  In Maryland, the City of Baltimore is considering legislation that would require contractors on projects of $5 million or more to hire first from union hiring halls, and then open up hiring to others only after two days.  For more information, visit The Baltimore Sun's website.

Bidder Responsibility Task Force to Meet

The Task Force on Bidder Responsibility, created by Washington State's Capital Projects Advisory Review Board (CPARB), will meet for the first time on March 24, 2010 at 2:00 p.m.

The Task Force was created in response to concerns by contractors about how some public agencies are implementing supplemental bidder responsibility criteria on public works projects that are overly restrictive and potentially anti-competitive.  The Task Force consists of both owners, contractors, and subcontractors and will attempt to forge a common understanding of how bidder responsibility criteria should be used on public works projects.

Another related topic of discussion will be how pre-bid eligibility criteria for subcontractors is being implemented on GC/CM (General Contractor/Construction Manager) projects.

RCW 39.04.350 outlines how supplemental bidder responsibility criteria may be used, and RCW 39.10.400 addresses pre-bid eligibility on GC/CM projects.

Prevailing Wage Thresholds

Different government agencies have various thresholds at which prevailing wage requirements begin to apply. 

Here are a couple that I'm aware of:

• State of Washington - no minimum threshold.  Applies to all public works.
  
• Federally Funded projects with Davis-Bacon prevailing wage requirements - $2,000.
  
• State of Indiana - $150,000.

If you are aware of other thresholds in other states, please contact me and I'll publish an updated list.

Public Contracting is a Public Trust

"A fair system of public contracting is not just about efficiency and cost savings.  
    
    It's about public trust."


Judy Nadler, Senior Fellow, Government Ethics, Santa Clara University, California

Performance Audit Plan Announced

Over the next four years, only two performance audits to be conducted by the Washington State Auditor's Office will focus on contracting and procurement issues:

• Results of Federal Economic Stimulus Funding
• Opportunities to Improve State Procurement

Absent from the list of 30 identified performance audits in the auditor's work plan for 2010 to 2013 are audits of construction management practices of public agencies that the auditor has focused on it the past.

Most memorably, the auditor issued a scathing report of the construction management and contracting practices of the Port of Seattle in December 2007.

Blog E-Mail Subscribers Top 300!

On March 16, 2010, the 300th person signed up for an e-mail subscription to this blog!

My first blog post was on June 2, 2007.  

I began offering the e-mail subscription service almost two years ago, in July 2008.  

Here's a chart showing the growth of blog e-mail subscribers:

If you haven't yet signed up for an e-mail subscription, it's easy to do.  Just go to Mike Purdy's Public Contracting Blog and fill in your e-mail address in the upper right hand corner of the blog, and then click on the link in the verification e-mail you will receive.

If you know anyone who could benefit from subscribing to the blog, please direct them to the blog at http://PublicContracting.blogspot.com.  

Please contact me if you have any questions.

Change Orders Mismanaged by State Agency

The Washington State Parks and Recreation Commission was the subject of an audit finding by the State Auditor's Office for not adequately monitoring change orders on its public works projects.

The audit found the following deficiencies in the change order practices of the Parks and Recreation Commission:

• Out of Scope:  On a $4.8 million project at Cama Beach State Park, the Commission approved a $586,178 change order for the construction of a bathroom and showers that was outside the original scope of the contract.
  
  
• Work After Completion:  The Commission authorized four change orders to the Mount Spokane State Park contract for work after the substantial completion date of the project.  The work of the change orders was not related to the minor close out items remaining.  On another project, a change order was approved three months after the contract completion date of the project.
  
  
• Funding Not Verified:  The audit identified a number of instances in which the funding for change orders was not verified until after the change orders had been approved.
  
  
• Dollar Discrepancies:  Some of the change orders had discrepancies between the written dollar amount and the numerical dollar amount, and the higher amount was paid.

The Parks and Recreation Commission noted that they have reorganized staffing in an attempt to address the systemic concerns raised by the audit.  In addition, they are providing training to headquarters and region staff.

 

Webinar: Limitation of Liability Clauses in Design Professional Agreements

Webinar: Limitation of Liability Clauses in Design Professional Agreements

When:  Wednesday, March 24, 2010 (1:30 p.m. to 3:00 p.m.)

Faculty:  Beth M. Andrus, Esq., Skellenger Bender P.S.

Sponsored by ACEC (American Council of Engineering Companies)

For more information and to register, click here.

Bid Evaluation Dilemma

Question:  How should a public agency evaluate a low bid where the low bidder has proposed unit prices that are less than the applicable prevailing wages for the work?

The answer to this bid evaluation dilemma is not easy and is very much dependent on the facts of the situation.

Is the Bid Non-Responsive?  Since responsiveness relates to whether the bid responds to the requirements of the bidding documents, the answer to whether such a bid would be non-responsive depends on whether the bidding documents specifically required that any hourly rate bid must be at least the prevailing wage rate.  If the bidding documents did state this, then the bid might be considered non-responsive.  

If, on the other hand, the bidding documents simply requested bids for hourly rates and in a separate location in the bidding documents required payment of prevailing wages, then perhaps the bid should be considered responsive.

Questions to Ask:  In evaluating such a bid, it is very important to have a conversation with the bidder.  Here are some of the questions you might want to ask the bidder:

1. Is the bidder aware that prevailing wages apply to the project?
2. Does the bidder plan to pay prevailing wages?
3. How will the bidder be financially successful on the project if they are paying prevailing wages, but have bid less than the prevailing wage?
4. Is the bidder comfortable with their bid price even with less than prevailing wages bid for certain bid items?
5. Does the bidder want to submit a request to withdraw their bid?
6. Is the bidder aware that you may request your state prevailing wage enforcement agency to investigate whether the bidder actually pays their workers prevailing wages?

Again, the answer to the question of how to evaluate such a bid is very dependent on the specific facts and the language of the bidding documents. 

King County (WA) Streamlines Procurement

King County Executive Dow Constantine signed an Executive Order on March 11, 2010 announcing changes to the County's procurement process in the following areas, and will be submitting legislation to the County Council as well:

1. Contracting Documents:  The County's standard contracting package will be reduced by 14 pages, and Requests for Proposals and Invitations to Bid will be written in a more user friendly manner.
   
   
2. Small and Disadvantaged Businesses.  For direct voucher purchases and purchase orders under $5,000, goals will be established for use of small and disadvantaged businesses.  For purchases between $5,000 and $24,999, County agencies must obtain at least one quote from a county-certified small business.  For construction projects, voluntary goals will be established for use of minority and women owned businesses.  Outreach efforts will also be expanded in order to meet participation goals on federally funded projects.
   
   
3. Technology:  Technology will be used more effectively "to notify vendors of upcoming bid invitations, analyze county spending practices, eliminate purchasing inefficiencies, and take advantage of supplier discounts."
   
   
4. Cooperative Purchasing Agreements:  There are plans to develop more cooperative purchasing agreements with other government agencies in the area in order to reduce costs.

Click here to read the news release on the procurement reforms from County Executive Constantine.

Feds May Favor Firms Who Pay More

The White House's Middle-Class Task Force is considering a proposal and potential Executive Order that would give preference to federal contractors who pay their workers more in wages and benefits.  The initiative is being termed as "responsible federal contracting," and would add responsibility criteria as part of award decisions.

This is viewed by many as a labor union driven objective that would restrict competition to union contractors and end up increasing prices. 

According to the Associated Builders and Contractors, "federal contractors would face the possibility of being scored based on compliance with existing labor, wage, benefit, tax, regulatory and environmental laws as well as cost, past performance and their ability to meet stated contract requirements."

Objectively speaking, bidder responsibility criteria can be a good tool for governments to use in awarding contracts.  However, they must be tailored to be objective so that the public is the beneficiary, not just one segment of the market.

Click here to read the February 2010, Annual Report of the Middle-Class Task Force.

Checklist for Approving Payments

The Washington State Auditor's Office published a list of 8 key questions for public agencies to ask when approving payments to contractors, consultants, and vendors.  Here's their list from their March 2010 Fraud Risk Alert newsletter:

1. Do you have firsthand knowledge that this vendor or contractor exists?  If not, who can you contact to verify they do exist?
   
2. Is this invoice based on an approved contract?  Have the terms of the contract been met?  If not, is a contract necessary based on the information in the invoice?
   
3. Has the vendor/contractor provided the goods or services identified in the invoice or other billing statements?  If you are not sure, verify with an independent source.
   
4. Are the correct amounts for price (including unit prices used), sales tax, freight and other variables addressed in the invoice?
   
