When Are Circumstances "Unforeseen" Justifying an Emergency?

Waiving competitive bidding requirements due to an emergency public works project can be tricky.

According to Washington State law on exemptions to competitive bidding requirements, 

"'emergency' means unforeseen circumstances beyond the control of the municipality that either: (a) Present a real, immediate threat to the proper performance of essential functions; or (b) will likely result in material loss or damage to property, bodily injury, or loss of life if immediate action is not taken." (RCW 39.04.280 (3)).

Citing this definition, the Washington State Auditor's Office issued a finding against The Historic Seattle Preservation and Development Authority (Historic Seattle) for improperly declaring an emergency in order to waive competitive bidding for a remodeling contract on Washington Hall initially worth $480,000.  Including change orders, the cost grew to $670,000 before completion.

Audit Findings

• What Does "Unforeseen" Mean? Although the condition of the building was known before the purchase, Historic Seattle reasoned that before buying the building it "had no ability to repair the property and no liability for personal injuries resulting from the building’s unsafe condition". Using a definition of "unforeseeable" as meaning "not able to be predicted or planned for in advance" (emphasis added) Historic Seattle argued that it was "not able to plan to make repairs to the building in advance of acquiring ownership."
  
  The Auditor's report noted that a prior appraisal of the building - performed months before Historic Seattle bought it - had "documented 'significant deferred maintenance' and concluded the building had 'a remaining economic life of zero years'". Since the results of the appraisal "are advance notice that the building will require significant repair and remodeling" and the building's "neglect was obvious at the time of purchase," the Auditor concluded that neither "issues noted during the appraisal" nor "concerns for the health and welfare of the tenant" constitute unforeseen circumstances.
  
  
• Building Open During "Emergency" Construction: The Auditor's report also called into question the timeline of the repairs, observing that although "state law says a declaration of emergency is to be addressed promptly" the repairs continued for over a year. Moreover, the Auditor noted that since Historic Seattle "declared an emergency stating the building was unsafe for general occupation," opening the building six months before construction was finished "appears to contradict the need for the emergency declaration." Historic Seattle responded that in spite of delays "all [work] but the electrical service upgrade... was completed within four months of award of the bid".
  
  
• Work Not Limited to Emergency Work: The Auditor also found that the "contract was not limited to repairs related to unsafe conditions" and that Historic Seattle "allowed unlimited change orders."

Questions to Ask Before Declaring an Emergency

• Is it an Emergency? Does the situation fulfill both parts of the exceptions to competitive bidding requirements in RCW 39.04.280? On a basic level, you can ask these two questions:

1. Was the situation not anticipated and beyond the public agency's control? And...
   
2. Is the situation either threatening performance of essential agency functions or likely to cause property damage, injury, or death if it's not addressed?

• Is the Emergency Timely?  Did the public agency formally waive competitive bidding requirements in a timely manner?  Does the project address the emergency work in a timely manner?

• Is there Sufficient Time to Bid the Project?  Does the public agency have sufficient time to conduct a publicly advertised bid process?

• Does the Emergency Go Too Far? Does the contract cover only work that's needed to address the emergency situation, or does it also include additional work that would be more appropriately covered through competitive bidding? (This is a good question to ask about any change orders to the project as well)

Read the full audit findings here.

Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC 
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