Wednesday, May 19, 2010

Tools for Selecting the Best Contractor

It's important that the contractor selected for a public works project be qualified and capable of successfully performing the project.  

Generally, there are three points in time when a public agency can review contractor qualifications:
  1. Prior to Advertising - Prequalification
  2. Prior to Award - Bidder Responsibility
  3. Prior to Performance - Specification Qualifications
Prequalification:  Under Prequalification, the public agency conducts a separate evaluation process to determine which contractors meet specific criteria and are thus able to submit bids.  Contractors may protest the Prequalification process which may lead to delays in the project.  In addition, of course, there may be protests and delays at the point of award. 

In Washington State, only three types of public agencies are specifically authorized to use Prequalification:
  1. WSDOT (State Department of Transportation) for highway work - RCW 47.28.070
  2. Public Utility Districts (PUDs) for electrical work - RCW 54.04.085
  3. Cities or towns owning an electrical utility for electrical work - RCW 35.92.350
The general interpretation has been that since the Washington State Legislature has specifically authorized certain types of agencies to use prequalification, that the authority does not exist for other public agencies to prequalify contractors.

Under the GC/CM (General Contractor/Construction Manager) project delivery method, the GC/CM may prequalify subcontractors prior to competitively bidding subcontract bid packages (RCW 39.10.400).

Bidder Responsibility:  Bids should be awarded to the responsible bidder submitting the low responsive bid.  Responsiveness deals with the bid and whether the bid complies in all material respects to what was required in the bidding documents.  Responsibility, on the other hand, relates to the bidder and whether they are capable and qualified to perform the project.  

RCW 39.04.350 authorizes public agencies in the State of Washington to establish relevant supplemental bidder responsibility criteria for public works projects, and to evaluate whether the low bidder meets these criteria.  

There has been a lot of controversy since this law was adopted in 2007 about how some public agencies are implementing the law.  Contractors have raised concerns about overly restrictive and anti-competitive criteria that have been used.  A Task Force to address these concerns has been created by the Capital Projects Advisory Review Board (CPARB).  The next meeting of the Task Force is on May 20, 2010.

Specification Qualifications:  Technical specifications frequently require that the contractor performing the work of certain sections in the specifications must meet specific qualification requirements related to years of experience or certifications.  Prior to the work being performed, it is the responsibility of the public agency to ensure that the contractor performing the work meets any qualification requirements outlined in the specifications.

What's the Difference?  Functionally, each of these tools accomplishes the same objective of ensuring the use of qualified contractors on public works projects.  The primary difference relates to when the review occurs of the contractor's qualifications.  

The Challenge:  Each of these tools has a level of subjectivity that requires public agencies to carefully define their objectives.  The challenge for public agencies is to protect the public's interests and get the best contractor at the lowest price (primary purpose of public bidding), while at the same time ensuring a fair and transparent selection process for the contracting community (secondary purpose of public bidding).

Training:  In mid-April 2010, I taught a five and a half hour class for the City of Bellingham on how to develop and implement Supplemental Bidder Responsibility Criteria on public works projects.  I am thinking of offering a similar class sometime in the fall.  If you're interested in such a class, please contact me.

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