5. Are the prices being invoiced reasonable?  Look for a standard to assess whether the price charged is reasonable.
   
6. Do the quantities make sense?  Do the quantities agree to the contract or agreement?
   
7. Has anyone verified the invoice and other documents are mathematically correct?
   
8. Has anyone verified this invoice has not already been paid?

Audit: Contract Increased by 124%

The Washington State Auditor's Office issued a finding that the Douglas County Sewer District No. 1 violated competitive bidding laws when it issued three change orders totaling $784,456 to an existing $631,713 contract, an increase of 124% over the original contract amount.  

The original contract was for extending approximately 2,280 feet of sewer lines. 

A New Project:  The three change orders added another 2,000 feet of extension to the project.  The audit finding noted that the change orders were "not within the original scope of the project and therefore should have been separately bid or the project should have been re-advertised to include the additional line."

Agency Response:  The Sewer District responded that the change orders were necessary in order to meet schedules related to nearby development and that they saved the mobilization costs that would have been incurred with bidding the work separately.

Additional Changes Total Almost $1 Million:  In addition, the audit noted but did not criticize an additional four change orders totaling $942,178 that were issued to deal with unstable soil and unexpected surface water encountered by the contractor.  While I do not know the details of these change orders, the magnitude of these changes raises questions about the adequacy of the contract documents, and whether the Sewer District managed the change order and pricing process appropriately.

Click here to read the four page audit finding and the district's response.  

The Douglas County Sewer District No. 1 serves the City of East Wenatchee, Washington.

AGC Seeks Veto By Governor of Off-Site Prefabrication Reporting Bill

The Washington State Legislature has approved legislation that would require contractors and subcontractors who hire firms to produce off-site, prefabricated, non-standard items outside the State of Washington for a public works project within the State, to report certain data to the Department of Labor and Industries.

The Associated General Contractors of Washington has announced they will ask Governor Chris Gregoire to veto the bill.

Bill Supported by Labor Unions:  The bill was heavily pushed by labor union interests who argued that collecting such data was an important first step to stem what they call a trend of companies setting up off-site prefabrication facilities just across the Washington border in Idaho and Oregon in order to avoid paying prevailing wages for such work.  Under Washington law and based on court cases, prevailing wages apply for the prefabrication of any product that is not "off the shelf" but was specifically prefabricated for a public works projects.  The applicable prevailing wages are those in the county the product is prefabricated.  Washington State has no prevailing wage jurisdiction for work performed outside of the state boundaries.

Projects and Agencies Affected:  Engrossed House Bill 2805 would require public agencies in the State of Washington to include language in every contract estimated to cost more than $1 million requiring the reporting of data by contractors and subcontractors on the existing Affidavit of Wages Paid form, which would be modified by the Department of Labor and Industries.  The Washington State Department of Transportation (WSDOT) and local transportation public works projects would be exempted from the requirement.

Data to be Collected:  The data that would be required to be submitted by the contractor or subcontractor who hired firms producing off-site prefabricated items outside the State of Washington includes the following:

• The estimated cost of the public works project
• The name of the awarding agency and the title of the public works project
• The contract value of the off-site, prefabricated, nonstandard project specific items produced outside Washington, including labor and materials
• The name, address, and federal employer identification number of the contractor that produced the off-site, prefabricated, nonstandard, project specific items.

Other features of the legislation include the following:

• The provision would apply to any applicable contract effective September 1, 2010.
• The provision would sunset on December 31, 2013.
• Data collected by Labor and Industries would be reported to the Capital Projects Advisory Review Board (CPARB) for review.
• Adds a new mandatory bidder responsibility criterion to RCW 39.04.350 that would prohibit a public agency from awarding a contract to any contractor who violated the reporting requirements of the legislation more than once.  The Department of Labor and Industries would presumably make such information available to public agencies.

AGC Concerns:  Concerns of the AGC include the fact that the definition of off-site, prefabricated, nonstandard, project-specific items "is unclear to contractors or awarding agencies."  AGC has also expressed concern about the $600,000 estimated cost to implement the legislation, especially in these difficult budget times.

Managing Mystery Subcontractors on Projects

Whether you're a public agency or a contractor, how do you keep track of what subcontractors are working on a construction project site?

Without a clear system and procedures in place, there can be increased liability for both public agencies and contractors relating to:

• Quality of performance
• Compliance with laws

Prevailing Wage Audit Risk:  For example, in Washington State, prior to the owner making payment to a contractor, the owner must have on file a Statement of Intent to Pay Prevailing Wages for the contractor and every subcontractor, regardless of tier, that worked during the month for which payment is being requested (RCW 39.12.040).  Without the approved "Intent" document, owners are subject to an audit finding by the Washington State Auditor's Office.  

4 Tracking Tools:  Here are four tools that owners and contractors can use to ensure they are aware of all subcontractors working on the site:

1. Daily Inspection Report:  Owners should require the completion of a daily inspection report by its representative on site that includes a listing of subcontractors present that day.  This is one of the most effective tools, as it doesn't rely on others to report to the owner the names of subcontractors, but collects live information from the field.  Similarly, contractors should keep daily records of subcontractors on site each day.
   
   
2. Contract Notification Requirement:  Include a provision in the contract between the owner and contractor requiring the contractor to notify the public agency of any subcontractors used, and require that such a provision be passed down into lower tier subcontracts as well.
   
   
3. Subcontractor Approval Process:  Some public agencies have established a subcontractor approval application process that provides that no subcontractor may be present on site until approved by the owner.  This helps in identifying subcontractors on site, but is not a substitute for the owner's "eyes and ears" on site keeping daily records of subcontractors working that day.
   
   
4. Listing Subcontractors with Pay Applications:  Require with each application for payment, whether to the owner from the contractor or to the contractor from subcontractors, a form identifying all subcontractors who worked during the month.  This form should be compared with the daily inspection reports of the owner to ensure that the report is complete and accurate.

Regardless of how the information is collected by the owner about what subcontractors are working on site, that information must find its way back to those responsible for ensuring that all Statements of Intent to Pay Prevailing Wages are on file prior to authorizing payment to the contractor.

Other tools?  If you use other tools to keep track of subcontractors working on projects, I'd like to hear from you.  You can either submit a comment on this blog entry (see below), or contact me by e-mail.

Writing RFP Scopes: What We Can Learn from the Aerial Tanker RFP

Northrop Won't Propose:  The recent decision by Northrop Grumman Corp. to not submit a proposal in response to the U.S. Air Force's Request for Proposals (RFP) for the multi-billion aerial tanker competition highlights the importance of writing a clear scope of work, and the dangers of writing a scope of work that favors one contractor or vendor.

Northrop Won't Protest:  Northrop maintains that the RFP language favors Boeing over its European Airbus A330-based tanker plane.  Northrop has stated they will not protest the RFP.  

The Tables Are Turned:  It's an interesting turn of events, driven by a lot of politics.  In 2008, when the RFP was originally issued, it was Boeing who protested that the RFP favored Northrop, eventually leading to that RFP to be canceled.  

Balancing Competition with Business Needs:  The challenge for government agencies is to both maintain competition and to write RFP scopes of work that meet their business needs.  As the Northrop-Boeing case illustrates however, it's not always easy to maintain that balance as there are a variety of political and business interests involved in the process.

Training on Developing RFPs:  This is a great example of the challenges involved in writing a good RFP that I'll use as part of an all day training seminar I'm developing.  I'll be teaching it in June for a specific client.  If you are interested in me teaching this class for your agency, or would like to discuss it, please contact me.

Southern California Educational Opportunities

The Southern California Chapter of the Construction Management Association of America (CMAA) is offering a number of educational seminars and training opportunities in March 2010:

• MTA's 2009 Long Range Transportation Plan, March 12, 2010 (8:00 a.m. to 9:30 a.m.), David Yale, Deputy Executive Officer, Regional Programming MTA.
  
  
• Construction Contracts: The 10 Most Important Terms, March 18, 2010 (8:00 a.m. to 10:00 a.m.), John Darling, Esq., Hunt Orthmann Palffy Nieves Lubka Darling & Mah, Inc.
  
  
• Construction Inspection for Public Works: Best Practices, March 24, 2010 (8:00 a.m. to 10:30 a.m.), Todd Niemann, CCM, RCI – President, TWNiemann, Inc.

Early Release of Retainage on GC/CM Projects

Retainage on a GC/CM (General Contractor/Construction Manager) project in the State of Washington may be released by the public agency prior to the normal 45 days following final acceptance of the project.

The Problem for Subcontractors:  Because GC/CM projects are often multi-year projects, a subcontractor who performed work early in the project would otherwise have their retainage held by the GC/CM until the GC/CM received the retainage from the public agency a few years later.  This creates a financial burden for such subcontractors.

Early Release Formula:  RCW 60.28.011 (11) has an alternative provision that allows for early release of retainage for work performed by a subcontractor whose work was completed within the first half of the time required for the GC/CM to complete the entire project.  Thus, if the contract between the owner and the GC/CM gives the GC/CM 300 calendar days to complete the project, this provision would apply to any subcontractor who completed their work on the project within the first 150 calendar days of the project.

Retainage Release Procedures:  For subcontractors who complete their work early as noted, the public agency may go through a final acceptance process for the work applicable to such subcontractors.  The public agency must then publish a notice in the newspaper of its final acceptance of a portion of the work.  After 45 days following final acceptance of a portion of the work, the public agency is required to then release to the GC/CM the retainage related to the work performed by such subcontractors, provided the following conditions have been met:

• No claims have been filed against the retainage
• Owner has received releases from the various state agencies (Revenue, Employment Security, L&I)
• Owner has received an Affidavit of Wages Paid, approved by the Department of Labor and Industries, for the affected subcontractors and any of their lower-tier subcontractors.

Withholding Funds for Claims:  If any claims against the retainage are filed within the 45 days following final acceptance of a portion of the work, the public agency should withhold from the retainage released to the GC/CM the amount of such claims.  This is done in the event a court later orders the public agency to pay such claims from the retainage.

Prevailing Wage Rate Retracted

The emergency wage rates for Construction Site Surveyor published by the Washington State Department of Labor and Industries on March 2, 2010 that became effective on March 3, 2010 have been retracted by L&I due to an error in not surveying a number of contractors.  

The corrected prevailing wage rates become effective on March 9, 2010 for the following counties:  Chelan, Grays Harbor, King, Kitsap, Lewis, Pierce, Skagit, Snohomish, Stevens, Thurston, Whatcom.

Thus, for projects with a bid submittal deadline of March 3, 2010 through March 8, 2010, the prevailing wage rates for Construction Site Surveyor for the counties listed above are the wages in effect as of September 2, 2009.

Additional information about this error and correction may be found at the following website address of L&I:  http://www.lni.wa.gov/TradesLicensing/PrevWage/files/CorrectionNotices/Re-CorrectionConstructionSiteSurveyor.pdf.

Emergency Prevailing Wage Rates Adopted

The Washington State Department published new prevailing wages to become effective on March 3, 2010.  On March 2, 2010, L&I made a number of corrections to the newly published wages.  

Under normal processes, the corrections would become effective 30 days following their publication.  However, L&I has the authority to declare that the correction wages constitute an emergency, something L&I did in this case.  Thus, the emergency corrections also became effective on March 3, 2010.

Impact of Emergency Prevailing Wages:  If you have been in the process of preparing bidding documents and printed the prevailing wage rates from L&I's website prior to March 2, 2010 (the date L&I provided the notification of the emergency corrections), you will probably need to go back to the website and reprint the wage rates and include the new wage rates with the emergency corrections in your bidding documents, by addendum if necessary.

Trades and Counties Affected:

• Construction Site Surveyor (Chelan, Grays Harbor, King, Kitsap, Lewis, Pierce, Skagit, Snohomish, Spokane, Stevens, Thurston, Whatcom)
• Brick Mason (Clark, Grant)
• Drywall Taper (Franklin, Skagit)
• Glazier (Island, Whatcom, Yakima)
• Plumber, Pipefitter and Steamfitter (Lincoln, Skamania)
• Residential Glazier (Yakima)
• Residential Laborer (King)
• Residential Plumber (Yakima)
• Residential Soft Floor Layer (Grant, San Juan)
• Roofer (Clallam, Jefferson, Lewis, Thurston)
• Sheet Metal Worker (Clark, Grant)
• Terazzo Worker (Spokane)

Publish Prevailing Wage Rates in Bidding and Contract Documents:  As a reminder, prevailing wage rates must be included in all bidding documents and contracts for all public works projects, including Small Works Roster projects.  It is not sufficient to simply reference that prevailing wages apply or to provide a link to L&I's website with the prevailing wages.

