Sunday, November 24, 2013

Best Wishes for a Wonderful Thanksgiving!

Many of us will be taking time off from work this week as we gather with family and friends for a time to remember the many gifts and blessings we have to be thankful for.  Thanksgiving is a good time to pause and reflect.  I will continue with blog postings next week. 

President Cleveland's 1886 Proclamation:  Here's the Thanksgiving Day Proclamation from 1886 from President Grover Cleveland:
Grover Cleveland
Tradition of Thanksgiving:  It has long been the custom of the people of the United States, on a day in each year especially set apart  for that purpose by their Chief Executive, to acknowledge the goodness and mercy of God and to invoke His continued care and protection. In observance of such custom I, Grover Cleveland, President of the United States, do hereby designate and set apart Thursday, the 25th of November, instant, to be observed and kept as a day of thanksgiving and prayer.

Pause, Worship, Give Thanks:  On that day let all our people forego their accustomed employments and assemble in their usual places of worship to give thanks to the Ruler of the Universe for our continued enjoyment of the blessings of a free government, for a renewal of business prosperity throughout our land, for the return which has rewarded the labor of those who till the soil, and for our progress as a people in all that makes a nation great.  

Grateful Hearts and Helping Those Who Suffer:  And while we contemplate the infinite power of God in earthquake, flood, and storm let the grateful hearts of those who have been shielded from harm through His mercy be turned in sympathy and kindness toward those who have suffered through His visitations.

Remembering the Poor and Needy:  Let us also in the midst of our thanksgiving remember the poor and needy with cheerful gifts and alms so that our service may by deeds of charity be made acceptable in the sight of the Lord.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Wednesday, November 20, 2013

How to Invite (or Avoid) an Audit Finding

It's really very simple.  If you receive any federal funding for any project (construction, consulting, services, goods and supplies), it comes with strings. 

Debarment and suspension:  One of the most common audit findings issued by the Washington State Auditor's Office is against public agencies who fail to check and document that companies they have contracted with are not on the federal government's debarment and suspension list.  

Recent audit findings:  Here's a list of just some of the recent audit findings issued for failure to ensure compliance with the federal debarment and suspension requirements:
What's the requirement?  According to the State Auditor's Office, "Federal grant regulations prohibit recipients from contracting with or making subawards to parties suspended or debarred from doing business with the federal government.  For vendor contracts of $25,000 or more and all subawards, the [agency] must ensure the vendor or subrecipient is not suspended or debarred." 

Practical tips:
  • Check grant terms and comply:  If you receive federal funding, designate an individual responsible for compliance with the grant term, one of which, of course, is to check the federal debarment and suspension status of firms.
  • Document compliance:  Document by printing out from the federal website ( that the firms are not debarred or suspended by the federal government.  Click here for a previous blog posting about how to document compliance.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Tuesday, November 19, 2013

Do Your Contracts Address Subcontractor Responsibility Criteria and Verification?

Whether you are a public agency, contractor, or subcontractor doing public works construction in the State of Washington, you should review your contracts to ensure they address the subcontractor responsibility requirements of RCW 39.06.020.  Here's what that law states:
A public works contractor must verify responsibility criteria for each first tier subcontractor, and a subcontractor of any tier that hires other subcontractors must verify responsibility criteria for each of its subcontractors. Verification shall include that each subcontractor, at the time of subcontract execution, meets the responsibility criteria listed in RCW 39.04.350(1) and possesses an electrical contractor license, if required by chapter 19.28 RCW, or an elevator contractor license, if required by chapter 70.87 RCW. This verification requirement, as well as the responsibility criteria, must be included in every public works contract and subcontract of every tier. (emphasis added)
Action steps:  
  • Public agencies:  Do your contracts address subcontractor responsibility criteria and the verification process?
  • Contractors and subcontractors:  Do your contracts address subcontractor responsibility criteria and the verification process?
  • CPARB language:  The Capital Projects Advisory Review Board (CPARB) has adopted Suggested Guidelines for Bidder Responsibility that includes suggested language on this issue for public works contracts for agencies and contractors.  Click here for CPARB's website where you can view the Guidelines.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Monday, November 18, 2013

New Internet Domain Name Extension for Construction Industry

Effective March 17, 2014, contractors, designers, and others in the construction industry will be able to use the newly created website domain extension of dot "build" that will join the list of commonly used extensions such as com, net, and org., a registrar of domain names has opened up a pre-registration process for obtaining the dot "build" extensions.

Competition for new domain names:  There is likely to be intense competition for this new digital real estate as companies in the construction industry brand their business with a domain name that corresponds more to the name of the business.  Increasingly, it is becoming more and more challenging to buy dot com domain names that fit the business and are easy to remember.  The opening of dot "build" and other specialty domain names will expand the landscape of available and relevant domain names.

More information:  For more information about dot "build" as an extension, click on one of the links below:

Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Sunday, November 17, 2013

Job Openings: 2 Buyer Positions

King County, Washington
  • Position:  Buyer (2 positions)
  • Location:  Seattle, Washington
  • Closing Date:  November 28, 2013 at 4:30 p.m. Pacific Time
  • Salary:  $28.80 to $36.50 hourly
  • Job Summary: These buyer positions will be on the Goods and Services team and will be responsible for sourcing contracts for the use of our agencies with solicitations and cooperative procurements while ensuring great pricing and terms.  One of the buyer positions may be assigned to the P-Card team and may be responsible for supporting our P-Card customers, increasing contract usage, conducting spend analysis, and assisting with training and auditing.  Both positions will interact closely with agency staff throughout King County, and work with vendors and contractors to ensure that the county business is conducted openly, inclusively, and provides the best value.
  • For More Information and to Apply:  Click here.
Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC

Wednesday, November 13, 2013

Why Bidders Are Never Non-Responsive

Why are bidders never non-responsive?  It's somewhat of a trick question, but it illustrates an important point. 

Responsiveness vs. Responsibility:  Responsiveness in public bidding always relates to a bid, while responsibility relates to a bidder.  To be responsive, a bid must be in compliance with the requirements of the bid documents.  To be responsible, a bidder must be capable and qualified to perform the work.  In other words, a bidder is never responsive or non-responsive.  It's their bid that is either responsive or non-responsive. 

Responsiveness questions:  Here are some of the common questions that should be asked about whether a bid is responsive and in compliance with all of the requirements of the bid documents, or whether a bid is non-responsive:
  • Bid submission location:  Was the bid submitted at the correct location identified in the bid documents?
  • Timeliness of bid submission:  Was the bid submitted prior to the deadline established in the bid documents?
  • Signed bid form:  Was the bid form signed?
  • Bid guaranty:  Was a bid guaranty or bid deposit (bid bond, cashier's check, certified check, cash) in the appropriate amount submitted with the bid?
  • Bid prices:  Does the bid include a bid price for all items identified on the bid form?
  • Bid form blanks:  Were all blanks on the bid form filled out completely?
  • Addenda:  Were all addenda acknowledged on the bid form?
  • Bid exclusions:  Did the bid include any exclusions or conditions different from the requirements of the bid documents?
Material vs. Immaterial Irregularities:  Should all bids with irregularities automatically be rejected as non-responsive?  Not necessarily.  There's a difference in the type of bid irregularities.  Some are material and others are immaterial.  In other words, a material irregularity in a bid is one that is significant and gives a competitive advantage or benefit to one bidder not enjoyed by other bidders.  Material irregularities in a bid should result in the bid being rejected as non-responsive and not considered further.  On the other hand, an immaterial irregularity in a bid does not give one bidder a competitive advantage or benefit not enjoyed by other bidders.  A bid with an immaterial irregularity may be accepted as responsive, or at the discretion of the public agency, may be rejected as non-responsive.

Is the bidder responsible?  While responsiveness relates to whether the bid complied with the requirements of the bid documents, responsibility assesses whether the bidder is capable and qualified to perform the work.  

Different laws on responsibility:  Laws differ regarding the amount of discretion a public agency may have in determining that the bidder with a low responsive bid is or is not a responsible bidder.  There is a spectrum of authority for public agencies in establishing bidder responsibility:
  • Significant discretion:  Some public agencies have broad discretion and judgment in making the determination of responsibility
  • Limited discretion:  Some public agencies permit a bidder responsibility analysis within certain bounds.  For example, in the State of Washington, all bidders on public construction projects must meet a half-dozen mandatory bidder responsibility criteria before being awarded a project.  In addition, agencies in Washington are permitted to establish additional relevant bidder responsibility criteria on a project-by-project basis to be used in making a responsibility analysis.  RCW 39.04.350 governs bidder responsibility in the State of Washington. 

  • Almost no discretion:  Some public agencies must almost always award to the bidder with the low responsive bid, regardless of capability or past performance concerns. 
Check your language:  I often see language in bid documents that notes the intent of a public agency to award the project to the "lowest responsive and responsible bidder."  This type of language blurs the important distinction between responsiveness and responsibility.  Instead, bid document language should reflect that the agency will award to the "responsible bidder with the lowest responsive bid," or something similar. 

Case by case:  Evaluating whether a bid is responsive and whether a bidder is responsible are determined on a case by case basis, dependent on the specific facts and the language of the bid documents.  It's important to involve the public agency's attorney in making these determinations, and in assessing how defensible a particular position is to a protest or lawsuit.  

The question:  "Why are bidders never non-responsive?"  Bidders are never non-responsive, even though their bid may be non-responsive.  A bidder, however, may be determined to not be a responsible bidder, making them ineligible to be awarded a project. 
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Tuesday, November 12, 2013

The Problem With Non-Competitive Unit Prices on Bid Forms

Some public agencies request unit prices on bid forms in order to establish these prices up front for potential change order work that may be necessary during construction. 

Unit prices not part of award evaluation:  Often these unit prices are not factored into the evaluation of determining the low bid amount, and are not included as part of the bid award amount.  Public agencies who follow this practice may end up spending more money on change order work.  In other words, if the unit prices are not part of the bid evaluation process and are not awarded, bidders have very little motivation to provide competitive unit prices, since they know that the unit prices they bid will not impact whether they are the low bidder. 

Options for obtaining competitive unit prices:  There are at least four theoretical options available for how to obtain unit prices that are not part of the bid award amount:
  • Unit price not part of evaluation process:  As noted above, an agency may request a unit price for potential change order work on the bid form.  The risk is that this amount may be much higher than the cost of the work or that could be obtained through a competitive process.  This approach is not recommended.
  • Unit price requested, subject to negotiation:  This option is similar to the first option, but the agency adds language to the bid form noting that the agency reserves the right to reject unit prices included on the bid form and to negotiate an appropriate cost when change order work is needed.  This additional language mitigates against the most serious concern of non-competitive unit prices.
  • Unit price with estimated quantities:  In this approach, the basis for evaluating and determining the low bidder would add the base bid to the extended amounts for unit price work (including estimated quantities on the bid form and requiring bidders to submit a unit price and extended amount).  However, the agency would only award the base bid (not the unit price extensions), but this process makes the unit prices competitive.  There are disadvantages to this approach that include possible unbalancing of bids by contractors.
  • Negotiate unit prices for change order work:  Under this option, a public agency would not request any unit prices not part of the award on the bid form.  Instead, when change order work arises during construction, the agency would negotiate the cost of the work with the contractor, in accordance with the provisions of the contract.  Typically, change order work is priced based on lump sum or time and materials (if no unit prices are included on the bid form).
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Thursday, November 7, 2013

Job Opening: Purchasing and Contracts Manager

City of Lynnwood
  • Position:  Manager - Purchasing and Contracts
  • Location:  Lynnwood, Washington
  • Closing Date:  November 13, 2013 at 11:59 p.m. Pacific Time
  • Salary:  $85,086 to $107,678 Annually
  • Job Summary:  This position is responsible for planning, organizing and managing centralized purchasing, contract and administrative functions for the City, providing services and oversight for all City departments.  The manager also develops citywide policies and procedures, as well as enforcement tools and controls.  Functions include management of: City bidding, contracting and purchasing; the City surplus program, mailroom, archives and records, copy center and other services.  Work is performed with considerable latitude for independent judgment, actions and decisions.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Job Opening: Senior Procurement Specialist

City of Vancouver, Washington 
  • Position:  Senior Procurement Specialist
  • Location:  Vancouver, Washington
  • Closing Date:  Friday, November 29, 2013 at 11:59 p.m., Pacific Time
  • Salary:  $34,020 to $64,152 Annually
  • Job Summary:  The person in this position will provide procurement services to City departments by developing and administering contracts, procuring construction services, public works, professional services, materials, supplies, commodities, equipment, and other services.  This position will be responsible for developing and implementing procurement training, strategies to increase contractor participation, and procurement process improvements. This is a full time, regular, exempt position.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Wednesday, November 6, 2013

When is a Change Order Permitted vs. Bidding the Work Separately?

Under what circumstances may a public agency issue a change order to a public construction project, versus when must additional work an agency desires to add to a project be separately bid and awarded?

It's an important question.  The answer, however, isn't always clear. Just like the skies of the Pacific Northwest, some things are simply gray.

Audit finding:  In the State of Washington, the State Auditor's Office regularly issues audit findings against agencies who have issued change orders for work that was "not included in the awarded bid specifications."  The Auditor's Office recently issued an audit finding against the Orcas Island Fire Department for adding $56,000 of work to a $426,562 contract for construction of a new fire station.  The audit report noted that the work included in the change orders represented "separate projects and appropriate bidding procedures should have been followed."  Unfortunately, the audit report does not identify the nature of the change order work that the auditor deemed inappropriate.

All change orders represent work not bid  The audit report makes the following statement: "Change orders are only allowable if the additional work is within the bid upon scope of the project."  By their very nature, all change orders include work that are not part of the "bid upon scope of the project."  That's the reason why a change order is necessary.  The audit report statement that "change orders are only allowable" under certain circumstances represents an opinion that is not specifically supported by any state law. 

Spectrum of acceptable actions:  Clearly, there are some change orders that are outside the original intent and scope of a project that should be bid as separate projects.  But there are also other change orders that may be outside the original intent of the project where it makes more sense to execute a change order.  Here are some reasons why it isn't always in the public's interests to separately bid all changed work:
  • Mobilization costs:  Adding work may be less expensive due to reduced contractor mobilization costs.
  • Safety issues:  There may be safety concerns associated with having more than one contractor on the project site.
  • Accountability:  With one contractor, it is easier to identify what party is responsible for coordination and appropriate performance and execution of the work.  
  • Contract documents are never complete:  No set of drawings and specifications that are bid is ever 100% complete.  It's simply not possible or cost effective to develop such documents.  The very nature of the construction process is that there will be unexpected conditions that arise, and changes and additions to the work that are necessary.
Ensuring competitive costs on change order work:  One of the criticisms of auditors with change order work is that there is an increased risk for a public agency of not receiving "the best price possible."  Just as public agencies are frequently required by laws and regulations to develop a cost estimate for each project (federally funded projects require this, and RCW 39.04.020 requires it in Washington state), a cost estimate can and should be developed for change order work.  Public agencies should also require from contractors a breakdown of change order costs with backup documentation that can be compared with the agency's estimate.  

Problems with low bidders:  Bidding is not the only method to determine the best price possible, and, in fact, bidding comes with its own host of challenges as evidenced by the experience of so many agencies of the problems that often come from the low bidder.  While a bidder may be low, their bid may be too low and an agency may end up either paying more to administer the project, deal with delays, and put up with inadequate performance. 
The question:  Change orders are a fact of life for construction projects, whether it is for governmental, commercial, industrial, or residential construction.  When is a change order permitted versus when must additional work be bid separately?  The answer is complicated and depends on the specific circumstances.  Agencies in Washington state, however, should be aware of the conservative position that the State Auditor's Office routinely takes on change orders and act appropriately.

Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Tuesday, November 5, 2013

Fraud Alert: Scam Seeks Contractor Bank Account Numbers

Contractors and public agencies should be aware of a scam that asks contractors for their bank account information. 

Contents of Letter:  The scammers fax a letter to a contractor on U.S. Department of Transportation letterhead, that has the contractor's name and address on the letter.  Here's the content of the letter:

Our records show that you are currently registered as a prospective contractor for procurements issued by the U.S. Department of Transportation.  However after reviewing your record we have noticed that you have not submitted your financial information release form. 

Your financial institution's privacy policy may not allow it to release your financial information even to government institutions without your consent; therefore we must have such form on file before we can move on with any procurement decisions. 

In September 2013, the procurement plan for the fourth quarter of 2013 will be finalized.  To be eligible for procurement with the U.S. Department of Transportation, you must submit the abovementioned form to us by fax at 202-318-6224. 

Please make sure your fax is preceded by a cover page so we may correctly identify your company.

Signature on letter:  The copy of this scam letter that I've seen was signed by "Julie Weynel, Senior Procurement Officer" and was dated September 20, 2013.

Form to complete:  The form attached with the letter includes the contractor's name and DUNS number.  It the requests the following information:

  • EIN
  • Bank name
  • Branch phone
  • Branch fax:
  • Operating account number
Before the blanks on the form for the "signing officer" from the contractor to sign the document, there is the following statement: "We authorize Department of Transportation to obtain financial information on our accounts held at your bank."

USDOT Inspector General:  The U.S. Department of Transportation's Office of Inspector General has issued a "Fraud Letter Warning" for this and similar letters.  USDOT "does not request financial information from prospective contractors wishing to submit a bid proposal or quote."  Click here to read the "Fraud Letter Warning" from USDOT, which also includes the names of other individuals besides "Julie Weynel" who have signed these fraudulent letters.

Action steps: 

  • Pass the word along:  Let contractors and public agencies know about this scam and that contractors should not respond to the letter.
  • Report letters to USDOT:  If you would like to report a fraudulent request for information to USDOT, please contact the Office of Inspector General (OIG) Hotline at or by calling 1 (800) 424-9071.
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

Monday, November 4, 2013

Why Should You Obtain Separate Payment and Performance Bonds

Most public agencies require some form of bond from contractors on public works construction projects.  The bonding company (or surety) issuing the bond stands behind the contractor to guarantee that the contractor will:
  1. Perform the work in accordance with the contract documents, and 
  2. Pay their subcontractors, suppliers, and workers
Separate and combined bonds both available:  Sometimes performance and payment bonds for public works construction projects come in the form of one bond, and sometimes they are obtained as two separate bonds. 
Separate bonds protect agency more:  Separate performance and payment bonds, each for 100% of the contract amount, protect the public agency more, without additional cost to the contractor (or agency).

Which bond is more important?  To understand why separate bonds protect a public agency more than a combined bond, we must first understand the purpose of the performance and payment protections.
  • Public agencies care more about the protections of the performance bond.  In other words, the public agency wants to ensure that a surety is backing the contractor and guaranteeing the successful completion of the project.
  • A payment bond, on the other hand, is for the protection of others: subcontractors, suppliers, and workers.
What's the problem with a combined bond?  While a combined performance and payment bond may seem to be more efficient (one bond instead of two), it is not as effective in protecting public agencies.  In other words, for every claim filed (and paid) against the payment protections of a combined bond, there is correspondingly less money available under the bond to protect the public agency and ensure that the contractor successfully performs the work.  On a project with multiple payment claims, it may be an indicator that there will be performance problems as well.

Why two bonds are better than one:  A public agency's strongest position is to have performance protections from a surety for 100% of the contract amount that does not get reduced by payment claims against a combined bond.  Sureties do not charge contractors more to obtain separate performance and payment bonds, and the separate bonds ensure that the public is better protected.

Separate bonds on FHWA funded projects:  Washington State's Department of Transportation (WSDOT), through their Highways and Local Programs Department, recently approved the use of separate payment and performance bonds for local agencies on FHWA funded projects.  APWA's Division 1 Committee has developed separate sample bond forms that may be used on FHWA funded projects, or projects with other funding.  The separate bond forms are available on the APWA Division 1 Committee's website (

Note:  This blog posting is a repeat of one from October 2, 2012.
Mike Purdy's Public Contracting Blog 
© 2012-2013 by Michael E. Purdy Associates, LLC

Sunday, November 3, 2013

Free Prevailing Wage Training in Vancouver, WA

Prevailing Wage Workshop for Awarding Agencies

Sponsored by:  Department of Labor and Industries and State Auditor's Office

Where:  Vancouver L&I Office, 312 SE Stonemill Dr. Ste. 120 Vancouver WA 98684

Cost:  Free

Date:  November 8, 2013 (1:00 p.m. to 3:30 pm)

Information and registration:  Contact Laura Herman at L&I at herq235@LNI.WA.GOV or at (360) 902-5311
Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC