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, 

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