Tuesday, June 30, 2009

How Effective is Mediation in Resolving Disputes?

For an insightful, thoughtful, and well-written article on the advantages and disadvantages of of using mediation to resolve construction disputes, visit Engineering News-Record.com.

The blog entry is written by Dr. Patricia Galloway, CEO of Pegasus-Global Holdings, Inc., based in Cle Elum, Washington.

Dr. Galloway is also the Vice Chair of the National Science Board, and Past President of the American Society of Civil Engineers.

Detroit Official Accepts Bribe for Support of Contract

Detroit City Councilwoman Monica Conyers admitted in federal court on June 26, 2009 to accepting at least two envelopes filled with $6,000 cash from Synagro Technologies in exchange for her support of a $47 million a year contract for Synagro on a wastewater treatment contract. She may have taken additional money from Synagro as well.

Conyers, the wife of Congressman John Conyers faces up to five years in prison and a $250,000 fine.

She is also under investigation by federal agents for receiving $40,000 of jewelry from a pawn shop for her support to vote against City Council plans to more closely regulate the industry.

For more information about the case, read the following stories:
It is important for public agencies to ensure that its contracting practices are transparent and clear. We read all too often of both elected officials and government employees involved in contracting of accepting bribes and making unethical decisions. When it comes to ethics in public contracting, appearances are also critical and the public contracting process must be above reproach.

Read my other blog entries on ethics
by clicking here. I also teach a class on "Ethics in Public Contracting." Contact me if you are interested in finding out more details about the class.

Monday, June 29, 2009

Job Opening: Contract Administrator at KBA

KBA Construction Management of Bellevue, Washington is seeking a Contract Administrator.

The Contract Administrator performs varied contractual, professional, and administrative related duties. The position requires knowledge and experience with contract terms and conditions, contract administration and development, preparation and negotiation.

For more information about the position and to apply, visit KBA's employment website.

Lawsuit on Bidder Responsibility in New York

LVI Environmental Services, Inc., the second low bidder on a massive asbestos abatement project in Rochester, NY, has filed a lawsuit with the New York State Supreme Court alleging that the low bidder, Cambria Contracting, Inc. did not meet the bidder responsibility criteria included in the bidding documents.

The project requires abatement of some five million square feet of asbestos-containing materials in the Midtown Plaza shopping center that will eventually be demolished to make way for a headquarters site for PAETEC Holding Corp.

In order to be determined to be a responsible bidder, the contractor must have removed at least 800,000 square fee of asbestos-containing material in each of the last five years and worked on similar buildings in an urban setting. LVI evaluated the material submitted by Cambria and alleges that Cambria did not meet the 800,000 square feet criteria in all of the past five years. In addition, LVI asserts that Cambria does not have the urban experience required.

The State Supreme Court has scheduled a hearing for June 30, 2009 on LVI's lawsuit.

Cambria's bid was for $34.1 million, while LVI bid $39.9 million.

For more information, visit the website of DemocratAndChronicle.com.

In Washington State, RCW 39.04.350 authorizes public agencies to develop relevant supplemental bidder responsibility criteria for public works projects. The law was adopted in 2007 with support of contractors and public agencies. Many contractors are now expressing concerns about the restrictive manner in which public agencies are establishing bidder responsibility criteria on projects.

Sunday, June 28, 2009

Did Anyone Really Design This?

Forget about the snow! This is a tough drive anytime!

Indiana City Rejects Low Bid for Failure to Acknowledge Addendum

The City of New Albany, Indiana rejected the low bid on a citywide paving project because the low bidder failed to acknowledge an addendum, declaring the $795,000 bid of Sedam Contracting as non-responsive.

The addendum, which Sedam claims they did not receive, specified a particular type of material to be used in the asphalt. Sedam acknowledged that their bid did not include the cost of the material specified, and estimated that the material would cost an additional $60,000. Sedam further went on record agreeing to provide the material specified at the cost bid. The lack of factoring in the cost of the material into their bid “doesn't change our bid,” Sedam asserted.

Nevertheless their bid was rejected, and the city's Board of Public Works then awarded the contract to the second low bidder at a cost of $56,800 more.

Should the city have rejected Sedam's bid as non-responsive? The general rule of thumb is that a public agency must reject a bid as non-responsive if there is a material irregularity in the bid. The generally accepted definition of what constitutes a material irregularity is one that gives a competitive advantage not enjoyed by other bidders. A public agency has a choice of rejecting or not rejecting a bid as non-responsive if it contains an immaterial irregularity.

