Mike Purdy's Public Contracting Blog: April 2011

Thursday, April 28, 2011

Issues and Trends in Public Project Delivery

I will be speaking on "Issues and Trends in Public Project Delivery" on Friday, April 29, 2011 at the annual seminar of the Pacific Northwest Chapter of the Construction Management Association of America (CMAA) in Bellevue, Washington.

The seminar will attempt to answer the question: "Is GC/CM or Design-Build Appropriate for Your Project?"

The outline for my 45 minute talk that begins at 9:00 a.m. is as follows:

Public Works Delivery Models
Design-Bid-Build (why we have it, and why owners prefer alternative project delivery)
More Use of Alternative Project Delivery
3 Key Trends in Contractor Selection (obtaining qualified contractors, applying bid preferences, requiring contractors by type)
More Bid Protests for Design-Bid-Build
GC/CM and Design-Build Issues

For more information, visit CMAA's registration website.

Wednesday, April 27, 2011

Indiana House Votes to Increase Prevailing Wage Exemption Threshold

The Indiana House of Representatives voted to increase the threshold for the applicability of prevailing wages on public works construction projects from $150,000 to $250,000 for the first year, and $350,000 thereafter.

Compromise Legislation: The thresholds were a compromise by House Republicans from their proposed $1 million threshold and the lower figures were designed to coax House Democrats to return to the state after their self-imposed exile in Illinois. House Republicans also backed off of a proposal that would have exempted school districts and state universities from the prevailing wage requirements for any project dollar amount.

Senate Action: The legislation goes to the Indiana Senate for their action. Click here for a WIBC news article.

Tuesday, April 26, 2011

Ohio Considers Allowing Alternatives to "Multiple Prime Contracting"

Ohio is one of just a few states that require significant use of "multiple prime contracting," but that may be about to change. Governor John Kasich has proposed loosening the requirement in his new budget.

About Multiple Prime Contracting: Under multiple prime contracting, an public agency divides up a project between multiple contractors, each hired as a separate prime contractor, instead of a single general contractor as the only prime, who then subcontracts for specialized portions of the work. For example, a public agency might hire electrical, plumbing, HVAC, and building construction contractors individually to work on their own portions of a project instead of one general contractor to hire, coordinate, and oversee all the contractors for the project.

Potential Advantages of Multiple Prime Contracting:

Less overhead: Without a general contractor, a layer of overhead and profit is eliminated.

Smaller pieces of work: The public agency may choose to divide up the work into smaller packages and solicit more bids, opening up the process to more small businesses and potentially lowering costs through decreased competition.

Potential Drawbacks of Multiple Prime Contracting:

No Single Point of Contact and Responsibility: Since no single contractor takes responsibility for the project as a whole, the public agency may be on the hook for cost overruns, schedule delays, or oversights that result from coordination between trades or are not attributable to any one contractor.

Less Communication: If a multiple prime project is not managed with care and skill, problems and conflicts can arise due to lack of coordination or communication between contractors each working on a small piece of the whole project.

Increased Owner Overhead: To support multiple prime contracting, the public agency must maintain systems to support increased estimating, bidding, administration, and management associated with using several contractors for each project.

Ohio's Experience: 2010 saw the introduction of a pilot program that designated three projects as "Construction Reform Demonstration Projects," which allowed them to use an alternative delivery method (besides the usual multiple prime requirement). Governor Kasich is now seeking to implement the program throughout the state as part of his proposed budget. The measure is currently in committee, but if the measure removing the multiple prime requirement is passed it is sure to have far-reaching implications for Ohio.

More Information:

Monday, April 25, 2011

Why It's Important to Get Bonds Up Front

In a painful lesson, the City of Peru, Illinois is learning first-hand why it's important to get a payment and performance bond from its contractors before signing a contract.

No Sign of Half-Million Dollar Bond: In January 2011, the city contracted with A-Unified, LLC, of Ohio to demolish a 120-year-old power plant, but work has yet to begin. "The biggest problem here is A-Unified is having difficulty getting a performance bond," said city attorney Doug Schweickert, according to the Illinois NewsTribune. In January, the NewsTribune reported that A-Unified promised to post a $500,000 performance bond, but - months later - has yet to do so.

Lessons Learned: Prior to executing a public works construction contract, public agencies should obtain the payment and performance bond from the contractor. If the contractor fails to provide the required bonds within the period of time allowed for after award, it is easier for the public agency to revoke the award of the contract (and award to the second low bidder), than it is to terminate an already executed contract for failure to provide the bonds.

Sunday, April 24, 2011

Bid Protest in Major Honolulu Rail Contract

The two losing bidders in a Honolulu rail car contract worth more than $1.2 billion have filed protests over what they see as serious errors in the selection process.

Unbalanced Bidding? Sumitomo Corporation of America, one of the losing bidders, argues that the evaluation criteria for the Design-Build-Operate-Maintain (DBOM) contract were excessively skewed towards the Design-Build phase. The company claims that this created an incentive for the firm that won the contract, Ansaldo Honolulu to submit an "unreasonably low" price for the Design-Build part of the project, and shift costs to the operate-maintain portion. Sumitomo contends that although Ansaldo's winning bid was $115 million cheaper for the Design-Build phase, Sumitomo's losing bid would have ended up costing $900 million less over the 30-year life of the project.

"Conditioned" Proposal Declared Non-Responsive: The other losing bidder, Bombardier Transportation, is decrying the city's eleventh-hour finding of its bid as non-responsive due to what appears to be a technicality. While details are scarce, the finding seems to be based on liability language that Bombardier included in the proposal. The city objected to the language as making the proposal "conditioned," but Bombardier insists that the clause "wasn't really a condition," but was only meant to clarify "confusing, contradictory, awkward, and faulty language" from the city. Furthermore, Bombardier argues, the language in question was in their original proposal, which had already passed muster with the city months earlier without any objections.

Past Performance Questions: In its protest, Sumitomo also raised questions about Ansaldo's past performance on other rail projects. The company raised questions about problems on projects in Los Angeles County, Sweden, Denmark, and Boston, even going so far as to argue that past issues "should have resulted in Ansaldo's disqualification."

More information

Lessons Learned: It is important for public agencies to develop clear and transparent selection processes for public works construction projects where cost is not the only criterion for selection (Design-Build, GC/CM, CM at Risk, etc.). Public agencies should be strategic in developing the selection criteria, scoring elements, and processes in a manner that helps mitigate against contractors attempting to unfairly game the process in order to be awarded the project.

Job Opening: Contracts Analyst

Port of Tacoma (Washington)

Position: Contracts Analyst

Location: Tacoma, Washington

Job Summary: Responsible for the preparation and administration of contract documents for consulting agreements, task order agreements, small works roster, and limited public works construction projects, including both pre-award and post-award contracts administration functions. Serves as the contracting resource to staff for construction, professional and personal service agreements and provides support and guidance in all functional areas of contract administration. Responsible for ensuring contract activities comply with Port resolutions, applicable administrative procedures and Federal and state laws. Provides backup support to Contract Managers.

Salary: $4,370 - $5,681 per month

Closing Date: Open until filled

For More Information & to Apply: Click here

Thursday, April 21, 2011

Washington State Recruiting Members for CPARB and Project Review Committee

CPARB Positions: Washington State's Capital Projects Advisory Review Board (CPARB) is seeking new board members knowledgeable about public works contracting to serve four-year terms beginning this year. Applications for the following seven governor-appointed positions are being sought for 2011:

1 General Contractor
1 Architect
1 Engineer
1 Specialty Contractor
1 Construction Trades Labor
2 Private Industries

To apply for any of these positions, visit the Governor's Office of Boards and Commissions' online application. More information is available in the CPARB and PRC Vacancies (PDF) posting on the CPARB web site.

Project Review Committee (PRC) Positions: CPARB's Project Review Committee (PRC) is also seeking members to serve three-year terms. Representatives from the following areas with knowledge of alternative public works contracting are being sought, most for vacancies coming open in July or August of this year:

1 Owner – Higher Education
2 Owner – Counties
1 Design – Engineer
2 Specialty/Subcontractor
1 Construction Manager
2 Minority/Women Businesses vacant
1 General Owner

Individuals interested in serving on the PRC should prepare a letter of interest including the following:

Your name & title
Your company or public agency name
Work address & Contact Phone Number
Short paragraph which highlights your skills, background, and special knowledge in alternative public works methods as detailed in RCW 39.10
Three references with contact information

Letters of interest should be submitted no later than May 2, 2011 (to be considered at the May 12, 2011 CPARB meeting), and should be emailed to Danelle Bessett, CPARB Administrator at Danelle.bessett@dshs.wa.gov. More information is available in the CPARB and PRC Vacancies (PDF) posting on the CPARB web site.

About CPARB and the PRC: CPARB was established in 2005 to advise the state legislature on public contracting delivery methods, public construction, and the impact of related legislation. The PRC was created in 2007 to review proposed GC/CM and Design-Build public works projects.

Wednesday, April 20, 2011

Portland (Oregon) Releases Disparity Study

Public agencies often use "disparity studies" to evaluate whether minority- and women-owned businesses (MBEs/WBEs) are getting less government work than other similar businesses.

Not only do such studies help evaluate programs designed to help MBEs/WBEs, but establishing past or existing discrimination (by a government entity or otherwise) is a key part of the legal foundation to justify programs that take race and/or gender into account in the award of public contracts.

How Disparity Studies Work: Disparity studies generally analyze whether there is a disparity between the availability of MBEs/WBEs in the market and how much they are actually being utilized. This is done by analyzing the value of work that firms of the size, qualifications, and interests of surveyed MBEs/WBEs should expect based on availability, and comparing it to the work they actually receive. If MBEs/WBEs are getting significantly less work than other similar firms, an disparity exists.

The Portland Study: The City of Portland and the Portland Development Commission hired a team of companies to assess MBE/WBE utilization between 2004 and 2009. After analyzing almost 4,000 City contracts and surveying over 3,700 local companies, the study concluded that there was not an overall disparity between availability and utilization of MBEs/WBEs, although relatively minor disparities did exist in some areas.

More Information: For more details, see the executive summary (PDF) of the report. The main page for the disparity study also includes links to each chapter of the full report.

Tuesday, April 19, 2011

Efforts Continue to Repeal 3% Withholding Requirement as Deadline Nears

A coalition of 124 national, state, and local organizations continues to urge Congress to repeal a 2005 law that would require all levels of government to withhold 3% from most payments for products or services, starting January 1, 2012.

Original Intent: The law, which would apply to federal, state, and local governments with expenditures of $100 million or more, was designed to combat tax evasion. Proponents point out that retaining 3% of payments against vendors' tax liability is projected by the government to raise nearly $7 billion between 2011 and 2015 through improved taxpayer compliance.

Hidden Costs: Critics, however, contend that the new rule could incur a number of hidden costs:

Cash flow: Companies, especially smaller ones, that rely on full, prompt payments for day-to-day expenses would be faced with making up the 3% reduction through price increases or costly financing.

Up-front investment to modify systems: Public agencies would need to invest in updates to their financial systems to track withholding and comply with reporting requirements.

Administrative costs: Agencies would also need to cover the cost of administering the withholding requirement.

Increased project costs: Bid prices may rise from companies raising their prices to cover additional costs, or from decreased competition as fewer firms bid on government jobs.

Repeal Efforts: A number of bills have been introduced to the House and Senate in the past few years in an attempt to repeal "Section 511" (the original measure was contained in Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005). While none have yet been successful (a few introduced this year are still in committee), the industry did gain a small victory in early 2009 when the date of implementation was postponed a year from the first of January 2011 to 2012.

More Information:

The Government Withholding Relief Coalition is spearheading industry efforts to repeal the withholding law, and maintains links to a number of resources
- A one-page summary of the law (PDF) by the Government Withholding Relief Coalition
The (one-page) text of the original law (PDF)
A recent GovPro article covering the new law and efforts to repeal it
My previous blog post on the law and its implications

Monday, April 18, 2011

Unbalanced Bids

Well respected Seattle construction attorney John P. Ahlers recently wrote an article in his Construction Law Blog covering the practice sometimes employed by contractors of "unbalancing a bid," or artificially shifting a significant part of the costs for a project from one part of the work to another.

Read the full blog entry here.

Sunday, April 17, 2011

Washington State Legislative Updates

As the 2011 Washington State legislative session enters its last week (adjourns April 24, 2011), here is an update on a number of bills relating to public works contracting that I have posted about this session:

No Retainage on Federally Funded Transportation Projects: SHB 1384 would align Washington State law with federal regulations, eliminating the withholding of retainage on federally funded transportation projects. Claimants (subcontractors, suppliers, workers, state agencies) would only have the payment bond to bring a claim against, since retainage would not be withheld.

Status: Passed - in the House (unanimously) on March 5 and in the Senate (unanimously) on April 9
More Information: See my previous blog entry.

Bidding Preference for Washington State Contractors: 2SSB 5662 would provide for a bidding preference for resident Washington State contractors on public works projects for all public agencies.

Status: Passed - in the Senate (32-13) on March 3 and in the House (87-8) on April 5
More Information: See my previous blog entry.

Design-Build on WSDOT Projects: SSB 5250 would increase the use of Design-Build on WSDOT projects to those over $1 million (down from the current $10 million) and require WSDOT to justify not using Design-Build.

Status: Dead for this session (it did not pass out of the House (opposite house) by April 12)
More Information: See my previous blog entry.

Defining Categories of Businesses for Small Works Roster: SHB 1173 would have amended the Small Works Roster legislation in RCW 39.04.155 by establishing various categories of business sizes and permitting public agencies to restrict solicitation of bids to small businesses.

Status: Dead for this session (it did not pass out of the House (house of origin) by March 7)
More Information: See my previous blog entry.

3% Bidding Preference for Washington State Businesses: HB 1355 would have established a 3% bidding preference for Washington State businesses in the award of public works, personal service contracts, and the purchase of goods and services by state agencies (including educational institutions).

Status: Dead for this session (it did not pass out of the House (house of origin) by March 7)
More Information: See my previous blog entry.

"4-in-1" Public Contracting Authority Bill: SSB 5519 would have addressed public contracting authority relating to: purchases from correctional industries, exceptions to personal service contract competitive solicitation, documented justification and exemption of certain sole source contracts, and competitive bidding dollar limits.

Status: Dead for this session (committee report from the House (opposite house) was not read in by March 25)
More Information: See my previous blog entry.

Eliminating Time Restriction for Filing Prevailing Wage Claim: HB 1433 would have changed the date a worker has to file a claim with the Department of Labor and Industries for unpaid prevailing wages on a public works project, from 30 days from the acceptance date of the project, to 30 days "from the date that an interested party knew or should have known about the potential violation of the payment of prevailing wage requirements."

Status: Dead for this session (it did not pass out of the House (house of origin) by March 7)
More Information: See my previous blog entry.

Enabling Waiving of Bonding & Retainage on Projects Under $5,000: HB 1970 would have authorized state agencies or municipalities to waive certain payment/performance bond and retainage requirements for public works projects of $5,000 or less. Also would have increased the threshold for using a combined prevailing wage form from $2,500 to $5,000.

Status: Dead for this session (it did not pass out of the House (house of origin) by March 7)
More Information: See my previous blog entry.

GC/CM Subcontractor Selection Process Protests: HB 1971 would have modified the procedures for subcontract bidder protests on General Contractor/Construction Manager (GC/CM) contracts using the alternative method of selecting electrical and mechanical subcontractors.

Status: Dead for this session (it did not pass out of the House (house of origin) by March 7)

Creating an Office of Civil Rights: SB 5557 and HB 1958 would create a state Office of Civil Rights, which would consolidate five existing civil rights-related agencies (the Office of Minority and Women’s Business Enterprise, the Washington State Human Rights Commission, the Commission on African American Affairs, the Commission on Hispanic Affairs, and the Commission on Asian Pacific American Affairs).

Status: Dead for this session (neither bill passed out its respective house of origin by March 7)
More Information: See my previous blog entry on the governor's proposal that led to these bills

Thursday, April 14, 2011

Washington State Releases Updated List of Debarred Contractors

The Washington State Department of Labor & Industries recently released an updated list of debarred contractors. Debarred contractors are not allowed to work on any public works project in Washington State.

Reasons for Debarment: Contractors can be debarred for violations of laws relating to:

Prevailing wages (RCW 39.12)
Contractor registration (RCW 18.27)
Workers’ compensation (RCW 51.48).

The list of debarred contractors includes additional details such as the beginning and (where applicable) ending date of debarment, the RCW section violated, and whether penalties and/or wages are owed.

Most of the 107 contractors were debarred for violation of prevailing wage law (RCW 39.12):

And, not surprisingly, a similar portion of contractors are debarred until wages or penalties are paid:

Checking State Debarment: Who should use this list and when?

Public agencies must check the list before awarding a public works contract to make sure they don't award a contract to a debarred contractor (part of the mandatory bidder responsibility criteria of RCW 39.04.350)

Contractors must check the list before signing a contract with a subcontractor for a public works project to make sure the subcontractor is not on the list (part of the subcontractor responsibility criteria of RCW 39.06.020)

Checking Federal Debarment: In addition to checking the Washington State debarment list, projects receiving federal dollars must ensure that firms signing contracts worth $25,000 or more are not debarred or suspended from doing business with the federal government.

I have written several posts on federal debarment in the past:

Additional State Debarment Requirements: In addition, contractors may be debarred based on infractions related to other laws. Contractors must:

So far it appears that no contractors have been debarred for violating either of these provisions. Presumably, the Department of Labor and Industries will add violations of these provisions to their existing list of debarred contractors.

Wednesday, April 13, 2011

Executive Director of Utility Contractors Association to Retire

Mike Myette will retire in July 2011 as Executive Director of the Utility Contractors Association of Washington (UCAW) after five years leading the organization.

About Mike Myette: Known for his passion and commitment to the construction industry and UCAW's mission, Mike has worked tirelessly with individual UCAW members as well as at the helm of numerous industry programs there, including the Mock Bid program and the Dispute Review Board. Mike has over 30 years of experience on infrastructure projects in the northwest, including work with Tri-State Construction, Inc., WSDOT, and consulting for numerous local agencies. With a wealth of experience and dedication to the construction community, his industry-wide leadership will be missed.

UCAW Seeking New Executive Director: With Mike's pending departure, UCAW is seeking candidates for the part-time position of Executive Director who have "a construction background along with management, marketing and strong communications skills." Applicants should contact Mike Myette at (206) 510-6536 or e-mail a resume to mike@ucaw.org.

Tuesday, April 12, 2011

King County (WA) Announces New Online Roster Programs

On April 4, 2011, King County rolled out a new online system to manage their Architectural & Engineering Roster and Small Works Roster. Firms can now apply for and manage their membership in both rosters online.

Less Than $300,000: Both rosters which will be used for projects under $300,000. While King County will begin using the new system to solicit bids starting in June, firms can apply any time during the year.

Application Process: To apply to the online roster, firms should be registered with the King County Online Vendor Registration (OVR) program. To register with the OVR system and apply to the rosters, visit the OVR account page.

More information:

Is GC/CM or Design-Build Appropriate for Your Project?

CMAA Annual Seminar: Is GC/CM or Design-Build Appropriate for Your Project?

When: Friday, April 29, 2011 (7:30 a.m. to 4:30 p.m.)

Where: Bellevue, WA (Coast Bellevue Hotel, 625 116 Avenue NE)

Cost:

CMAA Member: $175
Non-CMAA Member: $225
Early Bird CMAA Member: $150 (by April 16)
Early Bird Non-CMAA Member: $200 (by April 16)

Agenda:

Welcome - Setting the Stage (Dan Becker, HDR)

Issues and Trends in Public Project Delivery (Mike Purdy, Michael E. Purdy Associates, LLC)

Project Review Committee and Capital Projects Advisory Review Board (Eric Smith, Director, Major Capital Projects, University of Washington, Capital Projects Office)

Olympia City Hall - Design-Build Delivery (Lyle Martin, Hoffman Construction; Scott Harm, Belay Architecture; Court Olson, OAC Services - CM)

CM/Owner's Representative Role on GC/CM and Design-Build Projects (Larry Johnson, VP, HDR West Region Alternative Delivery Manager)

UW Foster School of Business Phase One - PACCAR Hall - GC/CM Project (Steve Tatge, UW Project Manager; Bob Dillon, UW Construction Manager; Dave Schneider, LMN Architects Project Manager; Kurt Winje, Sellen Construction Project Manager)

Owner's Panel - Why they use or don't want to use GC/CM or Design-Build

Information and Registration: Click here

Sponsored by: Pacific Northwest Chapter, CMAA (Construction Management Association of America)

Monday, April 11, 2011

2 Agencies Run Afoul of Federal Debarment Requirements

The Washington State Auditor's Office recently issued similar audit findings against both the University Place School District and the South Central Workforce Council in Yakima County.

What's Required? Both audit findings were for failure to fulfill the requirement that on federally funded projects agencies are prohibited from contracting with a company debarred or suspended from doing business with the federal government. For contracts worth $25,000 or more, agencies must ensure that vendors are not debarred or suspended.

The University Place School District received money from a State Fiscal Stabilization Fund grant, and paid over $434,000 of it for materials without checking that the vendor was eligible to do business with the federal government. According to the audit, "the District was not aware the requirements for suspension and debarment applied to the State Fiscal Stabilization Fund program," although the District did already have procedures in place to deal with suspension and disbarment requirements. (Read the full audit here)

The South Central Workforce Development Council received money from a number of job placement and training programs funded by the American Recovery and Reinvestment Act (ARRA). During 2010, the Council paid over $783,000 to five organizations, primarily for worker training, without verifying that the organizations receiving the money were not disbarred or suspended as per federal requirements. (Read the full audit here)

Complying with Federal Debarment Requirements: In general, if a project is receiving federal funding, public agencies should implement one of three procedures to ensure they are in compliance with federal debarment/suspension rules:

EPLS: Consult the online federal Excluded Parties List System (EPLS) before awarding funds to contractors or sub-recipients. Print out a copy of the documentation for your contract file.
Contract Clause: Insert a clause or condition into the contract that states the contractor or sub-recipient is not suspended or debarred.
Certification: Obtain a written certification from the contractor or sub-recipient that they are not debarred or suspended from doing business with the federal government.

Some public agencies make it a practice to check the status of all contractors, consultants, and vendors through EPLS, regardless of whether the project contains federal funding. This helps ensure that certain federally funded projects are not missed.

Training: Supply Chain Management

When: Friday, May 27, 2011 (8:30 a.m. to 4:30 p.m.)

Where: Lacey, Washington (Department of Ecology, 300 Desmond Drive SE)

Instructor: Steven M. Demel, CPPO, Tacoma School District Purchasing Manager

Description: This course provides purchasing and supply professionals with the essential supply chain management knowledge and tools necessary for optimizing customer support.

Expected Outcomes for Attendees:

Learn Supply Chain Management basics
Identify your role in the supply chain
Learn how to create your own business cases for supporting key supply and purchasing decisions, including justification for or against having a supply warehouse
Understand the roles of Purchasing in a successful supply fulfillment program
Recognize the benefits of Supply Chain Management best practices

Sponsored by: Washington State chapter of the National Institute of Governmental Purchasing

Cost:

$150 - NIGP National or Chapter Member
$180 - non-member

Information and Registration: Click here

Sunday, April 10, 2011

Construction Industry Employment Down in March 2011

In the midst of recent news coverage of the overall U.S. unemployment falling to 8.8% (a two year low), the construction industry still struggles with the highest unemployment of any industry, at 20% in March.

1,000 Jobs Lost in March: While construction unemployment is down from 21.8% in February and 24.9% a year ago, the industry lost a seasonally adjusted 1,000 jobs during March. Those losses were due to a decrease of 8,000 jobs in residential specialty trades, which was offset by moderate gains in the other four construction sub-sectors tracked by the Bureau of Labor Statistics:

Cautious Outlook: While noting positive indicators for the economy as a whole, Associated Builders and Contractors Chief Economist Anirban Basu was cautious about the outlook for the construction industry, saying:

More Information:

Thursday, April 7, 2011

Sustainability and Design-Build

Sustainability and Design-Build

When: Wednesday, April 13, 2011 (7:15 a.m. to 9:30 a.m.)

Where: Seattle, Washington (The Rainier Club, 820 Fourth Avenue)

Description: Can the Design-Build process facilitate sustainable outcomes? What best practices should be used on a Design-Build project to maximize sustainability? Three project teams will address questions using real world examples.

Project Teams:

Muckleshoot Indian Tribe K-12 School
- Jason Limp, BN Builders
- Forest Payne, Mahlum Architects
Jackson Federal Building Design-Build
- Dan Peyovich, Howard S. Wright
U.S. Federal Courthouse in Billings, MT
- Rob Warnaca, Mortenson Construction
- Margaret Montgomery, NBBJ

Sponsored by: Design Build Institute of America - Northwest Region

Cost:

$65 - members
$90 - non-members

Information and Registration: Click here

Wednesday, April 6, 2011

To Bid or Not to Bid? The Trend Towards Privatization

In a time when governments and public agencies across the nation are feeling the pinch of tightening budgets, many are turning to privatization as one way to control costs.

Proposed Michigan Law: In at least one case, the decision to competitively bid more work may be handed down from the legislature: a bill in the Michigan State House would require school districts to bid out food service, custodial, and transportation services.

While the bill, if passed, would doubtless change the landscape for how the state's 551 school districts procure services, many have already delved into privatization to save money (48.8% as of 2010, according a report by the Mackinac Center for Public Policy).

State Mandate vs. Local Control: And the response? Mixed, at least according to Greg Gray, Superintendent of the Brighton Area Schools. Although competitively bidding services saves the district over $2 million a year, Gray is cautious about the proposed legislation's mandate that all Michigan districts competitively bid food, custodial, and transportation services: "I think that's a local district decision... School districts were designed with locally elected officials on the school boards to manage their local issues that are fitting for their community," said Gray.

Concerns: Giving up local control is just one of the concerns that has been voiced about competitive bidding for public services. While advocates of privatization point to lowered costs from companies competing for the low bid, opponents question the costs to set up and operate a competitive bidding process, lack of adequate competition for certain services in some markets, and undue pressure on workers to accept ever lower wages and benefits.

More Privatization in the Future? The issues surrounding privatization are many and complex, but it seems likely that in the current economic climate we will continue to see governments and public agencies examine the transition to more competitive bidding as potential cost-cutting measure.

Update on 2011 City of Seattle Construction Specifications

Update on 2011 City of Seattle Construction Specifications

When: Wednesday, April 20, 2011 (6:00 p.m. to 8:00 p.m.)

Where: Tukwila, Washington (Southcenter Doubletree Hotel)

Speakers:

Glynda J. Steiner, P.E., C.C.M., Director of Construction Manager, Seattle Public Utilities
Randy A. Earlywine, P.E., Construction Standards Engineer, Seattle Public Utilities

Description: The City of Seattle’s Construction Specifications have been substantially updated for 2011, and are the primary contract document used in the construction of over $100 million of capital projects annually for Seattle Public Utilities (SPU), Seattle Department of Transportation (SDOT), Seattle City Light (SCL), Parks and Recreation Department, and the Seattle Center. These Specifications apply whenever any public or private construction is performed within the public right-of-way of the City of Seattle.

Sponsored by: Utility Contractors Association of Washington

Cost:

$45 members
$55 non-members

Information and Registration: Click here

Tuesday, April 5, 2011

Architectural Firms Report Slight Increase in Billings for February 2011

Architecture firms across the country reported a slight overall increase in billings for the month of February 2011, which could mean good news down the road for the beleaguered construction industry.

The Architectural Billing Index (ABI): Each month, the American Institute of Architects (AIA) surveys architectural firms across the country and uses it to compute the Architecture Billings Index (ABI). The ABI represents the seasonally adjusted percentage of firms reporting a significant (5% or greater) increase or decrease in billings. For instance, an ABI of 50 means that an equal number of firms reported decreases and increases.

Since most architectural design later turns into construction projects, the AIA calls the ABI "a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months."

The ABI in 2011: The ABI was up slightly in February to 50.6 (compared to 50 in January), marking the fourth straight month at 50 or higher - after nearly three years of almost uniformly decreasing billings.

More Resources:

Architect Magazine coverage of the February ABI, including (at the end of the article) a graph showing the ABI for the past 4 years

AIA's own write-up of the February ABI, including more detailed information some helpful graphs

The AIA whitepaper from 2005 explaining the ABI (PDF)

Monday, April 4, 2011

Survey Ranks Purchasing-Procurement as 5th Happiest Career

A recent survey of career satisfaction ranked Purchasing-Procurement as the 5th happiest career path.

The survey was conducted by CareerBliss.com and looked at the following nine factors:

Employee's relationship with their boss, co-workers, and customers
The work environment
Job resources
Compensation
Growth opportunities
Company culture
Company reputation
Daily tasks
Job control over the work performed on a daily basis

Respondents to the survey identified factors 1, 8, and 9 above as the most important in determining job satisfaction.

Taking first through fourth place before Purchasing-Procurement were: Biotechnology, Customer Service, Education, and Admin-Clerical.

Vendors: Learn About Government Contracting and Business Opportunities

2 Vendor Education Seminars in Washington State

When and Where:

Tacoma - Thursday, April 28, 2011

8:30 a.m. to 2:45 p.m.
Greater Tacoma Convention and Trade Center, 1500 Broadway
Registration deadline is Friday, April 15

Spokane - Wednesday, June 8, 2011

8:30 a.m. to 2:45 p.m.
Spokane Convention Center, 334 W Spokane Falls Blvd.
Registration deadline is Friday, May 20

Guest Speaker: Brian Sonntag, Washington State Auditor

Description: The seminars will feature training to help vendors successfully bid on government contracting opportunities. They will help businesses succeed in navigating state rules, regulations and services. They will also offer tips for bidding on the billions of dollars that public agencies spend annually for goods and services.

Learn about contracting opportunities throughout the state
Meet with people who facilitate the contracting process
Network and initiate relationships for future partnering
Learn how the contracting process works for government
Gather important resource information that can help your company thrive

Sponsored by: Washington State Department of General Administration

Cost: $50

Information and Registration: Click here

Sunday, April 3, 2011

Large Contractor Pays $19.6 Million Penalty in DBE Fraud Case

Skanska USA Civil Northeast, Inc. has agreed to pay the government $19.6 million as a penalty for using a Disadvantage Business Enterprise (DBE) as a front company. Skanska USA Civil, Inc., based in Sweden, was ranked by ENR as the 6th largest contractor in the United States.

No Work Performed by DBE: Skanska did work on eight projects for New York's Metropolitan Transportation Authority in which they hired a DBE, Environmental Energy Associates (EEA). However, EEA did not actually perform the work, nor were they capable in many instances of performing the work, thus violating the "commercially useful function" rule of the U.S. Department of Transportation's DBE program. In some cases, Skanska actually did the work that EEA was contracted to perform and in other cases, other contractors performed the work. However, Skanska was able to meet the DBE requirements (on the surface) by contracting with EEA.

DBE Owners Indicted: In an indictment unsealed on March 31, 2011, the owners of EEA, Balu Kamat and Carmine Desio were charged with mail and wire fraud conspiracy and with mail fraud.

"Tough Lesson" for Skanska: In agreeing to the payments, Skanska did not admit fault but indicated they did not follow best practices. "We've learned a tough lesson, and we urge others in the industry to learn from it," said Skanska USA Civil, Inc. president Richard Cavallaro.

Skanska Hiring DBE Manager: Skanska has advertised to hire a DBE manager.

More Information:

New York Times article, dated March 31, 2011
Press release, United States Attorney, Southern District of New York, dated March 31, 2011

Best Practices: Public agencies receiving federal U.S. Department of Transportation funding with DBE requirements must have sufficient and well-trained staff to monitor the compliance of contractors with the DBE requirements. The purpose of the DBE program is to provide genuine opportunities for DBEs to participate in government contracts.

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