Mike Purdy's Public Contracting Blog: May 2012

Wednesday, May 30, 2012

Training: Developing and Managing RFPs and RFQs

Developing and Managing RFPs and RFQs

When:

June 13, 2012 (8:30 a.m. to 4:30 p.m.) - Yakima, Washington (11 seats available)

Instructor: Mike Purdy

Class Outline:

Building the Public's Trust
Planning the Procurement
Standard Provisions and Concepts
Conflicts of Interest
Cost and price Analysis
Advertising Issues
Pre-Submission Meeting
Receiving and Opening Proposals
Evaluation Committee
Evaluation Proposals
Managing Interviews
Recommending Award
Contract Negotiations
Developing Scopes of Work

Sponsored by: Washington Cities Insurance Authority (WCIA)

Cost:

Free - WCIA Members
$115 - Non-WCIA Members

Information and Registration: Click here.

Job Opening: Construction Contract Officer

Oregon State University (OSU)

Position: Construction Contract Officer

Location: Corvallis, Oregon

Closing Date: June 3, 2012

Salary: $55,000 to $65,000

Job Summary: The Construction Contract Officer will support Procurement and Contract Services as a member of their management team through development, implementation, and ongoing support of University-wide procurement and contract policies and practices. The duties of the Construction Contract Officer involve managing procuring the services necessary to construct, protect, repair, maintain, and preserve the physical facilities and utility systems of the University. This position provides guidance to the University for a wide variety of complex and diverse contractual issues.

For More Information and to Apply: Click here.

Tuesday, May 29, 2012

Washington State Contract with Builders Exchange to Expire in July

For the last dozen years, the Washington State Department of General Administration (GA), now known as the Department of Enterprise Services (DES), has been under contract with Builders Exchange of Washington, Inc. to provide electronic posting of public works bidding documents online.

Contract Expires in July: The state's contract with Builders Exchange will expire on July 31, 2012 and the state has chosen not to conduct a new competitive selection process for another contract for these services.

Piggybacking: Many state and local public agencies have piggybacked off of DES' selection process and contract, and used Builders Exchange as the vehicle to make bidding documents available to contractors and subcontractors.

Office of State Procurement (OSP): For the first six years of DES's contracting with Builders Exchange, the Office of State Procurement (OSP) managed the contract, and some members of the state's Purchasing Cooperative Program piggybacked off of OSP's contract.

Engineering and Architectural Services Division: For the last six years, DES' contract has been managed by their Engineering and Architectural Services Division, and some agencies may have entered into an Interlocal Agreement with DES to piggyback off of the Builders Exchange contract.

No piggybacking: Other agencies have used Builders Exchange without piggybacking off of any state contract with the assumption that their expenditures were under their competitive bid thresholds for services.

Impact on local agencies: Because many public agencies have chosen to piggyback off of the state's contract for these services, DES' decision to not conduct a new solicitation process will have an impact on agencies who have relied upon the state's contract.

Options for bid document distribution: Without a DES contract that local agencies may piggyback off of, there are five basic options for agencies to provide access to bidding documents:

Local Agency Website: An agency could develop its own system and host the documents on its own website. Some agencies already do this.

Competitive Selection Process: An agency could conduct a competitive selection process, consistent with its own contracting requirements, and select a company to provide online access to bidding documents.

Piggybacking: An agency conducting a competitive selection process could make its selection process and contract available to other agencies to use through piggybacking with the use of an Interlocal Agreement.

Contract Directly without Competition: Some public agencies may be able to contract directly with Builders Exchange or another provider of these services if the dollar amount of such services is less than any competitive bid limits that may exist under state law for that particular type of agency. Bid limits are dollar amounts below which public advertising is not required, and these vary widely by type of agency. Builders Exchange has indicated they intend to reduce their fees to public agencies who continue to use their services.

Hard Copies: A public agency may choose to not make bidding documents available electronically, but only provide a hard copy of the documents to contractors and subcontractors, either for free, or upon payment of a refundable or non-refundable deposit.

Policy Issues: As our society and the construction industry moves more and more toward reliance on electronic documents rather than hard copies, the following policy issues should be considered by public agencies:

What firms should distribute documents? There are a number of other companies besides Builders Exchange that provide similar online services. How should a public agency make the decision about what company should distribute the bidding documents? If a public agency spends more than its competitive bid threshold to make its bidding documents available online, they will need to conduct a competitive selection process to obtain the services of an online plan center or organization to post the documents online..

Who should pay to access documents? In the interest of increasing competition on public works projects, it is beneficial for agencies to have their bidding documents available to a wide array of contractors and subcontractors at little or no cost. Under some models, a public agency pays for the documents to be posted online, while other models have the contractors and subcontractors pay to access the documents.

What system is most convenient for the users? Agencies should consider issues such as accessibility of the bidding documents to small contractors and the ability of contractors and subcontractors to easily print relevant documents.

Access to DES bidding documents: DES intends to provide a PDF of its bidding documents to a number of plan centers for electronic access by bidders. Builders Exchange will be one of the plan centers that DES sends their documents to. However, because DES does not plan to pay Builders Exchange the per page fee (or pay a fee to any of the plan centers), DES' bidding documents will only be made available by Builders Exchange and other plan centers to paying contractor members of those plan centers, and will not be accessible by contractors or the general public who are not paying members.

Monday, May 28, 2012

50 Years Ago: President Kennedy's Memorial Day Proclamation

I hope and trust you enjoyed a good Memorial Day weekend with family and friends!

It's good to pause and remember those brave men and women in our military who have given their lives in conflicts through the years so that we might remain a free nation.

On May 18, 1962, President John F. Kennedy issued his Memorial Day Proclamation, which is reproduced below. His words are still relevant to our nation today - even 50 years later.

President Kennedy's Memorial Day Proclamation

Whereas the supreme and selfless sacrifice of those who gave their lives on the field of honor have made it possible for succeeding American generations to remain free and enjoy the spiritual and material blessings of our free society; and

Whereas the courage and ideals of our noble dead have contributed to the advancement of the cause of world freedom and stand as an inspiration to us all; and

Whereas in our time we face a challenge which demands of us the same virtues of loyalty, courage, and devotion to country that characterized our fallen heroes; and

Whereas Memorial Day each year provides a fitting occasion upon which Americans may not only pay tribute to our honored dead but also unite in prayer for success in our search for a just and lasting peace; and

Whereas to this end the Congress, in a joint resolution approved May 11, 1950 (64 Stat. 158), requested the President to issue a proclamation calling upon the people of the United States to observe each Memorial Day as a day of prayer for permanent peace:

Now, Therefore, I, John F. Kennedy, President of the United States of America, do hereby urge the people of the United States to observe Memorial Day, Wednesday, May 30, 1962, by invoking the blessing of God on those who have died in defense of our country, and by praying for a new world of law where peace and justice shall be assured for all; and I designate the hour beginning in each locality at eleven o'clock in the morning of that day as the time to unite in such prayer.

I also urge the press, radio, television, and all other media of information to cooperate in this observance.

In Witness Whereof, I have hereunto set my hand and caused the Seal of the United States of America to be affixed.

DONE at the City of Washington this Eighteenth day of May in the year of our Lord nineteen hundred and sixty-two, and of the Independence of the United States of America the one hundred and eighty-sixth.

Wednesday, May 23, 2012

State Charged with Public Works Procurement Process Reform

Under the terms of legislation approved this year, the Washington State Department of Enterprise Services (DES) will be conducting an ambitious review of the state's current public works procurement processes and will make reform recommendations.

The state's capital budget bill (ESB 6074 - Section 1022) outlined the charge to DES but allocated only $75,000 to complete the quick turn-around study.

Focus of report: Because of the limited funding for the study, DES may concentrate some of its focus on state agencies, although the legislation broadly applies to the state's "current public works procurement processes." The report is required to include historical data on:

Use of change orders
Use of Job Order Contracting
How competitive public works contracts are advertised
Contract closeout procedures

In addition, DES told the Capital Projects Advisory Review Board (CPARB) on May 10, 2012 that the study may address a number of other topics, including the following:

Best value procurement
Use of electronic signatures
Standardizing bidding thresholds for all agencies
Prequalification of contractors on Design-Bid-Build projects

Labor union concerns: The impetus for the study came from the state employees labor union (Washington Federation of State Employees) and the impact that some public works processes are having upon their work. For example, union representatives expressed concern in testimony to the Legislature that some public works change orders are outside the original scope of work of the project and represent work that state employees, and not contractors, should be performing.

Stakeholder input: In developing its report and recommendations, DES may consult with the Capital Projects Advisory Review Board (CPARB) for advice and assistance, and will also solicit input from various stakeholders.

Other concurrent studies: In addition to the study being conducted by DES, two other organizations are conducting reviews of public works contracting, specifically the alternative public works contracting processes authorized by RCW 39.10:

Capital Projects Advisory Review Board (CPARB)

Joint Legislative Audit and Review Committee (JLARC)

Public works legislation in 2013: It is anticipated that next year the Legislature will be reviewing significant legislation addressing public works procurement and contracting procedures:

CPARB: CPARB's intent is to recommend legislation to the Legislature in January 2013. That legislation will take into account recommendations from JLARC as well as CPARB's Reauthorization Subcommittee. It is anticipated that the legislation will make recommendations for certain changes to the GC/CM, Design-Build, and Job Order Contracting laws, and will authorize continuation of these alternative methods beyond June 2013, which is when the current law expires.

DES: DES is required to submit its report to the Legislature and Governor by December 15, 2012, and to include draft legislation to implement the recommendations in its report. This legislation will also presumably be considered by the Legislature in 2013.

Overlap between studies: All three reviews (DES, CPARB, JLARC) will be examining Job Order Contracting processes and practices.

Tuesday, May 22, 2012

Investigations Target Washington State's Minority Business Office

Washington State's Office of Minority and Women's Business Enterprises (OMWBE) is under investigation for potential fraud in how it has certified Disadvantaged Business Enterprises (DBE), which are required to be used on U.S. Department of Transportation funded projects.

Multiple investigations: Not only did KING 5 News run a 20 minute video expose on May 20, 2012 culminating their almost one year investigation, but Governor Christine Gregoire has asked the Washington State Patrol to conduct an investigation to determine whether OMWBE was involved in any criminal abuses of power. And because the DBE goals are used on federally funded transportation projects, the FBI is also investigating. In response to the mounting pressure, OMWBE's Director, Cathy V. Canorro submitted her resignation letter to the Governor on May 9, 2012, with her resignation effective on June 1, 2012.

Questionable DBE certification? KING 5 News tells the story of at least one certified DBE they claim should not have been certified because they are not really owned and operated by a disadvantaged person, and the owner apparently has no construction experience.

Front company? KING 5 News recounts the story of another DBE that didn't perform construction work with their own forces, but subcontracted the work to non-DBE firms, even though their participation on the project was what was used to meet the DBE requirements.

What are the facts? It's a complicated and important issue. If you're interested in finding out the details of the specific companies involved, what former OMWBE investigators had to say, the following are some links with additional information:

KING 5 News Up Front, "Fraud in the DBE," May 20, 2012. This video recounts the results of KING 5 News' investigation

"Wash. official resigns amid allegations of fraud," by Michael Bastasch, May 16, 2012, The Daily Caller News Foundation

Resignation letter of OMWBE Director Cathy V. Canorro, May 9, 2012 to Governor Christine O. Gregoire

Monday, May 21, 2012

What is Ordinary Maintenance and is it a Public Work?

What is Ordinary Maintenance and is it a Public Work?

This is one of the most frequently asked questions by those dealing with public works in the State of Washington.

Public Works Definition: RCW 39.04.010 defines a public work, in part, as follows:

What is not a Public Work: Based on this definition of a public work, "ordinary maintenance" is not a public work.

Ordinary Maintenance Definition: So, if ordinary maintenance is not a public work, what is it? WAC 296-127-010 notes that ordinary maintenance is not a public work and defines ordinary maintenance as follows:

Work performed by agency personnel While the definition of ordinary maintenance in WAC 296-127-010 is somewhat long and detailed, the key thing to note in the definition is that ordinary maintenance "is defined as work not performed by contract." The only work that would not be performed by contract is work that is performed with a public agency's own personnel. All other work is done by a contract with a contractor or service provider. Thus, work performed by an agency's own personnel, whether it is regularly scheduled or not regularly scheduled, is ordinary maintenance, and such work is not a public work.

Is Maintenance the same as Ordinary Maintenance? The short answer is that maintenance and ordinary maintenance are different, but that is the subject of another blog posting later.

Summary: Ordinary maintenance is work performed by an agency's personnel and is not a public work.

Sunday, May 20, 2012

Training: Public Works Bidding and Contracting

2 Day Class on Public Works Bidding and Contracting

When:

June 19-20, 2012 (9:00 a.m. to 4:00 p.m.) - Yakima, Washington (17 seats available)

June 27-28, 2012 (9:00 a.m. to 4:00 p.m.) - Ridgefield, Washington (15 seats available)

Instructor: Mike Purdy

Class Outline:

Types of Contracts
Bidding
Bid Receipt
Bid Guaranty
Bid Responsiveness
Award
Bidder Responsibility
Contract Execution
Prevailing Wages
Construction
Change Orders
Close-out
Alternative Public Works Contracting

Sponsored by: Washington Cities Insurance Authority (WCIA)

Cost:

Free - WCIA Members
$175 - Non-WCIA Members

Information and Registration: Click here.

Wednesday, May 16, 2012

Is a Bid Guaranty Required on Small Works Roster Projects?

Washington state authorizes some public agencies to solicit competitive bids for public works construction projects less than $300,000 without advertising the project in the newspaper. Instead, the invitation to bid is sent to firms on a Small Works Roster maintained by the public agency.

Bid guaranty requirements: Many types of public agencies have requirements for a bid guaranty (usually 5% of the amount of the bid) to be submitted with the bid. Bid guaranties come in the form of either a bid bond, cashier's check, certified check, or cash.

May the bid guaranty be waived? A project bid under the Small Works Roster process of RCW 39.04.155 is not required by state law to have a bid guaranty submitted. This is supported by the following:

Different procedures: RCW 39.04.155 notes that the Small Works Roster is "in lieu of other procedures to award contracts." Thus, even if the state law governing a particular agency type requires a bid guaranty on public works projects, the Small Works Roster procedures may be different.

Electronic bids: It is permissible under the Small Works Roster requirements for a public agency to accept telephone or electronic bids from contractors. If a public agency follows this practice, it would be impossible to accept an enforceable bid guaranty over the telephone or electronically. In other words, a photocopy of a bid bond, cashier's check, certified check, or cash would not be enforceable!

Should telephone or electronic bids be accepted? Even though it is permissible to accept telephone or electronic bids for Small Works Roster projects, without proper controls and documentation, this can be a problematic practice. If an agency does accept telephone or electronic bids under the Small Works Roster process, they should automatically waive the bid guaranty requirement. If the bid guaranty requirement is important to an agency, then bids should be submitted in hard copy format.

Tuesday, May 15, 2012

How to Respond When a Proposal Price Exceeds the Budget

Under a Request for Proposals (RFP) process, often used for selecting consultants and other service providers, evaluation criteria typically include:

Qualifications and experiences of the proposer and staff
Proposed approach to the project
Proposed price

Evaluate and Rate Proposals: Proposals are then evaluated and rated by the public agency, assigning points for each of the evaluation criteria based on the quality and appropriateness the proposal to the project.

3 options: But what happens when the highest ranked firm's price is too high and more than the money available in the budget for the project?

There are three options for addressing this situation:

Award to another proposer: Include language in the RFP alerting proposers that the agency reserves the right to award to other than the highest ranked proposer if their price exceeds the budget. The agency would then look to the second highest ranked proposer to see if their price was within budget. Here's some RFP language that I used in one recent RFP:

Negotiate: Because this is a proposal and not a bid, an agency may discuss the scope of work and price with the highest ranked proposer, and negotiate the price so that it is within the budget available.

Re-advertise: If it appears the proposers did not understand the agency's scope of work and made assumptions that drove the price up, an agency could choose to revise the scope of work and re-advertise the RFP, asking for new proposals.

Monday, May 14, 2012

Connecticut Approves Alternative Delivery Methods for Transportation Projects

The Connecticut Legislature has approved legislation authorizing the state's Department of Transportation to utilize both Design-Build and Construction Manager at Risk (CMAR) in its construction projects. Connecticut Governor Dannel P. Malloy is expected to sign S.B. 33.

