Wednesday, June 29, 2011

Honolulu Bid Protests Denied; Bidders to Appeal

Two losing bidders on the City of Honolulu's Design-Build-Operate-Maintain (DBOM) rail car contract have indicated they will likely file appeals after the city denied their bid protests.  Thursday, June 30, 2011 is the deadline for filing the appeals.

$1.2 Billion Contract:  After evaluating the protests, the city affirmed their award to Ansaldo Honolulu.  However, that decision didn't sit well with either Sumitomo Corp. of America and Bombardier Transportation, who both plan to advance their case to the next level.  With a $1.2 billion dollar contract extending through 2024 at stake, the bidders appear willing to invest money in the protest and appeals process.

Basis of Appeals:  Sumitomo claim has charged that the evaluation criteria favored the Design-Build portion of the project, leading the successful firm to unbalance their bid with higher prices for the Operate-Maintain portion of the project.  Bombardier is challenging the city's declaration that their bid was conditioned and therefore non-responsive.  For more details of the disputes, refer to my blog entry of April 24, 2011.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Tuesday, June 28, 2011

Is a Bid Guaranty Required on Small Works Roster Projects?

In Washington State, most public agencies may streamline the selection of a contractor for public works projects less than $300,000, by not publicly advertising these projects but instead sending the Invitation to Bid to firms on the agency's Small Works Roster.

The Question:  The requirements for Small Works Rosters are found in RCW 39.04.155.  Many of the public agencies that use a Small Works Roster also have specific laws requiring them to obtain a bid guaranty from bidders on public works projects.  So, is a bid guaranty required on a Small Works Roster project for these agencies?  I was recently asked this question in a class I taught for contract administrators from many different agencies. 

No Bid Guaranty on Small Works Roster Projects:  I think there is a strong case to be made that a bid guaranty is not required on a Small Works Roster project.  I base my opinion on two elements from the Small Works Roster law (RCW 39.04.155):
  • Alternative Procedures:  RCW 39.04.155 (1) states that "these [Small Works Roster] provisions may be used in lieu of other procedures to award contracts..."  Thus, as an example, even though second class cities are required by RCW 35.23.352 to obtain a bid guaranty on public works projects, the argument can be made that such requirements don't apply for Small Works Roster projects.  However, RCW 39.04.155, in describing the procedures for Small Works Rosters, doesn't specifically discuss bid guaranties at all, so technically there are no alternate procedures relating to bid guaranties.
  • Electronic Quotations:  Perhaps more convincing, however, is that RCW 39.04.155 (2)(c), in describing Small Works Rosters, states that procedures shall be established by the public agency "for securing telephone, written, or electronic quotations from contractors..."  Thus, it is permissible under the Small Works Roster process to receive telephone or electronic quotations.  In the event an agency does this, obviously it would not be possible to obtain a bid guaranty since the guaranty couldn't be submitted by telephone or electronically.
Reasons to Still Require a Bid Guaranty:  Thus, all things in balance, I don't think it is required that public agencies obtain a bid guaranty on a Small Works Roster project.  However, just because it might not be required, doesn't mean that agencies should automatically waive bid guaranties.  There are some very good reasons for requiring a bid guaranty, especially in this difficult economic market.  Many contractors are struggling with obtaining bonding on public works projects.  A bid guaranty (especially a bid bond) is an indication that the contractor will be able to obtain Payment and Performance Bonds, and may serve as a good screening tool to ensure that only financially viable companies bid on public works projects.

Talk With Your Attorney:  In deciding whether to require a bid guaranty on a Small Works Roster project, consult with your attorney and others as you make a legal and risk analysis of how to approach this question.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Job Opening: Public Works and Consultant Contracting Specialist

City of Seattle, Washington
  • Position: Senior Planning and Development Specialist
  • Location: Seattle, Washington
  • Closing Date:  Tuesday, July 5, 2011 at 4:00 p.m.
  • Salary: $35.18 - $40.98 Hourly
  • Job Summary: The position works within the City's Purchasing and Contracting Services Division to develop, implement and manage highly complex contracting policies, programs and procedures, which include the Alternative Public Works Programs, Job Order Contracts, the Small Works Roster, Federal funding programs, and the Consultant Rules and Roster Programs. The position may work on policies and procedures for City Social Equity Programs such as Equal Benefits, Disadvantaged Business Enterprise (DBE), Apprenticeship, Prevailing Wage, Federal EEO and the Woman and Minority Inclusion program.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Monday, June 27, 2011

Ohio Legislature Reaches Compromise on Multiple Prime Contracts and Prevailing Wages

In a late night session on Monday, June 27, 2011, a legislative budget conference committee with members from the Senate and House approved two significant changes to Ohio's public construction regulations as part of the state's budget:
  • Multiple Prime Contracts:  Current Ohio law requires that public agencies award separate contracts dealing with separate trades instead of having a general contractor coordinate the work of the subcontractors.  The change would permit award of a single prime contract under certain conditions, which is the practice most agencies across the country follow.  More later as the details of the conference committee compromise becomes available.
  • Prevailing Wages:  The threshold for the applicability of prevailing wages would increase from $80,000 to $125,000 in 2012 and to $250,000 on July 1, 2013, far below the $5 million threshold proposed by Ohio Governor John Kasich.
The full Senate and House are scheduled to vote on the budget this week, in time for the Friday, July 1, 2011 start of the new fiscal year.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Sunday, June 26, 2011

Job Opening: Contracts Specialist 3 (WA)

Washington State Department of Social and Health Services (Olympia, WA)
  • Position: Contracts Specialist 3
  • Location: Olympia, Washington
  • Closing Date:  Monday, July 4, 2011
  • Salary: $4,114 to $5,395 per month
  • Job Summary:  This position is responsible for ensuring statewide agency compliance with laws, rules, and policies related to the acquisition of purchased goods and services. This position is governed by RCW 43.19, RCW 43.105, OFM SAAM Chapters 12, 20, 30 and 35 and other relevant state laws, policies and procedures.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Thursday, June 23, 2011

Who Can Authorize Change Orders?

Change orders on public construction projects are a fact of life.  There are always unforeseen conditions that require an adjustment in the contract amount and scope of work.

Authority Levels and Roles:  In managing the administration of change orders, it is important for public agencies to have clear internal procedures about who is authorized to execute change orders, and when approval from higher level management or a governing body such as a city council is required.

Tacoma City Council Not Informed of Change Orders:  Project management staff for the City of Tacoma, Washington have recently been criticized by members of the Tacoma City Council for not keeping the Council informed of change orders totaling $821,000 on a $26.5 million Design-Build contract for renovation of the city's Cheney Stadium.  Click here to read a news article from the Tacoma News Tribune about the change orders on the project.

Practical Tips:  In managing change orders, public agencies should have clear policies, procedures, and practices related to the following issues:
  1. What individual(s) have authority to approve change orders for the owner?
  2. What are the dollar thresholds of change orders that public agency employees may approve?
  3. When do contingency amounts spent on change orders need approval from higher level management or a governing body?
  4. At what dollar amounts does the governing body need to be notified of change orders or approve change orders?
  5. Is the governing body being kept informed on a regular basis on the progress of the project, and potential or actual change orders for the project?
  6. Is the public agency ensuring that the contractor is paid only after execution of a change order?
  7. Is the scope of work of the change order generally consistent with the scope of work for the project, or could it be bid as a separate project?
  8. Is the public agency conducting an independent cost estimate of the change order?
  9. Are the dollar amounts of the change order being appropriately negotiated by the public agency?
  10. Are there appropriate internal controls in place to ensure that the public agency's change order approval process is being implemented consistent with the approved policies and procedures?
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Wednesday, June 22, 2011

The Changing World of Public Procurement and Contracting

On Wednesday, June 22, 2011, I delivered a talk and facilitated a discussion on "The Changing World of Public Procurement and Contracting: Responses to the Global Market and Struggling U.S. Economy."

The audience consisted of senior marketing directors and vice presidents from across the country for companies who regularly contract with government agencies.  They are part of an advisory board to a Seattle-based company who helps businesses locate government contracting opportunities.

5 Trends in Public Contracting:  The two hour presentation and facilitated discussion focused on what I see as five key and emerging trends in public contracting:
  • The Rising Importance of Relationships
  • The Shift Toward Cooperative Paradigms
  • The Drive for Sustainability
  • The Impact of Technology
  • The Quest for Reducing Costs
More Information:  If you are interested in hearing more about the presentation, or would like to discuss the possibility of me presenting this material to your agency or organization, please contact me.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Tuesday, June 21, 2011

Job Opening: Contracts Specialist

Sound Transit (Seattle, WA)
  • Position: Contracts Specialist
  • Location: Seattle, Washington
  • Closing Date:  Friday, July 1, 2011 (5:00 p.m.)
  • Salary: Negotiable
  • Job Summary:  Prepares, finalizes, analyzes, and administers low to moderate risk contracts.  Assists agency departments and project managers in selection of procurement methods and strategies.  Prepares, issues, and awards contracts of a routine nature.  Assists in the preparation and administration of solicitations.  Responds to questions and issues and provides technical expertise and assistance related to associated low to moderate risk contracts.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Monday, June 20, 2011

What Not to do When Contracting for a Public Works Project

Many public agencies are small and contract for public works construction projects on a very infrequent basis.  As a result, they often are not aware of the requirements that must be followed.   Without carefully researching the requirements, or hiring staff or consultants to help manage a public works project, small agencies put public tax dollars at risk, and they may end up with audit findings.

Audit Finding:  The Skagit County (WA) Fire Protection District No. 3 was recently slapped with an audit finding by the Washington State Auditor's Office for violating three fundamentals of public works contracting: bidding, conflicts of interest, and prevailing wages.

No Sole Source for Public Works:  In 2009, the District declared a $146,055 construction project as a sole source, awarding the contract without any competitive bidding as required.  Under Washington State law, there is no provision for a sole source public works project.  All public works projects must be bid, unless an emergency has been declared waiving competitive bidding, or unless the dollar amount of the project is less than the public agency's bid limit (the amount below which competitive bidding is not required).  The Fire District did not declare and emergency and the amount of the contract was well above the District's bid limit.

Conflict of Interest:  In addition, the contractor awarded the project subcontracted work to a company owned by the District's fire chief, creating a conflict of interest.  To make matters worse, and more confusing, the District actually issued checks directly to the chief's company for work on the project, even though the company was a subcontractor to the general contractor.  

Prevailing Wages:  Finally, the District never collected the required prevailing wage forms from the contractor and subcontractors on the project.  A Statement of Intent to Pay Prevailing Wages was required from the contractor and subcontractors prior to the first payment, and an Affidavit of Wages Paid was required to be submitted by the contractor and subcontractors prior to release of retainage to the contractor.

More Information:  To read the audit finding, click here.

Good Intentions:  Most public agencies have good intentions and try to do what is best.  However, the world of public works contracting is complex and often confusing.  Without a clear understanding of the requirements, a wise public agency will obtain appropriate advice before embarking on a public works project. 
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Sunday, June 19, 2011

3 Positions Open on Washington's Project Review Committee

Washington State's Capital Advisory Review Board (CPARB) is seeking letters of interest from individuals knowledgeable in the use of alternative public works contracting procedures, to serve three year terms on its Project Review Committee.
Representatives needed in 2011 are from the following groups:
  • 1 Owner - Counties
  • 1 Owner - Cities
  • 1 General Public Owner
Letters of interest are due by 12:00 p.m. on August 1, 2011.  For more information click here.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Thursday, June 16, 2011

Town in New York Violates Public Bidding Law

The New York State Supreme Court has ruled that the Town of Hamburg violated a state law that requires public agencies to bid and award multiple contracts for subcontract work, rather than awarding public works projects to a general contractor.  

Does Estimate or Cost Trigger the Law?  Hamburg officials maintained that the law (known as the Wicks Law) didn't apply for the construction of a highway department storage building because the low bid came in less than the $500,000 that would trigger bidding and award of multiple prime contracts for the work.  The Court decision was based on the fact that the town's estimate for the project was over $615,000.  The town's attorney argued about the "lack of clarity" in the law as to whether the estimate or actual cost triggers the multiple prime contracts.

Pros and Cons of Multiple Prime Contracts:  The lawsuit was brought against the town by the operating engineers union who argued that the law helps prevent bid rigging and provides certain protections for the subcontractors, resulting in safer projects.  Public agencies, on the other hand, have historically argued that the law, which dates back to 1912, increases the cost of public works projects by as much as 30%.

Only a Few States Have Multiple Prime Contracts:  New York is one of only a few states states with such a requirement.  There are reasons why so few states have multiple prime contract laws.  They require public agencies to be responsible for coordinating public works projects, rather than assigning that risk to a general contractor.

More Information:   
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Wednesday, June 15, 2011

Preventing "Bait and Switch" of Key Personnel

Having clear procedures and language in your Request for Proposals (RFPs), Request for Qualifications (RFQs), and contracts about the commitment level and substitution procedures of key personnel can be an effective tool to prevent a consultant from proposing an individual in order to obtain the project, only to substitute them later and replace them with a less experienced individual (bait and switch).

Key Personnel as Evaluation Criterion:  When public agencies issue either a RFP or RFQ, typically one of the key evaluation criteria will be the experience of key personnel who will be used on the project.

Proposal is Commitment to Use Specific Staff:  Because the successful firm is selected, at least in part, on the qualifications and experience of the key personnel, the RFP or RFQ should state that by submitting a proposal or a statement of qualifications, the firm is making a commitment to use the key personnel during the contract, should they be selected.  The following is an example of language I have seen used in RFPs and RFQs:
By submitting a proposal [or statement of qualifications], the proposer agrees and acknowledges that it will provide for the duration of the project, the full complement of staff required to perform the work of the project, including the specific individuals identified in its proposal.
Substitution Procedures to Key Personnel:  However, because people do leave jobs or become unavailable for personal reasons, it is important that there be a deliberate process for substitution of the consultant's key personnel.  Any proposed substitute should have the same or higher qualifications and experience as those being substituted, and the substitution should be subject to approval by the public agency.  The following is an example of language I have seen used in contracts:
The consultant agrees to provide all professional personnel necessary to perform the scope of work, including the following individuals who were named in the consultant's proposal [statement of qualifications] submitted in response to the public agency's Request for Proposals [or Request for Qualifications].  These key personnel shall remain assigned for the duration of the project, unless otherwise agreed to in writing by the public agency.  In the event the consultant proposes to substitute any of the key personnel designated below, the individual(s) proposed must demonstrate similar qualifications and experience as required to successfully perform such duties.  The public agency shall have the sole right to determine whether key personnel proposed as substitutes are qualified to work on the project.  The public agency shall not unreasonably withhold approval of staff changes.
Position Title
Name of Individual

Check with Your Attorney:  In developing commitment and substitution language for your RFPs, RFQs, and contracts, be sure to discuss it with your agency's attorney.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Tuesday, June 14, 2011

Delaware Launches New Procurement Website

The State of Delaware last week launched a new procurement website.  The website was designed to:
  • Make it easier for businesses to find bidding opportunities with the state by searching a database of current bid and proposal solicitations
  • Track use of women and minority businesses
  • Enable businesses to contact state and local contracting officers
  • Provide resources on how to do business with the state
Public agencies looking for sample procurement and solicitation documents will find these documents online for both awarded contracts as well as those currently being advertised.

Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Monday, June 13, 2011

The Continuing Evolution of GC/CM Contracting

More and more public agencies across the country are beginning to authorize and embrace the General Contractor/Construction Manager (GC/CM) model of delivering public works projects, following the lead of what has been common in the private sector for some time.  

Differences by State:  At least 22 states currently authorize some form of GC/CM, although the terminology and practices differ by state and sometimes by local agency.  In some locations, it is referred to as CM/CG or CM at Risk, or CMAR.

Early Selection of Key Subcontractors:  In the State of Washington, last year the Legislature approved a new law that is taking GC/CM to the next phase of effectiveness.  RCW 39.10.385 authorizes the selection of mechanical and electrical subcontractors early in the life of the project (during the preconstruction phase) through a similar process by which public agencies select the GC/CM (qualifications and prices for fee and general conditions).  The cost of the subcontract work is then negotiated.  Only a couple of GC/CMs and public agencies have taken advantage of this new law to date.

Half-Day Seminar:  The Northwest Construction Consumer Council (NWCCC) is sponsoring a half-day seminar on the new law, bringing together individuals who have actually implemented its provisions.

What:  Changing Project Delivering at the UW through Innovation, Integration, and Adoption of MC/CM and EC/CM

When:  Wednesday, June 22, 2011 (8:00 a.m. to noon)

Where:  University of Washington Campus, PACCAR Hall

  • Free for NWCCC members
  • $99 for non-NWCCC members
  • Eric Smith, Director of Major Projects, University of Washington, Capital Projects Office
  • Will Dann, THA Architects
  • Troy Bloedel, Lease Crutcher Lewis
  • Steve Tatge, University of Washington
  • James Thomas, GLUMAC
  • Judy Ebmeyer, GLUMAC
  • Dave Nehren, Hermanson Company (Mechanical)
  • Tim Nelson, Nelson Electric
Information and Registration:  Click here. 
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Job Opening: Contract and Supply Chain Manager

Chelan County (WA) Public Utility District
  • Position: Contract and Supply Chain Manager
  • Location: Wenatchee, Washington
  • Closing Date:  Until filled
  • Salary: High $80,000s to mid $90,000s
  • Job Summary:  This position is responsible for managing the supply chain function for the District.  Manages the purchasing of materials, equipment, and services.  Manages materials warehouse operations including distribution and disposal of goods and equipment.  Manages contract origination and administration operations ranging from small service contracts to large construction contract bids.  Establishes procedures, contributes to policy making, controls expenditures and ensures compliance with all applicable regulations.  Primary contact for internal and external auditors.  Directs the work of purchasing, contracting, and warehousing supervisors and staff.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Sunday, June 12, 2011

Contractor Jailed for Fraud and Forgery

A contractor who had been debarred by the State of New Jersey from bidding on public works projects because of violations of prevailing wage requirements, was sentenced to four years in prison on June 10, 2011 for creating a stolen identity and forging documents.

Debarred in 2008:  In August 2008, Joseph Budis and his company, Murray Hill Equipment were debarred by the State of New Jersey for prevailing wage violations.  His other company, Murray Hill Enterprise, was debarred a month later. 

New Company Set Up With Alias:  But debarment didn't stop Budis from continuing to bid on public works projects.  His solution was to set up a new company, Murray Hill Historic Construction, using an alias - the name and Social Security number of an acquaintance on the contractor registration filing with the state.  With the new company, his real identity as a debarred contractor was shielded, and he figured he could continue bidding. 

Bidding With Forged Documents:  He did continue bidding on public works projects.  But to keep his true identity and the ownership of the new company a secret on the new projects, he submitted forged documents to public agencies he bid to.  
  • In one case, before his new contractor registration certificate had been issued by the state for fraudulently set-up Murray Hill Historic Construction, he forged the registration certificate to obtain a public works project.  
  • Then last year, he was the low bidder on a $673,240 dam and dike construction project in Clinton, NJ. The town awarded the project to him, unaware that the bid bond, performance bond, payment bond, powers of attorney, certificates of insurance, and notary signature on the bid were all forged. 
True Identity Exposed:  His scheme began to unravel in June 2010 when there was an accident on the Clinton job site.  To investigators, he claimed he was Joseph DeLia (his alias), but his driver's license - the one document he apparently didn't forge - reflected his real name, Joseph Budis.  Officials then realized that Joseph Budis was on the state's debarment list for prevailing wage violations.  It also came out that Murray Hill Historic Construction didn't carry workers compensation insurance for its workers, including the worker whose injury brought Budis' house of cards tumbling down.  The town of Clinton terminated his contract.

Indicted and Sentenced:  In October 2010, he was indicted in superior court.  Click here for a copy of the indictment.  On March 18, 2011, he pleaded guilty to two counts of making false representations on government contracts.  Finally, on Friday, June 10, 2011, he was sentenced to four years in prison, and ordered to pay $44,174 in restitution, and to pay an additional $250,000 as a public corruption profiteering penalty.  He and his companies were also debarred from public contracting for ten years.  Click here for a news story on the case.

Lessons Learned:  It doesn't happen often, at least not that I'm aware of, that contractors forge bonds and insurance documentation, although I have heard of a few cases.  If you have any questions about the validity of the documents, or you are not sure of who you are dealing with, you can always call the contractor's insurance broker and the bonding company to verify coverage. Fortunately, most contractors are honest and hard-working business owners, but this case does point out the need for public agencies to be diligent in checking out the credentials of low bidders.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Thursday, June 9, 2011

Seattle to Host Reverse Vendor Trade Show in July

The City of Seattle has announced it will be hosting a free Reverse Vendor Trade Show for businesses to learn about upcoming solicitations, sustainable purchasing, and business to business opportunities.  

More than 100 City of Seattle departments and other public agency representatives will be on hand to talk with businesses.

When:  Tuesday, July 26, 2011 (10:00 a.m. to 2:00 p.m.)

Where:  Seattle Center Fisher Pavilion Building

Cost:  FREE

Register:  Click here.

Questions:  E-mail Ginny Justiniano at or Sharon Rothwell at

Opportunities:  Events such as this are a great opportunity for businesses to connect with public agency representatives and other businesses...and public agencies learn a lot from their interactions with businesses and other agencies.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Wednesday, June 8, 2011

Managing Your Procurement Cards

Procurement cards are a great tool to expedite the purchasing process for public agencies.  However, the use of these government issued credit cards also must be managed carefully to prevent misuse, fraud, and non-compliance with public agency policies.

Audit Finding:  In Washington State, the State Auditor's Office recently took the Edmonds School District No. 15 to task with an audit finding for the District's failure to enforce their existing policies.  In  fiscal year 2010, the District spent almost $3.5 million with the procurement cards.  The audit found that the District did not monitor its own policies or notify users when their use of the cards violated the District's policies.  The violations included the following:
  • Split Purchases:  The District has a single purchase threshold of $2,500, but did not monitor purchases totaling $8,990 that appear to have been an attempt to circumvent the single purchase threshold.
  • Reconciliation:  The audit noted "four instances when original receipts and a signed reconciliation report were not provided to the purchasing department by the 15th of the month."
  • Documentation:  Two purchases "lacked itemized receipts for meals purchased while the cardholder was in travel status which does not comply with state law (RCW 42.24.115) or District policy."
Practical Tips:
  1. Have policies and procedures in place for the use of procurement cards.
  2. Do not permit purchases to be split to be less than the single transaction threshold
  3. Follow enforce the policies and procedures 
  4. Hold supervisors accountable for carefully reviewing purchases made by their employees.
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Tuesday, June 7, 2011

Contractor Requirements to Give Notice and Documentation of Changes

Most construction contracts include a provision for contractors to give the owner written notice within a certain time period after a potential change is known, and to follow it up with more detailed documentation of potential costs within another specified period of time. 

Court Case:  In Washington State, in 2003, the State Supreme Court issued a decision in the Mike M. Johnson v. County of Spokane case, in which the court held that the contractor, Mike M. Johnson, was bound to the strict notice and documentation requirements of the contract, and that by failing to follow those procedures, they essentially forfeited their right to relief for change order work.  

Prejudice Standard:  The court ruling has been very controversial with contractors and there have been unsuccessful attempts to have state legislation passed that would institute a prejudice standard for filing of notice and documentation.  In other words, if the owner was not prejudiced or damaged by the failure of the contractor to meet the strict time constraints of the contract, the claims could nevertheless be considered.

Resources:  Seattle construction attorney, John P. Ahlers, has written and argued extensively on this subject.  For an excellent, three part, in-depth review of the issues surrounding providing written notice provision and the prejudice standard, I recommend you read John's recent blog entries on the subject:
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC

Sunday, June 5, 2011

When Can a Bidder Be Disqualified?

Public agencies are generally required to award public works projects to the bidder with the lowest responsive bid, who is also a responsible bidder.  How bidder responsibility is defined differs by different states.

Bidder Responsibility Criteria:  In Washington State, public agencies are required to award public works project to the responsible bidder submitting the lowest responsive bid.  Bidder responsibility is addressed in RCW 39.04.350, which states that a public agency may establish relevant supplemental bidder responsibility criteria that may be used in determining whether a bidder is responsible and eligible for award of a project.  

