Merry Christmas and a Happy New Year!

Fighting the busyness:  The holiday season is often accompanied by even more busyness than what we usually experience during the year.  But it would be nice if it were a quieter time - a time to wait and prepare, a time to reflect and rejoice, a time to spend away from work and with family and friends. 

3 week break from this blog:  And so in the spirit of slowing down over the holidays, I will take a break from writing this blog for a couple of weeks.  I know that many of you will also be taking time off over the holidays, and I don't want to clutter your in-box with yet more e-mails to read come the first of the year.  I'll resume writing this blog in early January (unless there are any very time urgent subjects to communicate before then).  

Enjoy the holidays:  Until January, step back from your routines and enjoy the sights, smells, tastes, and meaning of this season, savoring each relationship, and remembering that each day we experience is a gift of grace.

President Obama's card:  Below is the President's holiday greeting card for 2012:

Merry Christmas and a Happy New Year!

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Report Recommends Reauthorization of Alternative Public Works Contracting Laws

JLARC recommendations:  In a December 5, 2012 proposed final report, the staff of the Washington State Joint Legislative Audit and Review Committee (JLARC) has recommended that the three alternative public works contracting methods of Design-Build, General Contractor/Construction Manager (GC/CM), and Job Order Contracting be reauthorized prior to their termination on June 30, 2013.  JLARC will meet in January to vote on adopting the report.

CPARB recommendations:  JLARC's review of RCW 39.10 (alternative public works contracting) was required by the Legislature and their recommendations will be important for the Legislature in considering reauthorization of RCW 39.10.  In addition, the Capital Projects Advisory Review Board (CPARB) made decisions and voted at their meeting of December 13, 2012 on specific language of the proposed reauthorization legislation.  Click here for a markup draft of the RCW 39.10 that CPARB considered along with a number of specific policy issues identified in the comments.  Not all of the items were approved by CPARB.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Job Opening: Contract Specialist with Private Company in Portland, Oregon

Manufacturing Company in the Portland, OR Metro Area

• Position:  Contract Specialist

• Location:  Portland, Oregon

• Closing Date:  Open until filled

• Salary:  $55,000 to $70,000 per year

• Job Summary: The manufacturing company seeking to fill this position through Aerotek is involved in a significant amount of contracting with the government, including the federal government.  The individual in this position will be responsible for composing contract letters, processing change orders, and manipulating files within MS Excel.  An understanding of engineering and manufacturing terminology is required.

• For More Information and to Apply:  Click here.  

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

IRS Increases 2013 Mileage Reimbursement Rate

The IRS has announced an increase in the standard mileage reimbursement rate from 55.5 cents a mile to 56.5 cents a mile, effective January 1, 2013.  Click here to read the announcement from the IRS.

Some Agencies Set Own Rate:  It's a good thing to remember, however, that not all state and local agencies may have adopted this standard on their contracts.  For example, under State of Washington guidelines issued from the Office of Financial Management (OFM), as of October 1, 2012, the authorized reimbursement rate for mileage was only 51 cents.

Check Invoices and Contracts:  If you're a public agency, make sure you check invoices carefully so that you pay the contractual mileage reimbursement rate you've agreed to.  If you're a contractor doing business with the government, review your contract before submitting an invoice so that you submit the correct rate on your invoices.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

3 Tools to Enforce Contractor Performance

There are three primary tools available to public agencies that are used to enforce lack of compliance by contractors on public works construction projects.

Bid guaranty:  If the contractor who has been awarded a public works project fails to execute the contract (sign it), a public agency may be compensated through the contractor's bid guaranty that was submitted with the bid.  Some of the common forms of bid guaranties are bid bonds, cashier's checks, certified checks, personal money orders, or cash.  A bid guaranty is for a specific percentage of the bid amount, typically 5%.

Liquidated damages:  If the contractor does not complete the work in a timely manner, consistent with the number of days provided for in the contract, a public agency may assess liquidated damages against the contractor for every day that substantial completion of the project is delayed until final completion.  Liquidated damages are not a penalty and must be specified in the contract.  Substantial completion occurs when the agency has beneficial use and occupancy of the facility for its intended purpose, even if all of the punch list items or other administrative matters have not been completed or resolved.

Performance bond:  If the contractor does not satisfactorily complete the work, goes out of business, declares bankruptcy, or otherwise disappears and does not perform the work they contracted with the public agency to perform, a public agency may contact the bonding company (surety) that provided a performance bond.  Under the terms of a performance bond, the surety agrees to complete the work consistent with the contract by either providing funding to the contractor, obtaining a new contractor to complete the work, or pay the public agency the dollar amount of the performance bond for the agency to complete the work.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Ensuring No Conflict of Interest for Consultant Evaluation Committee Members

One of the issues that can cause challenges, protests, and a lack of public confidence in the evaluation of proposals and qualifications on RFPs and RFQs occurs when a member of the evaluation committee has a conflict of interest with one or more of the proposers.

Subjective nature of evaluation process:  The evaluation process for selecting consultants and service providers based on RFPs or RFQs is, by its nature, more subjective than making selection decisions on bids where an award is based on price only.

Types of conflicts of interest:  Conflicts of interest can occur in the following situations:

• An evaluator has a financial or personal relationship with one of the proposers.  

• A member of the evaluator's immediate family has a financial or personal relationship with one of the proposers.

• There is an appearance or perception of a conflict of interest for an evaluator or member of the evaluator's immediate family, which, even if not real, may be just as damaging or problematic to the process, the project, and the reputation of the evaluator.

Require evaluators to sign statement:  My practice has been to require members of the evaluation committee to sign a Conflict of Interest and Confidentiality Statement before they are given the proposals to review. 

Here's language on the conflict of interest that I've included in the statement:

I understand and agree that I do not have a conflict of interest of a financial, relational, or other nature with any of the firms or key personnel of any of the firms I will be evaluating, and that there is no perception or appearance of such a conflict of interest that could arise.  I further agree that no member of my immediate family has any such conflict of interest.  "Immediate family" means a spouse or domestic partner, child, child of a spouse or domestic partner, sibling, sibling of a domestic partner, brother-in-law, sister-in-law, parent, parent of a spouse or domestic partner, a person for whom I am a legal guardian, or a person claimed as a dependent on my most recently filed federal income tax return.  The firms who have submitted proposals for this project are: [list firms here]

Practical steps:

• Code of Ethics:  Review your agency's code of ethics governing behavior of employees involved in procurement and contracting.  If you don't have such a code, develop one.

• Conflict of Interest Statement:  Ensure that evaluators of proposals and qualifications sign a Conflict of Interest and Confidentiality Statement before they are provided with proposals and qualifications to review and score.  If there is a conflict of interest, or an apparent conflict of interest, they should be replaced on the evaluation committee with another member who does not have a conflict of interest.

• Training:  Provide regular training for your agency's personnel on the importance of ethics in public procurement and contracting.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Design-Build Certification Workshop

Design-Build Certification Workshop

When:   January 13 - 18, 2013 (7:15 a.m. to 5:00 p.m.)

Where:  Spokane, Washington (222 Wall Street, Wheatland Bank Building)

Sponsored by:  Design Build Institute of America (DBIA).  This week long certification workshop is designed to provide all of the core classes in one week required for obtaining certification by DBIA as a DBIA professional.

Cost:  

• $2,150 (DBIA members)
• $3,150 (Non DBIA members)

Schedule and Agenda:

• Day 1:  Fundamentals of Project Delivery
• Day 2: Principles of Design-Build Project Delivery
• Day 3: Design-Build Contracts & Risk Management
• Day 4: Post Award Design-Build
• Day 5: Certification Exam Prep

Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

When Should Retainage be Released if a Retainage Bond Has Been Submitted?

Most public works construction projects require public agencies to withhold a certain percentage of each progress payment as retainage.  But what happens when an agency accepts a bond in lieu of withholding retainage?  When should retainage then be released (or not withheld)?

Release retainage after approval of bond:  When a contractor submits a bond in lieu of the public agency withholding retainage, it may be submitted anytime (prior to work beginning, prior to first payment, during the term of the contract, at the end of the project).  Once a retainage bond has been approved by the public agency, any retainage previously withheld should be released, and any future progress payments should be for the full amount, without retainage being withheld.

Washington state law:  Here's what RCW 60.28.011 (6) states about retainage bonds:

A contractor may submit a bond for all or any portion of the contract retainage in a form acceptable to the public body and from a bonding company meeting standards established by the public body. The public body shall accept a bond meeting these requirements unless the public body can demonstrate good cause for refusing to accept it. This bond and any proceeds therefrom are subject to all claims and liens and in the same manner and priority as set forth for retained percentages in this chapter. The public body shall release the bonded portion of the retained funds to the contractor within thirty days of accepting the bond from the contractor. Whenever a public body accepts a bond in lieu of retained funds from a contractor, the contractor shall accept like bonds from any subcontractors or suppliers from which the contractor has retained funds. The contractor shall then release the funds retained from the subcontractor or supplier to the subcontractor or supplier within thirty days of accepting the bond from the subcontractor or supplier.

Have your own bond form:  It's a good practice for agencies to have a standard retainage bond that must be used by contractors. This helps to ensure that the language in the bond is sufficient to adequately protect the agency's interests.

Retainage purpose and amounts vary:  The purpose and amount of retainage varies by state.  In Washington, retainage of 5% is established as a trust fund for the protection of claimants (subcontractors, suppliers, workers subject to prevailing wages, and various state agencies for payment of taxes and premiums).

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

How Frequently Should Certified Payroll Reports be Submitted by Contractors on Public Works Projects?

Federal prevailing wage requirements on public works construction projects requires that the contractor and all subcontractors, regardless of tier, submit weekly certified payrolls to the public agency.

Audit finding:  Some public agencies with federal funding on a project do not pay attention to the requirement for weekly payrolls.  Sometimes, they don't collect the payroll reports at all, or they collect them in batches from the contractor (not weekly), or collect them at the end of the project.  The largest county in Washington, King County, recently received a finding from the Washington State Auditor's Office (see page 56) for failing to enforce the submission of weekly payroll reports.  Instead, the county collected payrolls at the end of their projects.

Best practices:  If you have public works construction projects with federal funding, pay attention to the following:

• Frequency:  Are you collecting payroll reports weekly from the contractor and all subcontractors?

• Subcontractors:  Do you have a system for determining what subcontractors are working on site?

• Reviewing payrolls:  Are you reviewing the certified payroll reports on a weekly basis to ensure that prevailing wages are being paid to the workers?  As part of your review, are you evaluating the following: a) whether the classifications reported are appropriate, b) the hourly wage rate is at least the prevailing wage rate, c) the proper overtime rates are being paid, d) apprentices are registered apprentices who may be paid less than the journey-level wage, e) the payroll report is signed by an authorized individual?  

• Documenting your review:  Are you documenting your review of the payrolls by marking the payroll reports?

• Weekly pay:  Are you monitoring to ensure that the contractor and their subcontractors paying their workers on a weekly basis?  This is required by the federal Davis-Bacon Act.

• Worker interviews:  Are you interviewing a representative sample of workers on-site, asking them questions about what work they are performing and how much they are being paid?  Are you correlating this information with what is reported on weekly payroll reports?

• Invoices:  Do you have a process that ties in your approval of a contractor's monthly pay application and invoice with your review and approval of the weekly payroll reports?

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Upcoming Events

NIGP Annual Forum:  This annual conference for the National Institute of Governmental Purchasing will be held from August 24-28, 2013 in Orlando, Florida.  Early bird discount registration ends April 30, 2013.  Click here for more information about the Forum. 

NIGP - Washington State Chapter Annual Meeting:  The annual meeting of NIGP's Washington State chapter will be held on January 17, 2013 from 8:30 a.m. to 3:30 p.m. at Seattle City Hall.  In addition to the annual business meeting and awards, there will be presentations by the State Auditor's Office's Local Performance Center and Sound Transit on the process for their recent Pareto Award by NIGP.  I will also be speaking and updating attendees on developments related to On-Call Public Works Contracts that the State Auditor's Office and Department of Labor and Industries have recently raised questions about.  Click here for more information, to see the agenda, and to register for this $25 event (member price).

King County CSO Program Updates:  This January 17, 2013 meeting of the Pacific Northwest Chapter of the Construction Management Association of America will provide an update on King County's CSO program.  The cost for this dinner meeting (5:30 p.m. to 8:00 p.m.) is $45.  Click here for more information.

How Technology Advances Can Maximize Integrated Delivery:  Sponsored by the Design-Build Institute of America - Northwest Region, this breakfast meeting will be held on December 12, 2012 from 7:15 a.m. to 9:00 a.m.  The meeting will discuss BIM technologies as well as collaborative communication through Go To Meeting and other tools.  Cost is $65 for members and $90 for non-members.  Click here for more information and to register.

Why Design-Build Was the Best Delivery Method:  Sponsored by the Design-Build Institute of America - Oregon Chapter.  On December 11, 2012, from 7:15 a.m. to 9:30 a.m., there will be a Design-Build case study presented on why Design-Build was the best delivery method for the new Portland home office of contractor Lease Crutcher Lewis.  After the breakfast and presentation, there will be a tour of the new building, a block from the meeting location.  Click here for more information.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Consultant Selection - New Orleans Style

I posted a blog entry last week about my speech in New Orleans in which I spoke on "Best Practices in Public Sector Consultant Selection."  I was invited to speak there to help raise public awareness of some troubling selection practices being used in the region.

Unusual selection process:  Jefferson Parish (like a county) has a very unorthodox and problematic process for consultant and service provider selection.  After an evaluation committee has scored proposals based on established criteria and weighting, the results are provided to the elected Parish councilmembers.  The Council then allows the councilmember in whose district the work will be performed to make the selection without regard to the evaluation scoring.  

Ethical problems with the process:  This process used by Jefferson Parish encourages corruption and favoritism in the selection process by the Parish Council.  Decisions are often made on the basis of campaign contributions and personal relationships. 

• Campaign contributions:  A May 2012 report by the New Orleans based non-profit Bureau of Governmental Research noted that "the current council members received roughly $580,000 in campaign contributions in 2011 from parish service contractors and their principals.  This amount accounted for 43% of the contributions the councilmembers received last year." 

• Less than the best of reasons:  In selecting the fourth ranked firm to design an $18 millions performing arts center, the councilmember who made the decision noted, according the the BGR report, that he made the selection because "the selected architect was the only firm to contact him regarding the project and that he was impressed with the firm's enthusiasm." The project design has been a problem and the project is now years behind in schedule with cost overruns of 67% of the project budget.

Should price be a criterion for RFPs?  One of the debates that Jefferson Parish is having is the role of price in evaluating proposals and making selections.  Parish President John Young argues that price should be the only factor for many services.  My experience is that price should be a factor for all non-architectural and engineering services.  The amount that is scored based on price should vary depending on the type of service and how clearly defined the scope of work is.  The more clearly defined the scope of work, the lower the percentage of points that should be attributed to price.  Parish councilmembers now appear willing to consider price as one of the factors in evaluating RFPs. The discussion seems to revolve around establishing a set percentage for price on all RFPs, something I think would not be in the best interests of projects or Jefferson Parish.  See the November 29, 2012 newspaper article from The Times-Picayune newspaper.

Media coverage:  A number of newspaper reporters were present at the November 27, 2012 event at which I spoke and ran articles on it.  Here are links to the newspaper stories:

• Jefferson Parish President John Young says price should be factor in professional contracting. The Times-Picayune, November 27, 2012.  

• Contract process "appalling" - Group says changes needed to improve quality, fairness.  The Advocate, November 29, 2012

Resources:  

• Private Services in the Public Interest:  Reforming Jefferson Parish's Unusual Approach to Service Contracting.  Bureau of Governmental Research, May 2012 report. 

• Best Practices in Public Sector Consultant Selection. My presentation at the November 27, 2012 breakfast briefing sponsored by the Bureau of Governmental Research.  Please contact me if you'd like me to email you a copy of my PowerPoint.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com