Do Subcontractor Listing Requirements Apply to Design-Build?

Background:  In Washington State, RCW 39.30.060 requires bidders to list subcontractors for HVAC, plumbing, and electrical work on all public works projects estimated to cost $1 million or more.  The list of such subcontractors (or the listing by the prime contractor that they will perform such work themselves) must be submitted either with the bid, or within one hour of the bid submittal deadline.

Question:  Do these requirements apply to Design-Build projects (chapter 39.10 RCW) when firms are responding to either an RFQ or RFP (the two parts of the selection process)?

Not Applicable:  It is my opinion that the subcontractor listing requirements do not apply to either an RFQ or RFP as part of a Design-Build project.  I base my opinion on the following:

1. No Invitation to Bid:  RCW 39.30.060 (1) states that the requirements for subcontractor listing applies to "every invitation to bid" estimated to cost $1 million or more.  Selection of a Design-Builder is not conducted through an "invitation to bid" but through the two step process of an RFQ followed by an RFP for short-listed finalists.
   
2. No Subcontract Bidding:  The very nature of a response to an RFQ or RFP for Design-Build is different from the process in place for responding to a bid under a Design-Bid-Build project, in which the prime contractor solicits bids as part of developing their bid for a project.  Under a Design-Build RFQ or RFP, while the proposer may engage in some discussions with subcontractors, there is no design for subcontractors to bid on, since the project hasn't been designed.  

Thus, the purpose of RCW 39.30.060, which is to prevent bid shopping from occurring on public works projects, doesn't appear to be applicable for firms responding to an RFQ or RFP for a Design-Build project.

If you have different thoughts on this subject, I would be interested in hearing your opinion.

Resources and News on Design-Build

Check out Design-Build Board, a new blog by Patrick Miller, a construction attorney with Baker & Daniels LLP of Chicago.  

Patrick is also the President of the Design-Build Institute of America's Great Lakes Region.

2 Hour Seminar: Contract Indemnity and Risk Transfer Requirements

2 hour breakfast seminar on "Understanding Contract Indemnity and Risk Transfer Requirements"

Content:  This seminar will focus on understanding common contract clauses and requirements that serve to transfer risk between owners, general contractors and subcontractors on construction projects.  Common risk transfer provisions and mechanism include indemnification and hold harmless requirements, additional insured requirements, waivers of subrogration, limitations of liability and contract flow down provisions.  

When:  March 23, 2010 (8:00 a.m. to 10:00 a.m.)

Where: Tukwila, Washington (635 Andover Park West, Suite 101, UCAW Educational Classroom)

Sponsored by:  Utility Contractors Association of Washington (UCAW)

Cost:  $30 (includes breakfast)

Speaker:  Mike Grace of Groff Murphy PLCC

Information:  For more information and to register, click here.

Writing Effective Technical Specifications

I am teaching a 6 hour training seminar on "Writing Effective Technical Specifications" on Wednesday, March 3, 2010 in Vancouver, Washington.  The class is primarily focused on public works projects. 

Here are the main agenda items:

• State law requires specifications
• Why good specifications are important
• Tips in writing specifications
• Controlling quality in specifications
• Sources of specification language
• Types of specifications
• Interpretation of specifications
• Warranties
• Bidder responsibility criteria

I also teach a more general class, not focused so much on public works projects, on developing and reviewing scopes of work for other types of consultant and service contracts.  Please contact me if you are interested in having me provide this training.

Design-Build: Collaborating on the Future

Design-Build: Collaborating on the Future

When:  Tuesday, March 16, 2010 (7:15 a.m. to noon)

Topics:

• Risk allocation
• Getting into the Federal arena
• Teaming
• Quality Controlling costs
• Protecting design

Where:  Coast Bellevue Hotel (Bellevue, WA)

Sponsored by:

• Northwest Region of Design Build Institute of America (DBIA)
• American Council of Engineering Companies of Washington (ACEC)

Cost: 

• $195 for DBIA members
• $295 for non-DBIA members

 Speakers include:

• Robynne Parkinson, Law Offices of Robynne Thaxton Parkinson, PLLC
• Larry Bradbury, Chief, Military Construction, Army Corps of Engineers
• Doug Brinley, Principal, KPG, Inc.
• Bob Gaiteland, President, Reid Middleton
• Dan Callan, Vice President, Tetra Tech

For more information and to register, click here.