4 Things to Include in Bidding Documents:  In using supplemental bidder responsibility criteria, Washington state law requires that the following must be included in the bidding documents:

  1. The supplemental bidder responsibility criteria
  2. The documentation that the low bidder must submit to demonstrate that they meet the supplemental bidder responsibility criteria
  3. The deadline by which the low bidder must submit the documentation
  4. The deadline by which a bidder may appeal a preliminary determination that the bidder did not meet the supplemental bidder responsibility criteria.
Protest and Audit Risks:  I recently became aware of an agency that established contractor qualifications criteria in the technical specifications for years of experience of the contractor, but without including items 2 through 4 above in the bidding documents.  Attempting to disqualify the low bidder in such a situation may place the agency at risk for a protest from the low bidder.  In addition, a public agency is at risk of receiving an audit finding for not properly following the requirements of RCW 39.04.350.

Mandatory Bidder Responsibility Criteria:  In addition to the optional supplemental bidder responsibility criteria that a public agency may establish, all public agencies in the State of Washington must verify that the bidder to be awarded the project meets the mandatory bidder responsibility criteria of RCW 39.04.350.

Practical Tips:
  1. Are you checking to make sure the low bidder meets the mandatory bidder responsibility criteria before awarding a public works project?
  2. Are you maintaining documentation in your project file of your verification that the contractor meets the mandatory bidder responsibility criteria?
  3. If you are using supplemental bidder responsibility criteria, are you including the four items listed above in your bidding documents?
Checklist:  As part of training that I provide to public agencies on establishing and managing supplemental bidder responsibility criteria, I've developed a checklist to help public agencies answer the key questions and address the important issues.  The checklist is available on my website ( under the Resources tab, or by clicking here.

Questions:  Please contact me if you would like more information about how these requirements apply to your agency, or if you would like assistance in writing supplemental bidder responsibility criteria.  It can be complicated to write good criteria that are not overly restrictive of the bidding pool.
Mike Purdy's Public Contracting Blog© 2011 by Michael E. Purdy Associates, LLC

Wednesday, June 1, 2011

Should an Owner Negotiate or Bid Preconstruction Services on a GC/CM Project?

One of the major benefits of public agencies using the General Contractor/Construction Manager (GC/CM) method of public works project delivery is obtaining preconstruction services from the contractor early in the design process, including cost estimating, scheduling, value engineering, constructability reviews, etc.  

The GC/CM is typically selected early in the design process, preferably no later than the end of the schematic design phase in order to provide sufficient time for the GC/CM to interact with the owner and designer in shaping the project.  The GC/CM is selected partially based on qualifications and partially based on their price for their fee (overhead and profit) and specified general conditions costs.

In Washington State, the use of GC/CM is governed by state law in RCW 39.10.  It is surprising that very little is actually mentioned in state law about preconstruction services or how they are obtained.  Thus, public agencies have flexibility and options on whether to negotiate the cost of the preconstruction services or bid them as part of the process of selecting the GC/CM.

From my perspective, it is much more beneficial for an owner to negotiate the cost of the preconstruction services than to bid them. Here are some issues to consider in evaluating whether to negotiate or bid these services:
  • Scope of Work:  Bidding preconstruction services requires the owner to have a very detailed and precise scope of work, so that all contractors are bidding on the same body of work. This is often difficult for the owner to develop at such an early stage of the project, without significant input and advice from the contractor.
  • Partnership:  Because GC/CM is a partnership and collaborative model, negotiating the preconstruction costs gets the contractor and owner working together immediately.
  • Avoiding the Low Bid:  Bidding preconstruction services invites contractors to submit a low price in hopes of winning the project.  However, because preconstruction services are one of the biggest benefits of GC/CM contracting, bidding these services goes back to one of the criticisms of the low bid process: contractors bidding work low in order to be awarded the project, but not having included enough money in the bid to perform the project without disputes and contention.  In bidding preconstruction services, the owner may not, in fact, get the full range of preconstruction services without a fight with the contractor.
Simply put, negotiating preconstruction services gets the owner and contractor off on the right foot in creating a collaborative partnership for the project, rather than an adversarial one shaped by a low bid that has too little money in it to provide the full range of required preconstruction services.

GC/CM is known by different terms such as Construction Manager at Risk (CM at Risk) or Construction Manager/General Contractor (CM/GC).
Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC