Wednesday, November 28, 2012

Federal Audit Slams Procurement Practices of Washington, DC Airports

A federal audit of the agency that operates the Reagan and Dulles airports in Washington, DC has found significant problems with the procurement and contracting practices of the Metropolitan Washington Airports Authority (MWAA).

The November1, 2012  audit follows on the tail of a May 2012 interim letter sent to MWAA by the U.S. Department of Transportation’s Office of the Inspector General. 

Audit concerns: The audit identified several red flags in how the MWAA deals with contracts.
  • Lack of Competition: MWAA contracts over $200,000 are required to be competitively procured, but the agency invoked exceptions to the competitive process for nearly two-thirds of such contracts, often without adequate or timely justifications.   The agency also 
“awarded out-of-scope contract modifications and task orders without required Board approval, placed large-value task orders without adequate justification, and distributed work on multiple-award contracts disproportionately.  These practices limit competition because they allow MWAA to procure significant new work on existing contracts that could be awarded competitively.”
  • Ethical concerns: Staff accepted gifts from contractors totaling at least $12,000, including Super Bowl tickets, travel, and accommodations, a fishing trip, a trip to New York City to attend a major league baseball game, trips to golf tournaments, concert tickets.  MWAA policies regarding conflicts of interest do not prevent Board members from exercising inappropriate influence in the contracting process.  Some contracts were awarded to former board members.  The audit also criticized the agency’s ineffective code of ethics and lack of training for employees on ethical issues. 
  • Poor contract management: In 27% of the contracts audited, MWAA allowed work to begin before the contract award date. 
Summary of audit findings:  The following are some of the headings from the audit report relating to procurement and contracting (the report also criticized MWAA for its personnel and hiring practices):
  • MWAA’s contracting policies and practices do not maximize competition
  • MWAA does not follow federal best practices to publicize and solicit contract opportunities
  • Out-of-Scope contract actions, unjustified task orders, and unbalanced work distribution on multiple-award contracts further limited competition
  • MWAA does not track employees with delegated procurement authority or ensure they stay within delegated limits
  • MWAA lacks controls to ensure employees follow key contracting policies and procedures
  • MWAA lacks a formal acquisition planning process and has not effectively managed the size and skill of its acquisition workforce
  • MWAA’s contracting policies and practices do not emphasize procurement integrity
  • MWAA lacks sufficient controls to detect and prevent nepotism
  • MWAA’s financial disclosure processes have not promoted full disclosure of conflicts of interest to ensure compliance with ethics provisions
  • MWAA did not require recurring formal ethics training for all employees
  • Board policies have not been sufficient to prevent potential conflicts of interest, but effectively implementing new policies may prevent future unethical behavior          
What's next: MWAA has indicated its willingness implement the audit's recommendations.
  • A new ethics code will take effect for board members on December 1, 2012 and for MWAA employees on January 1, 2013.
  • About a dozen non-competitive contracts awarded to former board members have been terminated.
Lessons learned:  The following highlights key procurement and contracting issues that public agencies should be aware of:
  • Procurement Policies:  Public agencies should have clear procurement and contracting policies that are communicated to all staff.
  • Ethical standards:  It is important for public agencies to build an ethical culture, driven by clear policies and by the example of key leadership that holds everyone in the agency accountable.
  • Training:  Regular training on contracting and ethical requirements is critical to ensure that the policies are actually implemented.
  • Avoid politicization of procurement:  Establishing a centralized procurement function and objective standards can help to depoliticize procurement and contracting issues and build transparency into the process.
Additional information:
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Tuesday, November 27, 2012

Job Opening: Procurement Specialist

Community Transit
  • Position:  Procurement Specialist
  • Location:  Everett, Washington
  • Closing Date:  Open until filled
  • Salary:  $60,224 to $83,108 per year
  • Job Summary: Competitively procures quality goods and services, including professional services and information technology, in a timely, cost efficient manner for Community Transit's internal customers.  Establishes multi-year contracts and conducts formal and informal procurement processes, including contract administration, for all departments.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Job Transitions

Mark Little has been appointed as the Director of Contracts and Purchasing at the Port of Tacoma, effective November 13, 2012.  He was previously the State Purchasing Manager for the State of Idaho.

Mari Gregg began working at Sound Transit on November 5, 2012 as Senior Design and Construction Contracts Specialist.  She was previously a contracts manager with the Port of Tacoma.

Wendy Walker
Wendy Walker was promoted to Contracts Specialist 1 for the Office of State Procurement (Washington Department of Enterprise Services).  She previously served as the Contracts Assistant for the office.  She assumed her new duties on November 12, 2012.

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

Monday, November 26, 2012

Best Practices in Consultant Selection

I will be speaking in New Orleans on November 27, 2012 on "Best Practices in Consultant Selection" as part of a breakfast meeting sponsored by the independent Bureau of Governmental Research (BGR).

Unusual approach to selection:  BGR issued a report in May 2012 on "Reforming Jefferson Parish's Unusual Approach to Service Contracting."  According to BGR, elected parish councilmembers are given wide discretion to select any firm they want, notwithstanding the scoring and ranking based on established evaluation criteria and weightings.  The criticism of Jefferson Parish's contracting practices is that it politicizes the selection process and leads to selection of less than qualified firms.  Transparency in public contracting also suffers.  Click here for a June 24, 2012 blog entry I wrote with more details about BGR's report.

Important principles and practices:  I will be addressing key principles and practices that should guide selection of consultants and service providers. 
  • Key Principles
  • Transparency
  • Independence
  • Opportunity
  • Best Practices
  • Evaluation Criteria
  • Evaluation Committee
  • Evaluating Submittals
Click here for the announcement about BGR's breakfast briefing on November 27, 2012.

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

Thursday, November 15, 2012

Job Opening: Senior Contracts Administrator

Port of Tacoma, Washington
  • Position:  Senior Contracts Administrator
  • Location:  Tacoma, Washington
  • Closing Date:  Open until filled.  Original closing date was Wednesday, October 31, 2012
  • Salary:  $5,002 to $6,502 (midpoint) per month
  • Job Summary: This position is responsible for the management, oversight and administration of contract services for major public works construction projects, including both pre-award and post-award contract administration functions.  Serves as the contracting resource to the project managers for construction, professional and personal service agreements, and provides support and guidance in all functional areas of contract administration.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Happy Thanksgiving!

Since many of us will be taking time off next week to celebrate Thanksgiving with our families and friends, I will be taking a break from posting entries on this blog.  I will resume blog entries the week after Thanksgiving.

Wishing you a wonderful Thanksgiving - filled with grateful and thankful hearts and special times with loved ones!

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

Wednesday, November 14, 2012

Reporting Requirements for Small Works Roster Projects

Most public agencies in the State of Washington have the option, for public works construction projects estimated to cost less than $300,000, of not advertising the project, but of soliciting bids from a Small Works Roster of contractors.

Limited Public Works process:  Small Works Roster projects less than $35,000 are known as Limited Public Works and enable an agency to waive the payment bond, performance bond, and/or retainage.  

Reporting requirements:  Agencies using the Small Works Roster or the Limited Public Works process are required to make certain information available about contracts awarded under these processes.  The reporting requirements for Small Works Roster and Limited Public Works are a slightly different as noted in the chart below:

Small Works Roster
Limited Public Works
Maintain list of contracts awarded and make it available
Maintain list of contractors contacted (solicited) and contracts awarded

List shall be made available at least once every year
Maintain these lists for contracts awarded during previous 24 months under Limited Public Works

List shall contain:
  • Name of contractor
  • Contract amount
  • Brief description of the type of work performed
  • Award date
  • Location where bid quotations for contracts are available for public inspection
List shall contain:
  • Name of contractor
  • Contract amount
  • Brief description of the type of work performed
  • Award date
  • Contractor’s registration number

Meeting the reporting requirements:  Rather than maintaining two separate reporting systems, one for Small Works Roster projects and one for Limited Public Works project, an agency could combine the requirements.  The list below combines requirements and offers practical suggestions for how to meet the requirements:
  • Content of list:
  • Name of contractors solicited for each project
  • Name of contractor awarded each project
  • Contractor's registration number
  • Contract amount
  • Brief description of the type of work performed including project title
  • Award date
  • Availability of list:  Because the list must be made available once every year, one way to accomplish this would be to include in the annual Small Works Roster advertisement a notice of the availability of the list of previously awarded projects.
  • Accessibility of list:  An easy way to make the list available is to include it on your agency's website, or make it available upon request by e-mail or other means of communication.  Update the list regularly as Small Works Roster/Limited Public Works projects are awarded so it is always current.
  • Duration of list:  The list should be a cumulative list including at least those Small Works Roster and Limited Public Works projects solicited and awarded within the past 24 months.
State law:  Here are the reporting requirements for these two processes under state law:
  • Small Works Roster:   
Any state agency or local government using the small works roster process established in RCW 39.04.155 to award contracts for construction, building, renovation, remodeling, alteration, repair, or improvement of real property must make available a list of the contracts awarded under that process at least once every year. The list shall contain the name of the contractor or vendor awarded the contract, the amount of the contract, a brief description of the type of work performed or items purchased under the contract, and the date it was awarded. The list shall also state the location where the bid quotations for these contracts are available for public inspection.  RCW 39.04.200
  • Limited Public Works: 
A state agency or authorized local government shall maintain a list of the contractors contacted and the contracts awarded during the previous twenty-four months under the limited public works process, including the name of the contractor, the contractor's registration number, the amount of the contract, a brief description of the type of work performed, and the date the contract was awarded. RCW 39.04.155 (3) 
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Tuesday, November 13, 2012

What is E-Verify and Who Does it Apply To?

E-Verify is a federal government database that allows users to check whether workers are authorized to legally work in the United States. 

Federal agencies must use E-Verify:  As a federal law, E-Verify requires the following:
  • Federal contractors:  Federal agencies must require that companies with federal contracts over $100,000 check the employment status of their employees.
  • Federal employees:  Federal agencies must use E-Verify as part of their own hiring practices.
Companies with contracts with state and local governments are not required by federal law to use E-Verify, but may be required to comply with E-Verify under certain state laws.   

What state and local governments require E-Verify?  Several states have voluntarily chosen to require use of E-Verify. 
  • Arizona, Mississippi, South Carolina, and Alabama require all employers to use it, while other states use it in a more limited capacity.
  • In Washington state, E-Verify isn’t required for companies with contracts with the state or most local governments.   
  • According to Washington state legislative staff, the following cities and counties in Washington have independently required use of E-Verify: Cities of Centralia, Chehalis, Kennewick, Lakewood, Napavine, Sumner, Washougal; Counties of Clark, Cowitz, Lewis, Pierce, Whatcom.
  • Legislation was introduced in 2012 in the Washington Legislature (not approved) that would have prohibited the state and municipalities from using E-Verify unless required by federal regulations.
Does E-Verify work?  One of the concerns expressed about E-Verify is that its results are often not accurate.  According to one study conducted for the federal government, E-Verify is estimated to be 96% accurate based on all inquiries. Approximately 6.2% of all inquiries relate to unauthorized workers, and of this percentage a total of 54% of these inquiries resulted in unauthorized workers who were inaccurately given a green light. Less than 1% of the authorized workers checked against E-Verify are initially found to be unauthorized to work. 

Resources:  The following links provide more information about the E-Verify program:
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Monday, November 12, 2012

Job Opening: Contract and Procurement Specialist

KCDA Purchasing Cooperative
  • Position:  Contract and Procurement Specialist
  • Location:  Kent, Washington
  • Closing Date:  Open until filled
  • Salary:  $3,750 per month
  • Job Summary:  Manages all aspects of the public procurement contract process for a variety of projects.  Evaluates and orders supplies and direct ship orders for KCDA members.  Communicates and coordinates with all KCDA departments, vendors, and customers. 
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Job Opening: Procurement and Supply Support Specialist 2

The Evergreen State College
  • Position:  Procurement and Supply Support Specialist 2
  • Location:  Olympia, Washington
  • Closing Date:  Tuesday, November 27, 2012 at 5:00 p.m. PST
  • Salary:  $2,266 to $2,920 per month
  • Job Summary:  Act as the primary point of contact for the Purchasing office.  Maintain and operate the filing system.  Assist customers including: receive documents, provide process clarification, order expediting, providing copies of contracts and orders.  Receive incoming merchandise documentation.  Update finance management system.  Interact with campus users to verify receipt of goods/services, and contact vendors to verify goods have shipped.  Maintain the fixed assets inventory records.  Create purchase orders for lower risk transactions as assigned.
  • For More Information and to Apply:  Click here.  
Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

Sunday, November 11, 2012

Remembering Our Veterans

The Great War ends:  It was on November 11, 1918, at 11:00 a.m. (the eleventh day of the eleventh month at the eleventh hour) that the armistice or peace treaty went into effect that ended the Great War (what we now refer to as World War I).  It was a conflict that President Woodrow Wilson referred to as "the war to end all wars."

Honoring our Veterans:  Since that time, the commemoration of the day has been broadened as a time for us to honor the many men and women among us who have proudly and bravely served in our nation's military.

Pause and remember:  Whether Monday, November 12 is an official holiday and day off from work for you or not, it's good for all of us to pause during the day and remember with gratitude the men and women who have served this nation in uniform in order to preserve the incredible freedoms we enjoy.

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

Wednesday, November 7, 2012

New State Policy on Contractors Filing Prevailing Wage Form on Behalf of Subcontractors

The Washington State Department of Labor and Industries has issued a revised policy memorandum explaining the procedure for a contractor to file an Affidavit of Wages Paid form on behalf of a subcontractor who has refused to complete the form or who is no longer in business.

Background:  Before a public agency may release retainage to the contractor, the agency must have on file an Affidavit of Wages Paid, approved by L&I, for the contractor and every subcontractor of any tier.  For a number of years, L&I has had a policy addressing how a contractor may file an Affidavit on behalf of a subcontractor.  On October 29, 2012, L&I revised their policy memorandum to be consistent with the provisions of a new law approved by the Legislature in 2012.

New state law:  During the 2012 legislative session, the Legislature approved SSB 6421 which, for the first time, addressed in state law the concept of filing an Affidavit of Wages Paid on behalf of a subcontractor.  Here's the language that was added to RCW 39.12.040 (1)(b):
If a subcontractor performing work on a public works project fails to submit an "affidavit of wages paid" form, the contractor or subcontractor with whom the subcontractor had a contractual relationship for the project may file the forms on behalf of the nonresponsive subcontractor. Affidavit forms may only be filed on behalf of a nonresponsive subcontractor who has ceased operations or failed to file as required by this section. Filings made on behalf of a subcontractor may not be accepted sooner than thirty-one days after the acceptance date of the public works project and the contractor filing the affidavit must accept responsibility for payment of prevailing wages unpaid by the subcontractor on the project pursuant to RCW 39.12.020 and 39.12.065. Intentionally filing a false affidavit on behalf of a subcontractor subjects the filer to the same penalties as are provided in RCW 39.12.050.
Key points of procedure:  The following summarizes some of the key features of L&I's procedure for a contractor to file an Affidavit of Wages Paid on behalf of a subcontractor:
  1. Contractual Relationship Required:  There must be a contractual relationship between the contractor and subcontractor.
  2. Reasons for Filing:  Permitted only when the subcontractor has ceased operations or failed to file the form.
  3. Timing:  Contractor may not file on behalf of subcontractor sooner than 31 days after final acceptance of the project by the public agency.
  4. Affidavit Only:  Applies only to filing the Affidavit of Wages Paid, not the Statement of Intent to Pay Prevailing Wages.
  5. Hard Copy Required:  Contractor must file with L&I a paper hard copy of the Affidavit on behalf of the subcontractor.
  6. Supporting Documentation Required:  Specific documentation must be filed with the Affidavit demonstrating either the subcontractor's non-responsiveness, or evidence of the subcontractor having ceased operations.
  7. Filling out Form:  Specific instructions for contractors in completing the Affidavit on behalf of a subcontractor.
  8. Assumption of Liability by Contractor:  Contractor must file with L&I a separate "Assumption of Liability Statement" on company letterhead with the Affidavit.
Missing Affidavit from the prime contractor:  Neither the state law nor L&I's policy addresses what happens if it is the prime or general contractor who fails to file an Affidavit of Wages Paid.  The logical answer would be that the bonding company should be required to file the Affidavit on behalf of the contractor, a procedure that is supported by L&I.

Resources:  The following links relate to this subject:
  • Policy Memorandum:  L&I's October 29, 2012 Prevailing Wage Policy Memorandum on "Filing an Affidavit Form 'On Behalf Of' a Subcontractor"
  • Law:  RCW 39.12.040 (1)(b) describes requirements associated with contractor filing Affidavit on behalf of subcontractor.
  • Bill:  Substitute Senate Bill 6421 adopted in 2012 added procedure to state law.

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

Tuesday, November 6, 2012

Developing Estimates on Public Works Projects

Developing an cost estimate on a public works construction project is not only a good practice, but in some cases, it is required by laws or regulations.

When is an estimate required?  The following regulations address cost estimates on public works projects. 
  • Washington State:  RCW 39.04.020 dictates that there must be an estimate of the cost of a public works project prior to soliciting bids (whether advertised or through a Small Works Roster process).  Note that there is no minimum dollar thresholds specified for when the cost estimate must be performed.  Here's the specific language of the state law:
Whenever the state or any municipality shall determine that any public work is necessary to be done, it shall cause plans, specifications, or both thereof and an estimate of the cost of such work to be made and filed in the office of the director, supervisor, commissioner, trustee, board, or agency having by law the authority to require such work to be done. The plans, specifications, and estimates of cost shall be approved by the director, supervisor, commissioner, trustee, board, or agency and the original draft or a certified copy filed in such office before further action is taken.
  • Federal regulations:  In addition, many federal grant regulations contain language requiring "independent estimates before receiving bids or proposals."  Check the language of your federal grant regarding requirements on developing an estimate.
Who should perform the estimate?   The cost estimate may be performed by either internal agency staff, by the architect/engineer, or by another independent party hired by the public agency.  Some agencies make it a practice, especially on small projects, to obtain the estimate from contractors.  There are a couple of issues associated with this practice. First, depending on the circumstances, it may give one contractor a competitive advantage over others since they would have advance information about the project.  Second, an estimate from a contractor does not really represent an independent estimate.  The practice of obtaining the estimate from contractors should be used with caution, especially if federal funds are involved.

What should the estimate be based on?  An estimate should break down the project into its component parts of labor, materials, equipment, overhead, and profit, evaluating likely costs in each of these areas.  The size of the public works project will help dictate the level of detail and specificity that should be the basis of the estimate.  For example, a large public works project should be accompanied by a fairly detailed cost estimate based on estimates of current prices in the market.  On the other hand, a small public works project estimate might be based on historical prices the agency has paid for similar services.

Document the estimate:  It is important that the estimate be developed, reviewed, approved, and maintained as part of the project file.  Clearly documenting the estimate is an important step of demonstrating in an audit that the estimate was performed.

How is the estimate used?  The cost estimate is a matter of public record and is subject to public disclosure upon request.  Some agencies publish either the estimate or a range of the estimate in the Invitation to Bid or bidding documents.  Click here to see the results of a survey of agency practices on disclosing estimates that I conducted in the fall of 2011.  In Washington state, the estimate is important in determining at least two things:
  • Subcontractors List:  Whether the Subcontractors List required by RCW 39.30.060 should be submitted with the bid.  The Subcontractors List applies to public works projects estimated to cost $1 million or more. 
  • Small Works Roster:  Whether bids may be solicited through the Small Works Roster, which may be used only for projects estimated to cost $300,000 or less.
Work performed by public employees:  RCW 39.04.020 states that whenever an agency determines that a public work be "executed by any means or method other than by contract or by a small works roster process" (which I think means work by public agency employees), and the estimate is over $25,000, the agency must publish a notice of the work to be done (along with the estimate) in a legal newspaper at least fifteen days before the work begins.  Some types of agencies have restrictions in state law regarding how much work they can perform with their own forces.  Here's the language from RCW 39.04.020:
If the state or such municipality shall determine that it is necessary or advisable that such work shall be executed by any means or method other than by contract or by a small works roster process, and it shall appear by such estimate that the probable cost of executing such work will exceed the sum of twenty-five thousand dollars, then the state or such municipality shall at least fifteen days before beginning work cause such estimate, together with a description of the work, to be published at least once in a legal newspaper of general circulation published in or as near as possible to that part of the county in which such work is to be done.
Emergencies:  RCW 39.04.020 further notes that for an emergency public works project, the public agency is required to publish a description and estimate "within seven days after the commencement of the work."  This would be published in  your official newspaper or newspaper of general circulation in your area.  Some may consider that publication on your agency's website would also meet the requirement for publication.  Here's the language from RCW 39.04.020:
When any emergency shall require the immediate execution of such public work, upon a finding of the existence of such emergency by the authority having power to direct such public work to be done and duly entered of record, publication of description and estimate may be made within seven days after the commencement of the work.
Review your practices:  Review your agency's practices and policies regarding use of estimates, and discuss any concerns or outstanding issues with your attorney.

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

Monday, November 5, 2012

Don't Forget to Vote!

"Nobody will ever deprive the American people of the right to vote except the American people themselves - and the only way they could do this is by not voting."

Franklin D. Roosevelt

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

Sunday, November 4, 2012

Contract Administration

Eileen Youens
Eileen Youens is a Texas-based attorney and public procurement consultant.  I've communicated with Eileen over the years and had the chance to meet her when I was in Texas last year providing consulting advice for a client.  

Eileen has written a blog posting entitled "Contract Management in a Nutshell." 

It's a good piece that makes the case for why it's important to actually follow through and implement the terms of the contract - to make sure you get what you've contracted for.

Click here to read Eileen's blog from October 12, 2012.

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