Mike Purdy's Public Contracting Blog: August 2011

Wednesday, August 31, 2011

Is a Sole Proprietor Exempt from Prevailing Wage Requirements?

Under Washington state regulations (WAC 296-127-026), a sole proprietor who performs work on a public works project, or a project subject to prevailing wage requirements, is not required to pay themselves the prevailing wage rate.

Prevailing Wage Forms Still Required: However, according to the Department of Labor and Industries, they must nevertheless submit a "Statement of Intent to Pay Prevailing Wages" form (prior to the first payment being made by the public agency), and an "Affidavit of Wages Paid" form (prior to the public agency releasing retainage).

Are Other Owners Exempt? In addition to a sole proprietor (and their spouse), the following other owners are exempt from paying themselves prevailing wages on a public works project. They must, however, fill out the "Intent" and "Affidavit."

Any partner who owns at least 30% of a partnership
The president, vice-president, and treasurer of a corporation if each one owns at least 30% of the corporation

Oregon Construction Law Seminar

16th Annual Oregon Construction Law Seminar

When: September 22-23, 2011

Where: Portland, Oregon (World Trade Center, 121 SW Salmon, Bldg 2) - Live and Webcast

Cost:

$695 - Single Registration
Other rates

Agenda and Speakers:

Oregon Construction Law Update (D. Gary Christensen)

Pursuing Owners Claims Against Contractors (Guy A. Randles)

Lien Claims (Allan L. Mitchell)

Environmental Law Issues for Construction Lawyers (Joan P. Snyder)

Areas of Your Subcontract that Might Need Fixing (J. Daniel Gragg)

Construction Defects: Unique Construction-Related Issues and Developments (Dean E. Aldrick, Gregory Mockford)

Green and Sustainable Design and Construction Legal Issues (Eric A. Grasberger)

Federal Contracting and Claims: Hot Topics (David H. Bowser)

Electronic Discovery in Construction Cases: Best Practices and Case Law (Hafez Daraee, Kelly Roberts)

The New AIA and ConsensusDOCS Contracts: The Top Terms to Negotiate (Sean C. Gay)

A View from the State (William Nessly)

Pursuing Contractors Claims Against Owners (Thomas A. Larkin, Angela M. Otto)

Dealing with Construction Sureties and Pursuing Bond Claims ( David F. Bartz, Jr.)

Insurance Coverage Issues of Significance (Michael E. Farnell)

Resolving the Complex Construction Case: Mediator's and Advocate's Perspectives (John Spencer Stewart, Hon. Lyle C. Velure)

What Happens When Someone in the Chain Goes Bankrupt? (Robert L. Carlton)

Hot Topics in Oregon Construction Law (Thomas A. Larkin, J. Daniel Gragg, Eric A. Grasberger, Angela M. Otto, Guy A. Randles)

Ethical Considerations (D. Paul Neese)

Sponsored by: The Seminar Group

More Information and Registration: Click here.

Tuesday, August 30, 2011

Must a Bidder Meet All Supplemental Bidder Responsibility Criteria?

Public agencies in the State of Washington have the option on public works projects of establishing Supplemental Bidder Responsibility Criteria to help them determine if the low bidder is a responsible bidder capable of performing the project.

State Law Authorizes Criteria: The Supplemental Bidder Responsibility Criteria are authorized by RCW 39.04.350, and are in addition to certain mandatory bidder responsibility criteria applicable for all public works projects (also in RCW 39.04.350).

Industry-Wide Debate on Compliance: In evaluating whether a bidder meets the Supplemental Bidder Responsibility Criteria, there has been a discussion over the course of the last year as to whether the low bidder must meet all of the criteria in order to be responsible, or if the public agency has discretion to determine that the low bidder substantially meets the criteria.

The Two Approaches: Below is a discussion of the advantages and disadvantages of each approach:

Meet All Criteria: In 2007, when the legislation for bidder responsibility criteria was being developed, I understood that the intent of the parties was clearly that a low bidder would have to meet all of the criteria in order to be determined responsible. This recollection is supported by the actual language in RCW 39.04.350 (2) that requires the bidder to meet the criteria:

"...the state or municipality may adopt relevant supplemental criteria for determining bidder responsibility applicable to a particular project which the bidder must meet." [emphasis added]

Maintaining a bright line of compliance with the bidder responsibility criteria provides a clear and transparent process for contractors contemplating bidding on a public works project. Without this clarity, it is more difficult for a contractor to decide whether to bid on a project, because they don't know if their qualifications are good enough, and if they will be determined to be responsible.

Discretionary Compliance With Criteria: The State Department of General Administration (GA) has been the main proponent of this position and has included the following language in their Instructions to Bidders:

"...the Owner shall consider an overall accounting of the attached supplemental criteria for determining bidder responsibility.

