Are Reincarnated Construction Companies Responsible Bidders?

As a public agency, you've had less than satisfactory experiences with a particular contractor that has not performed well and that has left a trail of lawsuits and claims on previous projects.  Perhaps you've included bidder responsibility criteria in your bid documents to help ensure that the contractor will not meet the objective criteria and is not awarded future projects. 

Reincarnated contractor:  But what if the contractor closes down the construction company and the same owner simply re-opens a new construction company?  It's highly likely that you will continue to experience the same problems with the reincarnated company.  Is there anything you can do about this? 

Bidder responsibility criteria:  The Washington State Capital Projects Advisory Review Board (CPARB) has published Suggested Guidelines for Bidder Responsibility that outlines tools for public agencies to use in developing what is known as Supplemental Bidder Responsibility Criteria.  Here are a couple of the generic criteria included in the Guidelines:

• Claims Against Retainage and Bonds:   The Bidder shall not have a record of excessive claims filed against the retainage or payment bonds for public works projects during the previous three years, that demonstrate a lack of effective management by the Bidder of making timely and appropriate payments to its subcontractors, suppliers, and workers, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner.

• Lawsuits:     The Bidder shall not have lawsuits with judgments entered against the Bidder within five years of the bid submittal date that demonstrate a pattern of failing to meet the terms of contracts, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner. 

Responsibility criteria addressing ownership:  The challenge with the responsibility criteria above is that it does not address a company with a poor record that has simply opened up a new company with the same ownership.  Here are some suggested edits to the criteria that may help to address this situation:

• Claims Against Retainage and Bonds:   The Bidder shall not have a record of excessive claims filed against the retainage or payment bonds for public works projects during the previous three years, that demonstrate a lack of effective management by the Bidder of making timely and appropriate payments to its subcontractors, suppliers, and workers, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner.  For the purpose of this criterion, "Bidder" shall include the registered construction company submitting the bid, as well as the owner(s) of the company and any other construction companies the owner(s) may currently or previously have owned.

• Lawsuits:     The Bidder shall not have lawsuits with judgments entered against the Bidder within five years of the bid submittal date that demonstrate a pattern of failing to meet the terms of contracts, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner.  For the purpose of this criterion, "Bidder" shall include the registered construction company submitting the bid, as well as the owner(s) of the company and any other construction companies the owner(s) may currently or previously have owned.

Talk with your attorney:  Think strategically about what Supplemental Bidder Responsibility Criteria you include in your bid documents, and talk with your attorney as you develop language to deal with ownership of previous construction companies as part of the criteria.

Mike Purdy's Public Contracting Blog
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