Stating the Obvious!

What road is closed? I think this sign is a little behind the times!

No Sole Source Selection of Architects and Engineers

In Washington State, selection by public agencies of architects, engineers, landscape architects, and land surveyors is governed by the provisions of chapter RCW 39.80. This law establishes a process for selecting consultants in these four disciplines.

Public agencies are required to select the “most qualified” firm and not use price as an evaluation criterion.

RCW 39.80.060 does have an exception for emergencies. When the public agencies makes a finding that an emergency situation exists that requires the immediate execution of a contract, the provisions of chapter 39.80 RCW are waived.

However, there is no such exception for what might be considered to be sole source providers of services. Public agencies must go through a selection process as outlined in the law or, if the situation is an emergency, then a consultant may be selected without following the prescribed procedures.

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Insurance in the Construction Industry - Training Seminar

Insurance in the Construction Industry – Training Seminar

When: October 16 & 17, 2008

Where: Bellevue Courtyard Marriott -- Bellevue, WA

Cost: $250 for one day; $495 for both days

Sponsored by The Seminar Group

To view the full agenda, which includes registration information and pricing, click on this link. To register over the phone, or if you have any questions call (800) 574-4852.

The agenda topics include the following:

• Commercial General Liability
• Builder's Risk
• Surety Bonds
• AIA Insurance and Risk Allocation Provisions
• OCIP and CCIP
• Duty to Defend/Reservation of Rights: A Panel Discussion
• Agents & Brokers
• Good Faith Ethics
• R-67
• Are Construction Defects Covered Under a Contractor's CGL Policy?
• Allocation of Defense and Indemnity Benefits between Covered and Non- Covered Claims
• Construction Defect Insurance Currently Available in the Market (CG 22 94, etc.)
• Goings on Down South: The California Experience
• View from the Insurance Commissioner's Office
• Stipulated Judgments: Contractors Spell "Salvation"; Insurers Spell "Collusion"
• The Great American v. Assurance Decision: Is Boeing v. Aetna Dead or Dying?
• Presentation of a Contractor's Property Insurance Claim: Perspectives from Both Sides
• Who Gets the Money?
• Mediation and Settlement of Coverage & Bad Faith Disputes in Construction Litigation
  

Green Procurement Workshop

Green Procurement Workshop

Sponsor: Washington State Chapter of NIGP (National Institute of Governmental Purchasing)

When: October 28, 2008, 8:30 a.m. to 4:45 p.m.

Where: Greater Tacoma Trade & Convention Center (1500 Broadway, Room 318, Tacoma, Washington)

Cost: $80

Registration Deadline: October 17, 2008

For more information and to register, visit NIGP’s website.

Managing Schedule Delays & Resolving Delay Claims

Training on Managing Schedule Delays and Resolving Delay Claims

When: Thursday, October 9, 2008, 8:30 a.m. to 5:00 p.m.

Where: Washington State Convention and Trade Center, Seattle

Cost: Prior to September 26, 2008: $199 (government entities); $259 (private firms). After September 26, 2008: $20 extra.

Sponsored by: Contract Solutions Group

Instructors:

• Kenneth R. Baker (Sr. Vice President, Hill International)
• Athan E. Tramountanas (Attorney, K&L Gates)
• Thomas H. Wolfendale (Attorney, K&L Gates)

For more information and to register, click here.

UW Contracts Administrator – Job Opening

The University of Washington’s Capital Projects Office has an opening for a Contracts Administrator position. Information about the position and the application process may be found by clicking here.

Filing deadline: Open until filled.

Brief Description: The Contracts Administrator, under general direction from, and working in partnership with, the Contracts Manager, assists in the development and administration of public works construction and consultant contracts, working closely with contractors, consultants, and CPO personnel (project managers, construction managers, contracts specialists, accountants, and information technology staff). The Contracts Administrator is responsible for accurately interpreting and applying state laws, regulations, and University policies and procedures on public works construction and consultant contracts in order to ensure compliance and limit the University’s financial, operational, and audit liabilities and risks.

Questions: If you have any questions about this position, please call me at the University of Washington at (206) 221-4235. The position reports to me as the Contracts Manager for the UW.

Checking for Contractor Debarment

Prior to a public agency awarding a contract, especially a public works construction contract, the law requires that the agency verify that the contractor is not debarred from doing business with the government based on violating various laws.

If the project is funded in whole or in part with federal funds, public agencies are normally required under the terms of the funding agreement to verify that the contractor has not been debarred under any federal law or regulation. The federal government’s General Services Administration maintains a database entitled Excluded Parties List System (http://www.epls.gov/). Public agencies should check this website to determine if the contractor appears on the list or not. If they do not appear on the list, print a copy of the website demonstrating that they are not debarred or suspended from performing work on a federally funded contract. This documentation will be important to have on hand when the project is audited by either state or federal auditors. Checking to ensure that a public agency has checked the debarment status of a firm is a standard audit item.

If the project has no federal fund involved, the Washington State Department of Labor and Industries maintains a website of contractors who are debarred for violating prevailing wage regulations (chapter 39.12 RCW). Unlike the federal list which includes many more names and is searchable, the State list is not searchable and is a much smaller list that you can scan to see if the contractor is on it. Click here for the State's list of debarred contractors. Again, it’s a good idea to print a copy of the list for documentation to demonstrate that you have verified this. Under RCW 39.04.350, it is a requirement that public agencies check this list prior to awarding a public works contract. It’s one of a half-dozen mandatory bidder responsibility criteria that must be checked and verified by the public agency prior to award of a public works contract.

In the event the contractor you are intending to award to appears on either the federal or state debarment lists, you are prohibited from awarding the contract to them. It’s a good idea to provide them with written notice of your intent to award to another firm. This gives the contractor time to allow it to have the record corrected, if in fact they are somehow listed in error, or if another company with a similar name is one the list instead of the firm you intend to award to.

2008 Design-Build Conference & Expo

The Design-Build Institute of America (DBIA) will hold its annual conference and expo from November 3 – 5, 2008 in Las Vegas, Nevada at the Mandalay Bay Resort & Casino.

Discounted rates for registration prior to September 26, 2008: for members $850, and non-members $1,050. Special rates for public and private owners: members - $500 and non-members - $600.

For detailed information about the conference, lodging, etc., click on DBIA’s conference website.

Audit Finding on Competitive Bid Laws

The Washington State Auditor’s Office has issued a finding that the Northshore Utility District in King County did not comply with public works competitive bidding requirements.

After awarding a $1.3 million project for the extension of sewer and water lines in five neighborhoods, the District issued four change orders that the auditor found “were for work not within the original scope of the project.”

The District responded by stating that the work needed to be performed in order to provide appropriate service.

For more detailed information about the finding and the District’s response, please click here.

While there is no specific state law addressing change orders, it is clear that the Auditor’s Office has determined that if, in their opinion, the work is outside the original scope of work, then it should have been bid as a separate project. This would constitute what is frequently referred to as a “cardinal change.”

One of the lessons learned from this audit is that if a public agency has an emergency project (one that is officially declared an emergency and for which competitive bidding requirements are waived), that work may be added by change order to an existing, even unrelated project. If, however, the work is not officially declared an emergency, all the normal competitive bidding requirements apply.

I have developed a training session on what are appropriate versus inappropriate types of change orders. If you are interested in discussing having me provide this training for your agency, please contact me.

Training for New Buyers

The American Management Association is sponsoring training on “Fundamentals of Purchasing for the New Buyer.” They will be offering it in five locations throughout the country (closest is San Francisco) during October and November 2008. It’s a little pricey for the three day training ($2,095 for non-members and $1,895 for members).

Topics to be covered include:

• The Buyer’s Role in Today’s Organization
• Managing the Supplier Base and Relationships
• Making Effective Procurement Decisions: Applying Price, Cost and Value
• Tools for Enhancing Material and Product Flow
• Specialized Purchasing Instruments, Contracting Methods and Electronic Purchasing
• Professional Practices
• Negotiating Skills for the Buyer

For more information and registration, click here.

Chelan County Hit by Prevailing Wage Audit

The Washington State Auditor’s Office recently issued a finding that Chelan County failed to ensure that federal prevailing wages were paid on three projects totaling almost $650,000. The County did “not perform measures to ensure federal prevailing wages were paid by its contractors and did not obtain weekly certified payrolls.”

It’s a good reminder that on public works projects that have federal funds involved federal prevailing wages, as determined by the U.S. Department of Labor, will apply in addition to Washington State prevailing wages as determined by the Department of Labor and Industries.

The State Auditor’s Office has a published summary of the finding available at their website.

Boeing and the Tanker Re-Bid

After meeting with Department of Defense officials, The Boeing Company was expected to decide what its response would be to the re-bid of the $40 billion tanker contract. Boeing has essentially three choices:

1. Protest the draft Request for Proposals (RFP) put out by the Pentagon that some believe favors Boeing’s competitor, Northrop Grumman.
2. Submit a bid and try to win the contract.
3. Not submit a bid if they believe the cards are stacked against them based on the requirements in the RFP.

Resolving Construction Disputes without Litigation

One of the tools for helping the resolve construction disputes is to use a Dispute Resolution Board (DRB).

The Dispute Resolution Board Foundation is a non-profit organization based in Seattle that promotes the avoidance and resolution of disputes for both owners and contractors. They have valuable information about the dispute resolution process on their website.

APWA Publishes Summer 2008 Magazine

The Summer 2008 edition of the magazine of the Washington State Chapter of the American Public Works Association (APWA) is now available and may be viewed by clicking here.

Prevailing Wage Rate Corrections for Apprentices

The Washington State Department of Labor and Industries on Friday, August 8, 2008, announced corrections to some of the apprentice wages for the prevailing wage rates previously published and to become effective on August 31, 2008. The correction affects the rates in the Power Equipment Operators-Underground Sewer & Water classification in several counties throughout the state.

The revised rates are now the same as the apprentice rates for Power Equipment Operators that were published on August 1, 2008 and become effective on August 31, 2008.

The updated rates are below:

POWER EQUIPMENT OPERATORS- UNDERGROUND SEWER & WATER

A. Counties Covered: Adams, Asotin, Benton, Columbia, Ferry, Franklin, Garfield, Grant, Lincoln, Okanogan, Pend Oreille, Spokane, Stevens, and Walla Walla

1 0000-1000 Hours 65.00% $26.24
2 1001-2000 Hours 70.00% $27.50
3 2001-3000 Hours 75.00% $28.77
4 3001-4000 Hours 80.00% $30.03
5 4001-5000 Hours 85.00% $31.30
6 5001-6000 Hours 90.00% $32.56

B. Counties Covered: Chelan, Clallam, Douglas, Grays Harbor, Island, Jefferson, King, Kitsap, Kittitas, Lewis, Mason, Pacific, Pierce, Skagit, Snohomish, Thurston, Whatcom, and Yakima

1 0000-1000 Hours 65.00% $35.43
2 1001-2000 Hours 70.00% $37.09
3 2001-3000 Hours 75.00% $38.74
4 3001-4000 Hours 80.00% $40.39
5 4001-5000 Hours 90.00% $43.70
6 5001-6000 Hours 95.00% $45.35

Free Training on Public Works Contracting

The Washington State Chapter of the American Public Works Association (APWA) and the Municipal Research and Services Center (MRSC) are offering free training on public works contracting issues in September in three locations (Renton, Everett, and Camas).

When: September 4, 2008 (Renton), September 10, 2008 (Camas), September 23, 2008 (Everett)

Time: 10:00 a.m. to 2:30 p.m.

Cost: Free

To register and for more information, visit the Contract Administration Subcommittee’s website.

Subjects to be covered may include the following:

• Emergency Contracts
• Maintenance Contracts
• On-Call Contracts
• Service Contracts
• Public Works vs. Installation Contracts
  
• Limited Public Works Projects
  
• Purchase Orders for Public Works Contracts
• Sales Tax vs. Use Taxes
• Certified Payrolls
• Title VI
• Indemnification
  

Boeing to Bid Again on Tanker

The Boeing Company will have another chance of competing for the $35 billion Air Force tanker contract after Boeing’s protest of the award to competitor Northrup Grumman Corp. was upheld by the Government Accountability Office (GAO).

The Defense Department will be issuing a revised Request for Proposals (RFP) this month. However, some parties question whether the revised RFP unfairly favors Northrup Grumman.

For more information, click to visit the Seattle Post-Intelligencer story on this.

Boeing has additional information about the tanker bid on their blog.

Credit Card Fraud by Fire Department Official

The South King Country Fire & Rescue found itself on the front page of the local news section of the Seattle Times on Friday, August 8, 2008, and not in the most favorable light.

An assistant fire chief apparently used purchase orders and a district credit card to rack up more than $500,000 worth of personal charges for photography equipment, computer equipment, and firearms. Grant G. Gaspard, who had been with the fire district for 27 years, resigned in July 2008. Gaspard was in charge of the fire district's finances and procurement. The FBI was called in to investigate and Gaspard is being held in prison pending a hearing on Tuesday, August 12, 2008.

This kind of abuse of government credit cards and purchase orders occurs when a public agency doesn’t have sufficient internal controls in place to regularly monitor usage by employees. In a case like this one with a high ranking employee in charge of procurement, it was incumbent on his supervisor and other officials to have more sufficient controls in place.

It is important for there to be a clear segregation of duties so that one individual may not authorize payment, approve the credit card bill, and receive the goods also. While this may be more difficult to have segregation of duties in a small agency, it is critical to have rigorous review of purchases. Supervisors must do more than just sign a monthly approval form of credit card purchases. There is also a clear role for a centralized procurement official to review agency-wide purchases to determine if they are appropriate given the dollar authority level of the individual employee, and what the employee's job responsibilities are.

For example, if an employee's duties are to provide construction maintenance services for the agency and they typically purchase construction materials for renovation projects, a credit card purchase or purchase order requisition for computer equipment might not be appropriate and should be questioned.

System controls and diligence are crucial to preventing fraud. If you are concerned about your agency's operations in this regard, I am available to conduct an assessment of your risks, evaluation the controls and systems you have in place, and making recommendation to help you implement more prudent financial and system controls to prevent credit card fraud. Please contact me if you would like to discuss how I might assist you in this regard.

The South King County Fire & Rescue is a public fire protection district governed by the provisions of Title 52 RCW.

Everett Schools Seeks Construction Manager

The Everett Public School District is recruiting for a Constructin Manager to plan and administer school facility construction projects, and manage consultants and contractors. The individual selected for the position must be knowledgeable about the laws and regulations related to public works projects.

Salary range: $84,248 to $97,525

Closing date: August 29, 2008

For more information, visit the employment website for Everett Public Schools.

Payment Prohibited for Work Not Completed

Public agencies in the State of Washington are prohibited by the State Constitution from making payments to contractors, consultants, vendors, or any other party for work that has not actually been completed, or for goods and services not actually received.

The Washington State Constitution prohibits the lending of the public’s credit. Article VIII, Section 5 (Credit not to be loaned) states the following: “The credit of the state shall not, in any manner be given or loaned to, or in aid of, any individual, association, company or corporation.” Paying early for work not performed would clearly fall under this prohibition in the Constitution.

In addition, counties, cities, districts or other municipal corporations or political subdivisions are also governed by the provisions of RCW 42.24.080. This law requires that all claims for payment made to the public agency must be audited by the agency for appropriateness and the public agency must certify that:

“the materials have been furnished, the services rendered, the labor performed as described, or that any advance payment is due and payable pursuant to a contract or is available as an option for full or partial fulfillment of a contractual obligation, and that the claim is a just, due and unpaid obligation against the municipal corporation or political subdivision.”

Public agencies should ensure that staff who are charged with reviewing invoices for approval understand their obligations to not authorize payment if the obligations of the contractor, consultant, or vendor have not actually been met.

It is important to verify that obligations have been met before authorizing payment because it is the law, and also because it makes good business sense. Once you’ve paid a contractor, consultant, or vendor without them fulfilling their obligations, you loose your leverage to ensure that they comply with the terms of their contract with your public agency.

Small Trucking Firms Land Brightwater Job

The Truckers Consortium, after being notified in mid-July that their services would not be needed on King County’s $1.8 billion Brightwater wastewater treatment system project, was awarded a 60 day contract that may be extended.

The Truckers Consortium is a group of ten small trucking firms who have banded together to obtain hauling and disposal work in the Seattle area.

Click here to read King County’s August 5, 2008 news release on this subject.

For more information about the earlier setback, see my previous blog entry on this subject.

Free Prevailing Wage Training

The Washington State Department of Labor and Industries and the State Auditor’s Office will be offering free training on prevailing wages for public agencies.

When: In September and October
Where: In nine locations across the state
How long: Each session lasts three hours
Cost: FREE

Here’s the schedule:

September 9, 2008	8:30 am – 11:30 am	Everett
September 16, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Tukwila
September 22, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Tumwater
September 23, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Mount Vernon
September 29, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Moses Lake
September 30, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Yakima
October 1, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	East Wenatchee
October 6, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Spokane
October 8, 2008	8:30 am – 11:30 am 1:30 pm – 4:30 pm	Vancouver

For more detailed information about location and registration information, visit L&I’s website.

Prevailing Wage Rates Corrected by L&I

The Washington State Department of Labor and Industries has announced corrections to the prevailing wage rates for two classifications of labor included in the March 2, 2008 wage schedule.

1. Television System Technician (Telephone Line Construction – Outside) has been corrected to $25.78 per hour. This corrected rate is applicable for all counties in the State of Washington.

2. Landscaping or Planting Laborer (Landscape Construction) has been corrected to $8.50 per hour. This corrected rate only affects Walla Walla County.

Avoiding the Appearance of Impropriety

With all of the recent news about elected officials embroiled in ethics violations and conflicts of interest (Alaska Senator Ted Stevens, Seattle City Councilmember Richard McIver), it’s a good time to remember that even if a particular action is legal, it may not be appropriate if it would appear to a reasonable person to create an ethical conflict of interest.

What applies for elected officials also applies for those employees of public agencies who deal with contractors and consultants.

For example, let’s say that you’re planning to remodel your house. You’re looking for a good architect or contractor to help you. From your work, you deal with architects and contractors all the time, either as a contracting professional or a project manager or maybe a construction inspector. Would it be acceptable for you to hire one of the architects or contractors you know through your work connection to work on your house?

Depending on your agency’s regulations, it probably isn’t illegal to do so. However, it certainly creates the appearance of a conflict of interest from at least two perspectives.

1. There may be the impression, whether true or not, that the architect or contractor is giving you a discounted price on your home remodel.
   
2. Second, there may be the impression that your judgment will somehow be impaired when you interact with them at work and that you are granting them special favors, or helping them get selected in the first place.
   

It’s very important to step back from these situations and think about how a story about you using an architect or contractor you deal with at work on your home remodel would play out on the front page of the newspaper. How would people likely react?

Ethics isn’t always just about what’s legal. It’s about what appears to be proper. And once you’ve been accused of something improper, even if it’s legal, it will be hard to dig yourself out of this ethical hole and preserve your reputation and the reputation of your public agency.

Prevailing Wage Training Class

I will be one of four instructors on December 4, 2008 at a training seminar on Prevailing Wage Law, to be held in Tacoma. This training is sponsored by Lorman Education Services and is an all-day event.

The other instructors are Miriam Israel Moses (Executive Director of REBOUND), Greg Mowat (Principal of GTM Transformations LLC and PLA Specialist at Sound Transit), and Peter Guzman (LEAP Program Coordinator with the City of Tacoma).

More details will be coming out soon. If you are interested in being notified about the specifics, please contact me or wait for more information that I'll post on this blog.

Members Needed for CPARB's Project Review Committee

The Capital Projects Advisory Review Board (CPARB) is seeking letters of interest from individuals, knowledgeable in the use of alternative public works contracting procedures as detailed in RCW 39.10, to serve 1-3 year terms on its Project Review Committee (PRC). Current vacancies include:

• 1 to represent Cities
• 1 to represent Specialty/Subcontractors
• 1 to represent Construction Trades Labor, and
• 2 to represent MWBE (this could be from OMWBE or an MBE or WBE)

CPARB is a state board created (see RCW 39.10.240) to provide evaluation of public capital project construction processes including the impact of contracting methods on project outcomes and to advise the legislature on policies related to public works delivery methods.

The board’s Project Review Committee (PRC) was created in 2007 to review and approve projects and project teams proposing to use the General Contractor/Construction Manager (GC/CM) and Design Build contracting methods on projects and to certify public bodies for three years to use these procedures for projects with a total project cost of $10 million. The committee also reviews and approves the use of GC/CM procedures by certified public bodies for projects under $10 million. The PRC consists of members from many different public and private entities with wide variety of backgrounds, expertise, and experience.

The PRC started reviewing projects in July 2007. This committee may meet monthly. Panels of at least six committee members will be chosen to review project applications and will be expected to review several project applications prior to each meeting. Project applications have been standardized to approximately 20 pages. In addition to completing a project application packet, short oral presentations will be presented to the PRC during the public meeting. Committee members will be compensated for reasonable travel expenses.

If you are interested in serving, prepare a short letter of interest which includes:

• Your Name & title
• Your Company or public agency name
• Work & Home addresses
• Contact Phone numbers
• Short Paragraph which highlights your skills, background, and special knowledge in alternative public works methods as detailed in RCW 39.10
• 3 References with contact information
  
• State your availability to serve for 1, 2, or 3 years

E-mail your letter of interest to: Nancy Deakins, Deputy Assistant Director, E&A Services, Washington State Department of General Administration at deakink@dshs.wa.gov by August 12, 2008, for consideration at the August 14^th board meeting. CPARB will review letters of interest at subsequent meetings until positions are filled. Questions may be directed to Nancy via e-mail or phone at (360) 902-8161.

*The information above was contained in an e-mail from CPARB staff.

New Prevailing Wage Rates Published

The Washington State Department of Labor and Industries has published updates to state prevailing wages, effective on August 31, 2008. The new prevailing wages may be found on L&I’s website.

L&I establishes new wage rates twice a year, in late August and early March. The August 31, 2008 prevailing wage rates supersede the wages in effect on March 2, 2008. Prevailing wages for public works projects, once established for a project, remain in effect throughout the life of the project.

Generally, prevailing wages for public works construction projects are those that are in effect on the bid opening date of the project. More details about the effective date for prevailing wages may be found in the Washington Administrative Code (WAC 296-127-011).

In the past, L&I has found errors in their published rates, and often do not notify the public through their website of the changes. You may, however, sign up to be on L&I’s e-mail notification list by clicking here. They notify parties on the list of any corrections to the wage rates as well as informing people of other useful information.

What is Builder’s Risk Insurance?

Builder’s Risk Insurance is a type of insurance policy that either a contractor or a public agency may purchase to protect the agency for damage or loss of newly installed materials on a public works construction project during construction. A public agency may be able to obtain a better premium rate than its contractors if it buys the Builder's Risk Insurance policy directly.

Builder's Risk Insurance does not cover damage to existing property. For example, if a building is being remodeled or renovated and an event such as a flood or fire damages all or part of the building, Builder’s Risk Insurance would only cover the cost of any new materials that had been installed and damaged. It would not cover the existing building. Damage to the existing building may be covered under the contractor’s Commercial General Liability Insurance policy.

Likewise, Builder’s Risk Insurance would not cover any damage caused by demolition since its purpose is to cover only the cost of damage during construction to newly installed materials on a project.

Interest Due for Late Payments

Under Washington State law (RCW 39.76.010), if a public agency fails to make payment to a contractor, consultant, or vendor in a timely manner, the agency must pay interest at the rate of one percent (1%) per month on the amounts due.

The law considers a payment to be timely if it is made on the date specified in the contract, or if no date is specified, within 30 days of receipt of a properly completed invoice, or upon receipt of the goods or services, whichever is later.