While this discretionary approach does provide more flexibility for public agencies in determining whether a bidder is responsible, it does not promote predictability in the public bidding process, and leaves a lot to the discretion of the public agency in determining how close is close enough. With many contractors already concerned about the inappropriate application of Supplemental Bidder Responsibility Criteria by some public agencies, allowing for this discretion makes the entire process even more subjective than it already is.

Training: The two positions for determining compliance (meet all criteria or the discretionary approach) were one of the subjects addressed in March 2011 training sponsored by the Capital Projects Advisory Review Board (CPARB) along with industry associations.

Guidelines: CPARB is currently revising the Suggested Guidelines for Bidder Responsibility and will be discussing whether both approaches should be addressed in the Guidelines. Currently, the Guidelines suggest that bidders must meet all of the Supplemental Bidder Responsibility Criteria in order to be determined to be responsible.

Monday, August 29, 2011

Can Volunteers be Used on a Public Works Project?

Can volunteers be used on a public works project?

Based on a August 17, 2011 blog entry of mine reporting on an audit finding by the Washington State Auditor's Office against the Town of Eatonville performing volunteer labor on a fire station, the answer would seem to be "no."

Auditor Discloses New Information: However, after my blog entry was published, the Municipal Research and Services Center (MRSC) decided to look into the details of the audit finding. With additional information disclosed to MRSC by the auditor, it became clear that the reason for the finding is that the "volunteers" were not really true volunteers, but were paid a stipend.

MRSC's Research: After research by John Carpita, MRSC's Public Works Consultant, who coordinated with the State Auditor's Office, John wrote the following to me on what he learned.

Below is John Carpita's report on his communications with the State Auditor's Office, and MRSC's advice regarding the use of volunteers.

Training: Federal Regulation Changes Impacting Contracts

James F. Nagle

A Year in Review: Federal Regulation Changes Impacting Contracts

When: September 19, 2011 (5:30 p.m. - 7:30 p.m.)

Where: Lacey, Washington (WSDOT Administrative Services Office, 719 Sleater Kinney Road S.E.)

Speaker: James F. Nagle, Attorney at Oles Morrison Rinker & Baker LLP

Sponsored by: National Contract Management Association (NCMA), South Sound Chapter

Cost:

$20 (members - in advance)
$30 (non-members - in advance)
$5 more for at the door registration

Limited Space: Space is limited to 30 attendees.

Registration: Contact Rianne Perry by e-mail at rperry@agr.wa.gov or call at (360) 902-2177.

Sunday, August 28, 2011

Prevailing Wages Rates Corrected by Dept. of Labor and Industries

The Washington State Department of Labor and Industries (L&I) has published a correction to prevailing wages for Tile, Marble, and Terrazzo Finishers in the following Western Washington counties:

Clallam
Grays Harbor
Jefferson
King
Lewis
Mason
Pacific
Snohomish
Thurston
Whatcom

Effective September 25: The corrected rates were published on August 26, 2011 and will become effective in 30 days on September 25, 2011.

Rate for Finishers Will Drop: Thus, for a project with a bid submittal deadline prior to September 25, 2011, the prevailing wage rate for Tile, Marble, and Terrazzo Finishers is $40.76. Effective for projects with a bid submittal deadline of September 25, 2011 or later, the prevailing wage rate for this classification will drop to $37.76.

Changes to Other Wages Effective August 31: L&I published changes to other prevailing wage rates in their twice yearly update on August 1, 2011, with the new wages effective on August 31, 2011. Prevailing wages for a public works project are the rates that are in effect as of the bid submittal deadline. Different requirements apply for federal prevailing wages.

Webinar: Improving Change Order Management to Avoid Extra Costs

Webinar: Improving Change Order Management to Avoid Extra Costs

When: September 13, 15, 27, and 29, 2011 (Noon to 1:30 p.m. - Pacific Time)

Where: Your computer

Cost:

$199 - Public entity attending all four sessions
$59 - Public entity attending single session
$249 - Private entity attending all four sessions
$99 - Private entity attending single session

Session Topics:

Re-tooling Change Order Practices to Reduce Payments and Avoid Claims
Project Scheduling and Delay Analysis
Project Cost and Damages Analysis
Issue and Dispute Resolution Techniques to Reduce Expenses

Sponsored by: Contract Solutions Group

More Information and Registration: Click here.

Thursday, August 25, 2011

Friday Deadline to Respond to Survey on A/E Selection Practices

Friday, August 26, 2011 at 5:00 p.m. is the deadline to respond to the survey I've created on A/E consultant selection practices.

