Monday, January 28, 2013

Petition Fails to Force New Hampshire Town to Competitively Bid Work

The town of Auburn, New Hampshire (population 4,953 in 2010) has no policy requiring that work be competitively bid.

Petition filed:  The town's lack of a competitive bidding policy prompted some local residents to obtain signatures and file a petition calling for a vote of the citizens that would require the town to adopt a competitive bidding policy:
"requiring that the town and all its departments utilize a competitive bidding system for the expenditure of funds for acquisitions of property, equipment, services, repairs, construction, maintenance, road construction, road repairs, road maintenance, goods, etc."
Petition fails to qualify:  The petition never made it to a vote after the town clerk after discovering that some of the signatories to the petition were not registered voters.

Too expensive to competitively bid work?  Apparently, neither the town nor the state has a law requiring competitive bidding.  Town Administrator Bill Hermon argues that it's too expensive to bid a public works project because of the cost of developing plans and specifications so that all bidders can bid on the same work.  He stated:
"If you were going to put road work out to bid, there's a big expense up front to the extent that if you're going to be fair in a bid process, you're going to have to give all the bidders the same set of standards on which to bid.  So there's going to be detailed plans and expectations with (engineering) costs between $10,000 to $20,000 per project.  So there's a pretty bid expense before you can even begin the physical work."
Town's practice:  Instead of competitively bidding projects, the town establishes rates that contractors must agree to.  The town also buys the materials themselves for installation by contractors, eliminating the markup that contractors charge.  

Problems with the town's approach:  The town's approach to procurement is highly unusual and unorthodox and not in keeping with best practices for public procurement and contracting.  Without competitively bidding work, there are a number of issues raised.  Here are just a few of the issues:
  • Are rates low?  Are the town's pre-established rates competitive or could the town obtain a lower price through bidding?
  • Liability issues:  There may be warranty and other liability issues raised by requiring the contractor to install town purchased materials and equipment.
  • Perception about fairness:  There may be a public perception that the town favors just a few contractors and vendors, rather than opening up town business to all.
  • Quality of work:  Without detailed plans and specifications that have been developed by an architect or engineer, the town may not be obtaining the best quality or design of the work, which may ultimately lead to higher costs for the town.
More information:  Click here for more information.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC

No comments: