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.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com