Monday, November 29, 2010

Avoiding Conflicts of Interest When Selecting Consultants

What is the relationship between your selection committee members and the consultants who submit proposals?  What is the nature of the relationship between your project manager and the selected consultant?  

Personal Relationships with Consultants:  In many cases, government employees know the consultants who are proposing, often having worked with them in the past.  But what if the project manager or other evaluators also have a social relationship or personal friendship with any of the consultants submitting proposals or with the selected consultant?  Does that create a conflict of interest or the appearance of a conflict of interest?

Contract Termination:  The City of Sammamish, Washington recently terminated a $30,000 consultant contract for an environmental study to establish the "ordinary high water mark" for Lake Sammamish, after it was revealed that the city's project manager was a personal friend of the consultant.  In addition, the city's project manager was a member of the selection committee, and just prior to the selection process, the city's project manager had invited the consultant onto the city employee's boat.

Keep it Squeaky Clean:  In announcing the contract termination, in which the consultant will keep $20,000 for work already performed, Deputy City Manager Pete Butkus stated: "We want to make sure this is squeaky clean."  The study is "a very emotional issue for many people and we want to make sure it is technically correct and there's not anything that would allow someone to question the results."

Costly Relationship:  The city will start over with a new selection process, a different city project manager, and a new contract that will be for the same study as the terminated contract.

More Information:
Practical Tip: As part of the selection process, require each evaluator to sign the evaluation form with their scores.  The evaluation form should include a statement that the evaluator does not have a conflict of interest (financial, relational, or other nature) with any of the firms being evaluated or key personnel of any of the firms, and that there is no perception of a conflict of interest that could arise from any relationships.
Mike Purdy's Public Contracting Blog 
© 2010 by Michael E. Purdy Associates, LLC

Sunday, November 28, 2010

State Refines Draft "Best Value Selection" Legislation

The State of Washington, through a task force of the Capital Projects Advisory Review Board (CPARB) is continuing to revise draft legislation that would permit use of a best value selection process for public works construction projects, on a pilot basis.  If the task force is able to reach agreement on the draft legislation, and if CPARB approves the draft legislation at its December 9, 2010 meeting, the legislation would be introduced for consideration by the Legislature in January 2011.

Best value contracting as is being discussed by the task force means "a public works project that is awarded based on price, qualifications, and value added to the overall project."  Click here to read the draft legislation.

The task force will be meeting on Thursday, December 2, 2010 from 10:30 a.m. to 11:30 a.m. to discuss finalizing the draft legislation.  The meeting is open, but due to the small room, only a dozen people will fit in the room.  Other interested parties may participate via the telephone.
Mike Purdy's Public Contracting Blog 
© 2010 by Michael E. Purdy Associates, LLC

Tuesday, November 23, 2010

Best Wishes for Thanksgiving Day

For almost 150 unbroken years, beginning with Abraham Lincoln in 1863, in the midst of the Civil War, each President has issued a Thanksgiving Day Proclamation.  

The Proclamations have come in both bounteous and trying economic times, in times of peace and in times of war.  All the Proclamations urge Americans to step back from the immediacy of life and pause to remember how much we have to be thankful and grateful for.  It's a good habit to cultivate - and not just once a year.  

Cultivating a Heart of Thankfulness:  Our lives, like the life of our nation, are a mixture of joy and sorrow, health and sickness, prosperity and poverty, wholeness and brokenness, community and loneliness.  May we, in the midst of all that comes our way in life, remember this Thursday the many blessings we enjoy from a gracious God.  May we learn to live in the moment each day - cultivating a heart of thankfulness for all the good things in our lives.

Kennedy's 1963 Proclamation:  On November 5, 1963, just weeks before his untimely death in Dallas, Texas, President John F. Kennedy issued his third and last Thanksgiving Day Proclamation as president.  I've included the text of his Proclamation below.  The headings are mine to make it easier to read.


Colonial Forefathers: Over three centuries ago, our forefathers in Virginia and in Massachusetts, far from home in a lonely wilderness, set aside a time of thanksgiving. On the appointed day, they gave reverent thanks for their safety, for the health of their children, for the fertility of their fields, for the love which bound them together and for the faith which united them with their God.

George Washington: So too when the colonies achieved their independence, our first President in the first year of his first Administration proclaimed November 26, 1789, as "a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many signal favors of Almighty god" and called upon the people of the new republic to "beseech Him to pardon our national and other transgressions… to promote the knowledge and practice of true religion and virtue… and generally to grant unto all mankind such a degree of temporal prosperity as He alone knows to be best."

Abraham Lincoln: And so too, in the midst of America’s tragic civil war, President Lincoln proclaimed the last Thursday of November 1863 as a day to renew our gratitude for America’s "fruitful fields," for our "national strength and vigor," and for all our "singular deliverances and blessings."

The Passage of Time: Much time has passed since the first colonists came to rocky shores and dark forests of an unknown continent, much time since President Washington led a young people into the experience of nationhood, much time since President Lincoln saw the American nation through the ordeal of fraternal war - and in these years our population, our plenty and our power have all grown apace. Today we are a nation of nearly two hundred million souls, stretching from coast to coast, on into the Pacific and north toward the Arctic, a nation enjoying the fruits of an ever-expanding agriculture and industry and achieving standards of living unknown in previous history. We give our humble thanks for this.

Ideals of Honor and Faith: Yet, as our power has grown, so has our peril. Today we give our thanks, most of all, for the ideals of honor and faith we inherit from our forefathers - for the decency of purpose, steadfastness of resolve and strength of will, for the courage and the humility, which they possessed and which we must seek every day to emulate. As we express our gratitude, we must never forget that the highest appreciation is not to utter words but to live by them.

Gratitude for Blessings: Let us therefore proclaim our gratitude to Providence for manifold blessings - let us be humbly thankful for inherited ideals - and let us resolve to share those blessings and those ideals with our fellow human beings throughout the world.

A Day of National Thanksgiving: NOW, THEREFORE, I, JOHN F. KENNEDY, President of the United States of America, in consonance with the joint resolution of the Congress approved December 26, 1941, 55 Stat. 862 (5 U.S.C. 87b), designating the fourth Thursday of November in each year as Thanksgiving Day, do hereby proclaim Thursday, November 28, 1963, as a day of national thanksgiving.

The Great Unfinished Tasks: On that day let us gather in sanctuaries dedicated to worship and in homes blessed by family affection to express our gratitude for the glorious gifts of God; and let us earnestly and humbly pray that He will continue to guide and sustain us in the great unfinished tasks of achieving peace, justice, and understanding among all men and nations and of ending misery and suffering wherever they exist.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the Seal of the United States of America to be affixed.

DONE at the City of Washington this fourth day of November, in the year of our Lord nineteen hundred and sixty-three, and of the Independence of the United States of America the one hundred and eighty-eighth.

John F. Kennedy
Mike Purdy's Public Contracting Blog
© 2010 by Michael E. Purdy Associates, LLC

Monday, November 22, 2010

Local Preferences: Awarding Work to Local Firms

The Great Recession has prompted many local governments to think creatively on how to keep local contractors and their employees busy rather than permit construction dollars going to non-local firms.

Here are a couple of stories and resources addressing the issue of local preference:

Breaking Up Work in Smaller Contracts:  In Pennsylvania, the Hancock County School District in New Cumberland has made the decision to package construction bid packages for a three-year, $56 million program into smaller contracts, allowing local contractors the chance to compete for smaller projects.  If the entire project was bid separately, only large firms from far away would have the capacity to bid.  Click here to read an article from The Review.

Seeking Changes in State Law:  In Massachusetts, the town of Middleboro reluctantly awarded a water tank construction project to the low bidder from New Hampshire.  The second low bidder was from nearby East Bridgewater, Massachusetts but their bid was $4,000 higher.  Massachusetts state law requires award to the lowest bidder.  After awarding the project to the out-of-state firm, town officials voted to work for a change in the state's procurement laws that would permit them to grant preference to local firms.  Click here to read an article from

Unpacking the Meaning of Local Preferences:  From North Carolina, Eileen R. Youens, Assistant Professor of Public Law and Government at the University of North Carolina's School of Government, has written extensively on the subject of local preference.  She is one of the most knowledgeable and articulate commentators on public contracting.  You can read her entertaining and useful "Local Preferences in Public Contracting" blog posts by clicking below:
  1. Part 1
  2. Part 2
  3. Part 3
  4. Part 4
Mike Purdy's Public Contracting Blog
© 2010 by Michael E. Purdy Associates, LLC

Sunday, November 21, 2010

California City Rejects All Bids on Multi-Million Tennis Court Project

The City of Mission Viejo, California rejected all bids on a controversial multi-million dollar tennis center renovation project and voted to re-advertise the project.  

Claim of Error:  The action occurred after the low bidder claimed error, having left out $300,000 of lighting for the project on their $3.2 million low bid.

Bid Irregularities with Second Low Bid:  After evaluating the second low bid from Horizons Construction, the City's staff concluded that Horizons' bid, which was $250,000 more than the low bid, "was not satisfactorily completed."   In the public hearing before the City Council, staff commented that there were "irregularities in the bid" of Horizons, but offered no further explanation of the nature of the irregularities.  Horizons did not speak at the Council meeting and presumably wasn't present.

Hope for Better Prices on Re-Bid:  With the current competitive bidding environment for construction services, the City Council voted to reject all bids and re-advertise the project, with revised bidding documents, breaking the project into phases to assist with budgeting issues.

Community Controversy:  While there was next to no discussion about the recommendation to reject all bids or the irregularity in Horizons' bid, testimony at the heated November 15, 2010 City Council meeting revealed that the project is a controversial one, with residents testifying about delays in the project, and Council members questioning the project as well as additional designer costs.  For more information, read the article in the Orange County Register.

Things to Remember:
  • Claims of Error:  Public agencies who receive claims of error from contractors, based on either mathematical/clerical errors or errors of judgment, may be best served by accepting the claim of error, rather than denying the claim and entering into a contract with a contractor who will start the project losing money.
  • Non-Responsive Bids:  In rejecting bids based on "irregularities," it is important to determine whether the irregularity was material or immaterial.  A material irregularity is one that provides an advantage or benefit to one bidder not enjoyed by other bidders.  Public agencies should be careful to manage the evaluation of bids in an open, fair, and transparent manner, that increases the public's confidence in the integrity of the bidding process.
Mike Purdy's Public Contracting Blog 
© 2010 by Michael E. Purdy Associates, LLC

Thursday, November 18, 2010

113 Industry Associations Urge Congress to Repeal 3% Withholding Requirement

Unless Congress acts soon to repeal 2005 legislation, starting on January 1, 2012, just a little over a year from now, federal, state, and local governments and agencies with annual expenditures in excess of $100 million will be required to withhold 3% of each payment to vendors, contractors, and consultants, and send the money to the federal government for income tax purposes.

Associations Urge Delay or Repeal:  On November 11, 2010, a coalition of 113 industry associations sent a letter to all members of Congress urging them to delay implementation of the 3% withholding tax for two years, if full repeal is not possible during the lame duck session this year.  Click here to read the five page letter and documentation.  The Government Withholding Relief Coalition also asked Congress to conduct an independent study of the real cost of implementing the 3% withholding tax.  

Cost Concerns Raised:  Significant concerns have been raised by both businesses and government agencies on the cost of implementing this new tax.  The Coalition has argued that since the legislation was passed in 2005, there have been a number of reforms approved that mitigate against the need for the tax.  Government agencies and businesses are beginning to incur costs now as they gear up to implement the legislation on January 1, 2012.

Read the Legislation: Click here to read the actual 3% withholding tax legislation (one page).  You will note at the end of the legislation it states it is effective for payments made after December 31, 2010.  That was subsequently amended by ARRA (American Recovery and Reinvestment Act) on February 17, 2009 to delay implementation until January 1, 2012.

Federal Policy Collision:  Interestingly, at the same time the 3% withholding tax is moving forward, the U.S. Department of Transportation has adopted regulations (49 CFR 26.29) that restrict withholding of retainage on federally funded projects due to the negative impact it has on small and disadvantaged businesses.  This represents a public policy is a collision at the federal level:  the 3% withholding tax is detrimental to small businesses, while USDOT's regulations are designed to protect small businesses.

Retainage Regulations:  USDOT's retainage regulations are problematic for some states, such as Washington, that requires withholding of retainage to protect the claims of subcontractors, suppliers, and workers (RCW 60.28.011).  More on this in an upcoming blog.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Wednesday, November 17, 2010

Los Angeles Cancels Contract with Construction Program Consultants and Launches Ethics Investigation