Not only did Sedam fail to acknowledge the addendum, they didn't even have the addendum when bidding. They essentially bid on a different project than the other bidders, even though they agreed after the bid submittal deadline to honor their bid price and include the material specified in the addendum.

Did Sedam have an advantage that other bidders didn't have?
The short answer is "yes," and I believe the city was correct in rejecting their bid as non-responsive. Sedam had the option of deciding after the bid submittal whether to accept the project at the price bid or not. In other words, they had the choice of claiming that their bid was non-responsive and therefore must be rejected for failure to acknowledge the addendum (that they claim they didn't receive). They also had the choice, after all the bids were disclosed, of deciding that they would take the project at the price bid.

In determining whether a bid is responsive or non-responsive for failure to acknowledge an addendum, it is important to look at the content and substance of the addendum. Any addendum that impacts the price of potential bids leans toward being a material addendum, and thus failure to acknowledge the addendum should result in the bid being declared non-responsive.

Click on the website of The Evening News & The Tribune to read the account by Daniel Suddeath of the bid rejection.

Integrated Project Delivery

Integrated Project Delivery is a project approach which integrates, from start to finish the three major stakeholders (owner, designer, contractor) around mutual project outcome based objectives. It usually involves the three parties all signing one contract.

Check out this PowerPoint presentation put together by the architectural firm, NBBJ.

Thursday, June 25, 2009

State of Washington Investigates Integrated Project Delivery and Best Value Contracting

The State of Washington has established a task force to investigate the possibility of using two alternative methods of contracting for public works construction projects: Integrated Project Delivery (IPD) and Best Value Contracting/Competitive Negotiations.

These will be the topics discussed on July 1, 2009 at a task force meeting of industry-wide representatives under the auspices of the Capital Project Advisory Review Board (CPARB). If it is determined that these are appropriate contracting methods, CPARB could make a recommendation to the Washington State Legislature to approve these as alternative public works contracting procedures.

If approved, they would join three other models of project delivery already authorized by chapter 39.10 RCW: Design-Build, General Contractor/Construction Manager (GC/CM), and Job Order Contracting.

The task force on IPD and Best Value will meet from 1:00 p.m. to 3:00 p.m. on July 1, 2009 at the Northwest Carpenter Facility (25120 Pacific Highway South, Kent, Washington). The agenda includes evaluating what IPD and Best Value are, as well as looking at the current alternative public works delivery methods authorized.

Wednesday, June 24, 2009

Say Again?

A public agency recently received a letter from a company hired by the surety who provided the payment and performance bond for a contractor on a construction project for the agency.

Apparently, the contractor is experiencing financial difficulties, and the company put the public agency on notice to not make any further payments to the contractor without written permission.

However, their letter lost some of its impact when they closed with this statement: "Failure by [the public agency] to ignore this request may result in double liability on the part of [the public agency]."

So how does this brain twister of words actually work? Does this mean that the public agency would only have liability if they fail to ignore the request? Is this an invitation to ignore the request?

ConsensusDOCS Publishes Federal Subcontract

ConsensusDOCS, which offers a wide variety of standardized contract documents for the construction industry announced the release of a new subcontract tailored to meet the requirements of federal construction projects.

ConsensusDOCS is endorsed by 22 construction organizations including designers, owners, contractors, subcontractors, and sureties.

For more information about the release of the new federal subcontract, visit the website of the Associated General Contractors of America (AGC).

Tuesday, June 23, 2009

Possible Collusion in Kentucky Road Contracting

A federal grand jury is investigating whether two Kentucky highway paving contractors colluded to restrict trade.

Metcalfe County Judge-Executive Greg Wilson reported on his testimony to the grand jury in June 2009, noting that he recounted a meeting with Glass Paving and Stone in the spring of 2008 in which Wilson was told by Larry Glass, president of Glass Paving and Stone, that Glass had worked out an arrangement so that Glass would not bid on any more Metcalfe County projects. Instead, "they were going to let Scotty's take care of it." Scotty's refers to Scotty's Contracting and Stone, the other contractor under investigation.

Click on the website for the Louisville, Kentucky Courier-Journal.com for more information.

