Thursday, August 30, 2007

Regional Small Business Development Program

The Seattle Public Schools and Sound Transit are launching a Regional Small Business Development Program designed to help train small contractors and provide them with the tools to be competitive in the marketplace. The training is free. The categories of training include contracting, management, finances, marketing, and human resources, with specific classes under each of these areas. The introductory class is on September 11th. The classes are scheduled from September through February 2008. For questions about the program, call (206) 252-0561 or email There is a printed brochure available with more detailed information about the training offered.

Wednesday, August 29, 2007

Plans & Specs for the Low Bidder

Do your contract documents clearly state how many copies of the plans and specifications you will provide, free of charge, to the successful bidder versus what the contractor must pay for themselves? Without clear specification language you may find yourself either in a fight with the contractor (not a good way to start a project) or paying for additional plans and specifications for the contractor that you didn't budget for.

Here's some suggested language that you may want to consider including in your bidding documents:

"After award of the Contract, the Owner shall make available to the Contractor, without cost to the Contractor, any sets of Contract Documents that have been returned from plan holders. All other sets of Contract Documents required by the Contractor for the Project shall be obtained by the Contractor at the Contractor's sole cost."

Determining the Low Bidder with Additives and Alternates

If your bid form includes Additives, Deductives, or Alternates (see previous blog post from August 28th for more information), it is very important to make sure that you award the contract the bidder with the lowest bid of the combination of the base bid and Additives, Deductives, or Alternates that you choose to exercise.

Even if one bidder is the low bidder on the base bid, they may not be the low bidder when you add an Additive, Deductive, or Alternate bid. You should be comparing all bidders against the same combination of bids to determine who the low bidder is. In other words, if you choose to exercise Additive number 1 and 3, you should do a comparison of the price from all bidders on the base bid and Additives 1 and 3 to determine who is the low bidder on that combination.

Your decision of which Additive, Deductive, or Alternate bids to exercise should be based on funding availability and sound business reasons related to the project, and not on who your favorite bidder is. Not managing this part of the process correctly may subject you to both protests and/or audit findings.

In addition, you should not do a change order for any of the Additive, Deductive, or Alternate bids if such a decision, made at the time of bid submittal, would have changed the order of who you awarded the contract to.

Tuesday, August 28, 2007

Additives vs. Alternates

What's the difference between an Additive bid and an Alternate bid? What's a Deductive bid? Or an Additive Alternate bid? Different public agencies use the terms differently, but in my mind, here's what they mean.

An Additive bid is a body of work that the owner may award with the base bid if there is sufficient funding after the bids are received. By contrast, a Deductive bid is a body of work that the owner may delete from the base bid if there is insufficient funding to award the full base bid. The purpose of both Additive and Deductive bids is to build flexibility into the bidding process so that the owner can award the maximum amount of the project possible dependent on funding available. Additive and Deductive bids are often termed as bid protection tools.

The following is a potential bid form structure for requesting Additive bid prices:

Additive No.:

Description of Additive Bid:

Additive Bid Amount:







By contrast, an Alternate bid is a bid in which the owner asks for prices for an alternate method of constructing something in the base bid or using alternate materials. The alternate price would be the differential between the price included in the base bid and the price for the alternate method or material. In developing your bid form, it's important to make sure that you're clear that the alternate bid amount should be the differential price. An Alternate bid may be either an increased dollar amount or a reduction in dollars, depending on the nature of the alternate. In this sense, some people will refer to an Alternate bid as either an Additive Alternate (if the differential price is an increased amount), or a Deductive Alternate (if the differential price is a decreased amount). Personally, however, I think such terminology confuses the difference between Additives/Deductives and Alternates.

The following is a potential bid form structure for requesting Alternate bids:

Alternate No.:

Description of Alternate Bid:

Additive or Deductive

Alternate Bid Amount:







More later on determining the low bidder when you have Additive and/or Alternate bids, and things to avoid.

Saturday, August 25, 2007

Supplemental Bidder Responsibility Criteria

I have recently written language for the University of Washington's "Instructions to Bidders" that provides a framework for how to handle the use of supplemental bidder responsibility criteria. If you recall, SHB 2010 defines bidder responsibility in Washington state.

The following is the language I've written for both mandatory and supplemental bidder responsibility criteria. Note that you need to fill in the supplemental criteria based on your specific project. The Task Force for Bidder Responsibility, part of CPARB, is working now to finalize suggested guidelines for implementing this new law.

The following is the language from the "Instructions to Bidders" for both mandatory and supplemental criteria:

A. It is the intent of Owner to award a contract to the low responsible bidder. Before award, the bidder must meet the following bidder responsibility criteria to be considered a responsible bidder. The bidder may be required by the Owner to submit documentation demonstrating compliance with the criteria. The bidder must:

1. Have a current certificate of registration in compliance with chapter 18.27 RCW, which must have been in effect at the time of bid submittal;

2. Have a current Washington Unified Business Identifier (UBI) number;

3. If applicable:

a. Have Industrial Insurance (workers’ compensation) coverage for the bidder’s employees working in Washington, as required in Title 51 RCW;

b. Have a Washington Employment Security Department number, as required in Title 50 RCW;

c. Have a Washington Department of Revenue state excise tax registration number, as required in Title 82 RCW;

4. Not be disqualified from bidding on any public works contract under RCW 39.06.010 or 39.12.065(3).

Specifier – If no supplemental bidder responsibility criteria will be applied in the evaluation of the low bidder, delete paragraphs B, C, and D below.

If supplemental bidder responsibility criteria relevant to the project will be applied in the evaluation of the low bidder, the following paragraphs B, C, and D should also be included. The criteria should be included in paragraph B, and the documentation to be submitted by the bidder must be stated in paragraph C. If the A/E and/or UW Project Manager believe that supplemental bidder responsibility criteria should be used on the project, consult with the Contracts Manager in the UW Capital Projects Office [(206) 221-4235] as soon as possible for discussions and development of the criteria.

B. In addition to the bidder responsibility criteria above, the bidder must also meet the following relevant supplemental bidder responsibility criteria applicable to the project:




C. As evidence that the bidder meets the bidder responsibility criteria in paragraph B above, the apparent low bidder must submit the following documentation to the Owner within 48 hours of the bid submittal deadline. The Owner reserves the right to request such documentation from other bidders also.




D. If the Owner determines the bidder does not meet the bidder responsibility criteria in paragraph B above and is therefore not a responsible bidder, the Owner shall notify the bidder in writing with the reasons for its determination. If the bidder disagrees with this determination, it may appeal the determination within 24 hours of receipt of the Owner’s determination by presenting additional information to the Owner. The Owner will consider the additional information before issuing its final determination. If the final determination affirms that the bidder is not responsible, the Owner will not execute a contract with any other bidder until two business days after the bidder determined to be not responsible has received the final determination.

Two New Training Opportunities

Strategic Procurement Skills and Techniques: GA Annual Training Conference and Trade Show:

Wednesday, August 22, 2007

Incentive Payments for Early Completion

In addition to including liquidated damages in your bidding documents for a public works project, you may find it beneficial to include an incentive clause in your documents for early completion of the project, especially if early completion will earn you more revenue or inconvenience the public less, or for other good reasons.

If you do this, it's really important to manage the project in the field effectively. Downsides of including an incentive clause include the following:

  • The contractor may cut corners in an effort to complete the work early. You'll need to watch to ensure this doesn't occur and that the contractor meets the requirements of the specifications.
  • The contractor may allege that the owner has delayed the project and that without such delays, the contractor would have received the incentive.
  • The contractor may have bid the project and been the low bidder based on his/her assumption that they would earn the incentive payment.
If you've been reading the newspapers, you'll see that the contractor on the I-5 project in downtown Seattle is, at this point, scheduled to finish about five days early, earning $100,000 a day for every day they finish the work before the deadline.

Bid Protests

Just a reminder that RCW 39.04.105, which applies to municipalities (cities, counties, towns, districts, other public agencies - See RCW 39.04.010 for definition), establishes a procedure for how to deal with bid protests on public works projects.

  • Protest must be submitted in writing no later than two full business days following bid opening.
  • Municipality can't execute contract with any other bidder than the protesting bidder without providing at least two full business days' written notice of the intent to execute a contract for the project.
It's a good idea to make sure you have protest procedures in your bidding documents that are consistent with the State law.

Friday, August 17, 2007

New Laws Require Changes in Contracts

A number of new laws passed by the Legislature this last session will require that public agencies modify their bidding and contract documents.

For example, SHB 2010 on bidder responsibility has mandatory requirements for what constitutes a responsible bidder (this will also change each agency's practice on determining the responsible bidder) and on subcontractor responsibility (requiring language in every public works contract).

The other area, of course, relates to alternative public works. All existing GC/CM documents will need revision including the contract with the GC/CM, the architect/engineer, etc. There are specific reporting requirements for the contractor, architect/engineer, and public agency for these contracts and these requirements should be made into contractual terms.

Thursday, August 9, 2007

CPARB Meeting Canceled

I was scheduled to brief the Capital Projects Advisory Review Board (CPARB) today on the draft Suggested Guidelines for Bidder Responsibility. However, due to the fact that they could not muster a quorum, the meeting was canceled. The plan from here is to try and finalized the guidelines, especially the appendices, and then have the task force review them, report back to the Industry-Wide Subcommittee, and then CPARB at their September meeting.

Upcoming Training Opportunities

Purchasing, Bidding, and Contract Management:

Prevailing Wage Workshop:

Implementing 2007 Legislative Changes for Public Works Projects:
  • Dates: Sept. 12th (Camas), Sept. 18th (Everett), Sept. 27th (Renton)
  • Sponsored by: APWA and MRSC
  • Teachers: Nora Huey (King County), Gretchen Johnson (KBA), John Carpita (MRSC), Laura Herman (L&I), others
  • Cost: Free
  • Information at:
Washington Construction Law:

Wednesday, August 8, 2007

Type of Bonds

For public construction contracting, there are a variety of bonds to be aware of:

1) Bid Bond. A guaranty by a bonding company that the bidder will enter into a contract with the owner if awarded the project. Normally, these bonds are in the amount of 5% of the amount bid, and they serve to compensate an owner if a bidder fails to enter into a contract if awarded the contract.

2) Payment Bond. A bond issued by a bonding company guaranteeing that the bonding company will ensure that a contractor will pay its subcontractors and suppliers. This bond is normally in the amount of 100% of the amount of the contract award. RCW 39.08.

3) Performance Bond. This bond is often issued in conjunction with a Payment Bond and thus the bond serves a dual purpose guaranteeing both payment (see above) and that the contractor will perform and complete the work. If the contractor fails to perform and complete the project, an owner may turn to the bonding company to have them complete the work through hiring a contractor. RCW 39.08.

4) Retainage Bond. This bond may be submitted by a contractor in lieu of the owner withholding 5% of each progress payment to the contractor for retainage. The bonding company guarantees to pay any claims that would otherwise be due under actual retainage withheld by the owner. RCW 60.28.

5) Contractor's Registration Bond. Every contractor registered as a contractor in the State of Washington is required to post with the Department of Labor and Industries a bond. A general contractor must post a $12,000 bond, and a specialty contractor (one trade only) must post a $6,000 bond. RCW 18.27.

Construction Court Cases - Resources

A professor at the University of Washington, Steve Goldblatt, has a great website that provides links to key court cases dealing with the construction industry in Washington State. You can find it at this website address. There is also a link to this website on my website at under the Resources page.

Monday, August 6, 2007

When to Get Contractor's Registration Number

SHB 2010 (bidder responsibility) requires that before a public agency awards a public works project, they must verify that the bidder has a Washington State contractor's registration number issued by the Department of Labor and Industries. The registration must have been effective as of the bid submittal deadline, but an agency does not need to check that each bidder has the number before they submit a bid. It is only after bid opening and prior to award that the agency must check to make sure that the bidder not only has a current contractor registration number, but had one in effect as of the bid submittal deadline. it is against the law for an unregistered contractor to submit a bid.

There are other mandatory bidder responsibility criteria that public agencies must also check prior to award of a public works contract. SHB 2010 became effective on July 22, 2007 and is thus the law now.

Update - Bidder Responsibility Guidelines

The Industry-Wide Subcommittee of the Capital Projects Advisory Review Board (CPARB) had been scheduled to meet today, but with everyone's vacation schedules and other conflicts the meeting was canceled due to a lack of a quorum. The plan had been for the subcommittee to review the draft of the Suggested Guidelines for Bidder Responsibility that a task force has developed. The guidelines are not complete but are coming together nicely.

I will be in Olympia on Thursday to brief the full CPARB on the draft guidelines as they exist today and getting feedback from the CPARB members. The hope is that the task force can complete its work this month and have CPARB adopt the Guidelines at their September meeting. CPARB will publish the adopted guidelines to their website and the Municipal Research & Services Center (MRSC) has also indicated their intent to publish the guidelines on their website once they are adopted.

Insurance & the Minneapolis Bridge Collapse

The tragedy of the collapse of the bridge in Minneapolis raises interesting questions about liability and insurance issues. While investigators are still sifting through the facts of what happened and why, the collapse is a reminder of how different types of insurance work.

Professional Liability insurance is what covers designers (engineers and architects primarily) for their negligent errors and omissions in designing a structure or building. It appears that since the bridge was designed and built a number of years ago, the professional liability insurance may not still be applicable, even if it is ultimately proven to have been a design flaw. Perhaps the collapse was related more to lack of maintenance of the structure.

Builder's Risk insurance covers newly added construction work to a project in the event of damage while under construction. The classic case would be that Builder's Risk insurance would cover a fire at a new building under construction. Since it appears that the bridge was only being repaired, Builder's Risk insurance may not have even been required, nor would it necessarily cover such a collapse.

General Liability insurance covers damage to property and bodily injury as a result of an accident on the project. Presumably, the contractor on the bridge project had General Liability insurance which would help cover some of the losses in this case.

However, given the complexity and magnitude of the bridge collapse, it is sure to be investigated for a long time before insurance and liability issues are finally sorted out.

The Minneapolis Star Tribune had a good article on August 3rd on some of the details involved with liability issues. You can view the article at the following website address: