Avoiding Closed Door Selection of a GC/CM Contractor

GC/CM (General Contractor/Construction Manager) is one of three alternative public works contracting methods authorized in the State of Washington.  It is a form of what is generically known in the industry as Construction Manager at Risk.  Some states refer to it as CM/GC (Idaho and Oregon), or CM at Risk, or CMAR, or CMR.  There are differences in how this form of public works contracting is implemented. 

3 step selection process for GC/CM:  In Washington, the GC/CM is selected based on a combination of their scores for their proposal, their interview (not required by state law but highly recommended), and their price for their Percent Fee and Specified General Conditions costs.  At each stage of this three step process, a public agency may further reduce the number of firms who will move to the next step.  In some states, such as Idaho, price may not be used as part of the selection process for the CM/GC. 

Previous scores must be disclosed at bid opening:  By state law, finalist contractors who are asked to submit their price for the Percent Fee and Specified General Conditions must be told the number of points they have received for the proposal and interview at the bid opening for their prices.  RCW 39.10.360 (4) states (in part) the following: "At the time and place named, these bids must be publicly opened and read and the public body shall make all previous scoring available to the public."  This provision in the law is intended to prevent public agencies from modifying scores for the proposals and interviews in order to have their favored contractor win the most number of points.  The law is intended to ensure that the GC/CM selection process is a fair and transparent process.

Don't disclose scores early:  Some public agencies using the GC/CM process have made a different mistake and that is to publicly disclose the scores for the proposals and interviews to the finalist contractors before bids are due.  This practice enables contractors to determine how low their price must be to win the project.  This may result in a contractor bidding the project so low in order to get the highest number of points that there is not enough money in the project for them to make money, be successful, and complete the project.

Complexities of GC/CM:  GC/CM is a great project delivery tool, but it must be carefully developed and managed by the public agency.  Without being aware of some of these issues and how the different cost categories for GC/CM work, a public agency may be at a significant disadvantage in using this process. 

Presidential History:

• Presidential History Blog:   While I will discontinue writing this Public Contracting Blog on March 5, 2015, you can sign up for a free email subscription to my Presidential History Blog at www.PresidentialHistory.com.  On a case-by-case basis, I will only be accepting limited consulting and training opportunities after March 5, 2015.

• Presidential History News:  Be sure to watch my 6 minute video at www.PresidentialHistory.com in which I report "live" on the election returns for the 1916 presidential election between Woodrow Wilson and Charles Evans Hughes.
  
  
• Twitter and Facebook:  Follow me on Twitter @PresHistory and "Like" my Facebook page at https://www.facebook.com/mikepurdypresidentialhistory.

Mike Purdy's Public Contracting Blog
© 2015 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Seminar: Alternative Project Delivery

Seminar:  Alternative Project Delivery

When:  Friday, March 13, 2015 (all day) 

Where:  Bellevue, WA (Red Lion Inn) 

Agenda:  In the last few years there have been significant changes to the General Contractor/Construction Manager delivery method to include Heavy Civil Construction projects, and to the Design-Build delivery method to include Progressive Design-Build.  This seminar will have presentations from owners, contractors, and consultants on how they select and manager Alternative Project Delivery, and the risks and benefits associated with these delivery methods.

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

Presidential History:

• Presidential History Blog:   While I will discontinue writing this Public Contracting Blog on March 5, 2015, you can sign up for a free email subscription to my Presidential History Blog at www.PresidentialHistory.com.  On a case-by-case basis, I will only be accepting limited consulting and training opportunities after March 5, 2015.

• Presidential History News:  Be sure to watch my 6 minute video at www.PresidentialHistory.com in which I report "live" on the election returns for the 1916 presidential election between Woodrow Wilson and Charles Evans Hughes.
  
  
• Twitter and Facebook:  Follow me on Twitter @PresHistory and "Like" my Facebook page at https://www.facebook.com/mikepurdypresidentialhistory.

