Thursday, March 29, 2012

Training: Managing Project Risk

Managing Project Risk

When:  April 20, 2012 (8:00 a.m. to 5:00 p.m.)

Where:  Bellevue, Washington (Red Lion Hotel, 11211 Main Street)

Program Agenda:
  • Claims 101
  • Constructability Reviews
  • Delay Claims
  • Defining and Pricing Overhead Costs
  • Dispute Resolution and Managing Changes
  • Best Ways to Mitigate Claims (Owner Panel) 
  • $150 (by April 1, 2012 for ASCE members)
  • $175 (by April 1, 2012 for non-ASCE members)
  • $225 (after April 1, 2012)
More Information:  Click here and here.

Registration:  Click here.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Job Transitions

Judy Issac was appointed as Purchasing Manager at KCDA, a purchasing cooperative based in Kent, Washington.  She was previously the Purchasing Officer for the City of Shoreline, Washington.  Judy began her new duties at KCDA on March 26, 2012.

Kunjan Dayal, Sound Transit's Director of Procurement and Contracts for the last four years, will leave the agency on March 30, 2012 to take a new position as Director of Procurement and Contracts at TriMet in Portland, Oregon.

Terri Coe, formerly Contracts Specialist with the City of Tacoma, began a new position on March 12, 2012 with Kennedy/Jenks Consultants as Construction Project Coordinator.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Job Opening: Director of Procurement & Contracts

Sound Transit
  • Position:  Director of Procurement and Contracts
  • Location:  Seattle, Washington
  • Closing Date:  April 2, 2012 (5:00 p.m. - Pacific Time)
  • Salary:  Negotiable
  • Job Summary:  Under administrative direction, directs, manages, supervises, and coordinates the activities and operations of the Procurement and Contracts Division for the Agency including multiple sections and functional areas; provides leadership in contracting practices to the organization; provides contract support to Senior Leadership in Agency contracts; manages professional, paraprofessional and administrative staff; provides contracting support to Agency’s project, operations, and corporate departments; develops partnerships with businesses to support Agency’s project operations and corporate departments; develops, measures, and reports contract benchmarks and performance; manages expectations of regulatory agencies such as federal transportation administration (FTA), State Auditors, etc.; and provides highly responsible and complex administrative support to the General Counsel. Provides contracting support to the Agency’s DBE/WBE and small business programs, provides support to the Agency’s efforts to partner with key interest groups including construction contractors and A&E firms.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Wednesday, March 28, 2012

New York Halts Project Based on Court Order

The New York State Department of Transportation (DOT) has ordered the contractor on a $72.4 million interchange upgrade project to stop work, after DOT was ordered by the state Supreme Court to re-bid the project.  The contractor has completed less than 10% of the work.

Dispute over Project Labor Agreement:  At issue is a Project Labor Agreement (PLA) that was added to the bidding requirements eleven days prior to the bid submission deadline.  The low bidder on the project, Lancaster Development, Inc., a non-union contractor, had already prepared their bid when the addendum adding the PLA was issued.  Lancaster submitted their bid and, even though its bid was $4.5 million low, it was rejected as non-responsive for failure to comply with the PLA requirements.  Lancaster filed a lawsuit which resulted in the court ruling.

PLA did not advance competitive bidding:  The court ruled that DOT's decision to include the PLA as part of the project did not have "as its purpose and likely effect the advancement of the interests embodied in the competitive bidding statutes."  Lancaster's president, Mark Galasso, noted that the PLA "would force us to fire our entire workforce" and hire union workers.

Next steps:  New York DOT is reviewing its options.  Assuming the project is re-advertised without a PLA, Lancaster intends to bid.  And the joint venture firm that was awarded the project, A. Servidone/B. Anthony Construction Corp., is evaluating whether to appeal the decision.

More Information:  Click here here to read a March 7,2012 article from ENR New York.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Tuesday, March 27, 2012

New Orleans Requires Contractors to Report When They Violate Laws

The New Orleans City Council voted on March 15, 2012 to require that contractors self-report to the City when they violate laws.

Reporting violations within 90 days:  The new ordinance applies to contractors with construction contracts more than $50,000 and requires that each such contract include language requiring contractors to notify the City Attorney within 90 days:
"of any determination by a federal or state agency, or of any judgment issued by a court of competent jurisdiction, finding that in the conduct of performing work contracted by the City, the contractor or any of  its subcontractors violated labor or employment laws..."
Content of notification:  Under the new ordinance, contractors must report the following:
  • Specific charges filed against the contractor
  • Date of occurrence of the allegation
  • Identify of each specific City contract under which findings were issued
  • Official copy of administrative finding or court judgment
  • Contractor's written plan with actions taken and/or planned to correct violations
City to enforce:  If a contractors fails to notify the City or correct the violations, the City Attorney "shall issue written notice to the prime contractor and take such action as may be necessary to enforce the provisions of this Section, including the pursuit of all appropriate civil remedies." It is unclear what specific actions the City may take in the event of violations.

Opposition to ordinance:  The controversial ordinance passed on a 4 to 3 vote, with labor interests strongly supporting the measure, while business interests opposed it.

More information:
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Monday, March 26, 2012

Webinar: Turning a Good Contract into a Good Project

Webinar:  Turning a Good Contract into a Good Project

When:  Thursday, April 12, 2012 (10:00 a.m. to 11:30 a.m. Pacific Time)

Where:  Your office

Instructor:  Mike Purdy

  • $75 - NIGP members
  • $105 - Non-NIGP members
Course Description:  Public construction projects are risky. But if you’ve got a good contract, you won’t have any problems – right? Well, not exactly. Sometimes bad things happen to good contracts. But what makes a good contract, and what are some of the causes of problem projects? More importantly, how can you reduce the risks to your project? 

Mike will outline key foundations for a good public works construction contract as well as important foundations for a good project. Having a good contract and effectively managing the contract and project are both critical for the success of your public works construction projects.

At the end of the Webinar, students will be able to:
  • List different project delivery methods for public works projects;
  • Describe the effective use of bid protection tools;
  • Identify key risk management tools;
  • Differentiate between pre-qualification and responsibility;
  • Respond to different types of bid errors by contractors;
  • Outline key features of a contractor performance evaluation program;
  • List appropriate reasons for a change order; and,
  • Understand the importance of managing a project by the contract.
More Information and Registration:  Click here.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Sunday, March 25, 2012

Obtaining Qualified Subcontractors on GC/CM Projects

On GC/CM (General Contractor/Construction Manager) projects in Washington State, there are a number of tools available to both the contractor and the public agency to ensure that subcontractors working on the project are qualified.

Award to Low Bid Required:  The issue of qualifications of subcontractors is particularly important since RCW 39.10.380 requires that "all subcontract work and equipment and material purchases" must be competitively bid by the GC/CM and awarded to the low responsible bidder with a responsive bid.

4 Subcontractor Selection Tools:  There are four primary tools available to ensure qualified subcontractors on GC/CM public works projects:

  1. Prequalification: When the GC/CM and public agency determine that, for specific subcontract bid packages, it is "in the best interest of the project and critical to the successful completion" of the work, the GC/CM and public body may go through a process to prequalify which subcontractors are eligible to bid on specific subcontract bid packages.  This process, which is outlined in RCW 39.10.400, ensures that only subcontractors with the necessary experience are permitted to bid on specific bid packages.  There is a process outlined for determining that prequalification (technically referred to as “bidder eligibility”) is necessary and an appeals process.
  1. Bidder Responsibility:  On all subcontract bid packages in which prequalification is not used, the GC/CM and public agency must “include the specific objective criteria that will be used…to evaluate bidder responsibility.” (RCW 39.10.380 (2))  Whereas prequalification occurs prior to bidding, bidder responsibility evaluation occurs after subcontract bids have been submitted and prior to award.  The GC/CM is required to award to the lowest responsible bidder with a responsive bid.  The bidder responsibility criteria are in addition to the mandatory bidder responsibility criteria outlined in RCW 39.06.020 for subcontractors.  The bidder responsibility criteria help ensures that the low subcontract bidder has the requisite experience, qualifications, and personnel to perform the subcontract work.
  1. Bonding:  On subcontract bid packages of more than $300,000, subcontract bidders must submit a bid bond. RCW 39.10.380 (3) doesn’t appear to include the option for the GC/CM to receive alternate forms of a bid guaranty.  Any subcontractor awarded a subcontract by the GC/CM for more than $300,000 must also provide a performance and payment bond for the contract amount to the GC/CM.  The bid, performance, and payment bond requirements provide an added level of review into the qualifications and financial capability of subcontractors awarded work under a GC/CM project.
  1. Qualifications Based Selection of Certain Subcontractors:  In 2010, the Washington State Legislature adopted an alternative method for a GC/CM to select mechanical and electrical subcontractors. Rather than bidding this work, RCW 39.10.385 provides that the GC/CM may select these subcontractors before the design of the project is complete based on their qualifications, fee, and general conditions costs – a process very similar to how public agencies are required to select the GC/CM.  By having these key subcontractors on board during pre-construction, they are able to provide valuable services in helping to develop the design.
Project Delivery Methods:  In addition to the traditional Design-Bid-Build project delivery method (also known as the traditional low bid model), there are three alternative public work delivery methods authorized in Washington state:
  • GC/CM
  • Design-Build
  • Job Order Contracting
Other Names and Practices for GC/CM:  GC/CM (General Contractor/Construction Manager), as a project delivery method, is also known by a variety of other terms in other parts of the country: Construction Manager at Risk, CM at Risk, CMAR, and CM/GC (Construction Manager/General Contractor).  Different states have different requirements governing subcontractor selection and other facets of the GC/CM process.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, 

Wednesday, March 21, 2012

Training: Developing and Managing RFPs and RFQs

Developing and Managing RFPs and RFQs

Instructor:  Mike Purdy

Class Outline:
  • Building the Public's Trust
  • Planning the Procurement
  • Standard Provisions and Concepts
  • Conflicts of Interest
  • Cost and price Analysis
  • Advertising Issues
  • Pre-Submission Meeting
  • Receiving and Opening Proposals
  • Evaluation Committee
  • Evaluation Proposals 
  • Managing Interviews
  • Recommending Award
  • Contract Negotiations
  • Developing Scopes of Work

  • Free - WCIA Members
  • $115 - Non-WCIA Members
Information and Registration:  Click here for the Ridgefield class.  Click here for the Yakima class.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Job Opening: Buyer

Port of Tacoma (Washington)
  • Position:  Buyer
  • Location:  Tacoma, Washington
  • Closing Date:  April 4, 2012
  • Salary:  $31.44 per hour
  • Job Summary:  This position is responsible to complete complex processes related to the purchase of goods and services, including bid spec development, coordination of common goods purchases, evaluating high-dollar value commodities subject to bidding, including technical research, safety, insurance and warranties, vendor record management and bid compilation/award recommendations.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Tuesday, March 20, 2012

New Draft Washington State Policy on Prevailing Wages

The Washington State Department of Labor and Industries has issued a draft policy statement to address prevailing wage filing requirements for on-call public works contracts.  Comments are due to L&I by April 2, 2012.

Note:  This is a long blog posting, but it is a very important issue for public agencies who use on-call public works contracts.

The draft policy identifies different requirements for what L&I characterizes as two different types of on-call public works projects: “Hybrid" on-call maintenance/repair contracts, and all other on-call maintenance/repair contracts.

1.  "Hybrid" on-call maintenance/repair contracts:   According to L&I, these contracts are for a specific type of work and are performed on a recurring basis at a specific and identifiable location.  L&I's proposed requirements for these contracts include the following:
  • Effective date of prevailing wages:  The prevailing wages in effect on the bid submission deadline would be the wages in effect for the first year of such contracts.  If the contract is a multi-year contract, the draft policy would require that the prevailing wages be changed to reflect the current prevailing wages when the contract was renewed or extended for an additional year.
  • Filing Intent and Affidavit:  The prime contractor on these contracts would be required to file a "Statement of Intent to Pay Prevailing Wages" and an "Affidavit of Wages Paid" form annually.  But subcontractors performing work on these contracts would be required to file an Intent and Affidavit for each work authorization under the contract.
Analysis of proposed hybrid requirements:  The following are my comments on the proposed hybrid requirements:

  • Effective date of prevailing wages:  Under L&I's current regulations, the effective date of prevailing wages for a public works project is the required bid submission date, regardless of the length of the contract.  Hybrid on-call contracts are public works also.  L&I is arguing that RCW 39.12.040 requires Intents for each "contract" but Affidavits for each "project," and that each work authorization under a hybrid on-call contract is a "project."  Personally, I think it's a stretch to make such an argument.  “Contract” is defined in state law (RCW 39.04.010), but "project" is not defined.  In my opinion, the two terms are meant to be used interchangeably. When RCW 39.12 was adopted, I don't think there was ever any intent to distinguish between "contract" and "project" as it might relate to on-call public works projects - which aren't even addressed. L&I's proposal to require higher wages in subsequent years of a public works contract is at variance with their own regulations in WAC 296-127-011. Unless the WAC is formally changed, it is questionable whether L&I can modify that practice by a policy statement:
 "For all public works contracts, except janitorial or building service maintenance contracts, the applicable prevailing wage rates shall be the rates that are in effect on the date when bids by prime contractors are due for submission to contract awarding agencies. These rates shall remain in effect for the duration of the contract." [emphasis added]
Contractors should be required to submit bids based on the current prevailing wages (and any wage increases necessary to retain a qualified work force or comply with the terms of a collective bargaining agreement), and not transfer that risk and cost to public agencies that would be required to pay for the increased wages in subsequent years of a multi-year hybrid on-call contract.  In addition, if the hybrid on-call contract is bid and the award evaluation is based on anything other than hourly rates (and it is problematic, in my opinion, to bid these contracts based on hourly rates), it will be very difficult for public agencies to determine the increased amount in prevailing wages that must be reimbursed to the contractor to pay their workers.

  • Filing Intent and Affidavit:  It is unclear to me why L&I is distinguishing between prime contractors and subcontractors when both may end up performing work on an individual work order under the hybrid on-call contract.  To require an Intent and Affidavit for each subcontractor performing work on an individual work authorization is unreasonable, inefficient, and costly to the public.  Many work orders are very small.  For example, on a $150 work order, if the work was performed by a subcontractor, an additional $80 would need to be paid by the public agency as part of the work order to cover the cost of the Intent and Affidavit.  It seems to me that L&I should establish a minimum dollar threshold below which the Intents and Affidavits would not be required.  This may require a change in the law, and the law should address the lower risk and higher administrative cost associated with small public works projects.  Short of a legislative change, L&I can resolve this issue by eliminating the artificial distinction between a “contract” and “project” and simply require an Intent and Affidavit for each public works contract, regardless of the length of the contract (to be consistent with current regulations in WAC 296-127-011).
2.  Other on-call maintenance/repair contracts:  L&I’s draft policy states that these contracts do not meet the criteria for being a “hybrid” contract (for a specific type of work and are performed on a recurring basis at a specific and identifiable location).  The proposed requirements for these contracts are as follows:

  • Effective date of prevailing wages:  The prevailing wages in effect on “the award date for each ‘call-out' must be used.”  In other words, even though there is no “award” for each work order, I think L&I is intending to require that the wages in effect on the date when a work order is executed will be the prevailing wages in effect for that work order.  
  • Intents and Affidavits:  L&I’s draft policy states that “An Intent must be filed at the beginning of the contract period and [an] Affidavit must be filed following completion of each individual project or ‘call-out.’” 
Analysis of proposed requirements for other on-call contracts:  The following are my comments on these proposed requirements:

  • Effective date of prevailing wages:  One of the main problems with requiring that the effective date for prevailing wages for these on-call contracts be the date of the work order is that it eliminates any basis for competitive selection of the on-call contractor during the bidding process.  If the prevailing wages in effect as of the bid submission deadline mean nothing, why would there still be a requirement to notify contractors of the applicable prevailing wages?  Essentially, under the proposed policy, all work orders would be negotiated without relying on prices bid as part of the selection process for the on-call contractor.  It is unclear why L&I is applying such a different standard for these on-call contracts than they are proposing for the hybrid contracts.
  • Intents and Affidavits:  My comments above relating to Intents and Affidavits being required for each work order apply here as well.  
Other Features of L&I’s Draft Policy:  L&I’s draft policy also addresses Job Order Contracting, Building Service Maintenance (Janitorial) Contracts, and regular Public Works contracts.

More Information:  L&I has published both the draft policy and an explanatory memo.  Click below to view these documents:

Comments:  Comments are due to L&I by April 2, 2012.  If you have any comments, observations, or questions for me, please contact me.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Job Opening: Procurement Manager

Pierce Transit (Washington)
  • Position:  Procurement Manager
  • Location:  Lakewood, Washington
  • Closing Date:  Open until filled
  • Salary:  
         - Hiring Range:  $72,848 to $88,547 annually
         - Salary Range:  $72,848 to $107,630 annually
  • Job Summary: Provides leadership for the procurement, warehousing and inventory functions of Pierce Transit, including development of Procurement, Contract Compliance, and Warehousing Division goals, objectives and priorities.  Manages, plans, develops and evaluates all agency procurement activities of goods, equipment, services, construction, contracting management, warehousing activities, inventory control, credit cards.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Monday, March 19, 2012

Follow-up on Washington's New Public Works Bid Preference Law

As a follow-up to my blog posting of March 11, 2012 about the State of Washington's new public works bid preference law, there are three additional things to keep mind.
  • Federally Funded Projects:  If federal funding agencies prohibit the application of the bid preferences, then the provisions of the new law, RCW 39.04.380, do not apply.  I have been informed by WSDOT that projects funded by FHWA prohibit the use of bid preferences.
  • Optional or Mandatory?  Short of federal prohibitions on the application of the bid preference, the bid preference is mandatory on competitively public works projects, except projects awarded through the Small Works Roster. "In any bidding process for public works in which a bid is received from a nonresident contractor from a state that provides a percentage bidding preference, a comparable percentage disadvantage must be applied to the bid of that nonresident contractor." (RCW 39.04.380 (3))
  • Addition of More States with Bid Preference Laws:  The Washington State Department of Enterprise Services (formerly General Administration) is charged with updating the list of states with a public work bid preference law "periodically as needed."  Currently, only Alaska, Wyoming, Nevada, and New Mexico have public works bid preference laws - each at 5%.
Implementation Issues:  If you have questions or comments about the implementation of this new bid preference law, please contact me.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Sunday, March 18, 2012

Job Order Contracting - New User's Group Announced

The City of Bellevue is organizing a Washington State Job Order Contracting (JOC) User's Group.

When and Where:  The inaugural meeting of the group will be held on Thursday, April 19, 2012 from Noon until 1:00 p.m. at Bellevue City Hall.  It is open to anyone interested in JOC (agencies and contractors) and will be a working lunch meeting.

Agenda:  At this first meeting, the group will address the following questions:
  • What is a JOC User's Group?
  • Why are the group meeting?
  • What is it the group wants to accomplish as a JOC User's Group?
  • How often does the group plan to meet?
What Agencies May Use JOC?  Under Washington state law, RCW 39.10.420
  • State Department of Enterprise Services (formerly General Administration)
  • University of Washington
  • Washington State University
  • Every city with a population greater than 70,000 and any public authority chartered by such city under RCW 35.21.730 through 35.21.755
  • Every county with a population greater than 450,000
  • Every port district with total revenues greater than $15 million per year
  • Every public utility district with revenues from energy sales greater than $23 million per year
  • Every school district
  • State ferry system
New Legislation Will Expand Users:  Under the provisions of EHB 2328, which passed both the House and Senate unanimously, the list of public agencies authorized to use Job Order Contracting will expand (provided the Governor signs it) to include Sound Transit, regional universities, and The Evergreen State College.  

Questions:  If you have questions, please contact Mayvis Schwab at (425) 452-4870 or by e-mail at
Mike Purdy's Public Contracting Blog
© 2012 by Michael E. Purdy Associates, LLC

2 Job Openings - Applications Due March 19, 2012

State Department of Enterprise Services - DES (Washington)
  • Position:  Contract Staff Consultant
  • Location:  Olympia, Washington
  • Closing Date:  March 19, 2012 at 5:00 p.m.
  • Salary:  $40,000 to $79,152 annually
  • Job Summary: This position provides analysis and review/approval of personal service contract filings submitted to the contracts office.  Regularly provides consultation to state agencies and higher education on interpretation of statutory and DES policy requirements.  The position acts in a statewide leadership role in regularly advising state agencies and higher education on procurement and contracting laws, policies, and best practices.
  • For More Information and to Apply:  Click here.  

State Department of Enterprise Services - DES (Washington)
  • Position:  Contract Staff Consultant
  • Location:  Olympia, Washington
  • Closing Date:  March 19, 2012 at 11:59 p.m.
  • Salary:  $40,000 to $79,152 annually
  • Job Summary: This position develops and provides coordinated, effective training as statutorily mandated or required by agency policy.  Provides analysis and review/approval of personal service contract filings submitted to the contracts office.  Regularly provides consultation to state agencies and higher education on interpretation of statutory and DES policy requirements.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Wednesday, March 14, 2012

Public Works Bribery Case in Georgia

Two public works department employees of Dekalb County, Georgia accepted bribes from a contractor in exchange for allowing a $1.4 million sidewalk project to continue.  The engineering supervisor and construction inspector also directed the contractor to bill for work not performed and over-bill the county, in exchange for part of the over-billed amount.

FBI Sting:  Unbeknownst to the employees, the contractor contacted the FBI and the workers were arrested.  On March 6, 2012 the workers were charged with extortion and bribery.  If convicted in the pay-to-play scheme, the employees could face up to 20 years in prison and a fine of up to $250,000.

More Information:  Click here to read an article from the Atlanta Journal-Constitution.

Lessons Learned:  Checks and balances in the review and payment of invoices on public works projects is an important part of ensuring that the public's money is appropriately being disbursed.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Tuesday, March 13, 2012

Obtaining Qualified Contractors on Public Works Projects

Most public agencies are required to award public works projects to the low bidder, and may encounter performance problems with the selected contractor. 

There are a number of strategies available to help ensure that the low bidder is qualified, and how to respond if there are performance problems.

Clear Documents:  Spending the time up front to ensure that the scope of work is clear can help ensure that all bidders are able to submit realistic bids, and that the low bidder will be successful on the project.  Clear contract documents are also an important tool to hold the contractor accountable for performing the work - without unnecessary change orders.  It is important for the agency to review the drawings and specifications prepared by outside architects and engineers to ensure they are clear and reflect the agency's objectives.  If the agency is developing its own drawings and specifications, it is important to review these documents for internal consistency, meeting objectives, and fairness in the bidding process.

Mandatory Bidder Responsibility Criteria:  In Washington State, before a public agency may award a public works project, they must verify that the low bidder meets the mandatory bidder responsibility criteria outlined in RCW 39.04.350.  These criteria address basic registration and compliance issues of the bidder.  They are there to ensure that the contractor awarded the project is a legitimate contractor who pays appropriate taxes and has not been debarred from doing business in the state.  

Supplemental Bidder Responsibility Criteria:  In addition to the Mandatory Bidder Responsibility Criteria, public agencies in Washington State may establish additional or Supplemental Bidder Responsibility Criteria that address the qualifications and experience of the low bidder.  The implementation of these criteria is governed by RCW 39.04.350.  There is a document entitled Suggested Guidelines for Bidder Responsibility that has been developed by the state's Capital Projects Advisory Review Board (CPARB) that provides helpful information for agencies interested in utilizing Supplemental Bidder Responsibility Criteria on public works projects.  Other than selected agencies authorized in state law, most agencies in Washington State may not prequalify contractors

Dealing With a Bid That is Too Low:  One of advance signs of a pending problem project is receiving a bid that is significantly lower than the estimate - and significantly lower than the bids of other bidders.  If the low bidder does not submit a claim of error to withdraw their bid, it is a good practice for public agencies to meet with the bidder (before award) to discuss the scope of work and ensure that the bidder has a realistic understanding of the project and the agency's expectations.  Convincing a bidder with a bid that is too low to withdraw their bid is an important preventative measure that can save the agency a lot of grief later on.

Liquidated Damages:  In the event the contractor does not perform the work in a timely manner, the public agency may impose liquidated damages on the contractor for each day past the scheduled substantial completion date that the contractor fails to meet substantial completion.  Liquidated damages are not a penalty and represent an assessment of the agency's likely costs for a project that extends beyond the number of days included in the contract.  Some public agencies, even though they include liquidated damages in their contract, do not often assess the damages.  Liquidated damages are an important tool to help motivate the contractor to complete the work in a timely manner.

Performance Bond:  The surety that issued the performance bond for the project can be an important ally for a public agency when there are performance issues with a contractor (poor workmanship or lack of timely performance).  The bonding company, by issuing the performance bond, has agreed to stand behind the contractor and guaranties to the public agency that the contractor will successfully perform the project in accordance with the contract documents.  Agencies who are experiencing performance problems with a contractor should make it a practice to notify the bonding company so they can work with the contractor to resolve the performance issues.  In Washington State, RCW 39.08 requires that a performance bond be obtained on public works projects.

Termination:  Terminating a public works contract may be either for cause or convenience, and is typically a last resort of a public agency not satisfied with a contractor's performance.  It is important that public works contracts have clear language relating to both termination for cause and convenience.

Performance Evaluations:  At the end of each public works project, some public agencies conduct a formal evaluation of the contractor's performance using a standardized form.  The regular use of a performance evaluation system may be an important tool in the future to ensure that poor performing contractors are not used in the future (by tying it into supplemental bidder responsibility criteria).  Click here for my previous blog entry on 10 key elements of a performance evaluation program.

Summary:  These tools and strategies are part of an overall package that can help public agencies in managing public works projects and ensuring that qualified contractors perform well and in accordance with the agency's needs.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Monday, March 12, 2012

Suggested Guidelines for Bidder Responsibility - Now Available Online

The final version of the recently adopted revisions to the "Suggested Guidelines for Bidder Responsibility" has been posted online by Washington State's Capital Projects Advisory Review Board (CPARB).

CPARB adopted the revisions at their meeting on February 9, 2012.

Click here for my earlier blog entry describing the nature of the changes in the Suggested Guidelines.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Excellence in Procurement Summit

Excellence in Procurement Summit

When:  March 22, 2012 (8:30 a.m. to 4:00 p.m.)

Where:  Bellevue, Washington (City Hall, 450 110 Avenue NE)

Sponsored by: Washington State Chapter NIGP (National Institute of Governmental Procurement)

Cost: No charge to chapter members; $40 for non-chapter members

  • Introduction to Spend Analysis and Spend Management
  • How to Measure Savings and Demonstrate Value
  • Strategic Plan for Washington State Chapter NIGP
  • Update of 2012 NIGP National Forum in Seattle (August)
Information and Registration:  Click here.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Sunday, March 11, 2012

Reciprocal Bid Preference for Public Works Starts March 30, 2012

Washington state's new reciprocal bid preference law for public works projects will go into effect on March 30, 2012, according to information published by the Department of Enterprise Services (DES).

What public agencies are affected?   RCW 39.04.380 afffects all state and local agencies in Washington with the authority to procure public works.

What is a Reciprocal Bid Preference?  The following is an excerpt from the state's recent announcement:
Beginning March 30, contractors from states that have an in-state bidder preference competing on public works projects in Washington will have a reciprocal amount added to their bid proposals.  The reciprocal amount will be added to bring them in line with the disadvantages contractors based on Washington face when bidding on projects in Alaska, Nevada, New Mexico, and Wyoming."
How is the bid preference calculated?  Public agencies in Washington state should add a reciprocal disadvantage to all public works bids submitted by contractors from states with an in-state bidding preference (Alaska, Nevada, New Mexico, Wyoming).  The disadvantage amount will be equal to the advantage given by the state with the bidding preference.

Example of Calculation:
Alaska contractor bid amount
Multiplied by Alaska bidding preference
x    0.05

Alaska contractor bid amount
Amount added to Alaska contractor bid
Final bid total for award evaluation
If the Alaska contractor's final bid total is lower than the bid amounts submitted by all other contractors, including those from Washington, then the Alaska contractor is the successful bidder, and will be awarded a contract for the bid amount of $100,000.
What percentage preferences apply?  The four states with an in-state bidding preference for public works projects (Alaska, Nevada, New Mexico, Wyoming) all have a 5% bid preference for in-state bidders. 
What state is a contractor from?  The state of residence for a nonresident contractor is the state in which the contractor was incorporated or, if not a corporation, the state where the contractor's business entity was formed.  Public agencies will need to collect information indicating the state of residence of the bidders.  This may be accomplished either on the bid form or after bid opening. 
What is a nonresident contractor?  Nonresident Washington state contractors, at the time of bidding a public works project, are "from a state that provides a percentage bid preference to its resident contractors bidding on public works contracts" and do not have a physical office located in Washington.  Washington state resident contractors, on the other hand, have a physical office located in Washington.

What is the effective date of the new law?  The state has indicated the new requirement will be effective as of March 30, 2012, but does not specify whether that is based on bidding or award date.  In order to apply the new law, bidders will need to understand the reciprocal bid preference, and thus it seems to me, that the March 30 date would be for any project with a bid submittal deadline of March 30 or later.  Bidding documents should address the reciprocal bid preference, by addendum if necessary.

Language for Bidding Documents:  The Department of Enterprise Services has amended its Instructions to Bidders to include language addressing the implementation of the reciprocal bid preference.  Public agencies should review this language in sections 0.01 A and 0.12 E and include appropriate language in their bidding documents regarding the reciprocal bid preference requirements.  Click here to review the state's Instructions to Bidders.

Non-Applicability:  The reciprocal bid preference requirements do not apply to:
  • Small Works Roster or Limited Public Works projects (RCW 39.04.155)
  • "Any other procurement exempt from competitive bidding."  Although not explicitly stated, this may include public works procurements that are not based strictly on competitive bids such as alternative public works contracts (RCW 39.10) and procurements covered in RCW 39.04.270 (electronic data processing and telecommunications).
Additional Resources: The following links from DES provide additional information:
Questions and Comments: 
  • Roland Orr, DES contracts manager, may be contacted for more information: (360) 407-9361 or
  • I'm interested in hearing from you about any specific questions you may have about interpreting or implementing this new provision.  Please contact me with your thoughts
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Wednesday, March 7, 2012

Documenting Procurement and Contracts

Contracts are important for not only establishing expectations and obligations of the parties, but serve as the main tool in the event one of the parties does not fulfill its commitments.

Audit Findings:  Here's a quick list of some details to pay attention to that come to us based on the results of a recent audit finding by the Washington State Auditor's Office when they recently audited the Port of Ilwaco:
  • Document Selection Process:  The port hired two contractors for a public works project off of its Small Works Roster.  While the port told the auditor that they had contacted all the contractors on the roster about the project, they had no documentation to demonstrate their process or that firms had been contacted.
  • No Work Before Contract Execution:  There is no agreement or contract until both parties have signed a contract - and consultants and contractors should not be permitted to perform services prior to execution of the contract by both parties.  The auditor noted that an engineering firm hired by the port "provided services prior to the effective date of the contract."  In addition to the risk of an audit finding, it is not a good practice to permit work to begin without a signed contract.  Public employees who direct a company to begin work without a contract may pick up personal financial liability or be subject to disciplinary measures for their action.  Contractors and consultants who begin work without a contract do so at their own risk, understanding that they might not be paid for such work.
  • Document Contract Execution:  The auditor noted that the port did not have a copy of the contract signed by both parties in their files.  They were thus unable to demonstrate that there was, in fact, an executed contract, or that payments made were appropriate.  On another contract, the port awarded a public works construction project for more than $200,000, but did not require the contractor to sign a contract.
  • Extend Contract Time Before Expiration:  The auditor noted that the contract with an engineering firm was for a term of three months, but the contract was not amended to extend the term of the contract when the project was delayed.
Details are important:  It is important for public agencies to pay attention to a variety of details related to procurement and contracting.  These are not mere formalities, but serve as the basis for documenting how consultants are selected and what are the terms of the contract.

Copy of Audit:  Click here to read the audit report.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Tuesday, March 6, 2012

Strategies for Managing Decentralized Procurement

Many public agencies, especially smaller ones, do not have any centralized procurement staff, but rely on others who have the actual need for goods and services to be responsible for the procurement and contracting function.

Strategies:  The following strategies can help ensure compliance with regulations and a consistent approach by the agency procuring goods and services.:
  • Policies and Procedures:  Develop and adopt clear written policies and procedures that appropriately balance the culture of the agency, the experience and knowledge of the staff, and compliance with regulations and best practices.
  • Accountability:  Agency leadership should make expectations clear to directors and managers that they will be held accountable for proper procurement practices.
  • Training:  Provide in-depth training to staff who have been delegated with responsibility for procurement and contracting.  Directors and managers should also be trained. 
  • Checklists:  Develop simplified checklists that can help those doing procurement and contracting with knowing what steps to follow.  The checklists should follow and be consistent with the written policies and procedures.
  • Standard Templates:  Develop template documents for advertisements, RFPs, RFQs, purchase orders, consultant contracts, architectural/engineering contracts, construction contracts, service contracts, etc.  These template documents should be in compliance with the requirements, and should be protected so they are not changed without deliberate action.
  • Check and Balances:  Ensure there are sufficient checks and balances in place to reduce risks of one person taking inappropriate procurement and contracting actions.  Appropriate levels of approval, based on dollar amount, should be part of the policies and procedures.
  • Grants:  Designate staff who are responsible for reading and ensuring compliance with the terms of state or federal grants.
  • Pre-Audits:   Establish a process for pre-audits of your policies and procedures, checklists, standard templates, and specific procurements and contracts by either agency staff or outside experts.  The purpose of pre-audits is to identify and correct problem areas before an actual state or federal audit of your agency.  Because staff and regulations change regularly, pre-audits should be conducted at least on an annual basis.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Monday, March 5, 2012

Public Works Bid Mistakes

John Alhers
Seattle construction attorney, John Ahlers, of the law firm Alhers & Cressman, PLLC, has written three detailed and comprehensive blog entries on mistakes in public works construction bids:
These blog entries provide a great background of relevant court cases surrounding bid mistakes in public works contracting and are worth reading.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Sunday, March 4, 2012

Soliciting Firms on Small Works Roster to Bid

Public agencies in the State of Washington who chose to establish and maintain a Small Works Roster must follow the solicitation requirements outlined in state law (RCW 39.04.155).

Projects Not Advertised:  Small Works Roster projects ($300,000 and under) are not publicly advertised.  Instead, public agencies solicit the firms on the roster or appropriate rosters (if separate rosters by trade or geography have been established) when a project arises. 

Roster Solicitation Requirements:  The following chart identifies the requirements for soliciting firms on the Roster with bidding opportunities.  

For each dollar range threshold below, there are two options for solicitation: 
  1. Solicit all firms on the Roster (or appropriate rosters), or 
  2. Solicit five contractors, which comes with the requirement to "equitably distribute" opportunities to all firms on the Roster over time. 
In other words, it's not okay to simply go to the same firms on the Roster time after time, and ignore others on the Roster.

Audit Finding:  The Washington State Auditor's Office recently issued an audit finding against the Town of Woodway in Snohomish County regarding the use of their Small Works Roster.  The Town had a storm drainage project estimated to cost $184,765.  Because it was estimated to cost $150,000 or more, the Town had an obligation to either solicit from all the contractors on the Roster, or to solicit from at least five contractors, and notify the remaining contractors on the Roster of the opportunity.  The Town solicited bids from seven contractors, but did not notify the other contractors on the Roster that it was soliciting bids.

Procedures:  Does your agency have procedures in place to ensure that the Small Works Roster is being used appropriately?

Additional Audit Findings:  The same audit report found that the Town of Woodway also failed to withhold retainage or obtain a retainage bond on a different public works project.  On a third public works project, the Town released retainage before receiving releases from the Department of Revenue, Employment Security Department, and the Department of Labor and Industries.
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC