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.

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