What's Important to the State Auditor

The Washington State Auditor's Office has published a 3-page document entitled "Basics of Bid Law" summarizing public works bid requirements and common mistakes made by public agencies.  It is included as part of the resources in their Local Government Performance Center. 

Strengths and weaknesses:  While the document is fairly general and has some errors and misleading statements, it is nevertheless a helpful window into understanding the issues that the auditor is most concerned about. 

Outline of document:  The following is the high-level outline of the major topics included in the Basics of Bid Law document:

• Plans, specifications and estimated cost
• Competitive bid process
• Small works roster (<$300,000)
• Limited public works projects (<$35,000)
• On-call contracting for public works projects
• Other compliance requirements
  

Basics of Bid Law:  Click here to view the Basics of Bid Law document.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Job Opening: Senior Buyer

City of Tacoma

• Position:  Senior Buyer

• Location:  Tacoma, Washington

• Closing Date:  April 14, 2014 at 5:00 pm Pacific Time

• Salary:  $24.68 to $33.07 Hourly

• Job Summary:   Responsibilities for this position include serving as an expert consultant to assigned departments, recommending effective procurement methods, performing market analysis, conducting competitive solicitation processes, composing and issuing specifications, advertising, tabulating and evaluating bid submittals to determine the lowest and best responsible bidder.  Ensures timely and cost effective procurement of materials, supplies, equipment, and services for the City within the requirements of applicable state law, City of Tacoma ordinances, and department guidelines.

• For More Information and to Apply:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Job Opening: Purchasing Coordinator

Pierce Transit

• Position:  Purchasing Coordinator

• Location:  Lakewood, Washington

• Closing Date:  Open until filled

• Salary:  $58,874 to $72,121 Annually

• Job Summary:   Provides and coordinates purchasing services for agency-wide materials, supplies, equipment, construction, and services.  Determines supply sources, availability, and cost, prepares specifications, negotiates transactions, and assures goods and services meet with prescribed specifications, assists agency staff with information and legal guidelines related to contract administration and compliance, manages the copier, fleet, and credit card program.

• For More Information and to Apply:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

10 Tips for Dealing with a Bid Price Higher than the Project Budget

What options are available to a public agency if the bid prices received for a public works project are significantly higher than the budget available and exceed the estimate for the project?  What can a public agency do after they've rejected these bids?  What are the next steps and options available? 

Options:  The following are actions a public agency may choose to take in moving the project forward:

• Talk with bidders:  Talk with the bidders to assess their understanding of the project and its risks and why their prices were so high.  Use this information to help shape your strategy for re-bidding the project.

• Talk with potential bidders:  Meet with potential bidders who did not bid and find out why they chose not to bid.  Use this information to help shape your strategy for re-bidding the project.

• Evaluate the design:  Working with your architect or engineer, determine whether changes in design for the project are necessary before re-advertising the project.

• Bid allowance:  Assess whether any bid allowance(s) amount should be included on the bid form so you're not asking the contractor to bid on an unknown risk.

• Additive bid items:  Determine if there are any portions of the work that could be split out as additive bid amounts (desirable but not critical bodies of work) so that if prices come in high, you would still have flexibility to only award the base bid. 

• Accuracy of your estimate:  Evaluate the accuracy of your estimate, possibly by hiring an independent cost estimator to review whether the estimate is appropriate. 

• More funding:  Seek additional funding for the project if necessary.

• Recruit bidders:  Actively contact potential bidders encouraging them to bid on the project when it is readvertised, perhaps with changes based on your investigation.

• Pick a good bid deadline date:  Make sure that the project bid deadline doesn't conflict with other work bidding the same day/week for other public agencies or private entities in the same area. 

• Liquidated damages:  Evaluate whether the liquidated damages stated in the bid documents were too high and perhaps caused fewer bidders and/or higher prices.  Consider lowering the liquidated damages amount.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Bill Requiring Certified Payroll Reports Not Approved by Legislature

The Washington State Legislature did not approve a bill (HB 2331) that would have required public agencies to withhold payment to contractors until receipt of weekly certified payroll reports from the contractor and all subcontractors.  It passed the House, but did not come to a vote in the Senate.

Responsibilities and liabilities:  While the bill stated that public agencies would have no liability for the accuracy of the payrolls, testimony by representatives from labor unions in support of the bill indicated an assumption that public agencies would be reviewing the payrolls for accuracy of worker classifications.  The bill is unclear about what the responsibilities and liabilities public agencies would have under the proposed legislation.

Previous blog:  Click here to read my summary of the bill in my blog from February 23, 2014.
 
Senate hearing:  Click here to watch and listen to testimony pro and con on HB 2331 before the Senate Commerce and Labor Committee on February 21, 2014.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Will an Initialed Change on a Bid Form Make a Bid Nonresponsive?

Bidders frequently make last minute changes to their bid prices prior to submitting the bid to a public agency.  They are receiving updated and new prices from subcontractors and suppliers up until minutes or seconds before (and even after) the agency's bid deadline.

Who makes final changes to bid form?  As the bidder's office communicates those changes to their employee at the bid submittal site, that individual must then make appropriate changes to the bid form, often crossing out one number and writing in the revised dollar amount instead.

Common language on who must initial changes:  Often, an agency's Instructions to Bidders will include language similar to the following:

All bids shall be submitted on the Bid Form included in the Bid Documents and must be signed in ink by an authorized representative of the Bidder.  The person signing a Bid must initial each change appearing on the Bid Form.

Signer of bid rarely the one delivering the bid:  Requiring the person who signed the original Bid Form to also initial any changes on the Bid Form can create a logistical challenge for many bidders.  It may result in a protest to a bid if the person delivering the bid (not the signer of the bid) made the last minute corrections and modifications to the Bid Form based on telephone instructions received from the bidder's office.  

Potential solution:  One way to address this situation is to change the language of the bid documents to read as follows:

All bids shall be submitted on the Bid Form included in the Bid Documents and must be signed in ink by an authorized representative of the Bidder.  An authorized representative of the Bidder The person signing a Bid must initial each change appearing on the Bid Form.

Leave it up to the bidder:  This language leaves it up to the bidder to determine who is an authorized representative, and eliminates ambiguity about whether the Bid Form was properly executed, and reduces the potential for a protest based on who initialed the changes.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Bidders Arriving Late to a Mandatory Pre-Bid Meeting

Some public agencies require that attendance at the Pre-Bid Meeting for a public works construction project is mandatory in order to be eligible to submit a bid. 

Why mandatory meeting?  The purpose of requiring a mandatory attendance at a Pre-Bid Meeting is to ensure that the bidders fully understand the project site and can submit an appropriate bid. 

Late arrival at meeting:  If a bidder arrives late (how late is too late?) at a mandatory Pre-Bid Meeting, it negatively impacts their ability to see the entire site and fully understand the project.  Some public agencies will include language similar to the following in either the advertisement and/or Instructions to Bidders:

Bidders arriving more than 10 minutes late will not be admitted to the mandatory Pre-Bid Meeting.

Failure to attend mandatory meeting:  When an agency requires mandatory attendance at a Pre-Bid Meeting, they will not accept a bid from bidders who did not attend the meeting and sign in on the attendance list for the meeting.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Training: Prevailing Wage Law in Washington

Prevailing Wage Law in Washington

When:  Wednesday, April 16, 2014(8:00 a.m. to 4:40 p.m.)

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

Agenda and Instructors:

• Washington State Prevailing Wage on Public Works Act (David J. Soma)

• Plaintiffs' Perspective on Prevailing Wage Claims (Marc Cote)

• Project Labor Agreements (Iam M. Messerle)

• Bid and Contract Documents Regarding Prevailing Wages (William A. Linton)

• Public Owner Remedies for Noncompliance (William A. Linton)

• Employer Compliance Issues and Best Defense Strategies (Judd H. Lees)

Cost:  $369 

Sponsored by: Lorman Education Services 

Information and registration:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Is An Unreasonably Low Bid Non-Responsive?

Is an unreasonably low bid on a public works construction project non-responsive, or is the bidder not responsible, or neither?  

Bid tabulation:  Let's say that low bid came in at $25,000, with the second low bid at $160,000, and the third low bid at $180,000.  The engineer's estimate for the project was $200,000.

Responsiveness:  If the low bidder responded in accordance with all of the requirements of the bid documents, their bid would be responsive.  In other words, did they submit their bid on time, sign the bid form, include the required bid guaranty, etc.? 

Responsibility:  While responsiveness always relates to the bid, responsibility relates to the bidder and whether they are capable and qualified to perform the work.  Different states have different requirements for establishing responsibility.  In Washington, a public agency may include bidder responsibility criteria in the bid documents to evaluate after bid opening whether the low bidder met those relevant criteria and is capable of performing the work.  If no responsibility criteria were included, a very low bid would not be enough to find the bidder not a responsible bidder.  If bidder responsibility criteria were included in the bid documents, as long as the bidder met them, a public agency could not determine that a very low bid price made them not responsible. 

Meet with the bidder:  When faced with an unreasonably low bid, a public agency should meet with the bidder to review their understanding of the scope of work and how they estimated the project.  In the example bid tabulation above, it appears that the bidder didn't include all of the work in its bid.  In meeting with the bidder, the public agency would try to convince the bidder to withdraw their bid, rather than risk almost certain financial losses and a problem project.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

No Authority for Public Works Resident Preference by Local Agencies in Washington

The following question was recently posed to the Municipal Research and Services Center (MRSC) and their answer follows: 

Question:  May the city require that a certain percentage of employees on a public works contract be local residents? 

MRSC Answer:  No. There used to be a state statute, RCW 39.16.005, that required that contractors on public works projects employ a certain percentage of Washington State residents, but it was held to be unconstitutional in Laborer's Local Union No. 74 v. Felton Construction Co., 98 Wn.2d 121 (1982), and was later repealed. MRSC consistently advises that it is beyond the authority of local governments to include similar requirements in their bid specifications. 

See also AGO 61-62 No. 41, which discusses the lack of authority of local jurisdictions to include any kind of local preference in bidding unless specifically authorized by a specific state statute - which does not exist in this case.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Joint Checks to Ensure Subcontractor Payment

Subcontractors and suppliers on public works projects that have not been paid by the contractor may be able to file a claim against Retainage held by the owner (depending on the state), or file a claim against the Payment Bond provided to the owner by the contractor.

Eugene J. Heady

Joint checks:  Another strategy often used when a subcontractor has not been paid is for an owner to issue a joint check to both the contractor and subcontractor.

Article:  Atlanta Attorney Eugene J. Heady (Smith Currie & Hancock) has written an article entitled "Key Elements to an Effective Joint Check Agreement."  While the article is primarily focused on a contractor issuing a joint check to a subcontractor and supplier, many of the concepts in Mr. Heady's article apply for a public agency issuing a joint check to the contractor and subcontractor.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Seminar: Construction Management of Subsurface Risks

Seminar:  Construction Management of Subsurface Risks 

When:  March 21, 2014 (7:30 a.m. to 4:30 p.m.) 

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

Sponsored by:  CMAA - Pacific Northwest Chapter (Construction Management Association of America 

Cost: 

• $195 - General Member
• $225 - General-Non-Member

Agenda:

• Front End Documents to Manage Risk
• Seattle Seawall GC/CM Process
• Community Relations Panel
• Herrenknecht Vertical Shaft Machine on Ballard Siphon
• King County CSO Management of Risk
• Permits on Major Subsurface Projects

Registration and information:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Training: Effective Contract Content

Seminar on Effective Contract Content

When:  Tuesday, March 18, 2014 (8:00 a.m. to 4:30 p.m., Pacific Time) 

Where:  Spokane, Washington (Spokane Public Schools Facilities Conference Center)

Gregory Levinson

Summary:  Many contracts are typically plagued with ambiguities, inconsistencies, and unintended imprecision from unnecessary legalese.  Such mistakes can render contracts confusing, risky, and potentially very costly. 

Speaker:  Gregory Levinson, Attorney, Levinson Law, LLC 

Sponsored by: NAPM-Spokane 

Cost:  $150 includes continental breakfast and lunch) 

Information and registration:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Are Reincarnated Construction Companies Responsible Bidders?

As a public agency, you've had less than satisfactory experiences with a particular contractor that has not performed well and that has left a trail of lawsuits and claims on previous projects.  Perhaps you've included bidder responsibility criteria in your bid documents to help ensure that the contractor will not meet the objective criteria and is not awarded future projects. 

Reincarnated contractor:  But what if the contractor closes down the construction company and the same owner simply re-opens a new construction company?  It's highly likely that you will continue to experience the same problems with the reincarnated company.  Is there anything you can do about this? 

Bidder responsibility criteria:  The Washington State Capital Projects Advisory Review Board (CPARB) has published Suggested Guidelines for Bidder Responsibility that outlines tools for public agencies to use in developing what is known as Supplemental Bidder Responsibility Criteria.  Here are a couple of the generic criteria included in the Guidelines:

• Claims Against Retainage and Bonds:   The Bidder shall not have a record of excessive claims filed against the retainage or payment bonds for public works projects during the previous three years, that demonstrate a lack of effective management by the Bidder of making timely and appropriate payments to its subcontractors, suppliers, and workers, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner.

• Lawsuits:     The Bidder shall not have lawsuits with judgments entered against the Bidder within five years of the bid submittal date that demonstrate a pattern of failing to meet the terms of contracts, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner. 

Responsibility criteria addressing ownership:  The challenge with the responsibility criteria above is that it does not address a company with a poor record that has simply opened up a new company with the same ownership.  Here are some suggested edits to the criteria that may help to address this situation:

• Claims Against Retainage and Bonds:   The Bidder shall not have a record of excessive claims filed against the retainage or payment bonds for public works projects during the previous three years, that demonstrate a lack of effective management by the Bidder of making timely and appropriate payments to its subcontractors, suppliers, and workers, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner.  For the purpose of this criterion, "Bidder" shall include the registered construction company submitting the bid, as well as the owner(s) of the company and any other construction companies the owner(s) may currently or previously have owned.

• Lawsuits:     The Bidder shall not have lawsuits with judgments entered against the Bidder within five years of the bid submittal date that demonstrate a pattern of failing to meet the terms of contracts, unless there are extenuating circumstances and such circumstances are deemed acceptable to the Owner.  For the purpose of this criterion, "Bidder" shall include the registered construction company submitting the bid, as well as the owner(s) of the company and any other construction companies the owner(s) may currently or previously have owned.

Talk with your attorney:  Think strategically about what Supplemental Bidder Responsibility Criteria you include in your bid documents, and talk with your attorney as you develop language to deal with ownership of previous construction companies as part of the criteria.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Seminar: Should Project Owners Ask for More or Less?

Owners and their consultants play a big role in drafting public works contracts.  When feasible, they often prefer to shift project risks to contractors and designers.  But do they sometimes go too far and thereby discourage bids from some of the most qualified firms? 

When:  Wednesday, March 12, 2014 (4:45 p.m. to 7:00 p.m.) 

Where:  Seattle, Washington (Ivar's Salmon House, 401 NE Northlake Way) 

Speakers:  

• Douglas Oles, Attorney, Oles Morrison Rinker & Baker LLP
• Fred Tharp, P.E., WSDOT

Cost:

• $37 (includes dinner)

Sponsored by:  APWA, Washington State Chapter

Information and registration:  Click here. 

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Supply Management Conference in Seattle

Supply Management Conference

When:  Thursday, March 6, 2014 (8:00 a.m. to 6:00 p.m.) 

Where:  Seattle, WA (McCaw Hall at Seattle Center) 

Sessions include:

• The Key to Making Good Decisions: The Care and Feeding of the Brain
• Material Requirements Planning for a Demand Driven World
• What Are the Significant Drivers of Procurement for My Organization Using the Lean Six Sigma Methodology?
• Personal Branding for Success
• Applying the Kraljic Risk-Value Matrix to Contract Design
• How to Negotiate and Win With Almost Everyone
• Supply Management Strategies
• New Economics of Commerce: Evocative Insights That Will Change the Way You Think About Business
• Using ThomasNet.com to Support Supplier Diversity
• The Future of the Dollar in Financing International Trade
• How to Vision Your Way to Career and Personal Success: How to Set Goals and Actually Accomplish Them

Sponsored by: Institute for Supply Management (ISM) - Western Washington 

Cost:

• $375 (ISM-Western Washington members and email subscribers to this blog)
• $475 (non-ISM-Western Washington members - includes free 1 year membership to ISM-WW)

Information and registration:  Click here.

Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com