Happy New Year!

Best wishes for a wonderful new year! May it be a year of great personal and professional satisfaction for you.

During 2008, this blog received more than 4,700 visits from 62 countries around the world.

In 2009, I will continue to provide timely and relevant information to help government agencies and businesses in the area of contracting.

Michael E. Purdy Associates
Strategies - Solutions - Training

New 2009 IRS Mileage Reimbursement Rates

The IRS announced that the optional standard mileage rates for 2009 will decrease from 58.5 cents per mile (applicable to the last six months of 2008) to 55 cents per mile, effective January 1, 2009.

The reduction is in recognition of decreases in the price of gas over the last number of months. In the middle of 2008, the IRS took the unusual step of increasing the mileage reimbursement rate from 50.5 cents per mile to 58.5 cents per mile in recognition of spiking gas prices. The 2009 rate announced reflects the declining price of gas.

The IRS announcement on the new mileage reimbursement rate may be found on the IRS website.

Force Majeure and Winter Storms

With the severe winter snow storm that has engulfed much of Washington state, and for that matter the northern part of the nation, it's a good time to think about "Force Majeure" and how that impacts public works construction projects.

"Force Majeure" is a French term, literally meaning "superior force" and is often referred to as "Acts of God." Depending on your contract provisions, Force Majeure may include the following:

• Acts of God or the public enemy
• Acts of omissions of any government entity
• Fire, earthquake, or other casualty for which the contractor is not responsible
• Quarantine or epidemic
• Strike, embargo, or defensive lockout
• Unusually severe weather conditions, such as storm, flood, or hurrican which could not have been reasonably anticipated
• Unusual delay in receipt of supplies or products which were ordered and expedited and for which no substitute reasonably acceptable to the owner was available
• Acts of terrorism
• Riots, wars, invasions, acts of foreign enemies, civil war

It is the item about "severe weather conditions" that is particularly relevant now. The cold temperatures, and the accompanying snow and ice are clearly beyond what the area normally anticipates, as witnessed by the fact that the weather conditions are viewed by many as the worst in at least a dozen years.

Again, depending on the terms of your contract provisions, a contractor is generally entitled to an extension of time for performance delays directly attributable to Force Majeure, but not entitled to an adjustment in the contract amount. Be sure to read the terms of your contract carefully in evaluating contractor claims for either additional time or money based on Force Majeure.

Please contact me if you have any questions about how to apply the terms of your contract to delays resulting from Force Majeure.

Merry Christmas!

Best wishes to you and yours for a wonderful holiday celebration!

Training on Problem Construction Projects

Recognizing a Problem Project Before it Becomes One & What to Do if you Have one

When: January 9, 2009

• 6:45 a.m. to 9:30 a.m. - breakfast seminar
• 9:45 a.m. to 4:30 p.m. - all day workshop

Where: Seattle Airport Marriott (Sea-Tac) - 3201 South 176th Street, Seattle, WA 98188

Cost:

• Breakfast Seminar: $78
• All Day Workshop: $248

Sponsored by: Construction Seminars Northwest

For more information and to register, click here

Public Works Emergencies

If you have an event that requires the declaration of an emergency and waiver of competitive bidding requirements (see RCW 39.04.020), it's a good idea for the emergency declaration to also waive the competitive selection process for obtaining the services of the disciplines covered under chapter 39.80 RCW (architects, engineers, landscape architects, and land surveyors). It may be necessary as part of the emergency to have some design work performed and waiving the selection procedures under chapter 39.80 RCW can help facilitate the project.

Port of Seattle Changes Estimate on Project

Port of Seattle staff changed their internal estimate on a project to build a new cruise ship terminal near the Magnolia Bridge after the bids came in 30% over the Port's estimate. By changing the estimate after bids were submitted, Port staff avoided having to notify the Port Commission of the higher bid. The Port's policy requires that any bid that is more than 10% higher than the estimate must be submitted to the Commission for review.

Read the Seattle Times article from December 18, 2008 for more details.

RCW 39.04.020 is the state law that requires public agencies to develop estimates on public works projects. In summary, it requires the following for any public works project:

• Develop plans and specifications
• Develop an estimate of the cost of the work
• Have the plans, specifications, and estimate filed in the office of the individual or body authorized to require the work
  
• Have the plans, specifications, and estimate approved by the authorized individual or body

The law doesn't address the issue of modifying the estimate after bids have been submitted. Such a practice does appear to circumvent the public's interest, and in the case of the Port, appears to be at variance with the Port's internal policies that requires Commission approval of contract awards where the low bid is 10% or more of the estimate.

What practices does your public agency use with respect to development of estimates?