Wednesday, January 28, 2015

How Not to Implement Bidder Responsibilty Criteria on a Project

Establishing bidder responsibility criteria on public works construction projects can be a good idea.  It helps ensure that the low bidder is, in fact, capable and qualified to successfully perform the work.  Some public agencies, however, go about implementing responsibility in ways that are counterproductive and lack transparency. 

City of Des Moines, Iowa:  In September 2014, the City of Des Moines adopted what they grandiosely call the "City of Des Moines Taxpayer Quality Assurance Policy."  It only applies for building or facility projects estimated to cost more than $1 million.  In essence, it is intended to be a bidder responsibility law, but it is flawed in a number of ways:
  • More Prequalification than Responsibility:  The law requires that all contractors interested in bidding on a project must complete and submit "no later than two weeks prior to the deadline for accepting bids" a "General Contractor Quality Assurance Questionnaire" and respond to 26 questions.  Establishing bidder responsibility is generally determined after bids have been opened to assess whether the low bidder is responsible.  The City of Des Moines' questionnaire begins to look more like a prequalification process.
  • All bidders must complete questionnaire:  Unlike bidder responsibility practices, the City is requiring all bidders to complete and submit the questionnaire.  Because of the length and complexity of some of the questions, this may cause some bidders to decide not to bid on city work, thus reducing competition and increasing prices, or to bid on the project but increase their prices to recoup their costs in completing the questionnaire and to deal with the hassle of bidding with the City.
  • Responsiveness vs. Responsibility:  The City's practice of requiring the questionnaire prior to bidding makes submission of the form a matter of responsiveness initially before an analysis is even made of whether the bidder is responsible. In other words, if a bidder fails to submit the questionnaire by the deadline, presumably their bid is non-responsive. Documentation of bidder responsibility should never be made part of the bid process, but requested of the low bidder after bid opening.
  • Questionnaire is subjective:  The questions asked by the City are not actual bidder responsibility criteria, but collects information about which the City does not disclose what the basis will be of their evaluation of the questionnaire.  In other words, to properly implement bidder responsibility, there must be actual criteria and standards, so that anyone looking at the documentation submitted should be able to come to the same conclusion about whether the bidder met the criteria or not.  
Misguided effort:  The City of Des Moines' attempt to ensure responsible bidders is ultimately misguided.  It creates a subjective process that will discourage competition and increase costs. The policy also attempts to fix a non-existent problem.  According to the City's engineers, "in general, the City of Des Moines has not experienced major issues in its public bid construction program." Click here to read an excellent and more detailed analysis of the City's law from the law firm of Fabyanske Westra Hart & Thomson. 

Use bidder responsibility criteria:  The preferred method for implementing bidder responsibility is to publish actual criteria in the bid documents, and to then request documentation from the low bidder a certain number of days after bid opening demonstrating that they meet the criteria.  Criteria should be crafted in such a manner to not unduly restrict competition, but to establish a baseline threshold of the ability of the bidder to successfully perform the work.  Click here to read "Suggested Guidelines for Bidder Responsibility" published by the State of Washington's Capital Projects Advisory Review Board.

Presidential History:
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