Davis-Bacon Act Requires Weekly Pay to Workers

The federal Davis-Bacon Act, adopted by Congress in 1931, is the foundational law requiring payment of federal prevailing wage rates on federally funded public works construction projects.

Weekly Pay Required:  One of the provisions of the Davis-Bacon Act that many public agencies, contractors, and subcontractors are not aware of is that it requires that workers be paid "at least once a week."  

Cash Flow Problems for Contractors:  The weekly payment provision frequently causes conflicts, especially for smaller contractors and subcontractors who may not have the cash flow available to pay their workers on a weekly basis.  Nevertheless, contractors and subcontractors working on federally funded projects must comply with this provision.  

Contracting Strategies:  Contractors bidding on projects subject to federal prevailing wages must factor weekly payment to workers into their bid.  Sometimes a contractor may agree to help a subcontractor with cash flow by paying the subcontractor on a weekly basis in exchange for a discount of the subcontract amount.  

Monitoring by Public Agencies:  Public agencies are required to monitor weekly payrolls submitted by the contractor and subcontractors on federally funded construction projects, and should specifically check payrolls submitted to ensure workers are being paid weekly.

Applicability of Federal Prevailing Wages:  Read my earlier blog entry.

Training: Construction Contract Management

I provided 8 hours of training to about 20 City of Sammamish, Washington staff on Tuesday, June 29, 2010 on "Public Works 101: Construction Contract Management."

The outline of the class addressed the following issues:

• Types of Contracts
• Types of Solicitations
• Architectural and Engineering Services
• Bidding
• Award
• Contract Execution
• Construction
• Close-out

Click here to see a more detailed outline of the class.  Please contact me if you would like to discuss me providing this training for your agency.  In addition to the City of Sammamish, I've provided this one day training for Pierce County (WA) and Sound Transit (WA). 

2 Job Openings at Port of Seattle

Port of Seattle (Washington)

• Position:  Contracts Administrator - Construction Contract Services

• Summary of Duties:   Manage the procurement contract process for routine construction contracts from inception to closing.

• Salary:  $55,263 (minimum) - $69,089 (midpoint) annually

• Closing Date:  Monday, July 19, 2010 at midnight

• For More Information and to Apply: Port of Seattle website.

• Position:  Sr. Contracts Administrator - Construction Contract Services

• Summary of Duties:   Manage all aspects of the procurement contract process for complex construction contracts from inception to closing.

• Salary:  $62,517 (minimum) - $78,137 (midpoint) annually

• Closing Date:  Monday, July 19, 2010 at midnight

• For More Information and to Apply:  Port of Seattle website.

A Bidding Nightmare

It's 1:58 p.m., just two minutes before bids are due on your sidewalk replacement project - and your front counter staff person has taken a break or gone to pick up supplies in another part of the building.  

A bidder races in the door, frantic that no one is around to receive and stamp in his bid.  The bidder wanders through the hallways and cubicles, seeking someone to receive his bid.  He finally finds someone, who takes the bid back up to the front counter where the bid is date and time stamped in.  But the time stamp reads 2:01 p.m., after the deadline.  The bid is opened along with the other bids and the bid is the lowest bid.  

Is the Bid Responsive?  Is the bid responsive and should it be considered further?  Whether the bid should be accepted depends on the specific facts of the situation.  In this case, the public agency did not manage the process properly.  The bidder presumably was on time.  Should the bidder (and the taxpayers) be punished because the agency didn't have someone available to time stamp in the bid?

Tips on Bid Receipt:  To prevent bid protests and problems, here are a couple of practical tips on managing the receipt of bids:

• Make sure that someone knowledgeable on bid receipt procedures is at the bid receipt counter continuously at least an hour before the bid submittal deadline.
• Check the time clock with official time the morning of every day when bids will be received to ensure the time close is consistent with the official time.  See http://www.time.gov/.
• Do not accept or read bids that have been submitted after the bid submittal deadline.

Training:  I have developed a two hour class on best practices on bid receipt and opening issues that I have taught a couple of times.  Please contact me if you would like me to conduct this training for your agency.

WSDOT Specs Drop Support for MS Word 2003

Effective January 1, 2011, the Washington State Department of Transportation (WSDOT) will no longer support Microsoft Word 2003 for their file format for General Special Provisions (GSP) and Amendments.  They will use only Microsoft Word 2007 or newer versions.  Those without access to the supported version will still be able to view PDF versions online.

WSDOT also announced they will change the naming conventions for GSPs and Amendments as illustrated in the chart below:

If you have questions about the changes, contact Theresa Schreier at schreit@wsdot.wa.gov or at (360) 705-7467.

Construction Industry Market Analysis Reports

Jim Schug, a consultant with FMI Corporation, a management consulting and investment banking firm for the construction industry, was kind enough to share the following three FMI documents that may be of interest:

• Construction Outlook, 1st Quarter 2010 Report.  "The construction industry should prepare for another year of decline in nonresidential construction.  Construction lost 64,000 more jobs in February."

• 2010 Project Management Survey of 141 construction companies.  The survey identifies the key drivers behind the profitable and successful management of construction projects.

• New Day, New Strategy: Repositioning After the Great Recession.  The article looks ahead at the challenges and opportunities.   It "also looks at current strategies of leading firms in various markets, and other recommendations on how to engage customers, tackle competitors and deal with company-related issues in the new market environment."

Please contact me if you would like me to e-mail a copy of any of these documents.

Job Opening: Purchasing Officer for City of Shoreline, Washington

City of Shoreline, Washington

• Position: Purchasing Officer

• Summary of Duties:  Oversee the centralized purchasing function including the development or review of bid packages and contract negotiation and administration.

• Salary:  $60,372 to $73,456 annually

• Closing Date:  Friday, July 16, 2010 at 5:00 p.m.

• For More Information and to Apply:  Visit the City of Shoreline's website.

Small and Minority Business Events

• Seattle, Washington:  Northwest Minority Supplier Development Council, 2010 Business Conference and Opportunity Fair.  Thursday, July 8, 2010

• Seattle, Washington:  City of Seattle's 2010 Reverse Vendor Trade Show.  July 28, 2010

• Seattle, Washington:  University of Washington Business and Economic Development Council.  2010 UW Minority Business of the Year Awards.  Thursday, December 2, 2010

• Beaverton, Oregon:  Northwest Minority Supplier Development Council, Certified MBE Showcase.  Tuesday, June 29, 2010

• Washington, DC:  Public Hearing in support of the Task Force on Federal Contracting Opportunities for Small Businesses.  Monday, June 28, 2010.

North Carolina Agency Issues Large Change Orders

The Alcoholic Beverage Control (ABC) agency for New Hanover County, North Carolina was criticized for avoiding state bidding laws by excluding from bidding documents all of the known interior or core work for the construction of new liquor stores, and adding that work by change orders. 

All Core Work Done by Change Order:  ABC bid only the shell of the buildings, with the same contractor, Lee F. Cowper, Inc. being awarded most of the contracts as the low bidder.  ABC then issued large change orders to Cowper for the interior work such as the electrical, plumbing, ventilation systems, flooring, counters, etc. 

ABC Hand-Picks Subcontractors:  ABC's longtime Administrator Billy Williams, who retired in February 2010, used the questionable contracting mechanism to hand pick the key subcontractors for the projects.  According to a former ABC board member, Williams did so because of the good relationships he enjoyed with the subcontractors.

Change Orders Up to 385% of Original Contract:  The following chart illustrates the original contract and the change orders issued for four stores, all awarded to Cowper.

Professor Criticizes ABC's Practice:  A professor at the University of North Carolina's School of Government in Chapel Hill, Frayda Bluestein,  commented on the situation:  "It seems to me if you know this is part of the work, I don't see any reason why you shouldn't or couldn't bid that as part of the original bid or do a separate bidding process.  Doing the second part without bidding - there doesn't seem to be a justification for that."

 Additional Information:

• February 20, 2010 Star News Online article on the change orders
• February 21, 2010 WRAL.com article on the change orders and Administrator Billy Williams hiring Cowper to do construction work on Williams' personal residence.
• A search of news articles from the Star News Online for "Alcoholic Beverage Control" brings up dozens of articles about management, legislative, and ethical issues at various ABCs

Washington State Change Orders:  The Washington State Auditor's Office has announced they will begin scrutinizing change orders on all public agencies in the state when they conduct their annual audits.  Click here to read my previous blog entry on this subject.

Lessons Learned:  Change orders should relate to the project and not be work that could or should be separately bid.  ABC's actions are clearly outside of the norm and expectations for public contracting.  Make sure your agency has an independent internal review process for change orders and that they are reviewed for validity to ensure they are not cardinal changes outside the original scope of work for the project.  If you know of certain work that must be performed, include it on the bid form so that you can obtain competitive prices for the work.

Comments on Proposed Revisions to Prevailing Wage WACs

The Washington State Department of Labor and Industries has proposed revisions to the Washington Administrative Code (WAC) addressing prevailing wage regulations.  See my previous blog posting for a summary of the changes and the dates for public hearings.

On June 22, 2010, I sent L&I a letter with my comments and suggestions on the WACs.  Contact me if you would like me to e-mail you a copy of my letter.

In summary, my comments include the following:

• Effective Date of Prevailing Wages for GC/CM Projects:  Add language addressing the effective date of prevailing wages for GC/CM projects.

• Prevailing Wage Rates for Supervisors:  Increase from 10% to 20% of hours worked in a day as the threshold for when supervisors must be paid prevailing wages.

• Combined Intent/Affidavit:  Clarify what is meant by "agreement" with respect to a combined Statement of Intent to Pay Prevailing Wages and Affidavit of Wages Paid form.

• Splitting Projects:  Delete language about splitting projects to fall under the small works roster threshold.  The WACs address prevailing wages, not bidding requirements, and the subject of splitting is already addressed in state law.

• Bonds:  Add in references to state law relating to payment bonds.

Does Your Subcontractors List Promote Responsive Bids?

Many states and local governments have a requirement that bidders name certain subcontractors on a list to be submitted with their bid.  If the Subcontractors List form is not designed and structured clearly, it can result in unnecessary non-responsive bids and higher costs.  In my experience, not completing the Subcontractors List properly is one of the most common reasons for a non-responsive bid.

Washington State Requirements:  By way of illustration, in the State of Washington, RCW 39.30.060 requires that the bidder name with their bid (or up to one hour after the bid submittal deadline) the names of their subcontractors for electrical, plumbing, and HVAC work, or to name themselves as performing such work.  The Subcontractors List requirement applies to contracts estimated to cost $1 million or more.

Checklist for Reviewing Your Form:  Review your Subcontractors List form.  Does it address the following issues, if required?

• A place for the names of subcontractors for each of the required trades
• A box for the bidder to check if they are performing the work of any of the required trades
• A box for the bidder to check if the project does not include any work in the required trades
• A place for the bidder to name the subcontractors (or themselves) for work in the required trades for any alternate or additive work

Compliance Tip for Public Agencies:  If you are a public agency, make sure that your Subcontractors List form is clear and helps bidders to submit a responsive bid.   

Compliance Tip for Contractors:  If you are a contractor, make sure you read and understand clearly the requirements of what must be included on the Subcontractors List, even if the form is not complete and clear.

Denver Transit Pursues Multi-Billion Public-Private Partnership

Denver's Regional Transportation District (RTD) awarded a unique Design-Build-Finance-Operation-Maintenance contract to the Denver Transit Partners consortium for rail lines to the Denver International Airport and other areas.  

The design and construction costs came in just over $2 billion.  Denver Transit Partners will operate and maintain the lines for 40 years.

For more information, read the article in the Denver Business Journal.

AIA Revises Bond Forms

The American Institute of Architects (AIA) announced in late May 2010 that it has issued revised versions of the following two bond forms that will be made available this month:

• Bid Bond (A310)
• Performance and Payment Bond (A312)

For the last couple of years, most bonding companies would not issue the A312 Payment Bond without amendments limiting the surety's liability for failure to respond to claims within a timely manner.  For more information about the court cases that prompted the interim amendments to the A312 Payment Bond, visit my blog entry of June 28, 2008. 

For more information about the newly issued bond forms:

• AIA's May 25, 2010 news release

• Best Practices Construction Law blog by Nashville attorney Matt DeVries describes the nature of some of the changes

Training: Insurance in the Construction Industry

Seminar:  Insurance in the Construction Industry

When:  October 15, 2010 (8:30 a.m. to 5:00 p.m.)

Where:  Seattle, Washington (Red Lion Hotel on 5th - 1415 Fifth Ave)

Cost:  $495 for a single registration.  Discounts available for some.

Topics Include:

• Most Often Litigated Builder's Risk Issues
• General Liability Insurance: Hot Topics
• Top 10 Most Questionable Decisions in Washington Construction Insurance
• Duty to Defend
• Emerging Issues Regarding Additional Insured Coverage
• Constitutional Issues in Construction Insurance Disputes
• The Duty to Investigate in Construction Defect Disputes
• File Splitting:  Does it Really Benefit the Insured?
• Mediation of Construction Disputes: Time for a Change?

Information and Registration:  Visit the website of the sponsor, Lorman Education Services.

California City Rejects Bidder as Not Responsible

The City of Ventura, California recently found that the low bidder on a sewer system replacement project was not a responsible bidder, and awarded the contract to the second low bidder at an additional cost of more than $164,000.

Responsibility Criteria in Bidding Documents:  The city included bidder responsibility criteria in the bidding documents requiring that to be a responsible bidder the bidder must 

"have been in business for at least five (5) years providing comparable auger boring with guided boring machine construction method projects, including successfully completing a minimum of two previous projects similar in scope and scale to this project.  The two similar projects shall specifically include auger boring with guided boring machine construction methods, with a construction dollar amount of at least $500,000 per project."

Low Bidder Lacked Years and Type of Work Experience:  The low bidder, JO-SH General Engineering, by their own admission in their appeal letter, has been in business under two business names for five months less than the required five years.  JO-SH argued that the 25 years of similar experience the president of the firm has had should count in meeting the bidder responsibility criteria.  The city rejected JO-SH's argument.  In addition, JO-SH was not able to demonstrated completion of the two projects with "auger boring with a guided boring machine."

Appeal Rejected and Contract Awarded to Second Low Bidder:  On June 7, 2010, the Ventura City Council awarded the project to the second low bidder, Lash Construction, Inc. for $1,156,453.  Prior to the City Council's action, City's public works department rejected JO-SH's appeal of the not responsible determination.  Immediately after the April 13, 2010 bid opening, in which eleven bids were received, Lash Construction filed a protest claiming that JO-SH was not a responsible bidder.

More Information:  For more information about the City of Ventura's action, including the appeal and protest letters, the City's response letters, the detailed bid tabulation, and the recommendation of the public works director to the city manager, click here.

Lessons Learned:  Public agencies drafting bidder responsibility criteria must have clear business reasons for the criteria, and the criteria must not be overly restrictive of the bidding pool.  Contractors should take seriously the criteria before bidding a project.  In Washington State, a bidder who objects to the supplemental bidder responsibility criteria may request a public agency to modify the criteria before the bid submittal deadline.  

Job Opening: Buyer for King County

King County, Washington

• Position:  Buyer

• Summary of Duties:   Procure routine and non-routine materials, supplies, equipment and services to support King County's operational needs.

• Salary:  $57,179 - $72,467 annually

• Closing Date:  Friday, July 2, 2010 at 4:30 p.m.

• For More Information and to Apply:  Visit King County's website.

Lax Management of Fuel Cards Cited in Audit

The Washington State Auditor's Office, following up on 2008 audit findings regarding the use of fuel cards for the State Department of Ecology, found that the department was still not appropriately monitoring the use of the fuel cards for the department's 400 vehicle fleet, nor were the cards secured and reconciled to purchase card documentation.

Click here to read the audit report.

Manage Cards:  If your agency uses fuel cards or purchasing (procurement) cards, it is important to have clear guidelines, monitoring, and reconciliation of the usage of the cards to prevent abuses from occurring.

New Medical Construction Rosters Approved for University of Washington

The Washington State Legislature approved legislation that permits the University of Washington to pre-qualify contractors for construction rosters related to critical patient care or specialized medical research facilities (Medical Rosters).  

Pre-Qualification vs. Bidder Responsibility Criteria:  The intent of the new law is to permit the University of Washington to establish pre-qualification requirements for this highly specialized and sensitive work that contractors must meet to be placed on the roster.  The UW operates both the UW Medical Center and Harborview Medical Center. 

Prior to passage of the new law, the only tool available for ensuring that the low bidder was a responsible bidder was for the University to add supplemental bidder responsibility criteria, as authorized by RCW 39.04.350.  This can often be a time-consuming process with responsibility evaluated after bid opening. 

By essentially pre-qualifying contractors for the Medical Roster, the University of Washington will not have to establish separate supplemental bidder responsibility criteria on each separate project relating to medical facilities, thus saving time.

Modeled After Existing Laws:  Substitute Senate Bill 6355, which became effective on June 10, 2010, is modeled heavily after both the current Small Works Roster law authorized in RCW 39.04.155 and portions of the GC/CM law in RCW 39.10.360.  There are significant portions of each of these laws that are included in the new law, some word for word.

Key Features:   The new Medical Roster law, which adds a new section to chapter 28B.20 RCW, includes the following key features:

• Dollar Threshold:  The roster may be used for projects equal to or less than $5 million.

• Applicability:  The Medical Roster applies to "construction, renovation, remodeling, or alteration of improvements within a building that is used directly for critical patient care or highly specialized medical research."

• Relationship with Small Works Roster:  The Medical Roster may be used in lieu of the provisions of the Small Works Roster program (RCW 39.04.155).

• Single or Multiple Rosters:  A single Medical Roster may be created, or multiple rosters may be used based on different trade specialties or categories.

• Advertisement:  The University of Washington must advertise annually announcing the Medical Roster to contractors.  The law specifies a number of subjects that must be addressed in the public solicitation, including the reasons for using the roster, a description of the contractor qualifications required to be placed on the roster, the form of contract to be used, the evaluation and appeal process, etc.  Contractors may be added at any time during the year.

• Evaluation Criteria:  The University must establish an evaluation committee to evaluate the qualifications of contractors desiring to be placed on the roster.  Evaluation criteria must include at least the following:  a) Ability of a contractor's professional personnel; b) Contractor's past performance on similar projects, c) Contractor's ability to meet time and budget requirements, d) Contractor's ability to provide preconstruction services, e) Contractor's capacity to successfully complete the project; f) Contractor's approach to executing projects, g) Contractor's approach to safety and their safety history, h) Contractor's record of performance, integrity, judgment, and skills.

• Quotation Procedure:  The University of Washington must establish a procedure to obtaining quotations from all contractors on the Medical Roster to ensure competitive process.

• MWBE:  The University of Washington must make an effort to solicit proposals from certified minority and woman owned contractors.

• Reporting:  Annually, beginning in September 2010, a university using the Medical Roster must provide a report to the Capital Projects Advisory Review Board on the usage of the roster.

• Sunset:  The Medical Roster process for awarding such contracts terminates as of June 30, 2015.

Pre-Qualification:  The new law follows in the footsteps of existing statutes that permits certain types of government jurisdictions to pre-qualify contractors for specific work.  For example, Public Utility Districts must pre-qualify contractors for electrical work (RCW 54.04.085).

Subjective Process:  The Medical Roster law provides the University of Washington with significant latitude in selecting only qualified contractors for the roster, and requires that the evaluation criteria include highly subjective criteria relating to the integrity and judgment of the contractors.  These subjective criteria have caused significant concerns by contractors when used in supplemental bidder responsibility criteria.

DC Agency Seeks Contracts and Purchasing Manager

The Metropolitan Washington Council of Governments (COG) is recruiting for a temporary Contracts and Purchasing Manager.

• Summary of Duties:  "Hands-on" manager to lead and support the contracts and purchasing operations.  Requires expertise in all phases of contract administration from drafting and develop of Request for Proposals through contract close-out including negotiating and administering various types of contracts.

• Salary:  $69,986 - $93,297

• Date Posted:  Friday, June 11, 2010

• For More Information and to Apply:  Visit the COG's website. 

Design-Destruct: A Unique Variation of Design-Build

In a unique twist, the University of Washington plans to use the alternative contracting procedure of Design-Build for the demolition of an eleven-story brick veneer, concrete building constructed in 1931.  Located at Harborview Medical Center, which is owned by King County but operated by the University of Washington, Harborview Hall has reached its full life expectancy.

Approval by Project Review Committee:  On May 27, 2010, the State of Washington's Project Review Committee (PRC) gave approval for the University to use Design-Build for the demolition of Harborview Hall.  

Construction costs are estimated at $3.8 million.  The Project Review Committee's approval of the use of Design-Build comes under the authority of the PRC to approve up to ten demonstration Design-Build projects that are more than $2 million and less than $10 million.  Legislation authorizing these smaller Design-Build projects was approved in 2009 and is described in RCW 39.10.250 (4).

Why Design-Build is Appropriate for a Design-Demo Project:  The University argued that Design-Build offers the best contracting tool to ensure the success of this sensitive project in a highly congested urban area just east of downtown Seattle.  The selected contractor will be required to develop plans to protect pedestrian and utility tunnels beneath Harborview Hall, and protect oxygen tanks immediately behind the building that are necessary for life support systems for the hospital.

It is the first use of Design-Build to support the demolition of a facility for a public agency in Washington State.

Application of UW:  To read the University of Washington's application to the Project Review Committee describing the project, click here.

Seattle Lacks Controls Over Blanket Contracts

The Washington State Auditor's Office has issued a finding that the City of Seattle lacks internal controls over the use of four blanket contracts for the design and installation of a security system.   

Contract Use for Work Not Originally Identified:  The Auditor criticized the City for using the blanket contracts for separate public works projects that were not identified or contemplated in 2004 when the request for proposals was issued.  The audit singled out two fences built by Seattle City Light at a cost of $1 million as an example of work being performed that was not included in the original request for proposals.  

The audit report noted that work performed but not included in the original contract did not provide the City with assurances that the contractor would be qualified to perform the work, nor that the City would obtain competitive prices.

Previous Waiver Not Valid:  According to the audit, "the City believed a 2004 waiver of competitive purchase requirements for the security system was sufficient to waive competitive procurement for all subsequent related work." 

City's Response:  The City's response to the audit noted a number of steps they are taking to help manage such blanket contracts more effectively in the future.

Audit Report:  To read the audit report, click here.

California Training: Procurement & Contract Administration

When:  Thursday, June 17, 2010 (8:00 a.m. to 10:30 a.m.)

Where:  Long Beach, California (The Grand Conference Center, 4101 E. Willow Street)

Agenda:

• Bid Protests (applicable laws and regulations - federal, state, and county)
• Payment and Performance Bonds
• Warranty of Plans and Specifications
• Contract Administration (schedule, prompt payment statutes, 20-day preliminary notices, paid-if/when paid clauses, change orders)
• Termination for Cause and Convenience
• Statutory Releases
• Substantial Completion
• Public Works Stop Notices
• Mechanic's Lien (priority of encumbrances)

Instructors:

• Kyle A. Ostergard, Alston & Bird LLP
• Andy Howard, Alston & Bird LLP 

Sponsored by:  Construction Management Association of America, Southern California Chapter 

Information and Registration:  Click here.

What Date Controls the Effective Date of a Contract?

What is the date that controls when a contract becomes effective, and why does it matter?  

There are two basic methods that I've seen used on public contracts for establishing the effective date of contracts.

1. Specific Date Stated in Contract:  Some contracts will have language at the beginning of the contract that states something like this:  "This Contract is made and entered into on _____________, by and between the Owner and Contractor."  But what happens if the contract is actually signed by both parties either before or after the stated date?  Did the contract become effective at an earlier date when both parties signed it, since that is when they documented their agreement?  Does the contract not become effective until both parties sign it after the stated date, even though the contract stated an earlier effective date?  Generally, a contract does not become a binding agreement between the two parties until both parties have actually signed it.  Thus, using a specific date in the contract as the effective date that not connected to signature dates may be problematic.
   
   
2. Date of Last Signature:  Under this option, the contract will include language similar to the following:  "This Contract shall be effective on the last signature date set forth below."  On the signature page of the contract, there is a place next to each signature for the party to write the date when they signed the contract.  This option appears to avoid some of the ambiguity involved in the first option.  The contract becomes effective when the last party signs the contract, indicating agreement between both parties.

Get Legal Advice:  Take a look at your contracts, and check with your attorney or obtain legal counsel to see if you should modify your standard contracts relating to when your contracts become effective.

City of Seattle Reorganizes Contracting and Purchasing

As part of a budget-cutting measure, the City of Seattle has merged their Purchasing Division and Contracting Services Division into one consolidated division.   Nancy Locke, the City's Purchasing Director, has been appointed as the director of the combined Purchasing and Contracting Services Division.

The City's previous Director of Contracting Services, Linneth Riley-Hall, left in April to take a position at Sound Transit, and City officials decided to not fill the position after she left but to combine the two divisions.  The change became effective late last week.

Free Prevailing Wage Training for Oregon Contractors and Subcontractors

The Portland Development Commission (PDC) is offering a free two hour training session for Oregon contractors and subcontractors on prevailing wage requirements on public projects. 

When:  Monday, June 28, 2010 (9:30 a.m. to 11:30 a.m.)

Where:  Portland, Oregon (PDC Commission Room, 222 NW Fifth Ave, 1st floor)

Topics to be covered include the following:

• State of Oregon BOLI requirements
• Federal Davis-Bacon requirements
• Determining prevailing wage coverage
• Prevailing wage rate monitoring
• Agency and contractor responsibilities
• Process
• Avoiding prevailing wage mistakes

Information and Registration:  For more information and to register, click here, or contact Nathan Mosley at (503) 823-3322 or by e-mail at mosleyn@pdc.us.

Job Openings at Port of Seattle and Sound Transit

Port of Seattle:  

• Position:  Sr. Contracts Administrator -  Service Agreements

• Summary of Duties:  Responsible for managing all aspects of the procurement contract process for complex professional service agreements - from inception to closing.

• Salary:  $58,812 (minimum) - $73,496 (midpoint)

• Closing Date:  Thursday, July 1, 2010 at midnight

• For More Information and to Apply:  Visit the Port of Seattle's website.

Sound Transit:

• Position:  Senior Construction Contracts Specialist

• Summary of Duties:  Performs the full range of senior professional and technical duties involved in the preparation, finalization, analysis, and administration of construction, architect-engineering and other agreements and contracts.  Responsible for cradle-to-grave procurement and contract work, depending on the complexity and risks associated with the contract or agreement.

• Salary:  Negotiable

• Closing Date:  Wednesday, June 23, 2010 at 5:00 p.m.

• For More Information and to Apply:  Visit Sound Transit's website.

Washington Legislature Clarifies Intent on Alternative Public Works

In response to actions by certain public agencies that have caused concern among contractors and designers, the Washington State Legislature approved Engrossed House Bill 1690 to clarify its intent on existing laws regarding Alternative Public Works contracting procedures.

The new law is effective on July 13, 2010 and deals with the following subjects:

Alternative Processes Restricted to those in RCW 39.10:  Primarily in response to the University of Washington authorizing a developer model to pursue renovations to Husky Stadium, the new law states the following:  

"It is the intent of the legislature to clarify that, unless otherwise specifically provided for in law, public bodies that want to use an alternative public works contracting procedure may use only those procedures specifically authorized in chapter 39.10 RCW."  

Chapter 39.10 RCW authorizes the use of Design-Build, General Contractor/Construction Manager (GC/CM), and Job Order Contracting, but does not authorize a developer model that mixes certain elements from the private sector with Design-Build and GC/CM.

Applicability of Chapter 39.10 RCW to Housing Authorities:  Housing authorities have long argued that the alternative public works contracting procedures of chapter 39.10 RCW do not apply to them given their authorizing legislation (chapter 35.82 RCW).  EHB 1690 states that

"All housing authorities shall be subject to the provisions of chapter 39.10 RCW except where alternative requirements or procedures of federal law or federal regulation are authorized." 

The practical impact of this new legislation is probably that housing authorities will continue to use a "GC/CM-type" of procurement for certain public works without following chapter 39.10 RCW.  This is based on their position that federal law and regulations permit such an alternative public works contracting method, and most funding for housing authorities comes from the federal Department of Housing and Urban Development (HUD). 

Applicability of State and Federal Prevailing Wages to Housing Authorities:  The new law states that

"the requirements of chapter 39.12 RCW regarding prevailing wages shall apply to housing authority public works except where specifically preempted by federal law or federal regulations."

The Code of Federal Regulations, Title 24, Section 965.101 states that federal prevailing wages preempt state prevailing wages on projects "assisted with funds for low-income public housing under the U.S. Housing Act of 1937" (HUD funded).  

Under the new law, non-federally funded projects of housing authorities would clearly be subject to state prevailing wages, and federally funded projects funded by agencies other than HUD would be subject to both state and federal prevailing wages, with the contractor required to pay the higher of the two wages. 

CPARB Authorized to Recommend New Contracting Procedures:  The duties of the Capital Projects Advisory Review Board (CPARB) have been expanded with the new law to include responsibilities for submitting recommendations to the legislature "evaluating alternative contracting procedures that are not authorized" already.

Training: Developing and Managing RFPs and RFQs

On Wednesday, June 9, 2010, I had the pleasure of providing training on "Developing and Managing RFPs and RFQs" for about 20 contracting professionals from throughout the State of Washington.  

The training was sponsored by the Washington Transportation Training Coalition.

The agenda for the all day training included the following:

• Building the Public's Trust
• Planning the Procurement
• Standard Provisions and Concepts
• Conflicts of Interest
• Cost and Price Analysis
• Advertising Issues
• Pre-Submission Meeting
• Receiving and Opening Proposals
• Evaluation Committee
• Evaluating Proposals
• Managing Interviews
• Recommending Award
• Contract Negotiations
• Developing Scopes of Work

If you are interested in having me provide this training for your agency, or would like to be placed on a list for when I sponsor the training, please contact me.

Missouri Rejects Low Bid Not Submitted Electronically

The Missouri Highways and Transportation Commission rejected on June 2, 2010, as irregular the bid of low bidder, Steve & Associates, who failed to submit their bid electronically as required in the Missouri Department of Transportation (MoDOT) standard specifications.  

Instead the Commission awarded the contract to the second low bidder, Sam Gaines Construction, at a cost of $1.659 million, or $83,000 more than the low bid.

Specs Required Electronic Bidding Only:  At issue is the provision of section 102.3 of the standard specifications that states the following:

Any bid exceeding a monetary value of $250,000 shall be submitted electronically using the BidExpress website.  For any bid less than $250,000, bidders will be allowed to submit paper bids or submit bids electronically using the BidExpress website.  Any paper bids submitted with a bid exceeding $250,000 will be considered irregular in accordance with Sec 102.8.

Specs Defined Irregular Bids:  Section 102.8, Irregular Bids, of MoDOT's standard specifications states that:

"Bids that are not completed in accordance with the bidding documents, that show any omissions, false statements or certifications, alterations of form, additions not called for, conditional or alternate bids unless called for, irregularities of any kind, or that are not responsive to the request for bids may be rejected." 

The Irregularity in the Bid Was Immaterial:  Only bids that have a material irregularity must be rejected as non-responsive.  The test as to the materiality of an irregularity is whether it gives one bidder an advantage or benefit not enjoyed by other bidders.  

It seems to me that the low bidder in this instance did not gain any advantage by submitting a paper bid.  Thus, the irregularity in Steve & Associates' bid appears to be immaterial.  

A public agency has discretion whether to accept or reject a bid with an immaterial irregularity, while a material irregularity must be rejected as non-responsive.  In this instance, the Commission chose to reject the bid with an immaterial irregularity as non-responsive, at a cost to the public of $83,000.

Should the Bid Have Been Rejected as Non-Responsive?  While I don't have all of the documents related to the bids submitted to MoDOT, Section 102.8.2 of MoDOT's standard specifications would tend to support the fact that the Commission should not have rejected the bid as non-responsive.  It states the following: 

"A bid submitted on the "Request for Bid" document and that is otherwise complete and fully executed, will not be deemed an irregular bid and will not be subject to rejection by the Commission."

Presumably, Steve & Associates submitted their bid on the "Request for Bid" form, and perhaps their bid should not have been rejected.  

Bid Protest Coming?  Steve & Associates is considering filing a bid protest, arguing that they were twice told by MoDOT personnel that it was acceptable to submit a paper bid.

For More Information:

•  Click here to read a news article in The Fulton Fun newspaper.

• I have requested MoDOT to send me documents related to this bid and the Commission's action.  If there are additional facts that surface, I will be sure to report those in a future blog entry.

New Orleans Reforms Corrupt Contracting Practices

New Orleans Mayor Mitch Landrieu announced a series of significant contracting reforms on June 3, 2010, designed to make selection of consultants and contractors more transparent and open to the public. 

The changes follow years of questionable practices by previous mayors.  Mayor Landrieu noted that "We are going to institute a new way of doing business...to restore credibility and faith that the public should always have in the way government handles its money."

Chief Procurement Officer:  A new Procurement Office headed by a Chief Procurement Officer position will be created to implement and manage the contracting reforms and new processes.  Click here to read the mayor's Executive Order MJL 10-04 on this subject.

Consultant Selection Practices:  A key change will shift the decision making for selection of professional service consultants, such as architects and engineers, away from the mayor.  Instead, a selection committee of five high-ranking city employees will make a recommendation to the mayor.  The mayor will be required to either sign a contract with the recommended firm or state in writing why he is not doing so.  If the mayor does not agree with the selection committee recommendation, a new procurement process must be conducted.  

The selection committee will be subject to open public meetings and public records laws.  The new consultant selection procedures will apply to all contracts of $15,000 or more.  The ten page Executive Order also details procedures for development of standardized RFPs and RFQs, advertisement, selection criteria, and contract negotiations.  Click here to read the mayor's executive order MJL 10-05.

Disadvantaged Business Enterprises (DBE):  One of the mayor's Executive Orders establishes a provisional certification program for DBEs, creates an advisory committee to reform and strengthen the City's DBE program, creates a contract review committee for procurements, commissions a disparity study, and explores the creation of a surety fund for bonding DBEs.  Click here to read the mayor's Executive Order MJL 10-02.  

Another of the mayor's executive orders creates a new position of Director of Supplier Diversity.  Click here to read this Executive Order MJL 10-03.

Other Information:

• For a June 3, 2010 news article about the new contracting regulations in The Times-Picayune, click here.
• For a June 6, 2010 editorial in the The Times-Picayune, click here.
• For a history of some of the contracting scandals that have plagued the City of New Orleans, click here.

Training: Oregon Public Contracting and Purchasing Laws

The League of Oregon Cities is sponsoring a free all day (9:00 a.m. to 3:00 p.m.) training session on Oregon Public Contracting and Purchasing Laws.

When and Where:

• June 11, 2010, Medford, Oregon
• June 15, 2010, La Grande, Oregon

Instructor:

• Alexandra Sosnkowski

 Course Topics:

• Oregon's Public Contracting and Purchasing Laws (overview of Oregon's public contracting and purchasing and model public contracting, Legislative update of recent important changes to the statutes and rules)
• Identifying Public Contracts (personal services, goods and services, public improvements, social media issues relating to public contracts)
• Public Contract Procurement (defining procurement, bids vs. proposals, public contracting exemptions, handling bid protests)
• Local Public Contracting Codes (defining local contract review board and local contracting agency, creating or updating a local public contracting code)

For more information and to register, click here.

New Law on Subcontractor Selection on GC/CM Projects

An alternative process for selecting mechanical and electrical subcontractors on GC/CM (General Contractor/Construction Manager) projects in Washington State will become effective on June 10, 2010, and mirrors closely how public agencies are required to select GC/CMs.  

Qualifications and Price-Based Selection:  Under the provisions of Senate Bill 6401 approved by the Washington State Legislature, selection of these key subcontractors would be based partially on qualifications and partially on their prices for their fee (overhead and profit) and fixed costs for specified general conditions work.  The concept permits the early selection of mechanical and electrical subcontractors in order to create a tighter working partnership between the GC/CM, the owner, and the subcontractors.

Options for Subcontractor Selection:  The default position for GC/CMs to select subcontractors is for them to be competitively bid under the provisions of RCW 39.10.380 after negotiation of the Maximum Allowable Construction Cost (MACC) between the owner and the GC/CM.  There are two other alternatives available under RCW 39.10.370 for early subcontract bidding by the GC/CM.  SB 6401 adds a fourth subcontractor selection process.

Additional Information:

• I've developed a summary of the four options for subcontractor selection under GC/CM, as well as an outline of the provisions of SB 6401 that permits the selection of mechanical and electrical subcontractors on the basis of qualifications and price.  Click here to read this five page document.

• Senate Bill 6401 

Agencies Shift to Electronic Rosters

More and more public agencies are making the decision to shift their consultant, contractor, and vendor rosters to web-based rosters, abandoning hard copies of the files.  

There are many benefits for both the business community and for public agencies.  Electronic rosters allow agencies to search for businesses more effectively than with hard copies, and may open up business opportunities to firms that otherwise would not be known to government agency staff.

There is also a trend for public agencies to create common rosters used by many agencies.  This represents a good use of technology by reducing the level of effort required for businesses to be listed on rosters for multiple agencies.

In Washington State, there are two major electronic rosters with multiple agencies, each with strengths and weaknesses:

• eCityGov Alliance - Shared Procurement Portal

• Municipal Research and Services Center (MRSC)

The University of Washington's Capital Projects Office recently signed an agreement to join the eCityGov Alliance's Shared Procurement Portal for the selection of architectural, engineering, and related consultant services.    

Click here to read an article in the Seattle Daily Journal of Commerce about the UW's use of the new roster.

People in Transition - Promotions and New Hires

The University of Washington, Sound Transit, and the Port of Longview all recently hired new people in key contracting and purchasing management positions.

University of Washington:  Judy Giniger, formerly the Contracts Administrator in the UW's capital projects office, was promoted to Contracts Manager to replace me when I retired in early February.  Mandy Bender was hired as the new Contracts Administrator in May.

Sound Transit:  Linneth Riley-Hall, a veteran City of Seattle employee who served as the City's Director of Contracting Services, was hired by Sound Transit as Construction Contracts Manager in April.

Port of Longview:  Kara Metzger, formerly a budget analyst with Cowlitz County, was hired in April by the Port of Longview as their new Purchasing Manager.