Thanks to the 50 plus of you who have already responded. I'd love to get at least 100 responses, so please take just a couple of minutes to answer 10 easy multiple choice questions.

Complete Survey Now: Click here to access this online survey: http://www.surveymonkey.com/s/L6GTZPF.

Thanks! I'll publish the results of the survey in a future blog posting.

Job Opening: Purchasing Coordinator

Snohomish Health District (Washington)

Position: Purchasing Coordinator

Location: Everett, Washington

Closing Date: Monday, August 29, 2011

Salary: $21.62 - $28.97 per hour (20 hours per week)

Job Summary: Oversee and coordinate the District's central purchasing program including monitoring compliance with standard procurement and surplus property disposal regulations; coordinating the competitive bidding/proposal process; preparing documentation for contract awards; drafting standardized purchasing policies and procedures for the District; coordinating and overseeing activities associated with the District's telephone system.

For More Information and To Apply: Click here.

What is the Deadline for a Contractor to Accept a Subcontractor's Quote?

Matthew DeVries

In an interesting court case from 1987 in Virginia (Piland Corporation v. Ree Construction Co., 672 F.Supp. 244 (E.D. Va. 1987), the court ruled that the contractor had failed to provide timely notice to the subcontractor that it had accepted its quote. The contractor filed a lawsuit for breach of contract that the court ruled against.

Nashville, Tennessee construction attorney Matthew J. DeVries has a good blog entry describing more details of this case. Click here to view the blog entry.

Wednesday, August 24, 2011

Is a "No Bid" Bid Responsive?

Let's say you receive a bid, and for one of the bid items on the bid form, the bidder has written "no bid." Is the bid responsive or non-responsive?

It really all depends on what your bidding instructions stated.

Require a Bid on All Items: If the bidding instructions required that bidders submit a bid amount on all items, then "no bid" would not be a bid amount, and it would, therefore be a non-responsive bid. The bid would also be non-responsive if the bidder didn't write anything on the bid form for that item. On the other hand, if the bidder wrote "0.00" or "zero," that would be a bid amount and the bid would be responsive, at least on that count.

How to Determine the Low Bid: Generally, it's a good idea if your bidding instructions do require a bid on all bid items that will be part of the evaluation process to determine the low bid amount. If the bidding instructions do not require a bid on all items, and a bidder does not bid on one or more items, it becomes impossible to equitably compare the bids to determine which bidder is the low bidder, since some bidders may not have bid on every item.

All Items: In requiring bidders to bid on all items, the language in the bidding instructions should discuss all bid items, additives, alternates, deductives, and unit prices. In other words, any bid amount on the bid form that may be used to determine who the low bidder is.

No Bidding Instructions: If the bidding instructions do not require a bid on all items, then an entry on the bid form that reads "no bid" would probably be a responsive bid. Of course, there is then a much bigger problem of not being able to compare bid prices to determine the low bidder, because the bidders were bidding on a different body of work.

Washington State Construction Law Seminar

18th Annual Washington Construction Law Seminar

When: September 15-16, 2011 (9:00 a.m. to 5:00 p.m.)

Where: Seattle, Washington (Washington State Trade and Convention Center)

Topics (Speakers):

Federal Construction Law - New Developments (Bruce P. Babbitt)
A View from the State (Karin L. Nyrop)
ABC’s of Construction Contracting: Creating a Contract You Can Live With (Alan Bornstein)
Contracting in Indian Country (Quanah M. Spencer)
Washington State Public Works Competitive Bidding and Bid Protests (Arnold R. Hedeen)
Environmental Considerations (Eric S. Laschever)
Construction Changes/Differing Site Conditions (John P. Ahlers)
What Happens When Someone in the Chain Goes Bankrupt? (Jerry N. Stehlik)
Labor and Employment Issues (Chris Farias)
Washington Construction Law – New Developments (Paul R. Cressman, Jr.)
Claims Against the Design Professional Firm (Stanton P. Beck)
Insurance in the Construction Industry (A. Richard Dykstra)
Lien and Bond Claims; Dealing with Sureties (Kerry Lawrence and Alexander A. Friedrich)
Ethical Considerations for Construction Lawyers (John A. Strait)
Construction Mediation (Christopher J. Soelling)
Issues and Benefits of Building Green (Jesse O. Franklin, IV and Dean Martin)

Cost: $695 (other prices for various categories)

For more information and to register, visit the website of The Seminar Group.

Tuesday, August 23, 2011

When Should Retainage and a Bond be Obtained?

For most public agencies, at least in the State of Washington, retainage must be withheld and a payment and performance bond obtained for any public works project.

Prevailing Wages on Non-Public Works: But there are some contracts that may not fit the definition of a public work (RCW 39.04.010) that require the payment of prevailing wages. The quest is whether retainage should be withheld and a payment bond obtained on these contracts.

