4 Key Tools to Obtain Qualified Subcontractors on GC/CM Projects

In Washington State, GC/CM (General Contractor/ Construction Manager) is one of three alternative public works contracting procedures that may be used for certain public works construction projects in lieu of the traditional low bid, or Design-Bid-Build, process.

Under GC/CM, all construction work must be publicly bid to subcontractors by the selected contractor (the GC/CM) and awarded to the low bidder.  In order to help ensure that the subcontractors are qualified, there are four key tools that RCW 39.10 describes that may (or must) be used:

• Prequalification:  Officially known in state law as "subcontractor eligibility to bid," a GC/CM and public agency may essentially prequalify which subcontractors may submit a bid on specific subcontract bid packages.  To use this process, a public hearing addressing the intent to prequalify subcontractors must be held along with the proposed criteria, which may be modified based on feedback received at the hearing.  To utilize this process, the GC/CM and public agency must make a determination that doing so would be in the best interest of the project and critical to the successful completion of the subcontract bid package work.  A Request for Qualifications is then advertised and qualifications are received and evaluated based on the established criteria.  Only those subcontractors meeting the criteria and/or threshold number of points established in the RFQ are eligible to submit a subcontract bid.

• Responsibility Criteria:  If the prequalification process is not used, the GC/CM is required to include "specific objective criteria" that the GC/CM and public agency will use to evaluate whether the low subcontract bidder is a responsible bidder.  The primary difference between the prequalification and responsibility criteria processes is one of timing.  In prequalification, a determination of responsibility is made prior to bidding, while under the responsibility criteria section of state law (RCW 39.10.380 (2)), the determination is made after submittal of bids and prior to award of a subcontract by the GC/CM.  The responsibility criteria in GC/CM subcontract bidding is very similar to the Supplemental Bidder Responsibility Criteria permitted on Design-Bid-Build projects (RCW 39.04.350).

• Early Selection of Mechanical and/or Electrical Subcontractors:  Under a 2010 law approved by the Legislature, a GC/CM may select the mechanical and/or electrical subcontractors early in the process, during the preconstruction phase before the construction documents have been finalized.  The purpose of this early selection process is to bring the experiences and expertise of these key subcontractors to the preconstruction phase.  Under this process, these subcontractors are selected through a very similar process by which the GC/CM is selected by the owner based on qualifications and bids for fee and general conditions work.  The actual construction cost is negotiated between the GC/CM and subcontractor and that price is then folded into the negotiated Maximum Allowable Construction Cost (MACC) between the GC/CM and owner.  This process has been used just a couple of time so far and is outlined in detail in RCW 39.10.385.

• Payment and Performance Bonds:  For subcontract bid packages over $300,000, the subcontractors are required to submit a payment and performance bond to the GC/CM.  The owner bears the cost for these bonds as part of the MACC.  In this difficult construction economy, bonding companies are more carefully evaluating the financial viability of subcontractors.  Thus, bonding becomes an important tool to help ensure that only financially healthy subcontractors participate on these public GC/CM projects.  A GC/CM may also require a payment and performance bond for subcontract bid packages less than $300,000.

Applying the Tools:  Each GC/CM project is different: 

• Prequalification may not be appropriate for some subcontract bid packages, and the time it takes to go through the process may limit its use.  
• Bidder responsibility must be used for all subcontract bid packages where prequalification is not used
• The early selection of the mechanical and/or electrical subcontractors is a time-consuming process that a project schedule may not allow for.  Some owners and GC/CM see value in this process while for others and for specific projects, it may not be as appropriate.
• Bonding is required on all subcontract bid packages over $300,000.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

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