Happy Holidays!

Best wishes to you and your family as you take time to step back from the busyness of everyday life and spend time with your loved ones during this holiday season.  

May it be a good time of remembering the spirit and substance of what we pause to celebrate at this time of year.

Because many of you will be taking time off in the next couple of weeks, and you'll have enough to get caught up with after vacation, and because I will also be taking some time off, this will be my last blog posting for 2010.  It will resume again on Tuesday, January 4, 2011.

Thanks for the positive feedback so many of you have provided about my blog as a resource to help you in doing your job.

The picture here is of our Christmas tree with live candles that we light each night.

Merry Christmas and and a Happy New Year!

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Summary of 2010 Training and Speaking by Mike Purdy

The year that is coming to a close has been a busy one of training and speaking for me.  I gave a total of 33 speeches or training sessions (some all day long) in cities across the State of Washington and in two national webinars for a variety of public agencies and associations.

Below is a summary of the training and speaking I've done during 2010.

COMPREHENSIVE PUBLIC WORKS TRAINING

• Public Works Bidding, Award, Contract Management, and Close-out [Jointly sponsored by Washington State Department of Transportation (WSDOT) and Municipal Research and Services Center (MRSC)] - Richland, WA, Bellevue, WA, Camas, WA, and Mt. Vernon, WA

• Construction Contract Management 101 [City of Sammamish, WA]
  

• Purchasing, Bidding and Contract Management for Local Agencies [Washington Finance Officers Association (WFOA) - Vancouver, WA and Quincy-Columbia Basin Irrigation District - Quincy, WA]

BIDDING

• When Bad Things Happen to Good Contracts: Bid Protests, Claims of Error, and Scandals [Washington Finance Officers Association (WFOA) - Vancouver, WA and Construction Specifications Institute (CSI) - Puget Sound Chapter - Seattle, WA]

• Receiving and Opening Public Works Bids [Washington Association of School Business Officials (WASBO) - Tacoma, WA]

• Do I Have to Take the Low Bid? - Tools for Awarding to Responsible Contractors [National Institute of Governmental Purchasing (NIGP) - Webinar and National Association of Purchasing Management (NAPM) - Spokane, WA]

• Bulletproof Your Public Bidding Process: Keys to Minimize Liability [Government Educator - Webinar]

BIDDER RESPONSIBILITY

• Bidder Responsibility Criteria: Balancing the Interests of Owners and Contractors [Utility Contractors Association of Washington (UCAW) - Lynnwood, WA

• Writing Supplemental Bidder Responsibility Criteria [Pacific Northwest Public Purchasing Association - Bellingham, WA]

• Developing and Managing Supplemental Bidder Responsibility Criteria [City of Bellingham, WA]

BONDS

• Construction Bonds: Bid, Performance, Payment, Retainage, Warranty, Contractor's Registration [Jointly sponsored by American Public Works Association (APWA) - Washington State Chapter and Municipal Research and Services Center (MRSC) - Renton, WA, Camas, WA, Everett, WA, Yakima, WA

APPRENTICESHIP

• Apprenticeship Utilization Requirements on Public Works Projects  [Washington Association of School Business Officials (WASBO) - Edmonds, WA]

PUBLIC WORKS CONTRACT CLOSE-OUT  

• Public Works Contract Close-out: Bonding, Retainage, and Claims [Washington Association of School Business Officials (WASBO) - Tacoma, WA, Washington Finance Officers Association (WFOA) - Vancouver, WA, Enduris - Spokane, WA, and Michael E. Purdy Associates - Everett, WA]

ETHICS

• Avoiding the Front Page of the Newspaper - Why Ethics in Public Contracting Matters [National Association of Purchasing Management (NAPM) - Spokane, WA]

• Ethics in Public Contracting [Energy Northwest - Richland, WA]

SCOPES OF WORK

• Writing Effective Technical Specifications [Michael E. Purdy Associates - Vancouver, WA]

• Writing Effective Scopes of Work [Energy Northwest - Richland, WA]

CONSULTANT CONTRACTING

• Developing and Managing RFPs and RFQs [Washington State Transportation Training Coalition - Everett, WA and Enduris - Spokane, WA]

ALTERNATIVE PUBLIC WORKS CONTRACTING

• Issues and Trends in Public Project Delivery [Construction Management Association of America (CMAA) - Pacific Northwest Chapter - Bellevue, WA]

• An Introduction to the GC/CM Contracting Process [City of Bellingham, WA]

• GC/CM Contracting for Contractors and Subcontractors [Associated General Contractors (AGC) of Washington - Bellingham, WA]
  

If you are interested in me providing training for your agency or speaking to your association, please contact me. 

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

CPARB Schedules 2011 Meeting Dates

Washington State's Capital Projects Advisory Review Board (CPARB) has scheduled its five meetings for 2011 as follows:

• February 10, 2011
• May 12, 2011
• September 8, 2011
• November 10, 2011
• December 8, 2011

CPARB normally meets from 9:00 a.m. to noon in Olympia.  The meetings are open for anyone to attend and observe.

Mike Purdy's Public Contracting Blog
© 2010 by Michael E. Purdy Associates, LLC

http://PublicContracting.blogspot.com

Job Transition

Connie Pham Bartels has accepted a position with the City of Seattle as the Project Funding and Consultant Contracts Supervisor in the Capital Projects Division of the Seattle Department of Transportation (SDOT).  Her first day in the new position is December 20, 2010.  Previously, she worked for Sound Transit in the Contracting and Procurement Division.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Federal Bid Protests Increase by 16% in 2010

The number of bid protests filed with the federal Government Accountability Office (GAO) increased by 16% between 2009 and 2010.

4th Year of Protest Increases:  The continuing tight economic conditions are undoubtedly a major factor in the protests which have seen increases over the last four years as indicated in the chart below:

More Information:  

• Click here to read the complete GAO report to Congress on bid protests (19 pages)
• Click to read a summary article from the Georgia Tech Procurement Assistance Center

Practical Tips:  Make sure you have a comprehensive and independent quality control process for reviewing your solicitation documents before they are advertised to ensure that the selection process and requirements are clear.  Your solicitation documents should also define your agency's protest procedures, which may be partially governed by your state law.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

When Not to Approve a Change Order

Change orders to construction projects are a fact of life.  However, not all change orders are appropriate.

Expiration of Subcontractor Bids:  If a public agency is delayed in awarding a contract, but the contractor signs the contract for the amount of their bid, the public agency should not execute a change order to compensate the contractor for increased subcontractor prices due to the subcontractor bids having expired.  This amounts to bid negotiation, something typically not permitted in public works contracting.

Obtain Bid Price Extension:  Public agencies should make sure the contractor's bid price does not expire by requesting an extension of their commitment to their bid price prior to expiration.  Many agencies require that the contractor commit in their bid to hold their bid prices for 30 or 60 days.  Even if a contractor's bid price expires, if the contractor signs the contract at the bid price, they have then committed to the project at the cost of their bid, and no additional compensation should be due to them based on changed subcontractor prices.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Does a Certificate of Insurance Grant "Additional Insured" Status to a Public Agency?

Most public agencies require that the contractors and consultants they contract with carry Commercial General Liability Insurance and Commercial Automobile Insurance.  

What is an Additional Insured?  But because the contractor or consultant is the "named insured," they are the only party covered in the event of a claim, unless the public agency is also named as an "additional insured" under the contractor's or consultant's insurance policy.

What evidence should a public agency obtain to ensure they are, in fact, named as an "additional insured" on the contractor's or consultant's insurance policies?

Certificate of Insurance is Not Sufficient Evidence:  Often, public agencies will accept a certificate of insurance as evidence that they are named as an "additional insured," especially if the certificate of insurance states on it that the public agency is an "additional insured."  However, the certificate of insurance does not provide certainty that the public agency is actually an "additional insured."  

What is an Acord Form?  One of the most common insurance industry certificates of insurance is an Acord form.  The language in the upper right hand corner of the Acord certificate of insurance states that the following:

"This certificate is issued as a matter of information only and confers no rights upon the certificate holder."

The certificate holder is the public agency.  In other words, the certificate of insurance is informational only and does not confer "additional insured" status on the public agency.  

Get an Endorsement:  The only thing that modifies an insurance policy to guarantee that the public agency is an "additional insured" under the contractor's or consultant's insurance policy is an endorsement to the policy.  An endorsement is an amendment or modification to the insurance policy.  Thus, even if the certificate of insurance names the public agency as an additional insured, it is not evidence that the insurance policy has been amended to reflect the public agency being named as an "additional insured."

Crossing Out Acord Form Language:  Some public agencies will require the insurance broker to cross out the language on the Acord certificate of insurance noted above.  This causes two problems.  

1. Insurance brokers and agents are very hesitant to cross out this language, because a certificate of insurance is only informational.  
2. Even if the public agency is successful in getting an insurance broker or agent to cross out the language, the modified certificate of insurance does not demonstrate that the policy has been endorsed, or amended, to name the public agency as an "additional insured."  Only an endorsement is evidence of "additional insured" status.

Protect the Public's Interests:  Public agencies should require that they be named as an "additional insured" under a contractor's or consultant's insurance policies in order to have the public agency covered in the event of a claim.  As evidence of "additional insured" status, public agencies should require a certificate of insurance and an endorsement naming the public agency as an "additional insured."

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Training on Purchasing, Bidding & Contract Management for Local Agencies

I conducted an all day training session for 25 personnel from various irrigation districts in central Washington on Monday in Quincy, WA.  The agenda included the following:

• Types of Contracts

• Types of Solicitations

• Goods, Supplies, Equipment and Materials
• Competition Based on Price
• Competition Based on Price and Other Factors
• Piggybacking
• Purchasing or Procurement Cards
• Auctions
• Sole Source
• Emergency

• Public Works Contracting
• Bidding
• Award
• Contract Execution
• Construction
• Close-out

Please contact me if you would like a more detailed outline of the class or if you are interested in me providing the training for you.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Job Opening: Contractor Data Systems Administrator

The Port of Seattle has advertised to fill a Contractor Data Systems Administrator position.

Salary: Minimum $24.96 per hour - Midpoint $31.20 per hour

Job Location:  Seattle, Washington

Position Description:  The person in this position will oversee the day-to-day activities of the Office of Contractor Data, and provide support for the data collection systems for construction projects for the Aviation and Seaport Divisions and Port Construction Services. 

More Information:  Click here.

Application Deadline:  Friday, January 7, 2011 at midnight (Pacific Time)

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

The Plight of Small Businesses in Obtaining Government Contracts

Small businesses, and especially minority and women owned businesses, face many hurdles in competing for government work.  

Washington State Task Force:  The State of Washington's Capital Projects Advisory Review Board (CPARB) recently established a Small Business Task Force to identify strategies and tools to open up opportunities for small and minority businesses.

The purpose of the Small Business Task Force is to identify not only challenges faced by small businesses, but to think through possible solutions that may end up as legislative recommendations for CPARB to consider.  

First Task Force Meeting:  The Small Business Task Force held their first meeting on Thursday, December 9, 2010 and was attended by many representatives from various constituencies: small businesses, minority businesses, public agencies, contractors, organized labor, and others.

The Task Force spent the first meeting discussing both the challenges of small businesses in participating in capital projects (design and construction) as well as identifying potential solutions.

Issues to Discuss:  From my perspective, the types of challenges fall into four broad categories that can help make public procurement more "small business friendly":

1. Selection Processes:  What can agencies do to reduce the level of effort required to respond to solicitations while still meeting their business needs?  Are there ways to reduce the level of effort required by public agencies in producing solicitations?
2. Contract Requirements:  Should the length and substance of contracts be adjusted for specific projects based on the dollar value and risk of the project, rather than have a one-size-fits-all contract for all projects that may create problems for small business compliance?
3. Contract Administration:  What can be done to help ensure that public agencies report consistently and in a timely manner on their utilization of small, minority, and women owned businesses?  When agencies establish goals for small business utilization, do they have the necessary staffing and processes to follow-up on commitments made by contractors and consultants?
4. Regulatory Requirements:   Are there laws and regulations that should be changed that would help small businesses?  Are there existing laws that would be beneficial to small and minority businesses but which are not used by public agencies?

No One-Size-Fits-All Solution:  There are a host of other issues that must be taken into account in addressing this important issue:

• A recognition of the differing experiences and needs of prime contractors/consultants versus subcontractors/sub-consultants  
• The size of the public agency.  Some small and medium sized agencies don't have staffing resources to deal with small business issues
• The availability level of small and minority owned businesses in different geographic areas of the state.

Competing Interests:  In developing solutions that will help open up opportunities for small and minority owned businesses, it is important to remember that there are different and often conflicting interests of the various stakeholders, including the following:

• Small Businesses versus Large Businesses
• Minority Owned Businesses versus Non-Minority Owned Businesses
• Non-Union Businesses versus Union Businesses

It will be important for all parties on the Task Force to work together cooperatively in understanding the interests of the other parties, and to work creatively to craft solutions that work for all parties.

New Port of Seattle Program:  On a related note, the Port of Seattle is launching, in 2011, a Small Contractor and Supplier Program (SCS).  For more information about the program, visit the Port's website.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Prevailing Wage Law in Washington - Training

Prevailing Wage Law in Washington - 2 separate classes

When and Where:   

• Seattle - January 21, 2011 (8:00 a.m. to 4:30 p.m.) - Washington State Convention Center

• Tacoma - March 11, 2011 (8:00 a.m. to 4:30 p.m.) -  La Quinta Inn & Suites - 1425 East 27th St.

Cost: $359

Sponsored by: Lorman Education Services

Seattle Instructors:

• Laura Herman
• Judd H. Lees 
• David J.Soma
• Suzanne J. Thomas 

Tacoma Instructors:

• Michael H. Ferring 
• Laura Herman
• William G. Jeffery 
• Judd H. Lees
• David J. Soma 

Information and Registration:

• Seattle class
• Tacoma class 

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Contract Negotiations and Standard Contract Language of Public Agencies

After selecting a consultant or service provider based on a Request for Qualifications (RFQ) or Request for Proposals (RFP), where factors other than price are used as selection criteria, a public agency is faced with then negotiating a contract with the successful firm.  

Sometimes negotiations break down over the language included in the public agency's standard contract and the parties are unable to successfully negotiate a contract.

To mitigate against this problem, there are a couple of strategies that public agencies can employ:

• Make Contract Language Available:  Some agencies will either include the standard contract language as an attachment to the RFP or RFQ, or refer firms to the agencies website where the language can be read.  However, without taking additional steps such as those outlined below, the parties may still find they disagree about specific contract terms.

• Require Firms to State Objections to Contract Language:  Some agencies take it a step further and require as part of the response to the RFP or RFQ a statement by the proposer that they have no objection to the standard contract language, or if they do have objections, to identify the sections that are problematic.  However, without indicating what the public agency intends to do with the information about the objections to the language, the parties may still find themselves at loggerheads when it comes to contract negotiations.

• Require Firms to Propose Alternate Contract Language:  Other agencies require responding firms who have objections to the contract language to propose alternate contract language for consideration by the public agency.  In most cases, the alternative contract language will not be beneficial to the public agency, and the agency is still faced with potentially protracted contract negotiations over issues that have been identified prior to contract award.

• Assign Points Based on Acceptance of the Contract Language:  Another strategy employed by some public agencies is to assign points to firms who do not object to the contract language.  The number of points assigned would be reduced if alternate language was proposed that was not beneficial to the public agency.  This has the benefit of forcing firms to decide how much they object to the contract language or if is something they can live with.  This strategy has the most hope for ensuring successful and smooth contract negotiations.

If a public agency is using a two step selection process (qualifications and then price), it may be beneficial to request feedback from the proposers on draft contract language during the qualifications portion of the selection process, and then issue final contract documents during the pricing portion of the selection process.

In any event, standard contract language must protect the public's interests, but be fair to firms proposing to do work.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Job Opening: Senior Contracts Specialist

Sound Transit has advertised to fill a Senior Contracts Specialist position.

Salary:  Negotiable

Job Location:  Seattle, Washington

Position Description:  The person in this full-time position will perform the full range of senior professional and technical duties involved in cradle-to-grave procurement and contract work, including the preparation, finalization, analysis, and administration of agreements and contracts for goods and services. 

More Information:  Click here.

Application Deadline:  Monday, December 20,2010 (11:59 p.m.)

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

CPARB to Meet December 9, 2010

Washington State's Capital Projects Advisory Review Board (CPARB) will meet this Thursday, December 9, 2011 from 9:00 a.m. to noon in Olympia.  

The agenda, along with background materials for the topics to be discussed, are all available online by clicking here.

CPARB is charged by the Legislature with reviewing alternative public works contracting procedures and providing guidance to state policymakers on ways to further enhance the quality, efficiency, and accountability of public works contracting methods.  There are 23 members of CPARB representing various stakeholders in public works contracting.

Mike Purdy's Public Contracting Blog
© 2010 by Michael E. Purdy Associates, LLC

http://PublicContracting.blogspot.com

Selection Records and Scores: Public Records or Confidential?

Generally, most information maintained by public agencies about selection processes for contractors, consultants, and vendors is a matter of public record and subject to disclosure to anyone requesting such information.  But there are important exceptions.

When to Withhold Information:  If a public agency is using a two or three step selection process, information about scores from the early selection stages is generally not something that should be disclosed until the complete selection process has been completed.  

2 Step Selection Process:  Under a two step selection process, an agency asks for qualifications first, followed by a price or cost proposal from a short-list of firms.  The scores from both the qualifications and prices are added together to determine the highest ranked firm.

3 Step Selection Process:  Under a three step selection process, an interview might be added in as a third step after qualifications are scored and before price proposals are received.

Risks of Disclosing Information Early:  Providing information about the scores from the qualifications and/or interview stages before the price proposals are due may invite firms to calculate what their price needs to be in order to win the award, a low price may not be beneficial to the public agency if the firm has not covered all of its costs, and it creates a less than open and transparent selection process.

Let me provide a couple of examples to illustrate:

• GC/CM Selection:  In selecting a contractor to serve as General Contractor/Construction Manager (GC/CM) on a public works construction project, a three step process is generally used in the State of Washington.  Public agencies should not disclose the scores or order of ranking of the finalists selected to submit prices until after the deadline for submission of prices.  To disclose the scores for the qualifications and interview prior to the deadline for the prices invites contractors to calculate how low their bid needs to be in order to be the highest ranked firm.  There have been examples of public agencies in Washington who have made the mistake of disclosing the scores for the first two stages early with the result being that contractors have low-balled the project, essentially buying the award of the project.  Prices that are artificially low may cause performance problems for the public agency during construction.

• Air Force Bid:  As part of the ill-fated $40 billion Air Force air-refueling tanker contract, the Air Force recently made a "clerical error" and sent critical price information received from the two finalists (Boeing and Airbus) to the competing firms.  In other words, Boeing received the Airbus pricing and Airbus received the Boeing pricing.  The final step of the selection process is for both firms to provide a best and final price offer to the Air Force.  Fortunately, both firms realized the mistake of the Air Force and returned the data to the Air Force, but it isn't known whether they looked at the information and obtained any advantage.  Click here for a Seattle Times article on the Air Force error.

Under a multi-step selection process, it is obviously very important to keep certain information confidential (scores, ranking, and pricing) until the final selection has been made.  Otherwise, the entire selection process becomes tainted, and may become the subject of a protest.  At a minimum, such early disclosure undermines the integrity of the selection process and decreases the public's confidence in the transparency of the process.

Mike Purdy's Public Contracting Blog 

© 2010 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Receiving and Monitoring Payrolls on Federally Funded Construction Projects

If a public agency receives any federal funding for a construction project, the terms of the grant agreement will most likely require that the federal prevailing wage requirements of the Davis-Bacon Act will apply.

Receive and Review Payrolls Weekly:  One of the primary obligations of a public agency on such projects is to collect and review on a weekly basis the payroll reports from the contractor and each subcontractor, regardless of tier, to ensure that federal prevailing wages are being paid for the appropriate classification of work being performed.

Audit Finding:  In a recent audit finding by the Washington State Auditor's Office, the auditor found that a public hospital district, the Coulee Medical Center in Grand Coulee, Washington, rather than receiving and monitoring the weekly payroll reports, simply had the general contractor collect the payroll reports and then provide them to the hospital at the end of the project.  Without any review or monitoring of the prevailing wages being paid on a weekly basis on the $1.5 million of federal funding for the project, the district was out of compliance with the terms of their grant and was unable to ensure that prevailing wages were paid on an ongoing basis during the project.

Practical Tips:

1. Read the terms of your grant agreement and know what your obligations are.
2. Collect weekly payroll reports from the contractor and each subcontractor.
3. Review the payroll reports on a weekly basis to ensure appropriate prevailing wages are being paid.
4. Conduct interviews of construction workers on-site and compare information collected there with information reported on the payrolls.
5. Work with the contractor to ensure they pay restitution to any workers underpaid the prevailing wage.
6. Ensure that the staff who will be reviewing the payrolls have proper training on how to monitor the prevailing wages (overtime, appropriate classifications, apprentices, fringe benefits, relationship of federal to state prevailing wages, etc.).

Mike Purdy's Public Contracting Blog

© 2010 by Michael E. Purdy Associates, LLC

http://PublicContracting.blogspot.com