Legislative Update Training in Yakima on June 25th

John Carpita of the Municipal Research and Services Center will teach a workshop in Yakima on June 25, 2009 on legislative changes affecting public works contracting passed by the Washington State Legislature in the spring.

I've co-taught this same class this month with John in Renton, Camas, and Everett, but I can't make it to the Yakima class.

For more information and to register, click here.

Monday, June 22, 2009

Audit Findings: King County Construction Management

The Washington State Auditor's Office released an audit of King County's Construction Management practices with the following five findings:
  1. The lack of adequate performance measures and expectations prevent the King County Executive and Council from providing adequate oversight of construction activity.

  2. King County does not have an adequate construction project management information system.

  3. King County does not have standard construction management procedures.

  4. King County construction management data, files and records are not consistently maintained and are not readily accessible for management oversight and review purposes.

  5. King County does not provide resources that are adequate to enable the Executive Audit Services to comply with County policy requiring construction management audits.
Early this year, the State Auditor's Office terminated what began as a performance audit because the County was unable to provide the records necessary for the auditor to perform their review. The audit report released on June 22, 2009 reports on the information obtained by the auditor before the termination of the performance audit.

The auditor stated that "We believe the recommendations provided...may enable the County to better enforce project completion deadlines, liquidated damages and minimize overall construction costs."

The audit also addresses other County operations unrelated to construction management.

The following are resources about the audit:

  1. Read the complete audit report along with the auditor's recommendations and the County's responses.

  2. Visit King County's website to read the County's summary response to the audit and their disagreements with the auditor.

  3. See what the SeattlePI.com has to say about the audit.

  4. Visit the Puget Sound Business Journal's website to read their report of the audit.

Sunday, June 21, 2009

Federal Prevailing Wages - An On-Demand Webinar

Prevailing Wage Law - An Understanding of Davis-Bacon

When: At your convenience

Where: Your choice

Duration: 107 minutes

Cost: $219

Instructor: Van A. Goodwin, Littler Mendelson, P.C.

Sponsored by: Lorman Education Services

For more information and to register, visit Lorman's page for this Webinar.

Reaching for the Money!

This ATM was installed for giants!

3 Southern California Construction Management Seminars

3 Seminars sponsored by: Construction Management Association of America (CMAA) - Southern California Chapter
  1. Wednesday, June 24, 2009: Los Angeles School District - Bond Program Update and Future Opportunities (5:30 p.m. to 8:30 p.m.). Speaker: Greg Garcia, Director Facilities Contracts.

  2. Friday, June 26, 2009: Contracting for Green Design and Construction (8:00 a.m. to 10:30 a.m.). Speakers: Michael Baker, Ian Stewart, Steve Lamar, Peter R. Forsythe

  3. Thursday, July 16, 2009: Orange County Transportation Authority and Caltrans Project Updates and Opportunities (5:30 p.m. to 8:30 p.m.). Speakers: Charlie Guess and Saeid Asgari
For more information and to register, visit CMAA's Southern California Chapter website.

Wednesday, June 17, 2009

Can Contractor "Correct" Their Bid Price?

Here's my quick analysis of the bid dispute over a $100 million public works project at John Wayne Airport in Orange County, California after reviewing some of the documentation published online by the Orange County Board of Supervisors.

The low bidder, Whiting-Turner submitted a bid of $89,996,795. After bid opening, they claimed that they had transposed the number (in both words and numbers) and it should have been a bid for $98,996,795. The next low bidder's bid is just under $101 million. In support of Whiting-Turner's assertion that this was just a transposition and their bid should be awarded at the $98 million price, they noted that when you add up the two alternate prices (2A and 2B), both listed separately, you get the $98 million figure. I couldn't locate a copy of the complete bid form to verify this, but did find part of the bid form that shows that the contractor wrote in words and numbers the $89 million figure for the following: "Total Alternate bid (730 days) including Additive or Deductive Bid Items to Alternate Bid (2A+2B)." The heading to this bid total is important as will become clear below.

Whiting-Turner cites language from the Instructions to Bidders as follows: "At the time of opening bids, the County will evaluate the total amounts stated as the Total base Bid (821 Days) including Additive or Deductive Bid Items (1A +1B) and the Total Alternate Bid (730 Days) including Additive or Deductive bid Items (2A +2B). The County will determine the lowest bidder based on the Total Base Bid (821 Days) including Additive or Deductive Bid Items (1A +1B) and the Total Alternate bid (730 Days) including Additive or Deductive bid Items, whichever is lowest."

