Mike Purdy's Public Contracting Blog: July 2011

Sunday, July 31, 2011

Should You Split Bids?

What exactly is "bid splitting" and is it a good idea for public procurement?

Definition: Bid splitting occurs when a public agency takes a project, service, or goods and breaks the procurement up into smaller dollar amounts. There are both good and not-so-good motivations and reasons for splitting bids.

Advantages to Bid Splitting: Breaking work into smaller dollar amounts is a benefit for many small, minority, and women owned businesses who may not have the capacity to bid on a larger project. The smaller procurements open the market up to these businesses more, thus increasing the amount of competition received by the public agency, and hopefully resulting in lower prices. Many public agencies have policies that encourage work to be split into smaller procurements for these reasons. In addition, some federal regulations require good faith effort by grantees to break up the work to benefit smaller businesses.

Problems with Bid Splitting: Some public agencies, when faced with various bid limits that require them to seek competition above a certain dollar amount, will break up the work into smaller procurements in order to stay under the competitive requirements. They then make a selection based on less formal bidding requirements or award a contract without any competition, depending on the thresholds. Auditors frequently criticize public agencies for splitting bids in order to come in less than the competitive bidding dollar amounts, since such practices subvert the intent of competitive bidding. While this type of bid splitting may be expedient, it does not ensure that the public is obtaining the best prices for the work.

Procurement Cards: Public employees with procurement cards (government issued credit cards) sometimes split a purchase with their card in order to stay under their per transaction limit for each day. Agencies who have procurement cards and have established policies for per transaction limits should monitor purchases carefully to ensure that splitting of purchases is not occurring.

Balancing Different Interests: Does a public agency get the best prices by splitting procurements to benefit small businesses (resulting in more competition), or by aggregating purchases and projects resulting in quantity discounts from vendors and contractors? The challenge for public contracting professionals is to balance a number of competing issues. Each procurement should be evaluated individually to develop the best strategy that will result in the:

Use of small, minority, and women owned business
Maximum amount of competition
Most competitive prices being received
Compliance with the intent of competitive bidding requirements

Thursday, July 28, 2011

Job Transitions in Washington State

Charlotte Walther

Charotte Walther, the long-time Procurement & Contracts Administrator for the Port of Everett, has announced she will be leaving her position to take a new job with the Texas Department of Transportation in their San Antonio office. Her last day at the Port will be August 5, 2011.

Jay Field, formerly the Manager of Contracts and Procurement with the Washington State Department of Health, is the new Purchasing and Contract Manager for The Evergreen State College in Olympia, Washington. He started his new job on July 18, 2011.

Kevyn Davidson has accepted a new position as Contracts Specialist 3 with the Office of State Procurement, Department of General Administration, in Olympia, Washington. Kevyn has 20 years of public procurement and contracting experience and was formerly the Purchasing Manager for the Port of Longview, Washington. She began her new job on July 25, 2011.

Jai Jeter

Jai Jeter has announced his retirement effective in early August 2011, after a long career in public procurement and contracting. He is currently a Contracts Administrator with Sound Transit. He spent 17 years in procurement in the U.S. Air Force, and has served as the purchasing manager for the Seattle School District, the City of Lynnwood, and a school district in Cheyenne, Wyoming. He also worked for WSIPC in Everett. He and his wife will move to Savannah, Georgia to be closer to their children and grandchildren.

Kimberly Kallinger has left her position as Project Manager with eCityGov Alliance where she served for more than five years. She has accepted a management role with Avanade. Her last day with eCityGov Alliance was July 21, 2011.

Jim Hanon is retiring as Sr. Contracts Administrator at Sound Transit after more than a decade at the agency. His retirement is effective on July 29, 2011. He has been involved in contract administration for more than 20 years.

Marilyn Hemmann was promoted in May 2011 to Procurement Manager at Intercity Transit in Olympia, Washington. She previously served as a Procurement Coordinator at the agency.

Erin Hamilton will begin work at Intercity Transit in Olympia, Washington on August 1, 2011 as a Procurement Coordinator. Her previous position was as a Contracts Specialist 3 with the Washington State Department of Social and Health Services (DSHS).

Wednesday, July 27, 2011

What's a "Responsible Bidder"?

What's a "Responsible Bidder"? It's a good question. Many public agencies have laws that permit award of contracts not just based on the low bid, but to the low bidder who is also "responsible."

Washington State: In Washington state, bidder responsibility is defined in RCW 39.04.350 for public works projects. It outlines a half-dozen or so mandatory bidder responsibility criteria that a public agency must check for and validate before awarding a public works contract. The law also permits the use of supplemental bidder responsibility criteria that are "relevant" to a particular project. For additional information, check out the Suggested Guidelines for Bidder Responsibility on the website of the Capital Projects Advisory Review Board (CPARB). I've also developed a checklist to help public agencies in developing and implementing supplemental bidder responsibility criteria that may be found on my website at www.mpurdy.com/resources.

Good Article on Responsible Bidders: Eileen Youens, until recently a faculty member at the School of Government at the University of North Carolina at Chapel Hill, and now a Texas-based consultant (Eileen Youens Consulting, LLC) in procurement and contracting for state and local governments, has written an excellent article on "What's a 'Responsible Bidder'?" on her blog. Eileen is an attorney, very knowledgeable about public contracting issues, and a clear writer and communicator. Check out her website at www.youensconsulting.com.

Tuesday, July 26, 2011

Are Fewer Contractors Bidding Public Works Projects?

Recently, I've been hearing from a number of public agencies that they are not receiving many bids on public works projects, a marked change from fairly recently when many contractors from the commercial and residential markets, were flooding public projects with their bids.

There are a couple of reasons why this decreased number of bids may be occurring:

Bonding Capacity: As the nation's fragile economy continues, there is some indication that bonding companies are tightening their standards for what contractors they will bond. Thus, there may be some contractors who simply cannot qualify to bid on public projects because they can't obtain the required payment and performance bonds.

Government Paperwork: Another reason for the decreased number of bids may be that some contractors, after having tasted what it's like to do a public project, with additional procedural and reporting requirements, have simply decided that it's not worth their time and trouble to bid on projects.

Bankruptcy: As contractors go out of business in this difficult economy, there are fewer contractors who are able to compete and bid on public works projects.

Other Work: While it is theoretically possible that a contributing factor to the decreased number of bids on public works projects is because contractors are getting work from the private sector, it is unlikely to be a major factor given the still wobbly economy.

Your Experiences: I'm very interested in hearing whether you are noticing a decreased number of bids on public works projects, and what you think the reasons are.

I've created a poll on my blog for you to respond to. If you're reading this blog entry via an e-mail, you'll need to go directly to my blog to respond to the poll by clicking here. Look in the right hand column of the blog, just below the Twitter, Linkedin, and Facebook icons.

The poll will be active until Friday, August 5, 2011. I'll publish the results of the poll in a subsequent blog entry. As always, also feel free to contact me directly.

Monday, July 25, 2011

Clarifications on New Retainage Law (SHB 1384)

Last week I wrote a blog entry on the new Washington State law (SHB 1384) that prohibits withholding of retainage on certain federally funded transportation projects. The law went into effect on July 22, 2011.

Based on a number of conversations with WSDOT and others, and feedback from readers, I'd like to look in more depth at a couple of issues related to SHB 1384.

What Agencies Does SHB 1384 Apply To?

Why was SHB 1384 Introduced? The reason SHB 1384 was introduced was to address a conflict between USDOT regulations (49 CFR 26.29) and state law (RCW 60.28) regarding prompt payment and withholding of retainage. FHWA (Federal Highway Administration) found that WSDOT was not in compliance with 49 CFR 26.29, and thus WSDOT facilitated the introduction of SHB 1384 to allow them to be in compliance with both federal regulations and state law.

What Agencies Must Comply With USDOT Regulations? USDOT funds public works projects through a variety of programs, including but not limited to FHWA, FTA (Federal Transit Administration), and FAA (Federal Aviation Administration). Public agencies who receive funding from USDOT through any of their programs (FHWA, FTA, and FAA) must all presumably comply with 49 CFR 26.29 regarding prompt payment to contractors and subcontractors. However, the language of SHB 1384 does not appear to apply to USDOT projects funded by any program other than FHWA.

SHB 1384 Applies to FHWA Funded Projects: SHB 1384 appears to only apply to FHWA funded projects for a "highway, road, or street." In addition, Section 1 of the bill notes that "the legislature recognizes that federal regulations include requirements that pertain to contracts funded by federal-aid highway funds," meaning FHWA funded projects.

Should SHB 1384 Apply to FTA or FAA Funded Projects? Public agencies who receive funding from FTA, FAA, or other USDOT programs are in a difficult position. They must comply with 49 CFR 26.29 for prompt payment of retainage, which conflicts with RCW 60.28 regarding retainage. These public agencies should consult with their attorneys and funding agencies regarding the appropriate practice to follow. It seems to me there may be a couple of theoretical options to consider: 1) Comply with federal regulations, but not state law (which could result in a state audit finding). 2) Comply with state law, but not federal regulations (which could result in loss of federal funding). 3) Require a retainage bond instead of withholding retainage.

Should SHB 1384 Be Fixed by the Legislature in 2012? Because it appears that SHB 1384 may not have been as comprehensive as necessary in order to ensure prompt payment provisions are met on all USDOT funded projects, this may be a good topic for consideration by the Legislature in 2012, and something that perhaps the Capital Projects Advisory Review Board (CPARB) should address in making recommendations to the Legislature. It is my understanding that a number of agencies impacted by the conflict between federal regulations and state law are actively discussing their response now.

Effective Date: With regard to the effective date of administering the new law, it has come to my attention that WSDOT has administratively determined that the new requirements will become effective for FHWA Federal-Aid projects advertised on or after June 27, 2011.

WSDOT Revisions Made: WSDOT has developed General Special Provisions (GSP) for their specifications dealing with changes in both the retainage and contract bond provisions. They have also added a sentence covering the tax liability (Revenue, Employment Security, Labor and Industries) to their standard Local Agency Contract Bond, which combines payment and performance provisions into one bond. Even if a local agency chooses not to use WSDOT's Contract Bond form, language protecting the three state agencies should be added to the bond form used. Many public agencies obtain separate payment and performance bonds, each in an amount of 100% of the contract amount in order to provide more protection to the agency.

Consult Your Attorney and Funding Agency: This is a complicated subject and one that public agencies should consult with their attorneys and funding agencies about to determine the most appropriate course of action.

Sunday, July 24, 2011

WSDOT to Conduct DBE Program Disparity Study

The Washington State Department of Transportation (WSDOT) has advertised for a consultant to conduct a DBE Program Disparity Study. Proposals are due July 26, 2011.

Public agencies use "disparity studies" to evaluate whether disadvantaged business enterprises (or sometimes minority- and women-owned businesses) are getting less government work than other similar businesses. Disparity studies analyze whether there is a disparity between the availability of DBEs in the market and how much they are actually being utilized.

Thursday, July 21, 2011

New Law Prohibits Withholding of Retainage on Federally Funded Transportation Projects in Washington State

A new law in Washington State will prohibit public agencies from withholding retainage on public works projects funded in whole or in part by federal transportation funds.

Instead, the parties normally protected by retainage will be protected through the contractor's payment bond. The new law goes into effect on July 22, 2011. It will affect not only the Washington State Department of Transportation (WSDOT), but local agencies receiving federal transportation funds directly from WSDOT or directly from the U.S. Department of Transportation (USDOT).

Background: The legislation, approved as SHB 1384 by the Washington State Legislature, was introduced in response to USDOT regulations designed to help increase cash flow to small businesses by ensuring either prompt payment of retainage or by not withholding retainage. The new law is an amendment to RCW 60.28.011. Here's the text of the addition to the RCW:

Complex Implementation Issues: Implementing the new la w is a complex subject and I have outlined below some of the many issues that public agencies will need to consider in consultation with their attorneys. My apologies for the length of this blog entry, but there are many issues to cover.

Effective Date: SHB 1384 is not explicit about whether it is effective only for new contracts awarded on or after July 22, 2011, or whether it also applies to current contracts for which payments will be made to contractors on or after July 22, 2011. However, given the fact that WSDOT has been in negotiation with USDOT for a number of years about whether Washington needed to comply with the federal retainage regulations, my sense is that the intent of the legislation is that it would be effective for any payments made on or after July 22, 2011 and not just for new contracts.

Changes in Payment Bonds: Public agencies in Washington State using federal transportation funds on public works projects (those "involving the construction, alteration, repair, or improvement of any highway, road, or street") will need to be aware of at least three issues related to payment bonds:

Protect State Agencies with Payment Bonds: One of the impacts of SHB 1384 is that all of parties protected under retainage (subcontractors, suppliers, workers, and the state Departments of Revenue, Employment Security, and Labor and Industries) must be identified as protected parties in the payment bond. Currently, payment bonds do not provide protection for the three state agencies. Thus, payment bonds for projects funded by federal transportation funds must be modified to include Revenue, Employment Security, and Labor and Industries as protected parties.

Duration of the Payment Bond: According to SHB 1384, the payment bond "must remain in full force and effect until, at a minimum, all claims filed in compliance with chapter 39.08 RCW are resolved." The parties listed in chapter 39.08 RCW as being protected by the payment bond are described as "laborers, mechanics, and subcontractors and material suppliers." Thus, payment bonds will need to include language indicating how long the bond remains in effect. From my perspective, what is not addressed by SHB 1384 is whether the payment bond must also remain in effect until any claims filed by either the departments of Revenue, Employment Security, or Labor and Industries are resolved. These agencies are not listed as claimants under chapter 39.08 RCW. Public agencies may want to consider having the payment bond remain in effect until all claims (private and public) are resolved, even though the new law doesn't appear to address the public claims from the state agencies.

New Payment Bonds for Current Projects? If public agencies determine that SHB 1384 applies to any payments on current projects made on or after July 22, 2011, the agencies would need to pay future retainage to the contractors and obtain a revised payment bond adding the departments of Revenue, Employment Security, and Labor and Industries as protected parties under the bond. And, of course, some agencies may interpret SHB 1384 as requiring release of previously held retainage on current projects.

Changes in Contract Language: Contracts affected by SHB 1384 will need to delete standard language requiring the withholding of retainage (or obtaining a retainage bond) and replace it with language describing that the parties normally protected by retainage will, instead, be protected by the payment bond. Depending on how public agencies interpret the effective date of the new law (current contracts or only new contracts entered into after July 22, 2011), there may need to be change orders executed deleting the retainage requirements. It is my understanding that WSDOT has developed revised specification language to address SHB 1384, but I haven't seen or reviewed such language.

Impact on Projects with Partial Federal Funds: If a public agency has a public works project that is funded partially with federal transportation funds, and partially with state, local, or other federal funds, does the new law still apply? The language of SHB 1384 is that it applies to public works projects "funded in whole or in part by federal transportation funds." Thus, even if only part of the project is funded with federal transportation funds, the requirement to not withhold retainage would apply. The general principle on the applicability of federal requirements is that any federal money brings with it all of the federal requirements. This is certainly what applies when it comes to the applicability of federal prevailing wages.

Potential Impacts of the New Law: While SHB 1384 is a necessary step in order to ensure that the state continues to receive federal transportation funds, there are some potential impacts that may materialize, including the following:

Different Process for Collecting on Claims: Claims by subcontractors, suppliers, and workers against retainage are decided by the courts. With the new law, such claims will be protected by the payment bond. Thus, claimants, instead of going to court to collect on claims, will need to make their claim to the bonding company and attempt to collect from the surety.

Public Agency Rights Eliminated: Under RCW 60.28.021 dealing with retainage, after all claims have been resolved, "the public body may withhold from the remaining retained amounts for claims the public body may have against the contractor." However, under the new law, the payment bond is only designed to protect the parties described in RCW 39.08.010 ("laborers, mechanics, and subcontractors and material suppliers") and the three state agencies (Revenue, Employment Security, and Labor and Industries). It appears that the interests of public agencies have been eliminated in SHB 1384. In theory, a public agency could contractually require the payment bond to include this protection for the agency in the event of claims.

Increased Bond Costs: Under SHB 1384, the cost of a payment bond premium to contractors may increase based on additional financial liability to bonding companies, an added cost that may be passed onto public agencies. Bonding companies may pick up additional liability in two areas: 1) Prior to SHB 1384, it is typical that claims filed by subcontractors, suppliers, and workers subject to prevailing wages are first handled by retainage, and in the event retainage is not sufficient to cover all claims, through the payment bond. Under the new law, with no retainage, claims would go directly against the payment bond, thus increasing the potential liability of bonding companies. 2) Prior to SHB 1384, a payment bond only protects subcontractors, suppliers, and workers subject to prevailing wages. Under SHB 1384, three state agencies are added as protected parties under the payment bond, thus increasing the financial exposure of the sureties.

More Bonds Required for Subcontractors? SHB 1384 does not prohibit contractors from withholding retainage from subcontractors. Even though they may continue to do so, with the added financial exposure of bonding companies (see paragraph above), it is possible that sureties may begin to require contractors to also obtain bonds from their subcontractors in an effort to limit their added financial liability under the contractor's payment bond. If this occurs, it would be unfortunate. The impetus for the federal regulations and the new law on not withholding retainage is to ensure prompt payment to contractors, but it may result in some subcontractors not being able to participate on public works projects funded with federal transportation funds because of their inability to obtain a payment bond. The ability to obtain bonding has historically been a problem for small, disadvantaged, minority, and women owned businesses.

Practical Tip: Consult with your attorneys in making decisions on how to implement SHB 1384. Please contact me if you have questions, comments, or different approaches or thoughts on this new law.

Wednesday, July 20, 2011

IRS Increases 2011 Mileage Reimbursement Rate

Due to the increase in fuel prices, the IRS has announced an increase in the standard mileage reimbursement rate from 51 cents a mile to 55.5 cents a mile, effective July 1, 2011 through the end of the year.

Click here to read the announcement from the IRS.

Tuesday, July 19, 2011

When Are Contractor Qualification Requirements too Restrictive?

It's important for public agencies to obtain qualified contractors on public works projects. It's also important to have a wide pool of competitive contractors eligible to bid on construction projects.

Striking a Balance: When public agencies pre-qualify contractors, or establish responsibility criteria that impact what contractor may be awarded a project, it's important that the requirements be relevant for the project and not overly restrictive of the bidding pool.

Wyoming's Controversy: A number of Wyoming contractors are upset at the overly restrictive pre-qualification requirements placed on a $7 million pipeline project that effectively cuts them out of bidding the project on August 9, 2011. Only five contractors have pre-qualified and they're all from outside of Wyoming (Colorado, Montana, and Florida).

Are the Requirements Reasonable? The contractors have taken their concerns to the governor's office, the legislature, and the agency bidding the project (Shoshone Municipal Pipeline Joint Powers Board), contending that the requirement for having constructed projects with two miles of 24-inch pipeline in the past five years is an unreasonable requirement. "There hasn't been that much 24-inch pipe laid in the state in the past five years," Bruce Hicks of Excel Construction Co. complained. In addition, contractors are questioning the relevance of the 24-inch requirement, since "it all goes together the same way" regardless of the diameter of pipe.

Bid Preference Law Not Applicable: Wyoming recently passed a bid preference law giving in-state contractors a preference if they are within 5 percent of the low bid from an out of state firm. However, with the project requiring pre-qualification, the Wyoming firms won't even get the chance to bid to see if the bid preference might be applicable.

More About the Wyoming Issues: Click here to read a Casper Star-Tribune article on the controversy, or click here to read an article from codyenterprises.com.

Washington State's Experience: In Washington State, only a few types of public agencies are authorized to pre-qualify contractors. However, under RCW 39.04.350, all public agencies may establish supplemental bidder responsibility criteria to evaluate whether the low bidder is a responsible bidder capable of performing the work. In the four years that the bidder responsibility law has been in effect, contractors have voiced concerns about how some agencies have inappropriately implemented the law.

Solving the Problem in Washington State: The state's Capital Projects Advisory Review Board (CPARB) has appointed a task force to address the issues and come up with recommendations. In March 2011, CPARB joined with a number of industry associations to sponsor a training session on the bidder responsibility law. Efforts are underway to conduct additional training this fall. The task force will also be recommending changes to CPARB's Suggested Guidelines for Bidder Responsibility to address some of the concerns raised.

Checklist: I've done a lot of training on Washington's bidder responsibility requirements and have developed a checklist to help public agencies work through the issues when they utilize the criteria. You can find the checklist on my website by clicking here.

Monday, July 18, 2011

Agency Violates Piggybacking Requirements

An audit revealed that the purchase of two ambulances by Central Skagit (WA) Medic One failed to comply with piggybacking requirements for buying the vehicles off of another public agency's contract.

Popularity of Piggybacking: Piggybacking is being used more and more by public agencies eager to avoid the added time and expense of separately bidding various products, and instead relying on the competitively bid products of another agency or a purchasing cooperative.

No Piggybacking Documentation: The Washington State Auditor's Office found that Central Skagit Medic One bought two ambulances in 2010 for almost $340,000, piggybacking off of another agency's contract. However, the Auditor noted that Central Skagit Medic One could not document or demonstrate that it met the following piggybacking requirements:

The award falls within Medic One's own bid thresholds and bidding requirements. This could not be demonstrated because Medic One does not have procurement policies and procedures.
The lead public agency advertised for bids in accordance with its own statutory requirements.
The lead public agency posted the bid notice on a website established for posting public notice for bids.
The lead public agency's request for bids notified bidders the contract could be used by more than one public agency.

Interlocal Agreement: In addition to ensuring compliance with the above items, a public agency in the State of Washington piggybacking off of another's solicitation and contract must have an Interlocal Agreement with the lead public agency. RCW 39.34 (Interlocal Cooperation Act) governs the use of piggybacking in Washington State.

Audit Report: Click here to read the audit finding that also includes a finding that Medic One did not solicit bids or quotes when it purchased more than $100,000 worth of fuel and medical supplies.

Sunday, July 17, 2011

Seminar and Webcast: Insurance in the Construction Industry

Insurance in the Construction Industry

When: October 5, 2011 (8:30 a.m. to 4:45 p.m.)

Where: Seattle, Washington (Grand Hyatt, 721 Pine Street), or by live webcast

Topics:

Current Issues Affecting Builder's Risk and Course of Construction Claims
Appellate and Construction Litigation Update
Resolving Construction Defect Claims Prior to Suit
What is the Proper Role of the Broker's Claims Department in the Claims Process
Ethical Considerations in Defending and Resolving Construction Disputes Involving Insurance
The "Made Whole" Doctrine Under Washington Construction Insurance Law
Current Market Conditions
Allocation Issues When Multiple Insurers are Involved
Claims Made Insurance
Condo Coverage Issue Update

Sponsored by: The Seminar Group

More Information and Registration: Click here.

Thursday, July 14, 2011

Job Opening: Senior Buyer

City of Seattle, Washington

Position: Senior Buyer

Location: Seattle, Washington

Closing Date: Tuesday, July 19, 2011 at 4:00 p.m.

Salary: $32.63 - $38.00 Hourly

Job Summary: The Senior Buyer is assigned a contract portfolio, with a group of related commodities and contracts many of which require extensive ongoing contract administration. In addition, this position is assigned special projects with multiple issues of considerable scope that require long-term commitments and are of an ongoing duration with policy implications. The Senior Buyer will also be assigned to lead special projects which may include policy research, WMBE programs or environmental initiatives, or other social responsibility initiatives of the City.

For More Information and To Apply: Click here.

Wednesday, July 13, 2011

Can You Negotiate a Lower Price With a Bidder If You Receive Only One Bid?

If a public agency receives only one bid on a public works construction project, and the bid amount is over the funding available, can the public agency negotiate a lower price with the bidder?

There are a lot of variables and issues to evaluate in answering this question, and the answer may be different depending on the public agency. Here's a quick list of some issues to consider:

Legal Authority: What applicable laws apply to the public agency? Is negotiation in this type of situation permitted, prohibited, or not addressed?

No Harm, No Foul: If there are no laws that address the ability of the public agency to negotiate the bid, a case can be made that negotiation may be appropriate. Since there are no other bidders whose interests would be harmed by the negotiation, and the public would benefit from a lower price, it may be a decision a public agency makes to negotiate with the only bidder for a lower price

Is It Good for the Project? Even if the public agency decides that it is okay to negotiate with the only bidder, if may not necessarily be in the best interests of the project or the public. If the bidder agrees to lower their price below what is financially viable for them, just to get the project, the public agency may be faced with either performance issues or additional requests for change orders to make up the difference of the lower negotiated price.

Why Was There Only One Bid? As part of the decision making process, the public agency should evaluate the reasons why only one bid was received. Were the bidding documents unclear? Was the bidding period too short? Were the risks of the project too high? Were there a lot of other projects bidding on the same day? The public agency should discuss the reasons with potential bidders who chose not to bid. The answers to this question may impact whether to attempt to negotiate the bid price or re-bid the project.

Re-Bidding the Project: Is it likely that the public agency will receive a lower price if the project is re-advertised after addressing issues of why only one bid was received?

Talk With Your Attorney: The public agency should consult with its attorneys to determine the best course of action in a case like this to ensure that any negotiation is legal.

Comments: If you have dealt with this issue in the past, I would love to hear how to handled it and why you made the decision you did. Please either contact me or write a comment to this blog entry.

Tuesday, July 12, 2011

Keeping Track of Insurance Coverage: How One Agency Solved the Problem

Many public agencies find it challenging to ensure they maintain current evidence of insurance coverage for all of the contracts they have with contractors, consultants, service providers, and vendors.

Oregon's Solution: Multnomah County, Oregon has developed a technology solution to the problem that Brian R. Smith, the County's Purchasing Manager, states "can be easily replicated by other governmental agencies."

Brian R. Smith

GoPro Article: In the June/July 2011 edition of GoPro, the official publication of NIGP (National Institute of Governmental Purchasing), Brian wrote an article entitled, "Keeping Coverage Current: A Simple Approach to Tracking Insurance Certificates."

Click here to read Brian's article.

Monday, July 11, 2011

Job Transitions in Washington State

Tina Davis was appointed as Senior Contracts Specialist with Sound Transit, effective July 5, 2011. In this capacity, she will administer federally funded contracts and alternative public works projects. She previously worked for five years for the City of Seattle as a Sr. Program Administrator in the Purchasing and Contracting Services Division.

Ginny Justiniano

Ginny Justiniano began work at Sound Transit as their new Construction Contracts Specialist on July 6, 2011. She came from the City of Seattle where she was a Senior Buyer in the Purchasing and Contracting Services Division for more than five years. Previous to that, she was a Buyer with the City of Lynnwood. Ginny is the current president of the Pacific Northwest Public Purchasing Association (PNPPA).

Mike Myette

Mike Myette retired as the Executive Director of the Washington State Chapter of the National Utility Contractors Association (NUCA), formerly known as the Utility Contractors Association of Washington (UCAW). On July 1, 2011, Dan Patsula began his duties as the new Executive Director of the association.

Greg Mowat

After more than a decade as the Project Labor Agreement Specialist at Sound Transit, Greg Mowat recently resigned to pursue further development of his consulting business, GTM Transformations. As a consultant, Greg focuses on labor-management relations/administration, negotiations training/facilitation/coaching, organizational development, conflict transformation, strategic planning, mediation/ADR and one-to-one consultation. Prior to his time at Sound Transit, Greg was the Employment Standards Program Manager at the Department of Labor and Industries for almost nine years.

David Soma recently resigned as Prevailing Wage Program Manager and Industrial Statistician with the State of Washington's Department of Labor and Industries. Ann Selover has been appointed to the position on an acting basis.

Other Transitions: If you know of other job transitions of procurement and contracting professionals (including yourself), please contact me.

Sunday, July 10, 2011

Washington State Construction Law Seminar

18th Annual Washington Construction Law Seminar

When: September 15-16, 2011 (9:00 a.m. to 5:00 p.m.)

Where: Seattle, Washington (Washington State Trade and Convention Center)

Topics (Speakers):

Federal Construction Law - New Developments (Bruce P. Babbitt)
A View from the State (Karin L. Nyrop)
ABC’s of Construction Contracting: Creating a Contract You Can Live With (Alan Bornstein)
Contracting in Indian Country (Quanah M. Spencer)
Washington State Public Works Competitive Bidding and Bid Protests (Arnold R. Hedeen)
Environmental Considerations (Eric S. Laschever)
Construction Changes/Differing Site Conditions (John P. Ahlers)
What Happens When Someone in the Chain Goes Bankrupt? (Jerry N. Stehlik)
Labor and Employment Issues (Chris Farias)
Washington Construction Law – New Developments (Paul R. Cressman, Jr.)
Claims Against the Design Professional Firm (Stanton P. Beck)
Insurance in the Construction Industry (A. Richard Dykstra)
Lien and Bond Claims; Dealing with Sureties (Kerry Lawrence and Alexander A. Friedrich)
Ethical Considerations for Construction Lawyers (John A. Strait)
Construction Mediation (Christopher J. Soelling)
Issues and Benefits of Building Green (Jesse O. Franklin, IV and Dean Martin)

Cost: $695 (other prices for various categories)

For more information and to register, visit the website of The Seminar Group.

Wednesday, July 6, 2011

Do Decentralized Procurement Systems Really Work?

Public agencies differ widely when it comes to how centralized or decentralized the procurement and contracting function is.

For some smaller agencies, procurement is totally decentralized and often not systematic. Larger agencies generally tend to centralize some or all of the procurement functions. And then there are many agencies in the middle, with a combination of centralization and decentralization.

Key Features of a Procurement System: Regardless of the size or model used by the public agency, it is important for the agency to be deliberate in its procurement and contracting practices to ensure the following:

Transparency: Public contracting should be conducted in an open environment where businesses understand clearly the process the agency will use in making contract selections and awards. This means that procedures should be published in bidding documents and online.

Ethical Behavior: Without clear policies and procedures, government contracting can be ripe for ethical and fraudulent abuse.

Protests: The procedures for protests should be clear to all businesses. And, of course, the bidding and solicitation documents should be clear to mitigate against potential protests.

Consistency: Especially under a decentralized or partially decentralized environment, it is important for the public agency to have consistent procedures and expectations between different departments.

Phoenix Criticized: The City of Phoenix, Arizona has recently come under criticism for the inconsistent and unpublished regulations under its decentralized procurement system. The Arizona Republic ran an interesting article on July 6, 2011 on the City's practices and attempts by the City Council and others to make improvements.

Challenges of Decentralization: One of the challenges that comes with a decentralized system is that it means more people must be experts in procurement and contracting issues in order to protect the public's interests and provide a fair forum for contractors, vendors, service providers, and consultants. Phoenix attorney, Kevin O'Malley, who often represents businesses on City contracting issues noted that:

Review Your Policies and Procedures:

Have you reviewed your agency's procurement and contracting practices recently?
Are your policies and procedures up-to-date and consistent with current laws, regulations, and best practices?
Are you actually complying with your published policies and procedures?
Are your bidding documents consistent with your policies and procedures?
If you have a decentralized model, are the departments and individuals who are managing solicitations and contracts knowledgeable and trained?
Are your policies and procedures consistent with the requirements of any grants you may receive?
If you don't have written policies and procedures, consider developing them, or obtaining expertise to help you develop them.

Tuesday, July 5, 2011

Job Opening: Project Funding and Agreements Coordinator Supervisor

City of Seattle, Washington (Seattle Department of Transportation)

Position: Project Funding and Agreements Coordinator Supervisor

Location: Seattle, Washington

Closing Date: Tuesday, July 19, 2011 at 4:00 p.m.

Salary: $35.18 - $40.98 Hourly

Job Summary: The Seattle Department of Transportation (SDOT) is seeking to hire a Project Funding and Agreements Coordinator Supervisor to lead the Consultant Contract Unit (CCU). The position provides technical and authoritative Consultant Contract policy advice and assistance to the department and project managers, for capital improvement and other projects. The position oversees a rapidly increasing workload dealing with complex contracting issues totaling over $35 Million annually. This position reports to the Project Controls and Consultant Contracts Manager and supports departmental goals in promoting diversity, race and social justice efforts. This position also leads coordination with other City departments and private consultants on complex Consultant Contract matters and represents SDOT on Citywide issues. Oversees a complete CCU program and provides customer service to a department of approximately 800 employees, myriad consultants, Citywide contacts, and others.

For More Information and To Apply: Click here.

Monday, July 4, 2011

John Adams Was Wrong (Partially) About Independence Day

John Adams correctly predicted in 1776 that the vote in Philadelphia by the Second Continental Congress to approve America's independence from Great Britain would be an event celebrated by countless generations. Adams wrote to his wife, Abigail, that

Wrong by Two Days: Adams' prophecy, however, was wrong on one important point: he missed the date of the future celebrations by two days. He wrote that "the second day of July 1776 will be the most memorable epocha in the history of America." July 2, 1776 is the day that a preliminary vote for independence occurred. However, it was not until July 4th that the Second Continental Congress voted to approve the actual Declaration of Independence.

John Adams: Adams, of course, was a tireless worker for independence, on the committee to draft the Declaration that Thomas Jefferson actually penned, and went on to become the nation's second president in 1797.

Celebrations: I trust you all had a wonderful 4th of July celebration with family and friends - a good time to step back and gratefully remember the incredible freedoms we enjoy as Americans.

Sunday, July 31, 2011

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