The Los Angeles Unified School District has canceled a contract with a consulting firm hired to manage the District's $7 billion school construction program, while its Inspector General investigates a number of ethical issues raised through a whistleblower complaint. 
  • Reduction of Consultants?  Over the last decade, four key consultants have helped the district manage its school construction program.  After the District "ordered a reduction in the number of  highly paid outside consultants" due to a budget crisis, the four consultants left the District and formed a new company, Consilia, LLC.  The new company was then hired this fall by the District to manage $7 billion for a school construction program in a contract worth more than $3.7 million.  The District is investigating whether the order to reduce highly paid consultants was circumvented by the hiring of Consilia, LLC. "It looks funny," Superintendent Ramon C. Cortines said, "when we say we are reducing the number of consultants, then the consultants leave and we turn around and hire their consulting firm."
  • Competitive Selection?  A related issue under investigation relates to whether Consilia, LLC was selected through a proper selection process.  Some sources charge that the four consultants wrote the scope of work for managing the construction program, and then formed Consilia, LLC to carry out the program.  District officials have stated that Consilia, LLC was selected after a competitive request for proposals was issued for which three proposals were received.
  • Work as Subcontractor?  The District's Office of the Inspector General is also investigating whether the District permitted the hiring of Consilia, LLC as a subcontractor on a contract that violated a ban imposed by the District on using subcontractors on that contract.
Concerns About Cancellation:  A member of the District's construction oversight committee expressed concerns about the cancellation of Consilia's contract:  "The public needs to be worried about the $7 billion they just gave the district [through a 2008 bond meaure] because the people who know how to spend it have all just been fired," said civil rights attorney, Connie Rice.

More Information:   
Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Integrated Project Delivery - All Day Training

Integrated Project Delivery - Making It Work For You

When:  Monday, December 13, 2010 (8:00 a.m. to 5:30 p.m.)

Where:  Seattle, Washington (Mountaineers Club, 7700 Sand Point Way NE)

  • $195 (AIA, AGC, LCI, or SMPS Members)
  • $285 (Non-Members)
  • IPD Terms and Tools
  • IPD Contracts and Risks
  • IPD Case Studies
  • IPD for Smaller Budgets
  • AP Hurd, Vice President of Development, Touchstone
  • Chuck Hardy, General Services Administration
  • David Pixley, Project Management Director, Facility Planning & Development, Sutter Health
  • Eric Smith, Interim Director, Major Projects Group, University of Washington Capital Projects Office
  • James Frey, Senior Vice President, Alberici Group (representing the AGC)
  • Jay Halleran, Managing Partner, NBBJ
  • Ken Sanders FAIA, Managing Parner, Gensler
  • Scott Redman, President, Sellen Construction
  • Todd Johnson, Vice President, Facilities, Seattle Children's Hospital

Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Tuesday, November 16, 2010

Are You Paying Consultants Consistent with Contract Terms?

In negotiating and executing a consultant contract, both the consultant and the public agency agree upon the basis of payment, including but not limited to hourly rates, permitted reimbursable expenses, and sub-consultant mark-up percentages.

Review Invoices:  When invoices are submitted to the public agency for payment, it is critical for appropriate public agency staff to carefully review the invoice to ensure that the payment requested is consistent with the terms of the contract.

Audit Finding:  The Washington State Auditor's Office issued a Citizen Hotline Report on November 8, 2010 reporting on its investigation of charges made by a citizen against the City of Snoqualmie.  The citizen complaint complained that the City was overpaying consultants because City personnel were not carefully reviewing invoices submitted for payment.  The auditor found that the City was overcharged $13,000 based on invoices reviewed by the auditor.  The City then passed the costs onto private developers in accordance with agreements in place.

Specifically, the auditor noted the following overpayments by the City:
  • Hourly Rate Overpayment:  The City paid a forestry consultant at an hourly rate of $110 per hour, when the contract limited the hourly rate to $85 per hour.  For a six month period in 2007, this amounted to an overpayment to the consultant of more than $4,000.
  • Mileage Reimbursement Overpayment:  The City reimbursed the same forestry consultant for mileage at 48.5 cents a mile, while the contract only permitted reimbursement at 31.5 cents a mile, resulting in an overpayment of more than $1,600.
  • Payment for Reimbursables Not Permitted:  The City reimbursed an engineering firm almost $1,700 for the use of a four-wheel drive vehicle and cellular telephones that were not allowable under the contract.
  • Hourly Rate Overpayment:  The City approved invoices for and paid for the work of a senior project manager with an engineering firm at an hourly rate of $130, when the contract only permitted $120 per hour.
  • Mileage Reimbursement Overpayment:  The City approved mileage reimbursement for an engineering firm in excess of what was permitted by the contract.  In addition, the City approved mileage reimbursement for personnel who were working on the project, but did not incur actual mileage expenses because no travel occurred.
Practical Tips:  In managing your consultant contracts, do you have processes in place to ensure that invoices paid are appropriate and consistent with the terms of the contract?  Here are a couple of procedural tips that can help you in managing contract payments.
  • Contract Terms:  Know the payment terms of your contract.
  • Copy of Contract:  Ensure that staff who are managing contracts or approving payments for contracts actually have a copy of the contract.
  • Detailed Invoices:  Require that invoices be submitted in sufficient detail to determine the breakdown of costs so the public agency can determine if the costs are consistent with the terms of the contract.
  • Review Invoices:  Have appropriate staff with direct knowledge of the work performed review the invoices not just for whether the work was performed, but whether the charges are consistent with the terms of the contract. 
  • Internal Controls:  Institute appropriate internal controls within your agency so that others (supervisors, purchasing, contracting, or accounting) also review invoices for consistency with the terms of the contract.
  • Rejection of Invoices:  Reject invoices submitted that are inconsistent with the terms of the contract, and require the consultant to re-submit the invoice after it has been corrected.
More Information:  Click here to read the complete 15 page Citizen Hotline Report.  In addition to the overpayments noted above, the report also concluded that the City could have saved a significant amount of money by hiring a city employee to perform the work instead of paying consultants. 

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Monday, November 15, 2010

Contractor Involved in Excessive Subcontractor Lawsuits

Ebenal General, Inc., a Bellingham, Washington based contractor has racked up at least 35 lawsuits by subcontractors since 1999, with 14 of those lawsuits in just 2009 and 2010.  That doesn't count the eleven times since 1998 that Ebenal has sued subcontractors to force them "to live up to their agreement," according to the owner of the construction company.  

Statistics such as these are outside the norm for most general contractors.  Contractors with business practices responsible for multiple lawsuits can be problematic for both subcontractors and owners.  

Risks for Subcontractors:  Subcontractors need to be knowledgeable about the integrity and practices of the general contractors they work for.  One project where a contractor fails to pay a subcontractor can be the cause of a subcontractor going out of business.  

Risks for Owners:  Owners who hire general contractors with a poor record of subcontractor relationships and payments and a history of lawsuits can cause project completion to be delayed, often with substantial additional costs to the owner.  Ebenal has recently failed to complete on time a dormitory project at Western Washington University  in Bellingham.

Bidder Responsibility Criteria:  In 2007, the Washington State Legislature adopted RCW 39.04.350 which provides public agencies with the right to establish supplemental bidder responsibility criteria to address issues such as having an excessive history of lawsuits and failure to pay subcontractors in a timely manner.

More Information:  To read an article from The Western Front Online about Ebenal, click here.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Sunday, November 14, 2010

Types of Design-Build Entities

The Design-Build Institute of America (DBIA) recently adopted a position paper expressing no preference for the type of Design-Build entity that may contract with an owner.

Different types of Design-Build entities include the following:
  • Contractor with a designer (architect/engineer) as a subconsultant
  • Designer with a contractor as a subcontractor
  • Joint venture between a contractor and designer
  • Entity with in-house design and construction capabilities
Click here to read DBIA's one page position paper, including key elements that should be present in any contractual arrangement.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

The Future of Capital Project Delivery

All Day Conference:  The Future of Capital Project Delivery

When:  Wednesday, November 17, 2010 (8:30 a.m. to 5:00 p.m.)

Where:  Tulalip, Washington (Tulalip Resort Conference Center)

  • $299 for NWCCC members
  • $379 for Non-members
Presentations on the following subjects:
  • Target Value Design
  • BIM Project Execution Planning
  • Integrating Technology into Lean Construction
  • Project Delivery through Best Value Selection
  • Advancing New & Emerging Technologies to Provide Highest Business Value in Capital Project Life-cycle
  • Industrial Engineering Techniques for Improving Field Operations
  • Project Delivery at Boeing
  • Innovation and Integration in Project Delivery at the University of Washington
  • The Future of Capital Project Delivery
  • Eric Smith, University of Washington
  • Churck Lynch, Boeing
  • Dr. Glenn Ballard, UC Berkeley
  • Steve Hutsell, Corps of Engineers
  • John Lynch, Washington State Department of General Administration
  • Kimon Onuma, Originator of BIMStorm
  • Brigitta Foster, Sandia National Labs
  • Ceoff Anderson, Lease Crutcher Lewis
  • Ray Topping, FIATECH
  • Deke Smith, BuildingSMART Alliance NIBS
Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Thursday, November 11, 2010

Davis-Bacon Prevailing Wage Compliance

Many public agencies and contractors are being faced for the first time with unraveling the complexities of managing compliance with federal Davis-Bacon prevailing wage requirements.  Below are two different approaches: training and outsourcing.


When:  Wednesday, November 17, 2010 (11:00 a.m. Pacific Time - for 90 minutes)

Information and Registration:  Click here.


Faced with monitoring Davis-Bacon federal prevailing wage requirements on four upcoming capital construction projects, the Seattle School District has decided to manage compliance with Davis-Bacon requirements not with their own staff, but by outsourcing the compliance function.  The school district has issued a Request for Proposals (RFP) to obtain the services of an outside firm to manage Davis-Bacon compliance.

Duties of the selected firm will include:
  • Working with the District's project managers to assure compliance with Davis-Bacon
  • Construction monitoring, including reviewing and overseeing contractors' payroll compliance, checking and documentation, and closeout
  • Ensuring that all legal requirements for contractor forms, logs, rates, etc. have been met and submitted to federal agencies and the District's project manager
The RFP is available on the Builders Exchange website (  Click on "Posted Projects," "Goods and Services," and "Seattle Public Schools Goods and Services."


I've been approached by one public agency recently about developing and providing training for their staff on federal Davis-Bacon prevailing wage monitoring and compliance.  It's a class I may be developing soon.  Please contact me if this is something you would be interested in having me present for your agency, or at a class with staff from different agencies.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Prevailing Wages Scopes of Work Proposed for 3 Classifications

The Washington State Department of Labor and Industries is proposing to adopt scope of work descriptions for three classifications of labor for which prevailing wages exist, but not descriptions.

Public Hearing:  A public hearing will be held on December 9, 2010 at 2:00 p.m. at L&I's headquarters in Tumwater, Washington to consider testimony on the proposed scope of work descriptions for the following three classifications:
  • Dredge workers
  • Truck drivers
  • Ready mix truck drivers.  
Written Comments:  Written comments may also be submitted to L&I by e-mail at or by mail to Sally Elliott, Specialty Compliance Services Division, PO Box 44400, Olympia, WA 98504-4400.

Schedule for Adoption:  The changes, if adopted, would be added to the Washington Administrative Code (WAC).  L&I hopes to adopt the new regulations on January 18, 2011 with a tentative effective date of March 1, 2011.

Read the Proposal:  Click here to read the proposed scope of work descriptions for dredge workers, truck drivers, and ready mix truck drivers.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Tuesday, November 9, 2010

Determining the Sufficiency of a Bid Bond

When a public works construction project requires the submission of a bid bond with the bid, under what circumstances should the bid be rejected as non-responsive for failure of the bidder to provide a sufficient bid bond?

Is the Bid Bond Enforceable?  Generally, the key question to ask about any irregularity in a bid bond is whether the bid bond would be enforceable with the surety (bonding company).  If the bid bond could not be enforced, the bid would typically be considered non-responsive.

No Surety Signature:  For example, if the bid bond was not signed by the surety or the surety's representative, the surety would argue that there was no agreement on their part to provide the bid bond.  In such a case, the bid would probably be rejected as non-responsive.

Different Names:  But what happens if the name of the bidder on the bid form and the name of the bidder in the bid bond (principal) are different?  In a recent case before the U.S. Government Accountability Office, based on specific facts, GAO ruled that a discrepancy in the names of the bidder and the bid bond principal still rendered the bid bond enforceable because the record showed that the bidder and the bid bond principal were, in fact, the same entity, and the bid was responsive.  In different situations, however, a discrepancy between the name of the bidder and the name of the bid bond principal could render a bid non-responsive.   Click here to read the 4 page GAO decision.

Consult Your Attorney:  Bid responsiveness questions are best handled on a case-by-case basis and with the advice of your attorney.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Training in North Carolina

Basic Principles of Local Government Purchasing

When:  December 6-9, 2010 (4 days)

Where:  University of North Carolina-Chapel Hill (School of Government)

Cost:  $385

Content:  This course is designed for new local government purchasing officials and covers the basic principles of purchasing, including legal aspects of purchasing and construction contracting; purchasing concepts and terms; the purchasing process; use of manuals; use of the Internet in purchasing; budgeting; accounting and fiscal control; disposal of surplus property; conflicts of interest; and professional development.

More Information:  Click here.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Monday, November 8, 2010

Small Businesses Struggle to Get Government Construction Contracts

Small contractors, and especially minority and women owned businesses, have historically had a difficult time competing for public works projects as either general contractors or subcontractors.  

Here are three recent developments in this area:

Los Angeles:   In a recently released 18 page report entitled "The Case for Minority Business Contracting Reform," the Greater Los Angeles African American Chamber of Commerce called for the city to make changes to encourage greater use of  small, local businesses owned by minorities and women in the city's contracting.  The State of California is constrained by provisions of  Proposition 209 approved by the voters in 1996.  Click here for a news article from the Los Angeles Times from October 31, 2010.

Seattle:  The law firm of Oles Morrison Rinker & Baker is presenting a two hour breakfast training meeting entitled "A New Era for SBA: What You Need to Know About Doing Business As, or With, a Small Business."
  • When:  Tuesday, November 16, 2010 (7:00 a.m. to 9:00 a.m.)
  • Where:  Seattle, Washington (Ruth's Chris, 727 Pine Street)
Washington State:  After hearing comments from a number of minority businesses at the October 28, 2010 meeting of the Capital Projects Advisory Review Board (CPARB), the board voted to establish a task force to address strategies for opening up opportunities for small businesses, especially minorities and African American businesses, in obtaining work on capital projects (design and construction).

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

APWA (Oregon/Washington) 2011 Spring Conference

 The Oregon and Washington chapters of APWA (American Public Works Association) have announced their joint spring conference for March 29, 2011 through April 1, 2011 in Vancouver, Washington.

For more information, visit APWA's website.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Sunday, November 7, 2010

ABC Urges Army Corps of Engineers to Not Use Project Labor Agreements

The Associated Builders and Contractors (ABC) has filed comments opposing adoption of Project Labor Agreements (PLAs) by the U.S. Army Corps of Engineers on projects in Georgia, Kentucky, and Connecticut.

PLAs are strongly supported by labor unions and contractors who are signatory to collective bargaining agreements, but are opposed by merit shop or non-union contractors and associations such as ABC.

In a November 3, 2010 press release, ABC argued that PLAs cause public works projects to be more expensive, and do not deliver the benefits promised.  

Click here to read the ABC's press release, which includes links to their comments to the Army Corp of Engineers.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Training: Greenroads Certification - A Path to Sustainability

Dinner Meeting:  Greenroads Certification - A Path to Sustainability

When:  Wednesday, November 17, 2010 (4:45 p.m. to 7:00 p.m.)

Where:  Seattle, Washington (Rock Salt Restaurant, 1232 Westlake Avenue North)

Cost:  $37.00

Registration Deadline:  Wednesday, November 10, 2010

Program:  The presentation includes an overview of the "Greenroads Ratings System" and provides case studies of two test projects, one in Kirkland and one in Bellingham.

  • Jeralee L. Anderson, Lead author and editor of Greenroads
  • Freeman Anthony, City of Bellingham
  • Rod Steitzer, City of Kirkland
  • Jesse Thomsen, Perteet, Inc.
More Information and Registration:  Click here.
Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Seminar: Transporation Success in the Northwest

Breakfast Meeting:  Transportation Success

When:  Wednesday, November 10, 2010 (7:15 a.m. to 9:00 a.m.)

Where:  Seattle, Washington (Rainier Club, 820 4th Avenue)

Sponsored by:  Northwest Region of DBIA (Design Build Institute of America)

Speaker:  Fred Tharp, Senior Manager, WSDOT

  • Update on recent projects
  • Outline of projects in the procurement stage
  • Overview of new electronic signage on 1-5 and I-90
  • Update on WSDOT's Guideline for Design-Build
Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Thursday, November 4, 2010

2 Contracting Jobs in Washington State

Contracts Manager

Agency:  Washington State Department of Transportation (WSDOT) 
Salary:  $57,384 to $73,896 annually

Job Location:  Lacey, Washington

Position Description:  WSDOT's Administrative Services Contracts Office is seeking a Contracts Manager to oversee the personal services and information technology contracting program for WSDOT.

More Information:  Click here.

Application Deadline:  Tuesday, November 30, 2010 (5:00 PM Pacific Time) 

Procurement Coordinator

Agency:  C-TRAN

Salary:  $52,872 to $71,460 annually

Job Location:  Vancouver, Washington

Position Description:  The Procurement Coordinator coordinates and manages the public procurement process for all supplies, equipment, and services required by C-TRAN.

More Information:  Click here.

Application Deadline:  Open until filled.  Position was posted on October 29, 2010.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Wednesday, November 3, 2010

San Diego County Voters Ban Project Labor Agreements

Voters in San Diego County, California voted overwhelmingly on Tuesday, November 2, 2010 to amend the county's charter to ban the use of Project Labor Agreements (PLA) on county public works projects.

Project Labor Agreements are between a government agency and one or more labor unions and essentially provide that only union contractors may be used on a particular project.  Non-union contractors have criticized PLAs as being anti-competitive.  

Scott Crosby, the president of the San Diego Chapter of the Associated Builders and Contractors expressed his concern about PLAs:  "If you're a non-union company and you win a bid under a PLA, you can use your workers, but you have to sign them up through a union hiring hall and start paying benefits into their pension funds."

The San Diego vote follows the actions of Oceanside and Chula Vista, two Southern California cities, who have also banned PLAs. 

More Information:
Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy)

Tuesday, November 2, 2010

Florida County to Prequalify Contractors

Concerned about the track record of a particular contractor, county officials in Florida have taken steps to establish a prequalification process for public works contractors, rather than relying on evaluating the qualifications of the low bidder after bids have been received.

Current County Practice:  Prequalification would allow Lee County to determine what contractors are permitted to bid County road projects.  Currently, any contractor can bid on the County's projects.  The County then evaluates the low bidder's responsibility based on the firm's past job history, its financial strength, its payment record to subcontractors, environmental compliance, and history of litigation. 

On November 1, 2010, the County commissioners voted to move ahead with establishing a prequalification process.  

County Concerns with Contractor:  Although the County maintained that the move toward prequalification was not targeting any contractor, the County has had a number of problems with Michigan-based Posen Construction.  The County's concerns with Posen include the following:
  • Asbestos was identified on Posen's projects.
  • Posen has a history of not paying subcontractors.
  • Additional County time to oversee Posen's projects.  County commissioner Tammy Hall complained that "if we have to spend twice as much staff time, it's not really a low bid."
Additional Information:  From, click here.

When Should Contractor Qualifications Be Determined?  Prequalification and bidder responsibility essentially rely on the same criteria for determining whether a contractor should be awarded a public works project. The difference is in the timing.  Under prequalification, the decision about a contractor's qualifications is made prior to bidding and limits what contractors can submit a bid.  Under bidder responsibility, the decision about a contractor's qualifications is made after bids have been submitted, and the low bidder is evaluated to determine if they are qualified and meet pre-established criteria.

Bidder Responsibility in Washington State:  In Washington State, RCW 39.04.350 allows public agencies to develop bidder responsibility criteria to be used in evaluating whether the low bidder is qualified to perform a project.  The 2007 law has been the source of significant controversy in the state, with some contractors complaining about overly restrictive criteria that limits their ability to be responsible.  A task force with public agencies, contractors, and subcontractors is currently meeting to develop common ground in understanding how bidder responsibility should be implemented.

Prequalification in Washington State: Only a few types of public agencies in Washington State are specifically authorized to prequalify contractors, including the following:

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

Monday, November 1, 2010

Former Chicago Area Official Arrested in Contracting Scandal

A high ranking Chicago area official was arrested last month on October 4, 2010 and charged with three felonies in a wide-ranging contracting scandal.

Carla Oglesby, former deputy chief of staff to Cook County (Illinois) Board President Todd Stroger, resigned her position while in jail and is now out on bail after posting a bond.

Awaiting Trial:  Oglesby is now awaiting trial and is accused of theft of government property, money laundering, and official misconduct:
  • Ten days after Oglesby was hired, she signed off on a $24,975 non-competitive consultant contract to a company she owns, and continued to work for on the weekends.  Contracts over $25,000 require the approval of the Cook County Board.  After the contract was awarded, Oglesby then used her influence to expedite payment to her company, before any work had been completed.  "It is unclear at best as to whether any work was performed by CGC Communications," an October 7, 2010 Board of Ethics report noted. Oglesby was suspended in May 2010 after the information became public, but her boss, County Board President Todd Stroger brought her back on the payroll after just a five day suspension, an action that outraged other Board members.
  • Oglesby is also accused of directing more than $300,000 of additional contracts to herself and others, each one below the $25,000 selection threshold requiring approval by the Cook County Board.
More Information:
Practical Tips:
  1. Develop a careful delegation of authority system with respect to contract decisions.  
  2. Provide for separation of duties relating to contracting and payment issues.  No one individual should be permitted to make a contract selection, sign the contract, authorize setting up a vendor in the financial system, approve invoices, and authorize checks to be written, and deliver checks.
  3. Ensure your agency has internal control mechanisms and checks and balances to prevent fraud and abuse.
  4. Have a regular internal audit function in place to ensure that abuses do not occur.
  5. Make sure your agency has an ethics policy.
  6. Provide regular ethics training for your employees.
    Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

    People in Transition - New Hire

    The City of Shoreline,Washington recently hired Judy Isaac as its Purchasing Officer to replace Cathy Robinson, who took a position with King County.  Judy has more than 20 years of experience in procurement, including 13 years in public purchasing with the City of Redmond and the Lake Washington School District. 

    Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)