Monday, October 7, 2013

Subcontractors List Not Required on Alternative Public Works Projects

In Washington state, the Legislature has gone on record declaring that the practice of "bid shopping" is against public policy. 
Bid shopping occurs when a contractor seeks to pressure a subcontractor to lower their price below another price the contractor has already received, since a lower overall price increases the chance of the contractor being the low bidder.
When is the Subcontractors List required?  Due to the different nature of contractor selection and bidding on what are known as alternative public works projects (those not solicited through the traditional or Design-Bid-Build method but through methods authorized in Chapter 39.10 RCW), the subcontractors list requirements of state law do not apply on alternative public works.  

What does state law require?  RCW 39.30.060 requires, for projects estimated to cost $1 million or more, that the prime bidder submit a list of subcontractors (for electrical, plumbing, and HVAC) with the bid (or within an hour of the bid submittal deadline).   Here's the relevant language:
Every invitation to bid on a prime contract that is expected to cost one million dollars or more for the construction, alteration, or repair of any public building or public work of the state or a state agency or municipality as defined under RCW 39.04.010 or an institution of higher education as defined under RCW 28B.10.016 shall require each prime contract bidder to submit as part of the bid, or within one hour after the published bid submittal time, the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for performance of the work of: HVAC (heating, ventilation, and air conditioning); plumbing as described in chapter 18.106 RCW; and electrical as described in chapter 19.28 RCW, or to name itself for the work."

Design-Build:  Under Design-Build, public agencies do not issue an "invitation to bid" as noted in the subcontractor list law cited above, but issue either a Request for Proposals or a Request for Qualifications, in which the Design-Builder is selected based on qualifications and cost or price related factors. Under legislation approved in 2013 by the Washington State Legislature, price may now be negotiated with the chosen Design-Builder once the design has progressed to a point where the price may be determined.  RCW 39.30.060, the subcontractors list law, was written to address Design-Bid-Build projects.  Under Design-Build, subcontractors are generally not even identified at the time a contractor submits their qualifications to the public agency, making submittal of the subcontractors list not possible.

GC/CM:  Like Design-Build, the GC/CM is not selected based on an "invitation to bid," but through a Request for Proposals process.  When the GC/CM is selected, subcontractors have not been identified as RCW 39.10.380 requires that the GC/CM competitively bid all subcontract work after the construction cost has been negotiated.  The subcontractors list law requires the prime contract bidder to submit the list with their bid, but with the GC/CM process, subcontractors submit bids to the GC/CM after the GC/CM has already been selected and has executed a contract with the public agency.

Job Order Contracting:  RCW 39.10.430 (6) is more explicit than the provisions for Design-Build or GC/CM and states that "the requirements of RCW 39.30.060 [subcontractors list] do not apply to requests for proposals for job order contracts."

Legislative changes:  For clarity, chapter 39.10 should be amended to explicitly exempt Design-Build and GC/CM projects from the requirements of RCW 39.30.060.  They are very different project delivery methods and the requirements for the subcontractors list simply do not apply to these methods of selection.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC


Kim Scattarella said...

How do I download a copy of your subcontractor's list found on pages 90-93 in "Demystifying Public Works Bidding & Contracting" ? I was in your class earlier this week.

Mike Purdy said...

I will send you via email a copy of the subcontractors list.