Only 3 states with no Design-Build for transportation projects: With the new law, Connecticut will join 46 other states that authorize Design-Build for transportation projects. Only Iowa, Nebraska, and Oklahoma do not permit Design-Build for transportation projects.

Construction Manager at Risk (CMAR): This alternative delivery method, also known as CM at Risk, GC/CM (General Contractor/Construction Manager), and CM/GC (Construction Manager/General Contractor), involves selecting the contractor early in the design process based on qualifications and limited pricing (overhead and profit and general conditions costs). The contractor then provides input during design to the engineer or architect and is responsible for the actual construction. Laws vary, but often the contractor selects subcontractors based on a public bidding process and awards to the low bidder.

Design-Build: Under the Design-Build model, the public agency selects one firm under a single contract to both design and build the project. Design-Build provides for a more seamless process and is often faster than the traditional Design-Bid-Build method of public works construction.

State of Washington: The State of Washington permits the use of both GC/CM and Design-Build with various requirements outlined in RCW 39.10. A subcommittee of the state's Capital Projects Advisory Review Board (CPARB) is currently meeting to discuss recommendations for potential changes in the law that will be considered by the Legislature in January 2013. RCW 39.10 will expire in June 2013 unless reauthorized by the Legislature.

More information about Connecticut's law: Click on the following links for additional information about Connecticut's new law:

News Release from DBIA (Design-Build Institute of America), "Connecticut Passes Transportation Design-Build Law"

Fairfield County Business Journal article from May 9, 2012, "Design-build bill awaits Malloy's signature

Sunday, May 13, 2012

Job Opening: Manager, Purchasing and Supplier Diversity

Port of Tacoma (Washington)

Position: Manager, Purchasing and Supplier Diversity

Location: Tacoma, Washington

Closing Date: May 27, 2012

Salary: $5,517 per month to $7,173 per month

Job Summary: This position manages, administers and controls the Purchasing and Materials Management functions for the Port of Tacoma including operations and maintenance inventory requirements. This position also has responsibility for cultivating and nurturing a supplier diversity program.

For More Information and to Apply: Click here.

Wednesday, May 9, 2012

Do Your Bidding Documents Address Unbalanced Bids?

An unbalanced bid occurs in a unit price bid when the bidder artificially shifts a significant part of the costs for a project from one part of the work to another - to the potential detriment of the public agency.

Why do bidders unbalance their bids? Bidders may unbalance their bids in anticipation that certain units of work may be required during the project with significantly higher quantities than the estimated quantity for a particular unit price bid item. By bidding these unit prices high and other unit prices artificially low, the bidder is gambling and hoping that they can make additional profit on units that will be used more on the project - all the while still maintaining a competitive overall bid price to enable them to be awarded the project.

The problem with unbalanced bids: An unbalanced bid works to the potential detriment of a public agency which may end up spending more on a project because of this strategy of a bidder.

Bidding document language: It is important that bidding documents provide a public agency with the right to reject a bid that is materially unbalanced. Without such language, it may be harder to reject an unbalanced bid. The City of Seattle Standard Specification provides that the City may consider a bid irregular and reject it if:

Resources:

U.S. Department of Transportation. The Federal Highway Administration developed a May 16, 1988 memorandum on "Bid Analysis and Unbalanced Bids."

Seattle construction attorney John P. Alhers has written an excellent treatment of the subject on the blog of his law firm Ahlers & Cressman PLLC: "Unbalanced Bids and Unbalanced Schedules of Value - Hidden Dangers for Contractors and Owners."

Practical tip: Review your bidding documents to ensure they address unbalanced bids.

Tuesday, May 8, 2012

Job Transition: Alyce Benge Accepts Position in Arizona

Alyce Benge, CPPO

A long-time fixture in Washington state procurement circles, Alyce Benge, has accepted a position as the Purchasing Administrator for Arizona's third largest city.

Mesa, Arizona: Alyce will begin her new duties as the Purchasing Administrator for Mesa, Arizona on May 21, 2012. In her new job, she will lead a team of 12 buyers and other purchasing staff.

Leaving Port of Tacoma: Her last day in her current position as the Purchasing Manager at the Port of Tacoma will be May 16, 2012. Alyce is also the Vice President of the Washington State chapter of NIGP.

Career History: Her 25 year career in public procurement has included positions with the Issaquah School District, the State of Washington's Office of State Procurement, the Federal Way School District, Olympic College, and the City of Poulso. She has a degree from the University of Washington.

Best Wishes: Washington state's loss is Arizona's gain! She plans to still attend the 2012 NIGP Forum that will be held in August in Seattle.

Training: Competitive Construction Bidding

Competitive Construction Bidding

When: Thursday, May 17, 2012 (1:00 p.m. to 5:00 p.m.)

Where: Portland, Oregon (World Trade Center, 121 SW Salmon, Bldg. 2)

Agenda:

The Bidding Process - Update on the Traditional Low bidding Process

Alternative Public Project Procurement Process

Oregon's Model Procurement Rules, The Model Bidding Code, Bid Protests and Recent Cases

Contractor's Perspective on Bidding Construction Projects

Private Construction Bidding Procurement

Sponsored by: The Seminar Group

Cost: $325 for a single registration. Reduced fees for other categories

Information and Registration: Click here.

Monday, May 7, 2012

Can Price be Used in Selecting Architects and Engineers?

In selecting a consultant to provide architectural and engineering services, can a public agency use the proposed price as part of the evaluation and selection process? In most cases, the answer is "no."

State Laws: All but a handful of states have a Qualifications Based Selection (QBS) law. Some of these state laws apply only to state agencies and not local governments, while others apply to both state and local agencies. Click here for a state-by-state list of QBS laws. In Washington State, RCW 39.80 applies to state and local agencies and prohibits the use of price as a selection criterion.

Federal Laws: At the federal level, federal contracts and state and local agency projects funded with federal money are governed by the 1972 federal QBS law, known as the Brooks Act.

What is QBS? Under Qualifications Based Selection, the public agency is required to select the most qualified firm, without the cost or proposed price being requested or being included as an evaluation criterion. The parties then enter into negotiations about the scope of work and cost. In the event that negotiations are unsuccessful, the public agency may then enter into negotiations with the second most highly qualified firm.

What disciplines are covered by QBS? Various state and federal laws define architectural and engineering services covered by QBS differently.

Washington State: In Washington state, RCW 39.80 covers four disciplines under QBS: architecture, engineering, landscape architecture, and land surveying.

Federal Brooks Act: The following is the list of disciplines covered under the Brook Act. It is more expansive than the list of covered disciplines by Washington state law:

Federal Departments: Certain federal funding sources, such as the U.S. Department of Transportation [49 U.S.C § 5325(b)], augment the list of disciplines covered under the federal Brooks Act.

Practical tips:

State Law: Review the requirements of your state law regarding Qualifications Based Selection and what disciplines are covered.

Federal Law: If your project includes federal funds, the Brooks Act will apply. The particular funding agency may have other requirements that expand the list of what is covered by QBS.

Select Based on Qualifications: Ensure that your solicitation document, typically a Request for Qualifications, does not include price as an evaluation criterion.

Learn How to Negotiate: Because most government agencies are typically more comfortable just accepting the low bid, obtain proper training in how to negotiate the cost of architectural and engineering work.

Resources: The American Council of Engineering Companies (ACEC), a strong proponent of QBS laws, has a web page with some good resources describing the purpose and practice of QBS. Click here to visit their QBS resource page.

Sunday, May 6, 2012

The Cloud and Public Procurement

As technology develops and advances, it impacts how business is conducted - and it may have an impact on public procurement and contracting. One of the emerging trends of technology relates to cloud computing, in which data is stored on remote servers operated by others.

Eileen Youens is a Texas-based attorney and public procurement consultant. I've communicated with Eileen over the years and had the chance to meet her when I was in Texas last year providing consultant advice to a contractor there. Eileen has written a timely, clear, and thought-provoking blog post on "Public Procurement in the Cloud." She addresses the following topics in her article:

Explains what cloud computing is
Addresses how cloud computing might apply to public procurement
Outlines 5 concerns with cloud-based public procurement
Offers 5 suggestions for exploring and implementing cloud-based public procurement

Technology will continue to change how we work. Eileen's blog post is a great introduction to how cloud computing may impact public procurement and contracting in the years ahead. It's worth reading and thinking about. Click here to read it.

Wednesday, May 2, 2012

Reciprocal Bid Preference Law and GC/CM

Does Washington State's new reciprocal bid preference law (RCW 39.04.380) apply to GC/CM projects?

GC/CM Subcontract Bidding: The Department of Enterprise Services (DES) has stated that RCW 39.04.380 does not apply when the GC/CM conducts public bidding for selection of subcontractors on GC/CM projects. I agree with that interpretation.

GC/CM Selection: DES is reviewing their position on whether RCW 39.04.380 applies in the selection of a GC/CM by public agencies. From my review, it doesn't appear that the bid preference law applies to the selection of a GC/CM for the following reasons:

GC/CM Addressed in RCW 39.10: RCW 39.04 addresses Design-Bid-Build projects and thus RCW 39.04.380 is applicable only to Design-Bid-Build projects. On the other hand, RCW 39.10 addresses Alternative Public Works, including GC/CM, and lays out all of the requirements governing Alternative Public Works. The requirements for selection of a GC/CM are outlined in considerable detail and specificity in RCW 39.10.360. Because RCW 39.04.380 does not either directly or indirectly address its applicability to GC/CM projects, there is no basis to assume that the reciprocal bid preference requirements would apply to the selection of a GC/CM. If the Legislature had intended that the reciprocal bid preference requirements should apply to GC/CM selection, they would have been explicit in requiring it, since it would represent a modification to the process outlined in RCW 39.10.360.

Reciprocal Bid Preference is in Conflict with GC/CM Selection Process: RCW 39.10.360 (4) requires that the GC/CM be selected based on what contractor receives the highest number of points from the qualifications and pricing portion of the selection process. Thus, in many instances, the firm submitting the lowest price for the Percent Fee and Specified General Conditions costs is not the firm with the highest number of points, and they are not awarded the project. There is no reference in RCW 39.04.380 that the reciprocal bid preference applies to, or modifies, the clearly defined GC/CM selection process in RCW 39.10.360. Without any explicit reference in either RCW 39.04.380 or elsewhere in RCW 39.10 that the reciprocal bid preference applies to GC/CM selection, application of reciprocal bid preferences to GC/CM selection would be in violation of the requirements of RCW 39.10.360.

GC/CM Selection is Not a "Bidding Process": RCW 39.04.380 (3) indicates that the reciprocal bid preference is applicable to "any bidding process for public works." As noted above, the selection process for a GC/CM is not a bidding process, but is based on a Request for Proposals in which the contractor is selected based on qualifications and very limited pricing (less than 10% of the construction contract amount). In public procurement, there are really two basic models of how selection occurs. First, strict bidding in which price is the only determining factor in selection, used for Design-Bid-Build public works projects, purchase of goods/supplies/materials/equipment, and purchase of some non-consultant services. The second model is one in which selection is based on qualifications only or a combination of qualifications and price through either a Request for Qualifications or a Request for Proposals (RFP). This model is used for selecting architects and engineers, consultant services, and GC/CM contractors. An RFP process is not a "bidding process" as used in RCW 39.04.380, and thus it is not appropriate or correct to apply the reciprocal bid preference requirements to an RFP process, when the law clearly indicates it is to be used only for "bidding processes for public works."

Legislative Intent: In reading the legislative background on RCW 39.04.380, including the summary of committee meetings prepared by committee staff, there is no indication that RCW 39.04.380 was intended to apply to the GC/CM selection process. The Legislature, in adopting Alternative Public Works contracting procedures in RCW 39.10, established an entirely separate framework for the implementation of these alternative methods, including GC/CM.

More Information: It will be interesting to see what DES' position is on whether the reciprocal bid preference law applies to the selection of a GC/CM. Click here for more blog entries about bid preferences.

Tuesday, May 1, 2012

Free Online Course: Price Analysis, Cost Analysis, or Total Cost of Ownership

Free Online Course: Price Analysis, Cost Analysis, or Total Cost of Ownership: Determining the Best Approach

Sponsored by: Institute for Supply Management (ISM)

Cost: Free

More Information and Registration: Click here.

Wednesday, May 30, 2012

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Wednesday, May 16, 2012

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