Some examples of contracts that fall into this category include the following:

Building Service Maintenance: Workers on Public Building Service Maintenance contracts must be paid prevailing wages according to RCW 39.12.020, even though such work is not a public work. According to WAC 296-127-01308, these workers include janitors, utility janitors, waxers, and window washers.

Maintenance Performed by Contract: According to RCW 39.04.010, "maintenance when performed by contract" is subject to prevailing wages. There are different opinion as to whether this work is a public work or only subject to prevailing wages, but that is another discussion.

How Are Workers Protected? Some agencies take the position that work subject to prevailing wages that does not constitute a public work, should not have retainage and bonding provisions. In taking such a position, it is important to evaluate the risk. One of the purposes of retainage and a payment bond is to protect workers subject to prevailing wages. Thus, while the work might not be a public work, if it is subject to prevailing wages, how will the workers be protected in the event of a claim that prevailing wages were not paid? Without withholding retainage and obtaining a payment bond, a public agency may be at risk of paying unpaid prevailing wages to workers on these contracts.

Lack of Clarity: One of the challenges of deciding whether to require retainage and a payment bond on these non-public works projects that require payment of prevailing wages is that Washington state law is less than crystal clear on this point.

Bond: RCW 39.08.010 actually requires a bond for all "work." "Work" is fairly broad and could reasonably be interpreted to refer to work subject to prevailing wages that is not a public work.

Retainage: RCW 60.28.011 states that retainage is required for "public improvement contracts." A "public improvement contract" is not defined. One could make the argument that a "public improvement contract" in chapter 60.28 RCW is the same as a "public work" defined in chapter 39.04 RCW, although there is no explicit connection between the two.

What's the Answer? In making a decision on whether to require retainage and a payment bond for prevailing wage work that is not a public work, public agencies should look at the following issues:

Understand the purpose of retainage and payment bonds
Evaluate the agency's potential financial exposure if retainage and payment bonds are not required
Assess the ability of businesses who do this work to obtain a payment bond
Assess the impact of withholding retainage on the cash flow of businesses
Note the dollar amount of the contract
Note the duration of the contract work
Estimate the number of workers who will be performing on the contract
Evaluate the amount of work required by the agency and business to administer retainage and bonding requirements.

Consult With Your Attorney: A conservative position would be to require retainage and a payment bond on work subject to prevailing wages that is not a public work. Some agencies, however, choose to take a more flexible approach in making this determination. Make sure you work with your attorney in making a decision on this important issue for your agency.

Monday, August 22, 2011

Are Pre-Construction Services Under a GC/CM Contract Subject to State Sales Tax?

Under a General Contractor/Construction Manager (GC/CM) contract in the State of Washington, the public agency contracts first with the contractor for pre-construction services, and then after successful negotiation of a Maximum Allowable Construction Cost (MACC), contracts for construction services.

The Sales Tax Question: A frequently asked question is whether the pre-construction services, which are essentially consultant or professional services that would not typically be subject to state sales tax, are subject to state sales tax under a GC/CM project.

State Law: RCW 82.04.051 addresses this question by affirming that pre-construction services under a GC/CM contract are subject to state sales tax. While the law doesn't specifically mention GC/CM, nor does the Department of Revenue's more plain English version, it is clear that this is the intent. Discussions with the Department of Revenue also confirm that pre-construction services under a GC/CM contract are subject to state sales tax, even if the pre-construction contract is a separate, stand-alone contract.

Revenue's Statement: In material prepared by the Department of Revenue, they note the following:

Pre-Construction Activities Subject to State Sales Tax: Under a GC/CM project, of course, the parties do contemplate at the time of execution of the pre-construction (professional services) contract that the contractor will be performing the construction, subject to successful negotiation of the MACC. Thus, pre-construction services under a GC/CM contract are subject to state sales tax, as is the construction portion of the contract.

Training: Public Contracts and Procurement Regulations in Washington

Public Contracts and Procurement Regulations in Washington

When: Thursday, October 20, 2011 (8:30 a.m. to 4:30 p.m.)

Where: Seattle, Washington (Washington State Convention Center, 800 Convention Place)

Cost: $359

Agenda and Instructors:

Insurance Coverage Issues in Public Works Construction (Todd C. Hayes)

Public Works Bonding in Washington State (William L. Cameron)

Current Developments in Public Contracting (William A. Linton)

Change Orders and Claims (Bruce A. Cohen)

Sponsored by: Lorman Education Services

More Information and Registration: Click here.

Sunday, August 21, 2011

Planning For and Surviving I-900 Performance Audits

Based on Initiative 900 that was approved by the votes of the State of Washington in 2005, the Washington State Auditor's Office regularly conducts performance audits of public agencies in the state.

When: October 28, 2011 (9:00 a.m. to 5:00 p.m.)

Where: Seattle (Crowne Plaza Hotel, 1113 Sixth Avenue)

Cost:

$525 for Single Registration
$425 for Government Employees
Other prices for other categories

Agenda and Speakers:

Introduction and Overview (Krista K. Mush, Michael D. McKay, James P. Wagner)
Adoption & Overview of I-900 (Michael E. McKay, James P. Wagner)
View from the State Auditor's Office, Part 1 (Jan M. Jutte)
View from the State Auditor's Office, Part 2 (Lou Adams)
Accounting Issues and Standards (Paul S. Fricca)
Issues for Agencies Being Audited (Krista K. Bush, Michael D. McKay)
Managing the Audit Process (Krista K. Bush)
Issues for Private Contractors (James P. Wagner)
Issues Relating to Release of Audit Report (Lou Adams, Jan M. Jutte, Michael D. McKay, James P. Wagner)
Panel Discussion

Information and Registration: Click here.

Sponsored by: The Seminar Group

Other Performance Audit Resources:

10 Tips for Surviving a Performance Audit (PowerPoint from Washington State Department of Health)

Performance Audit Work Plan from State Auditor's Office

Performance Audit Summary Results from State Auditor's Office

Job Opening: Senior Buyer

King County (Washington)

Position: Senior Buyer

Location: Seattle, Washington

Closing Date: Monday, August 29, 2011 at 4:30 p.m.

Salary: $60,167.12 - $76,265.28 annually

Job Summary: The Senior Buyer is responsible for the procurement of major equipment, technology, or assigned products and services in support of the operations of King County and its specialized projects and program needs. The incumbent will create unique procurement documents and/or methodologies to address special project needs, perform highly sensitive procurement activities, and may direct the work of others. This is a senior level professional classification, therefore little or no direct supervision is given.

For More Information and To Apply: Click here.

Thursday, August 18, 2011

Survey on Consultant Selection Practices of Public Agencies

In talking with many public agencies, I've noticed different practices related to:

Consultant selection
The role of evaluation committees
Whether committees develop consensus scores
How scores of individual committee members are documented.

What Are Best Practices? I've created an online survey to find out what common and best practices are with public agencies.

Click Link to Respond to Survey: To participate in the survey and answer ten questions, please click on this link: http://www.surveymonkey.com/s/L6GTZPF.

Survey Closing Date: The survey will remain open until next Friday, August 26, 2011.

Results of Survey: I will publish the results on a future blog entry.

Thanks for your participation!

Wednesday, August 17, 2011

Fire Station Addition Completed by Volunteers in Violation of State Law

A $71,284 addition to a town's fire station was completed by volunteers when the town's competitive bid limit required any public works project over $45,000 to be competitively bid.

Audit Finding Issued: The Washington State Auditor's Office issued a finding against the Town of Eatonville for failing to competitively bid the project through either the town's Small Works Roster or through an advertised invitation to bid. The town also failed to complete a cost estimate for the project as required by state law.

Process Deficiencies: The audit finding noted the following deficiencies in the town's process:

Violation of the competitive bidding requirements of RCW 35.23.352
Increased risk by not obtaining liability insurance from the volunteer firefighters
Not obtaining a performance bond to ensure successful completion of the project
Contractors did not have the opportunity to bid the project
Prevailing wages were not paid

Town's Response: The Town responded by affirming its commitment to comply with state law in the future, noting that the Town now has a new Mayor and Town Administrator who have established new policies and expectations.

Read the Audit: To read the audit finding, click here.

Tuesday, August 16, 2011

Who Gets the Money if There Are Too Many Claims Against the Retainage?

Most public works projects require that retainage be withheld from each progress payment. But what happens if there are more claims against the retainage than there are dollars in the retainage account?

Under Washington state law (chapter 60.28 RCW), there is a priority order on conflicting claims as outlined in the chart below:

Who Decides What is a Valid Claim? It's important to remember that a public agency should never pay a claim against the retainage from a worker, subcontractor, or supplier based simply on their claim. It's not the role of the public agency to decide whether it is a valid claim or not. That's up to the courts to decide, and a claim filed by a worker, subcontractor, or supplier should only be paid from the retainage to the claimant if the court orders it. On the other hand, the state agencies noted above do not have to have a court order before they may require a public agency to make payment from the retainage.

Other States: The purpose of retainage differs often by states. If you're from another state, your state laws will have a different priority order. I'm interested in hearing how your retainage requirements work. Please feel free to either leave a comment on this blog entry or contact me.

Monday, August 15, 2011

Free Webinar on Contracting for Architectural and Engineering Services

Webinar on Contracting for Architectural and Engineering (A/E) Services

When: Tuesday, August 30, 2011 (10:00 a.m. to 11:00 a.m.)

Cost: Free

Where: Your computer

Sponsored by: Municipal Research and Services Center (MRSC)

Panel:

John Carpita (moderator), MRSC
Mike Purdy, Principal, Michael E. Purdy Associates, LLC
Joe Simmler, Senior Project Engineer, Otak
Jan Olivier, Transportation Manager, Kittitas County

5 Questions to be Addressed by Panel:

Do you feel that Qualifications Based Selection (QBS) for A/E consultants is a good business practice?
What professional disciplines does QBS selection apply to and should it be used for certain non-A/E consultants?
What are the advance notification provisions of Chapter 39.80 RCW and how have they been applied correctly and incorrectly?
Do you feel that agencies select directly from their A/E consultant rosters more frequently than they should?
What are some best practices for agencies to follow in their Requests for Qualifications, interviews, and contract negotiations?

More Information and Registration: Click here.

Sunday, August 14, 2011

City Awards $1.37 Million to Consultant Without Competition

Over the last four years, the City of Wilsonville, Oregon has awarded $1.37 million of consultant contracts to a company headed by the City's former transit agency director, without any competition, raising ethical questions of whether the City's procurement regulations were followed or whether special preferences were given.

Cynthia Thompson

No Competition: Cynthia Thompson is the former employee who now owns BCB Consulting. She left City employment about ten years ago, and got her first consultant contract with the City in 2007. Last December, she was awarded an $800,000 consultant contract. Neither of these two contracts or the ones in between were awarded after any competitive selection process, despite the City's requirements that at least three proposals are received for any personal services contract over $10,000.

Mixed Reactions: While some City staff and officials defended the actions, others indicated an interest in finding out more about why the contracts were awarded without the required competition.

More Information: For more information, click to read an article from www.oregonlive.com.

Job Opening: Capital Projects Coordinator

Shoreline School District (Washington)

Position: Capital Projects Coordinator

Location: Shoreline, Washington

Closing Date: Open until filled

Salary: $58,918

Job Summary: Supervises the processing of workflow for capital projects; interacts with various public agencies, office staff, and vendors to expedite activities according to established procedures; evaluates and suggests improvements to processes; and perform all other related duties.

For More Information and To Apply: Click here.

Thursday, August 11, 2011

Bonds: Combination or A la Carte?

Should a public agency obtain one combination payment and performance bond, or separate payment and performance bonds?

How Many Bonds Are Required? Some public agencies require a combined payment and performance bond in the amount of 100% of the contract amount. Others more wisely require separate payment and performance bonds, each in an amount of 100% of the contract amount.

The Risks of a Combined Bond: With a combined bond, there may not be sufficient bonding capacity to meet all of the claims on a problematic project. For each claim by subcontractors, suppliers, and workers, the amount of the bonding protection available for performance claims by the agency are reduced, if a combined bond has been provided.

The Benefits of Separate Bonds: Sureties I've talked with have indicated that separate payment and performance bonds do not cost the contractor more. The benefit to public agencies of obtaining the separate bonds is to ensure there is sufficient bonding capacity to deal with a performance default by a contractor.

Wednesday, August 10, 2011

What is the Purpose of Retainage and Payment Bonds?

What exactly is the purpose of Retainage and how is it different from the purpose of a Payment Bond?

And when you throw into the mix the new Washington State law (SHB 1384) that prohibits withholding of retainage on USDOT funded projects for highways, roads, and streets, how does that affect what parties are protected by Retainage versus a Payment Bond?

Know SHB 1384: If you are not already familiar with SHB 1384 that was approved by the Washington State Legislature this spring, and became effective on July 22, 2011, I encourage you to read the following two blog entries I've written on the subject:

New Law Prohibits Withholding of Retainage on Federally Funded Transportation Projects in Washington State

Clarifications on New Retainage Law (SHB 1384)

Protected Parties: The following chart notes what parties are protected by Retainage and Payment Bonds under both non-USDOT funded projects and some USDOT funded projects. SHB 1384 addresses USDOT funded projects for highways, roads, and streets.

References: The following references are helpful in sorting through issues of Retainage and Payment Bonds. Be sure to check with your attorney when interpreting these laws and especially the impact of SHB 1384.

Chapter 60.28 RCW (Retainage)
Chapter 39.08 RCW (Payment Bonds)
SHB 1384 (Retainage on some USDOT funded projects)
49 CRF 26.29 (USDOT regulations on prompt payment)

Safety and Small Business Opportunities Event

What is Safety? Lifestyle, Sustainability, and Profitability

When: Tuesday, August 23, 2011 (8:00 a.m. to 1:00 p.m. - Registration starts at 7:30 a.m.)

Where: Seattle, Washington (Sound Transit, 401 S. Jackson St.)

Cost: Free

Sponsored by: U.S. Department of Transportation, Office of Small and Disadvantaged Business Utilization, Northwest Small Business Transportation Resource Center

Agenda:

Opening Remarks (US DOT OSDBU Director Brandon Neal, U.S. Congressman Jay Inslee, King County Executive Dow Constantine, Snohomish County Executive Aaron Reardon, Sound Transit CEO Joni Earl)

Networking and Expo

Safety Awareness Panel (AGC, Washington State Patrol, Sound Transit, Labor and Industries, PCL Civil Constructors, WAKA Group, Inc.)

Small Business Opportunities Panel (WSDOT, King County, Sound Transit, SBA, East West Bank, OMWBE, Naval Facilities Engineering Command)

Registration: Call or e-mail (425) 248-4222 or lkeeffe@snoedc.org

Tuesday, August 9, 2011

Coming Soon: Audit on Construction Change Order Pricing

The Washington State Auditor's Office has completed most of their work on their performance audit of Construction Change Order Pricing for seven cities and one county in the state.

Audit Being Finalized: The auditor's office has requested the agencies audited to provide their technical review of the draft audit. Once the auditor makes any changes in the audit based on feedback and corrections from the agencies, they will send the final draft report to the agencies for them to provide their formal written response to the audit. The formal responses from the agencies will be published in the final audit. The auditor hopes to publish the audit later this month.

Agencies Who Were Audited: The following are the agencies that were audited:

City of Bellingham
City of Everett
City of Puyallup
City of Richland
City of SeaTac
City of Shoreline
City of Spokane
Thurston County

What Are Best Practices? It promises to be an interesting audit report when it is finally published that will generate a lot of conversation (and some disagreement with the audit) over what practices should be followed. It probably won't rise to the blockbuster level of some of the previous construction management performance audits that have come from the state auditor.

NPI is now the National Procurement Institute

The National Purchasing Institute (NPI), has voted to change its name to the National Procurement Institute to reflect a broader mission for the organization.

NPI is the Public Sector Affiliate of the Institute for Supply Management formerly known as the National Association of Purchasing Management.

NPI will hold its 43rd Annual National Conference & Products Exposition just outside Denver, Colorado from October 30, 2011 through November 2, 2011.

Monday, August 8, 2011

The Results of the Poll: Why Are Fewer Contractors Bidding Public Works Projects?

In my blog entry on July 26, 2011, I asked the question why fewer contractors appear to be bidding public works projects. I laid out some potential reasons and I set up a poll on my blog.

The Poll Results: A total of 40 individuals responded to the poll selecting the reason(s) why they believed public agencies are receiving fewer bids. Here are the results:

Reason	Number of Responses
Limited Bonding Capacity	21
Too Much Government Paperwork	21
More Contractors Have Gone Bankrupt	14
Contractors Have Enough Private Sector Work	3
Other	5

Failing Subcontractors: One reader commented that the decreased number of bidders he has noticed is due to the fact that general contractors are finding it increasingly difficult to find subcontractors, since many subcontractors are going out of business. This was supported by another comment from an agency that checked how many local carpentry firms were on their Small Works Roster. Of the ten local firms on the Roster, four are now out of business.

Tightening Credit: One reader noted that contractors are finding it harder to bid on public works projects due to reduced credit capacity from lenders and banks. Smaller firms, which have historically had a difficult time with public bonding and insurance requirements are being hit more and more with these issues.

No Private Sector Work: With private sector construction work still reeling from the economy, contractors and subcontractors from this market, who are still around, are looking at public works projects, but often are challenged by the increased requirements and paperwork they haven't experienced in the private sector.

Design-Build: 2011 Owners Forum

2011 Owners Forum on Design-Build

When: Tuesday, September 27, 2011 (8:00 a.m. to 3:00 p.m.)

Where: Seattle, Washington (Dome Room at the Doubletree Arctic Hotel, 700 Third Avenue)

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

Cost:

$50 - Owner
$195 - Member Practitioner
$295 - Non-Member Practitioner

Agenda:

Proprietary Meetings - "Owners Role During Post Award Process" (Craig Unger)
Legalities of Proprietary Meetings (Robynne Parkinson, Esq.)
Quality Control (Tom Moore)
Lunch Speaker (Greg Gidez)
CPARB and PRC - "What is it and what do our owners expect from it?" (Eric Smith and Rodger Benson)
GSA - "Lessons Learned from ARRA Projects" (Rick Thomas)

Information and Registration: Click here.

Sunday, August 7, 2011

To Bond or Not to Bond

Most public agencies have requirements to obtain payment and performance bonds on public works construction projects.

Why Are Bonds a Good Idea: A payment and performance bond serves as a form of insurance or protection for the public agency, taxpayers, and others to protect against two types of events:

The contractor doesn't pay subcontractors, suppliers, or workers
The contractor fails to perform the work

Especially in this troubled economy where many contractors are on shaky financial footing, it's a good idea for public agencies to have protection beyond the assets of the contractor alone. That's why most states have laws requiring payment and performance bonds.

Ohio's Gamble: Ohio State University (OSU) recently awarding a $1 billion Construction Manager at Risk hospital project without a requirement for the contractor to submit a payment and performance bond.

OSU's Position: OSU argued that the bond was not required since the law requiring bonds applied only to "bidders," and Turner Construction Company was not a bidder, but was selected as the Construction Manager based on a qualifications based process.

The Challenge to OSU: The American Subcontractors Association (ASA) and the Surety and Fidelity Association of America (SFAA) disagreed and took OSU to court. ASA and SFAA argued that projects came under the Construction Demonstration Reform Projects authorized by the Ohio Legislature (HB 318) that requires that

The Court's Decision: The Supreme Court of Ohio dismissed the lawsuit on June 21, 2011, noting that ASA and SFAA lacked standing to file the case. With $1 billion at stake let's hope there are not performance or payment problems on the project.

More Information: For additional details about the OSU case, see the following links:

A Bond Loophole? by Keane E. Aures, Robinson & Cole, LLP, Attorneys at Law
American Subcontractors Association

Evaluate the Risk: Even in those limited cases where laws permit a public agency to waive or reduce bonding requirements, public agencies should evaluate the potential risk to the project.

Example: In Washington State, a public agency using a Small Works Roster process with a project costing less than $35,000 may waive the bonding requirements, provided that the agency agrees to pick up the liability in the event of claims.

Thursday, August 4, 2011

Free Training on Federal (Davis-Bacon) Prevailing Wages

Davis-Bacon Wage Rates Prevail (or Do They)

When and Where:

September 7, 2011 (Renton, Washington)
September 15, 2011 (Olympia, Washington)
September 21, 2011 (Yakima, Washington)
September 27, 2011 (Everett, Washington)

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

Instructors:

Donna M. Hart, U.S. Department of Labor
Laura Herman, Washington State Department of Labor and Industries

Sponsored by:

Cost: Free

Information and Registration: Click here.

These classes fill up quickly so register as soon as possible.

Wednesday, August 3, 2011

Training: World Class Procurement Practices

World Class Procurement Practices: The concept of World Class Procurement has application to both the public and private sectors. This workshop will address what is meant by "World Class" and what practices countless public agencies are adopting to achieve such status. Case studies shared in the class will illustrate many common practices of agencies and procurement professionals that are considered World Class.

When: September 23, 2011 (all day)

Darin Matthews

Where: Yakima, Washington

Cost:

$275 - NIGP National Members
$375 - Non-Members

Instructor: Darin Matthews, Chief Procurement Officer for Metro regional government, Portland, Oregon

Sponsored by: NIGP (National Institute of Governmental Purchasing)

Course Outline:

Definition of world class; public and private sector perspectives
Evolution of procurement techniques
Industry trends and survey data
Pre-Solicitation approaches
Sourcing and effective market research
Building departmental relationships that are win-win
Analyzing usage data and financial reports
Developing a quality training program for procurement
Leading procurement techniques
Creating standard procurement documents
advantages and disadvantages of proposal processes
Alternative procurement methods
Delegation of authority and de-centralization
Developing an effective procurement card program
Post-award activities
Contract administration plans
Managing contract disputes
Developing contract performance measurements
Evaluation of contractors and suppliers
Implementation of World Class practices
Achieving short term wins
Longer term strategies for implementing new practices
Cultivating a world class culture

More Information and Registration: Click here.

Wednesday, August 31, 2011

Tuesday, August 30, 2011

Monday, August 29, 2011

Sunday, August 28, 2011

Thursday, August 25, 2011

Wednesday, August 24, 2011

Tuesday, August 23, 2011

Monday, August 22, 2011

Sunday, August 21, 2011

Thursday, August 18, 2011

Wednesday, August 17, 2011

Tuesday, August 16, 2011

Monday, August 15, 2011

Sunday, August 14, 2011

Thursday, August 11, 2011

Wednesday, August 10, 2011

Tuesday, August 9, 2011

Monday, August 8, 2011

Sunday, August 7, 2011

Thursday, August 4, 2011

Wednesday, August 3, 2011

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