Whiting-Turner goes on to state that "This indicates that JWA [John Wayne Airport] would evaluate the bids based on items 1A and 1B, and items 2A and 2B, not on anything else."

From what I read in the Instructions to Bidders, it is the total that the airport will evaluate, not the component parts of the totals as Whiting-Turner appears to incorrectly assert in their letter. Thus, based on the language in the Instructions to Bidders, I think the airport is correct in stating that the contractor's bid is the $89 million figure, that it may not be corrected, and that the $89 million figure is consistent with how the Instructions to Bidders states that the bid will be evaluated. Nothing in the bidding documents that I've read suggests that the airport will evaluate the bids based on the component parts (2A and 2B) in the event of a discrepancy between the component parts and the total bid.

Take a look at the documents and various letters for yourself, and see what you think. The Orange County Board of Supervisors is scheduled to make a final decision on this matter at their meeting of July 14, 2009.

In dealing with bid errors, public agencies will be held to the standard for evaluation and correction of bids noted in the bidding documents. Often there is language in bidding documents granting the public agency the right to correct mathematical errors (multiplication of unit prices times quantities in favor of unit prices instead of the extension, and addition of extensions instead of the total written).

If Whiting-Turner does not want to perform the project at the $89 million figure, they can formally submit a claim of error and request to be relieved of liability for their bid and not have their bid bond taken by the County.

Monday, June 15, 2009

Audit Finding for Failure to Comply with Prevailing Wage Requirements

The Washington State Auditor's Office recently cited the Seattle Indian Services Commission, a public corporation, with failing to comply with state prevailing wage requirements to obtain "Statements of Intent to Pay Prevailing Wages" and "Affidavits of Wages Paid" from contractors.

The Commission was unaware that prevailing wage requirements applied to maintenance work when performed by contract (RCW 39.04.010).

In their response to the audit finding, the Commission noted the problem of a small agency such as theirs dealing with small repair such as window replacement. They noted that "it will be quite difficult to find a vendor, who for a $700 contract, would either know how or be willing to produce and file the necessary paperwork, at least that has been our experience."

To read the complete three page audit finding, visit the State Auditor's Office website at this link.

Sunday, June 14, 2009

Top Security!

Did the drawings really say to install the equipment like this?

Job Opening: Contracts Administrator at Sound Transit

Sound Transit is recruiting for a Contracts Administrator.

Filing for the position closes on June 30, 2009.

For more information about the job and how to apply,
visit Sound Transit's website.

Webinar: Using ConsensusDOCS in Federal Contracting

Webinar: Are You Ready to Contract for Federal Projects?

When: July 9, 2009 (10:00 a.m. to 11:00 a.m. Pacific Time)

Where: Your office

Cost: $99 for members of organizations endorsing ConsensusDOCS, $229 for non-members

Sponsored by: Associated General Contractors of America (AGC)

For more information and to register, visit the AGC's website.

The webinar will focus on the standard subcontract agreement from ConsensusDOCS and its compliance with the most recent contracting requirements and practices found in the Federal Acquisition Regulation (FAR).

ConsensusDOCS is endorsed by 22 construction related associations.

Thursday, June 11, 2009

The Purpose of a Bid Guaranty

It is fairly typical, good business practice, and often required by the law, that public agencies advertising for bids on a public works project require all bidders to submit with their bid a bid guaranty.

Acceptable bid guaranties generally fall within the following three categories:
  1. Bid bond: A bid bond is a guaranty from a bonding company or surety.

  2. Cashier's check: A check written from the account of a bank or other financial institution after the bidder has given the bank the amount of the check.

  3. Certified check: A check written from the account of the bidder that comes with a certification by a bank or financial institution that the bidder's account has, and will continue to have, sufficient funds to cover the amount of the check. In other words, it's guaranteed by the bank.
A bid guaranty serves a couple of key purposes:
  • To pay the public agency in the event the bidder is awarded the project but fails to enter into a contract, and the agency needs to either award to the second lowest bidder at a higher cost or readvertise the project.
  • To discourage frivolous bids from bidders who have no intention or ability to enter into the contract.

Wednesday, June 10, 2009

The Role of Performance Evaluations in Selection

Public agencies are often faced with continuing to use the same contractors and vendors despite poor performance on past contracts, either for the agency or for another organization.

The key to controlling the selection process is to establish an objective performance evaluation program. Important elements of such a program include the following:
  1. Define and publish how the program will be used in making selection decisions so all contractors and vendors are aware of it.
  2. Evaluate all contractors and vendors, not just the ones with poor performance.
  3. Support the ratings with objective and professionally written comments.
  4. Provide for an appeal process if a contractor or vendor disagrees with the ratings.
  5. Maintain a database of the ratings.
  6. Train your personnel in the use of the evaluation program.
  7. Monitor the quality and consistency of the evaluations from a management perspective.
Many public agencies have instituted performance evaluation programs. Where some of them fall short is that the personnel charged with evaluating contractors and vendors fail to provide honest evaluations, either because of a sense that it's too much work to document poor performance, or because they don't want to antagonize the contractor or vendor.

The federal government faces similar concerns with their performance evaluation program, according to a recent report from the Government Accountability Office. To read a brief article on this report, visit the

Findings on Library System Performance Audit

The Washington State Auditor's Office has issued a performance audit report of the Construction Management practices of the King County Library System.

The summary for the report states the following:

"We found that KCLS is doing a good job overall with its construction projects. We did find opportunities for improvement and to reduce its risk. We found that KCLS has incomplete policies and procedures for managing construction projects. We found issues with contracting practices, and in particular, change orders, that resulted in paying excessive markups on projects. Its current change order rate is 17 percent. By following the recommendations, they could reduce it to around 10 percent, which is more in line with industry best practices. The construction project method they chose for the five design-build projects was a good approach for KCLS, but was not legal according to state law."

Having clear and complete policies and procedures for managing construction projects, along with staff who have been trained in them is critical to proper construction management. The use of Design-Build projects in Washington State is limited to public agencies who have received either agency approval or project approval to use Design-Build, one of three alternative public works contracting procedures authorized by chapter 39.10 RCW. Please contact me if you would like assistance in reviewing, revising, or writing contracting policies and procedures for your agency. Likewise, I can provide assistance in the use of Design-Build, General Contractor/Construction Manager (GC/CM), and Job Order Contracting, the three alternative public works contracting procedures.

Tuesday, June 9, 2009

$9 Million Claim of Error to be Decided in July

The Board of Supervisors for Orange County, California has put off an official decision until their July 14, 2009 meeting on the award of a multimillion dollar contract for construction work at John Wayne Airport.

At issue is the $89 million bid submitted by the low bidder, Whiting-Turner. After bid opening, Whiting-Turner claimed that they had transposed the bid amount and really meant their bid to be $98 million, still below that of the second low bidder, McCarthy Building Cos., whose bid was just under $101 million. Whiting-Turner submitted documentation demonstrating that they intended to bid $98 million, and requested approval to change their bid to $98 million. However, airport officials will apparently be recommending against such an action given the rules of competitive bidding. Ultimately, the Board of Supervisors will make the final decision.

Look for a lawsuit by McCarthy Building Cos. if Orange County awards the contract to Whiting-Turner at the revised amount of $98 million. McCarthy would argue that Whiting-Turner had an advantage not enjoyed by other bidders - the ability to decide whether to take the job or not and at what price, often referred to as having a "second bite at the apple." Changing the bid amount is a classic case of giving a bidder an advantage, not to mention that it constitutes negotiation of the price. Behind McCarthy's protest would be the assertion that they were not similarly afforded the opportunity to modify their bid.

In theory, many companies could prove after bid opening that they made a "mistake" and that their intended price, based on their worksheets, was something different. If this practice were permitted, it could lead to bidders submitting intentionally low bids, knowing that after bid opening, they could adjust their price if necessary to still remain the low bidder, but not leave so much money on the table.
  • To read some of the original letters from Whiting-Turner and other documentation, click here (17 pages).

Writing Effective Technical Specifications

Here's an outline of a class I've put together on Writing Effective Technical Specifications for public work contracts. It's roughly a four hour class.

Please contact me if you'd like to discuss bringing this training for your agency - or maybe you might want to get a couple of other public agencies in your area together to co-sponsor the training.

Monday, June 8, 2009

Impact of Change Orders on Job Order Contracting (JOC) Thresholds

Within the State of Washington, Job Order Contracting (JOC) is considered one of three alternative public works contracting procedures, in addition to Design-Build and General Contractor/Construction Manager (GC/CM). These alternative processes to Design-Bid-Build are authorized in chapter 39.10 RCW.

A work order authorized under Job Order Contracting is limited to $300,000 except that within a contract year, a public agency may issue up to two work orders valued up to $350,000.

Is it a problem if an agency issues a work order for $290,000 and executes change orders that push the total work order amount over $300,000? Assume for the sake of this discussion that the agency has already used up its two $350,000 work orders.

There are two general opinions on this question. Under the first reading, the intent of the JOC statute appears to limit the dollar amount of work orders to $300,000. Given that a work order is negotiated based on a mutual understanding of the project, most parties would expect that there would be fewer change orders on a JOC work order than on a typical Design-Bid-Build public works project. I would anticipate that any auditor would hold a public agency to the standard of $300,000 inclusive of all change orders. However, chapter 39.10 RCW does not directly address the question of change orders, and so a position that doesn't permit work order amounts to exceed $300,000 with change orders isn't specifically supported by the law.

The second school of thought on whether change orders to a JOC work order can take the work order amount over $300,000 comes from a somewhat tortured reading of state law. RCW 39.10.450 (1) states that a public body "shall not issue more than two work orders equal to or greater than three hundred thousand dollars in a twelve-month contract period." Under one reading of this sentence, as long as the public body doesn't issue any work order over $300,000, it's okay. Again, however, I don't think the drafters of this legislation had change orders in mind when they wrote the law. Thus, we are left with no specific direction one way or another from the actual language of chapter 39.10 RCW.

The better reading, in my opinion, is to look at what I think is the intent of establishing a threshold amount in the first place. The drafters thought that the maximum would be the maximum. Had the subject of change orders been raised during the development of the law, I would guess that the discussion would have quickly moved to limit to amount to $300,000, inclusive of all change orders.

The prudent and cautious approach for agencies using Job Order Contracting is to ensure that its work orders do not exceed $300,000, even with change orders.

Web Training: Alternative Dispute Resolution for Construction

The Current State of Construction Alternative Dispute Resolution (ADR)
  • Are we meeting the industry's demand for efficiency, effectiveness and fairness?
When: Thursday, June 18, 2009

Time: 12:00 p.m. to 1:30 p.m. (Pacific time)

Where: Your office with your computer and phone

Cost: $99 for a single connection. Have it in a conference room with multiple attendees all for the cost of the single connection.

Sponsored by: Contract Solutions Group

Registration Deadline: Friday, June 12, 2009

For more information and to register, click here.

Climbing the Stairway to Success

Hmmmm....Was it the Designer or the Contractor? How does something like this get built without anyone noticing that there may be a slight problem?

Sunday, June 7, 2009

An Economic Construction Forecast for 2009

The Construction Users Roundtable (CURT) has published their spring 2009 edition of their magazine, The Voice. In it is an article entitled "Money Matters: An Economic Construction Forecast for 2009" on page 18.

Click here to download the spring edition of The Voice.

Kennewick Hospital Approved to Use GC/CM

Kennewick General Hospital received approval on May 28, 2009 from the Project Review Committee (PRC) to use the General Contractor/Construction Manager (GC/CM) project delivery method. PRC members are appointed by the Capital Projects Advisory Review Board (CPARB). Kennewick General Hospital has hired DAY CPM Services to help manage the almost $58 million project.

Kennewick's Request for Qualifications (RFQ) for GC/CM firms has been published and is available online at
Builder's Exchange. Contractor responses are due June 17, 2009.

Firms that are shortlisted to submit prices will be asked to bid on the following:
  • "Percent Fee" (overhead and profit, or "Construction Manager's Fee" as Kennewick is describing it)
  • Fixed amount for "Specified General Conditions"
  • Preconstruction Services
Public owners using GC/CM obtain pricing for Preconstruction Services through either negotiations or bidding, as Washington State law (chapter 39.10 RCW) is not specific in dictating this practice. Kennewick General Hospital will be asking contractors to bid the cost of Preconstruction Services.

In order to make bidding effective for Preconstruction Services a public agency must have a very clearly defined scope of work for Preconstruction Services so that all bidders know the expectations and are all bidding on the same work.

Training: 2009 Legislation Affecting Washington State Public Works Contracting

Along with John Carpita, Public Works Consultant with the Municipal Research and Services Center (MRSC), I will be providing training this month on legislation affecting public works contracting that was passed by the Washington State Legislature in their 2009 session.

The training will be held in four locations around Washington State:
  • Renton (June 10, 2009 - class filled)
  • Camas (June 17, 2009)
  • Everett (June 18, 2009)
  • Yakima (June 24, 2009)
For more information and to register for this free training, visit APWA's website. The training is sponsored by MRSC and the Contract Administration Subcommittee of APWA's Washington State Chapter.

The PowerPoint presentation below is what we will be using in the training. Here is a quick summary of the topics and who will be teaching them. I will not be at the Yakima training.
  • Mike Purdy
  • Apprenticeship
  • Bidder Responsibility
  • Prevailing Wages
  • Change Orders
  • Retainage
  • Alternative Public Works Contracting
  • Bills of Note That Didn't Pass
  • John Carpita
  • Bid and Purchase Limits
  • Latecomer Agreements
  • Sales Tax
Please let me know if you have any questions about any of this material or if you would like additional training for your agency or organization.

Friday, June 5, 2009

Construction Employment Falls

Government employment data for the construction industry shows that construction employment fell in the last year in most of the nation's largest metropolitan areas, according to an analysis by the Associated General Contractors of America (AGC).

Visit the
AGC's website for more details from their June 3, 2009 news release.

Thursday, June 4, 2009

$9 Million Claim of Error on Orange County Airport Project

A contractor submitted an $89 million bid to expand Orange County's (California) John Wayne Airport. After bid opening, the contractor claimed that they had made an error and transposed the numbers in the bid, and that their bid amount should be $98 million.

The second low bid of McCarthy Builders, Cos. came in at almost $101 million.
The low bidder, Whiting-Turner, wants the job at the $98 million price tag. They have apparently submitted documentation showing that their bid was intended to be $98 million, not $89 million.

What should Orange County do? In many ways, other than the magnitude of the error, there is not that much unusual about the situation. Contractors make mistakes on bids frequently, and submit claims of error. A contractor who makes a mistake on a bid really has just two choices:
  1. Accept the bid at the actual price they bid. The contractor needs to determine whether they can afford to do the project for the bid amount. Owners should be wary of contractors who may be starting a project without much margin or profit as it could lead to a problem project fraught with disputes and change orders. It benefits neither the contractor nor owner for a contractor to be in a difficult financial situation on a project.

  2. Request that their bid be withdrawn and that they be relieved of obligation and liability for the bid because of the error, with the owner agreeing to not go after their bid bond. Claims of error should be filed with the owner in a timely manner after the bid submittal deadline and should document the nature of the error.
What is not an option is what is apparently being discussed some in Orange County and that is to allow the low bidder to correct their bid, even if documents show that they made the mistake, and even if they are still the low bidder. Accepting a revised bid like this amounts to bid negotiation, and in public work contracting in most states, this is not a permitted practice.

Generally, there are two types of errors that occur on public works projects: mathematical or clerical errors (such as a transposed number or adding up a column of numbers incorrectly), and errors of judgment in which the contractor didn't understand completely the scope of work called for in the bidding documents.

For more information on Orange County's situation, visit the website of

Air Force to Fill 2,000 New Contracting Positions

In light of a contested award for aerial refueling tankers last year, the Air Force recently announced that it will be gearing up its contracting personnel to more effectively manage its procurement and contracting functions.

According to an article published in The Seattle Times on May 16, 2009, the Air Force plans to fill "more than 2,000 new contracting jobs, paying closer attention to costs at the early stages of weapons programs, and making sure contracting personnel are prepared for the complex defense-acquisitions process.

Wednesday, June 3, 2009

Design-Build Presentations in Seattle and Portland

Design Build Project Management: The Art and the Science

When and Where: Times:
  • 7:15 a.m. Registration
  • 7:30 a.m. Continental Breakfast starts
  • 8:00 a.m. to 11:30 a.m. Program
Speaker: Barbara Jackson Cost:
  • $125 for DBIA members
  • $149 for non-members
Sponsored by: The Northwest Region of the Design Build Institute of America (DBIA) For more information and to register, click on the following links, depending on the location:

School District Violates Federal Procurement and Debarment Requirements

The Snoqualmie Valley School District No. 410, located in King County, Washington, was the subject of a recent audit by the Washington State Auditor's Office.

The audit found that the District procured services from four vendors without documenting the selection process.

In addition, the District awarded four contracts totaling $165,398 in which they failed to check the federal database for whether any of the vendors were suspended or debarred from participating on government contracts.

To read the complete audit finding, visit this page from the State Auditor's Office website.

The federal suspension and debarment checking requirement applies to any contract in excess of $25,000 when there are federal funds involved. Public agencies may check the federal database by visiting

Tuesday, June 2, 2009

Cities to Hold Annual Conference in Spokane

The Association of Washington Cities will hold their annual conference from June 23 to 26, 2009 in Spokane at the Spokane Convention Center. Workshops will focus on survival strategies, sustainability, and the staples of running a city.

For more information and to register, visit the AWC's website for the conference.

Contractor Selection Dispute for DC Crime Lab

The District of Columbia's plans to build a state of the art crime lab hit a snag with a protest from one of the two proposers on the $133 million Design-Bid-Build project.

Tompkins Builders was the second highest ranked firm, and DC Mayor Adrian Fenty recommended to the Council of the District of Columbia that the contract be awarded to the highest ranked firm, Whiting-Turner. Tompkins protested to the city's Contract Appeals Board.

One of the issues in the dispute revolves around whether Tompkins met the responsibility criteria for the project of having completed construction of a LEED building and a similar scientific laboratory building, each for $75 million and each within the last five years. Tompkins argued that its parent company Turner Construction Company, met the responsibility criteria.

On May 21, 2009, the Contract Appeals Board ruled that the decision of the city to "exclude Tompkins from the competition because it did not satisfy the special standards of responsibility was unreasonable and irrational." The Board directed that the city perform a new evaluation of Tompkins' proposal.

On May 28, 2009, Council Chairman Vincent Gray announced that he was withdrawing from consideration by the Council the proposed contract with Whiting-Turner, as Mayor Adrian Fenty had recommended.

For a description of the process and the appeal,
visit the Council's page here.

Visit the web page for the
Contract Appeals Board to read their decision.

To read other documents in the appeal process,
click here.

In order to ensure a fair and open process for contractors and provide the public with the best outcome, it is critical that Design-Build competition and bidder responsibility criteria be handled with extreme care by government agencies. It also points out the importance of anticipating in RFP documents how to handle and evaluate certain situations such as whether a parent company's experiences can be used by a contractor, and how to evaluate the experiences of a joint venture formed specifically for a project.

Monday, June 1, 2009

Florida Governor Vetoes Contracting Bill

Before a public agency enters into any contract, there must be sufficient funding to pay for the obligations under that contract. This appears to be the foundation of controversy in the State of Florida, leading the Legislature to pass a bill, vetoed by the Governor, that would tighten controls in this area.

Florida Governor Charlie Christ vetoed a bill on May 27, 2009 that would have increased the control of the Governor and Legislature over the contracting actions of state agencies. Christ claimed that the bill would impose "additional contracting requirements on state agencies and those who do business with the state at a time when we should be doing everything we can to streamline bureaucracy and stimulate economic growth."

Among other things, SB 2994 would have done the following:
  • Prohibit agencies from agreeing in a contract to "pay liquidated damages or early termination fees for a breach or early termination of a contract" due to the Legislature not providing full funding.
  • Prohibit agencies from contracting to pay interest if the agency had insufficient budget authority to pay for the obligations of a contract.
  • Prior to execution of a contract in excess of $10 million, the authorized public official would need to notify the governor, president of the Senate, and speaker of the House.
  • Require specific language in every contract to the effect that the "contract may be terminated by the state upon 30 days' written notice if funding for this contract is specifically eliminated" in accordance with specific conditions.
Click on the Orlando Sentinel to read a story on this issue. To see the complete text of the bill, click here.

2 Year Anniversary of This Blog

Two years ago today, I launched Mike Purdy's Public Contracting Blog as a way to keep public contracting staff up to date on issues and resources.

Over those two years, I'm glad to say the blog has grown in popularity, and served as a useful resource for those involved in public contracting issues.

Here are some interesting statistics about the blog:
  • 98 subscribers to the blog by e-mail from at least the following states: Washington, Oregon, California, Arizona, Michigan, Florida, New York
  • 516 blog postings
  • 8,486 visits to the blog
  • Visits from 76 countries
  • Visits from 1,632 cities
Here's to the next year of blogging! If there are topics you would like to see discussed, please contact me.