Mike Purdy's Public Contracting Blog
© 2015 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Training: Construction Manager at Risk Projects

An Introduction to Construction Manager at Risk Projects

When:  January 8, 2015 (8:00 am to 5:00 pm) 

Where:  Boise, Idaho (1301 N. Orchard St., Idaho Correctional Industries) 

Instructor:  Mike Purdy 

Cost:  $300 

Background:  In some states, like Idaho, the Construction Manager at Risk process is called CM/GC (Construction Manager/General Contractor).  In other states, it is referred to as GC/CM.  And in still others, it is called Construction Manager at Risk, CM at Risk, CMR, CMAR, or other terms.  This training will focus on best practices for Construction Manager at Risk projects, and examine the provisions of a new Idaho law that actually has very few requirements associated with implementation of the process.  Effective July 1, 2014, public agencies in Idaho are authorized, by a revision to Title 54 Chapter 45, to use the CM/GC project delivery method for public works construction projects. 

Sponsored by:  Idaho Public Purchasing Association

Registration:  Click here.  Must register prior to January 7.

Questions and more information:  Contact Bob Perkins at bperkins@adaweb.net.

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

Applicants Sought for Washington's Project Review Committee

The Capital Projects Advisory Review Board (CPARB) is seeking letters of interest from individuals knowledgeable in the use of GC/CM and Design-Build to serve a 3-year term on its Project Review Committee (PRC). 

Open seats:  The following open seats will be filled by CPARB at its meeting on November 13, 2014:

• 2 Owner - Higher Education
• 1 Owner - School Districts
• 1 Owner - Cities
• 1 Owner - Counties
• 1 Design Industry - Engineer
• 1 Construction Manager
• 2 Specialty Subcontractor
• 2 Minority/Women Owned Business

Function of the PRC:  The Project Review Committee reviews applications from public agencies in Washington state interested in using either GC/CM or Design-Build for specific projects.  The PRC also certifies experienced public agencies, granting them authority to use these alternative project delivery methods without seeking PRC approval for each project. 

PRC meetings:  The PRC meets as often as bi-monthly to review project applications and hear applicant public agencies present their reasons for wanting to use GC/CM or Design-Build. 

To apply:  Individuals interested in serving on the PRC should submit a short letter (that will be posted on CPARB's website) by 5:00 pm on November 1, 2014 to Danelle Bessett at danelle.bessett@des.wa.gov.  The letter should include the following information:

• Your name, title, and company or public agency name
• Work address, email address, and best contact phone number
• Short paragraph which highlights your skills, background or special knowledge for the PRC
• Three references with contact information

Additional information:

• CPARB notice recruiting PRC members

• Project Review Committee website

• RCW 39.10.240 
• RCW 39.10.250 
• RCW 39.10.260
• RCW 39.10.270
• RCW 39.10.280
• RCW 39.10.290
  

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

New GC/CM Wastewater Treatment Facility Dedicated

On June 24, 2014, the City of Bellingham (WA) officially dedicated its newly expanded wastewater treatment facility at Post Point.  

GC/CM:  The $50 million project was accomplished through the use of the General Contractor/Construction Manager (GC/CM) project delivery method, a form of Construction Manager at Risk that many states permit on public projects.

My advisory role:  As I have done with many projects, I was the City's advisor on GC/CM related issues, including assisting them with obtaining approval to use the process, contractor selection, negotiation of costs with the contractor, and review of changes and pay applications.  I also provided training to the City and the contractor on some of the implementation issues of GC/CM related to Washington's state law (RCW 39.10).

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

2 Days of GC/CM Training

2 Days of Training on GC/CM (General Contractor/Construction Manager)

GC/CM is one of three alternative public works contracting procedures authorized by Washington State law (RCW 39.10).  The generic name for this method of contracting, and as it is known elsewhere in the country, is Construction Manager at Risk.

Who should attend?  If you represent a public agency and you are exploring whether to deliver an upcoming project through GC/CM, attendance at the training will be very helpful for you.  Likewise, if you represent a contractor or subcontractor and are interested in doing work for agencies with GC/CM projects, understanding how it works is very important. 

Structure of the training:  The training is a good overview of the GC/CM process and some of the issues involved in implementing it.  There will be presentations by industry experts, hands-on class exercises, and plenty of time for questions and answers with a panel.  The training will also explore the recently approved legislation that establishes different requirements for heavy civil construction projects.

When:  June 19 and 20, 2013 (8:00 a.m. to 5:00 p.m.)

Where:  Seattle, Washington (AGC Building, 1200 Westlake Ave. N.)

Cost:  $350

Sponsored by:  AGC Education Foundation, University of Washington, and Mechanical Contractors Association of Western Washington

Information and Registration:  Click here.

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

3 Upcoming Training Opportunities (Apprenticeship, Public Procurement, and BIM)

1.  Benefits of Apprenticeship for Contractors

When:  February 18, 2014 (3:00 p.m. to 5:00 p.m.) 

Where:  Everett, WA (Snohomish County Admin East Building, 3000 Rockefeller Ave)

Cost:  Free

Agenda: Informational session for contractors to learn about the benefits of apprenticeships offered through various state approved apprenticeship training programs including NW Laborers, NW Washington Electrical Industry JATC, and Construction Industry Training Council (CITC), and how apprentices through these programs can meet apprenticeship requirements for Snohomish County public works construction projects. In addition to representatives of these three programs, a representative from the Department of Lab or and Industries will also speak.

Sponsored by:  Snohomish County 

Information and registration:  Contact Jennifer Koontz at (425) 388-3344 or by email at jennifer.koontz@snoco.org.

*********************************************

2.  Introduction to Public Procurement

When:  March 5 - 7 2014 (8:00 a.m. to 5:00 p.m.) 

Where:  Everett, WA (Community Transit, 2312 West Casino Road) 

Cost:  

• $660 for NIGP members
• $860 for non-NIGP members 

Agenda:  

• Day 1
• Pre-test
• History and Value
• Private and Public Purchasing Organizations
• Differences
• Similarities
• Purchasing Cycle

• Day 2
• Legal Issues
• Ethics/Professionalism
• Contract Administration
• Organizational Structure
• Roles
• Centralized vs. Decentralized

• Day 3
• Planning
• Specifications
• Market Conditions
• Socio-Economic Factors
• Technology
• Federal
• Post-Test 

Sponsored by:  NIGP, Washington State Chapter 

Information and registration:  Click here. 

********************************************* 

 3.  Building Information Modeling (BIM): New Technology in Construction

When:  March 26, 2014 (1:00 p.m. to 5:00 p.m.) 

Where:  Seattle, WA (City University, 521 Wall Street) 

Cost:  

• $295
• $245 for Government Employees
• Other rates also available 

Agenda:  

• Introduction: Why BIM - Why Now? (Brendan J. Peters, Perkins Coie LLP)

• The Past and Future of BIM (Dennis Neeley, Neeley Consulting)

• The Legal Side of BIM (Brendan J. Peters, Perkins Coie LLP)

• Managing BIM and the BIM Execution Plan (Christopher Hubbard, Quarry Group)

• BIM from the Owner's Contractor's and Design Professional's Perspective (Andrew L. Greene, Perkins Coie LLP; David de Yarza, BNBuilders; James Hansen, Bethel School District; Jason Limp, BNBuilders, Jay Martin, Miller Hull)

• BIM Coordination and Integrated Project Delivery (IPD) (Tim Luke, Basepin; Jim Stoner, Hainline & Associates)

• BIM and Dispute Resolution (Christopher Nutter, Navigant Consulting) 

Sponsored by:  The Seminar Group 

Information and registration:  Click here.

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

More Public Contracting Bills Introduced in Washington Legislature

In addition to the bills I commented on in my previous blog from January 21, 2014, the following additional bills impacting public contracting in the State of Washington have been introduced to the Legislature:

Exempt Proposals from Public Records Disclosure:  A bill (House Bill 2578) introduced to the Washington State Legislature would exempt from public records disclosure the proposals submitted by contractors for alternative public works delivery methods (Design-Build, GC/CM, and Job Order Contracting) and related evaluation documents until after a contract is executed or the selection process is terminated. 

Expand Prevailing Wages to Public-Private Partnerships:  Substitute House Bill 1025S would create a new definition of a "subsidized public works" project and would require that prevailing wages be paid on such projects.  Similar bills have been introduced in past years, but have not been successful.  Adoption of this bill would have the impact of limiting the number of public-private partnership projects constructed.  See my previous blog on legislation introduced in earlier years. 

Expand Apprenticeship Utilization Requirements:  House Bill 2526 would establish penalties for contractors failing to comply with the apprenticeship utilization requirements of RCW 39.04.320 for public works projects of the State Department of Enterprise Services, the State Department of Transportation, institutions of higher education, and all school districts.  The bill would also significantly expand requirements for use of apprentices on all public works projects of the state and all municipalities.  Here is a summary of the provisions of this bill:

• Debarment:  HB 2526 would add to the list of reasons for contractor debarment the failure of the contractor to comply with the apprenticeship utilization percentages required by RCW 39.04.320.

• Bidder Responsibility:  HB 2526 would also add to the list of mandatory bidder responsibility criteria in RCW 39.04.350 the failure of the contractor to meet apprenticeship percentage utilization requirements under RCW 39.04.320.

• State Monitoring of Compliance:  The State Department of Enterprise Services would be required to maintain on its website a list of contractors that failed to meet apprenticeship percentage utilization requirements on public works projects.

• Bid Preference for Contractors with Apprenticeship Programs: HB 2526 would provide a 5% bid preference to be used in bid evaluation for contractors with a registered apprenticeship training program approved by the Department of Labor and Industries for trades to be used on the public works project.

• Expand Apprenticeship Utilization Requirements for all Public Agencies: HB 2526 would require that "the bidder must be a party to an apprenticeship agreement for each trade it is employing that has a registered apprenticeship training program" if the "bidder will employ more than one trade on the public work."  This provision appears to have the impact of requiring apprentice utilization for all municipalities, and not just those agencies named in RCW 39.04.320.

Permit Electronic Public Works Bidding for State Agencies:  Substitute House Bill 1841 would permit state agencies to conduct competitive bidding for public works projects electronically or accept electronic signatures as part of the bidding process.

Permit Fire Districts to Perform Public Works Without Bidding:  House Bill 2266 would permit a fire department or regional fire authority to "use fire service personnel, either employed or volunteer, to perform" public works projects less than $20,000 without obtaining competitive bids.

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

GC/CM Training on February 13-14

2 Days of Training on GC/CM (General Contractor/Construction Manager)

GC/CM is one of three alternative public works contracting procedures authorized by Washington State law (RCW 39.10).  The generic name for this method of contracting, and as it is known elsewhere in the country, is Construction Manager at Risk.

Who should attend?  If you represent a public agency and you are exploring whether to deliver an upcoming project through GC/CM, attendance at the training will be very helpful for you.  Likewise, if you represent a contractor or subcontractor and are interested in doing work for agencies with GC/CM projects, understanding how it works is very important.  Architects and engineers can also benefit from the training in understanding their different role on a GC/CM project.

Structure of the training:  The training is a good overview of the GC/CM process and some of the issues involved in implementing it.  There will be presentations by industry experts, hands-on class exercises, and plenty of time for questions and answers with a panel.  I will be one of the presenters (talking about the complexities of the various cost categories in GC/CM contracting) and will also be on the panel.

When:  February 13-14, 2014 (8:00 a.m. to 5:00 p.m.)

Where:  Seattle, Washington (AGC Building, 1200 Westlake Ave. N.)

Cost:  $350

Capacity:  51 seats available (as of January 12, 2014)

Sponsored by:  AGC Education Foundation, University of Washington, and Mechanical Contractors Association of Western Washington

Information and Registration:  Click here.

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

Proposed Bills Affecting Public Contracting in Washington State

The following bills affecting public contracting have been introduced into the Washington State Legislature this session: 

Allow local agencies to waive prevailing wages:  House Bill 2299 would allow "a county, municipality, or political subdivision of the state" to waive prevailing wage requirements for public works contracts estimated to cost less than $5 million dollars.  The waiver could also apply for public building service maintenance contracts (janitorial, shampooer, window washer, waxer).  In order to opt out of the prevailing wage requirements of Chapter 39.12 RCW, the governing body of the public agency would need to approve such a waiver by a majority vote.  The legislation specifically would permit public agencies to subdivide public works projects in order to come in under the $5 million threshold.  

Require certified payrolls prior to paying contractors:  House Bill 2331 would require a public agency to obtain certified payroll records from the contractor and all subcontractors prior to making any payment to the contractor, and would also require the payrolls prior to final payment and release of retainage to the contractor. 

Relax various prevailing wage requirements:  Senate Bill 6186 would do the following:

• Apprentice use on WSDOT projects:  Reduce apprenticeship percentages required on WSDOT projects from 15% to 13% and increase the threshold of which projects apprenticeship applies to from $2 million to $4 million.

• Electronic surveys:  Require the Department of Labor and Industries to provide contractors with the option of completing prevailing wage surveys electronically.

• On-Site work only:  Restrict the applicability of prevailing wages only to workers "employed directly on the site of work," eliminating the impact of court decisions requiring prevailing wages for off-site prefabrication of work performed specifically for a public works project.

Change methodology for establishing prevailing wages:  The following three bills address how the Department of Labor and Industries should establish the prevailing wage rates:

• Statistical analysis vs. wage surveys:  House Bill 2210 would require the Department of Labor and Industries to use a "stratified random sampling methodology," instead of the "wage surveys" currently conducted to establish prevailing wages.  It would also exempt data collected by Labor and Industries through this process from disclosure under the state's public records laws.

• Survey only non-public works projects:  House Bill 2209 would restrict prevailing wage surveys conducted by the Department of Labor and Industries to only "nonpublic work" projects.  Behind this bill is the assertion that public works projects, on which prevailing wage must already be paid, artificially inflate prevailing wage rates.  The bill would also exempt data collected by Labor and Industries through wage surveys from disclosure under the state's public records laws.

• Use only union wage rates to establish prevailing rates:  House Bill 2527 would require the Department of Labor and Industries to establish prevailing wages based on collective bargaining agreements, instead of through conducting wage surveys.  For trades where there are no collective bargaining agreements, L&I would be required to conduct wage surveys or use "other appropriate methods" to establish the prevailing wage rates.

Civil construction on GC/CM projects:  House Bill 2208 would define a "heavy civil construction project" for GC/CM (General Contractor/Construction Manager) projects and permit the GC/CM to self-perform as a negotiated amount up to 50% of the cost of the work, and to bid on other portions of the work agreed to with the public body, provided that at least 30% of the work is competitively bid.  The current law requires that a GC/CM must bid to self-perform any of the work and such self-performed work is limited to 30% of the construction cost.

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

Subcontractors List Not Required on Alternative Public Works Projects

In Washington state, the Legislature has gone on record declaring that the practice of "bid shopping" is against public policy. 

Bid shopping occurs when a contractor seeks to pressure a subcontractor to lower their price below another price the contractor has already received, since a lower overall price increases the chance of the contractor being the low bidder.

When is the Subcontractors List required?  Due to the different nature of contractor selection and bidding on what are known as alternative public works projects (those not solicited through the traditional or Design-Bid-Build method but through methods authorized in Chapter 39.10 RCW), the subcontractors list requirements of state law do not apply on alternative public works.  

What does state law require?  RCW 39.30.060 requires, for projects estimated to cost $1 million or more, that the prime bidder submit a list of subcontractors (for electrical, plumbing, and HVAC) with the bid (or within an hour of the bid submittal deadline).   Here's the relevant language:

Every invitation to bid on a prime contract that is expected to cost one million dollars or more for the construction, alteration, or repair of any public building or public work of the state or a state agency or municipality as defined under RCW 39.04.010 or an institution of higher education as defined under RCW 28B.10.016 shall require each prime contract bidder to submit as part of the bid, or within one hour after the published bid submittal time, the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for performance of the work of: HVAC (heating, ventilation, and air conditioning); plumbing as described in chapter 18.106 RCW; and electrical as described in chapter 19.28 RCW, or to name itself for the work."

Design-Build:  Under Design-Build, public agencies do not issue an "invitation to bid" as noted in the subcontractor list law cited above, but issue either a Request for Proposals or a Request for Qualifications, in which the Design-Builder is selected based on qualifications and cost or price related factors. Under legislation approved in 2013 by the Washington State Legislature, price may now be negotiated with the chosen Design-Builder once the design has progressed to a point where the price may be determined.  RCW 39.30.060, the subcontractors list law, was written to address Design-Bid-Build projects.  Under Design-Build, subcontractors are generally not even identified at the time a contractor submits their qualifications to the public agency, making submittal of the subcontractors list not possible.

GC/CM:  Like Design-Build, the GC/CM is not selected based on an "invitation to bid," but through a Request for Proposals process.  When the GC/CM is selected, subcontractors have not been identified as RCW 39.10.380 requires that the GC/CM competitively bid all subcontract work after the construction cost has been negotiated.  The subcontractors list law requires the prime contract bidder to submit the list with their bid, but with the GC/CM process, subcontractors submit bids to the GC/CM after the GC/CM has already been selected and has executed a contract with the public agency.

Job Order Contracting:  RCW 39.10.430 (6) is more explicit than the provisions for Design-Build or GC/CM and states that "the requirements of RCW 39.30.060 [subcontractors list] do not apply to requests for proposals for job order contracts."

Legislative changes:  For clarity, chapter 39.10 should be amended to explicitly exempt Design-Build and GC/CM projects from the requirements of RCW 39.30.060.  They are very different project delivery methods and the requirements for the subcontractors list simply do not apply to these methods of selection.

Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Training for Public Agencies on Changes to Alternative Public Works Contracting

RCW 39.10 Since Reauthorization:  During the 2013 legislative session, the Washington State Legislature adopted changes to the alternative public works contracting statutes (Design-Build, GC/CM, and Job Order Contracting), and reauthorized these methods for another eight years.

When:  September 17, 2013 (9:00 a.m. to noon)

Where:  Seattle-Tacoma International Airport (The Conference Center, 17801 International Blvd.)

Cost:  Free.  Attendees must pay for parking.

Instructors:

• Bob Maruska, CPARB Chair; Assistant Director of Engineering Design Services, Port of Seattle

• Ed Kommers, CPARB Vice Chair; Executive Director, Mechanical Contractors Association of Western Washington

• Dan Absher, CPARB Member; President, Absher Construction

• Eric Smith, Member and Past Chair Project Review Committee, Director, Capital Projects, University of Washington

Information and registration:  Click here.  Limited to 200 attendees so sign up early.

Questions:  Contact Bob Marsuska at (206) 787-3146 or by email at maruska.b@portseattle.org.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Obtaining Qualified Contractors on Public Construction Projects

Traditionally, public agencies have awarded public construction projects to the low bidder.  In theory, this ensures that the public pays the lowest possible cost for such work.  However, the low bid doesn't always result in the lowest price at the end of the project, nor does it ensure that the low bidder is capable of performing quality work.

Agencies seek more flexibility in award:  In response to concerns about low bidders not performing well and arguing for change orders that will increase the contract cost, public agencies have increasingly been developing alternative methods for awarding public construction projects.  These alternative methods come with their own set of challenges and may actually cost more money, depending on how the selection process is implemented.

Design-Bid-Build:  The following three approaches, based on contractors bidding a fully designed scope of work, are sometimes used by public agencies for ensuring that the contractor selected is qualified to perform the work:

Prequalification:  Under this scenario, contractors must be prequalified and meet certain criteria before being permitted to bid on a project.  Some public agencies are not authorized to prequalify contractors.  For those that are authorized to prequalify contractors, it is important that the criteria used to evaluate qualifications be clear, objective, and not overly restrictive of the bidding pool of contractors.

Bidder Responsibility:   In many cases, bidder responsibility criteria are the same as the prequalification criteria.  The only difference is that all contractors may bid a project rather than just prequalified contractors.  The low bidder must then demonstrate they meet the bidder responsibility criteria.  Prequalification analysis occurs prior to bidding, while bidder responsibility evaluation occurs after bidding, but prior to award.  Like prequalification, bidder responsibility inserts an element of subjectivity into the award process.

Best Value:  A best value selection process moves away from price as the only basis for identifying the successful contractor and instead begins to looks more like a Request for Proposals process, where various evaluation criteria are identified, including price.  Not all public agencies are authorized to conduct a best value selection process, and the process is often criticized for its subjectivity with the result that the public agency may contract with the firm who does not have the lowest bid.

Alternative Project Delivery Methods:  The following two alternative project delivery methods are gaining in popularity with public agencies.  Unlike the models used under a Design-Bid-Build approach, the design is not complete when the contractor is selected under the following two alternative methods:

Construction Manager at Risk:  This process is known by many different names (CM at Risk, CMAR, GC/CM (General Contractor/Construction Manager), and CM/GC (Construction Manager/General Contractor)).  Not all public agencies are authorized to use this process which involves selection of a contractor early in the design process, through a Request for Proposals process, partially based on qualifications and partially based on limited pricing (fee and general conditions work).  The selected contractor then works with the designer in providing various preconstruction services (cost estimating, scheduling, constructability reviews, value engineering, etc.) before the construction cost is negotiated between the parties when the design is sufficiently completed. 

Design-Build:  Under this project delivery method, the public agency uses a Request for Proposals process to select one firm to both design and build the project, eliminating or reducing conflicts between the designer and contractor.  The price is either part of the selection process (which brings with it many of the problems of the traditional low bid award), or the price is negotiated between the partieis when the design is sufficiently complete.  

Indefinite Delivery/Indefinite Quantity:  Also known as IDIQ, this method of public construction is basically an on-call process, in which undefined work is bid ahead of time and one contractor is selected, sometimes based on price alone and sometimes based on price and qualifications.  There are two major forms that IDIQ public construction contracts take:

Job Order Contracting:  Under Job Order Contracting, a contractor is selected partially based on qualifications and partially based on their markup percentage for serving as the general contractor for undefined work that will be assigned as the needs arise.  Establishing the cost of a specific project is typically based on an agreed upon unit price book.  Nevertheless, the contractor and agency must still negotiate the specific cost of work to ensure that units and quantities used in the estimate are appropriate.  Job Order Contracting is sometimes criticized for being more expensive than the traditional low bid process, but it is a more efficient process for ensuring that work is performed in a timely manner.

On-Call Contracting:  On-call construction contracting differs from Job Order Contracting in the selection process in that specific units of work are bid as part of the selection process (rather than relying upon a unit price book).  While the contractor in Job Order Contracting may be required to subcontract out major portions of the work, under on-call contracting, the contractor often performs all or most of the work themselves.  On-Call contracting is an effective tool for minimizing multiple invitations to bid for what are typically smaller dollar amount projects.  

General comments:

• How much are bidder qualifications worth?  In most of the methods described above, there is some level of subjectivity involved in the selection process as a public agency evaluates and scores bidders based on qualifications and experience.  The result is that the low bidder may not end up being the selected bidder, or the price may be negotiated.  

• Maintaining fairness and transparency:  In selecting contractors based on factors other than the low price, it is important that the process established be fair and transparent, and that the qualifications and proposals of contractors be rated as objectively as possible.  The low bid process was originally established to avoid public agencies showing favoritism to certain contractors.  Public agencies are now recognizing that the low bidder isn't always the best option for the public.  But in expanding the scope of selection methodologies, there is the risk of shifting back into an environment of favoritism to certain contractors.  These alternative tools must be managed carefully and thoughtfully.

• Not all agencies authorized to use all methods:  Not all public agencies are authorized to use some of the selection methods outlined here.  State laws differ.  In addition, if there are federal funds involved with a project, public agencies need to work closely with the federal department granting the money to ensure that the selection process complies with federal regulations.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Choosing the Right Construction Project Delivery Method

Traditionally, public agencies have awarded public works construction projects using what is often referred to as "Design-Bid-Build," in which the award is based on the low responsive bid submitted by a responsible bidder.  

Alternative Project Delivery Methods:  Increasingly, alternative project delivery methods that have been used in the private sector are being used in the public sector.  Most prominent among the alternative methods are Design-Build and Construction Manager at Risk (also known as GC/CM, CM/GC, CMAR, etc.).  Regulations differ from state to state on how these methods work or if they are even authorized.  In Washington State, Design Build and GC/CM (General Contractor/Construction Manager) are authorized and their permitted use described in Chapter 39.10 RCW.

Analysis of 4 Project Delivery Methods:  I recently ran across an excellent ten-page, easy-to-read article from the Fall 2004 issue of Popular Government, based in North Carolina, entitled "Public Construction Contracting: Choosing the Right Project-Delivery Method" by Valerie Rose Riecke.  The article analyzes the following four project delivery methods:

• Design-Bid-Build using separate (or multiple) prime bidding
• Design-Bid-Build using a single prime bidding
• Construction Manager at Risk
• Design-Build

Construction industry goals:  The article presents the findings of a questionnaire distributed to construction industry experts addressing the advantages and disadvantages of each of these four project delivery methods based on the following four construction contracting industry goals:

• Controlling project costs
• Meeting or accelerating the schedule
• Ensuring a quality product
• Decreasing the administrative burden.

Comment:  The article, while dated, does a good job of explaining the perceived advantages and disadvantages of each of the four project delivery methods.  Of the four methods identified, the Design-Bid-Build using separate (or multiple) prime bidding is not used frequently, and rated much lower in most of the questionnaire results. There are only a handful of states that even permit the use of this method.

Previous Blog Post:  On April 25, 2012, I published a blog post summarizing a variety of project delivery methods and the advantages and disadvantages of each.  Click here to read the posting.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

New Public Procurement Laws Approved in 2013 Legislative Session

The Washington State Legislature has approved the following laws impacting public procurement and contracting:

Alternative public works procedures:   Substitute House Bill 1466 reauthorizes the alternative public works contracting procedures of Design-Build, GC/CM, and Job Order Contracting for another eight years.  There were a number of relatively minor changes to the law that I will blog about later.

No retainage on federally funded transportation projects:  Substitute House Bill 1420 fixes a technical problem from previous legislation that was necessary to comply with U.S. Department of Transportation regulations regarding retainage.  While much of the bill represents an improvement, it does have its flaws as I noted in a previous blog entry.

• State agencies protected under payment bond:  Under SHB 1420, no retainage may be withheld on any project funded in whole or in part with federal transportation funds.  Instead, the protection normally afforded by retainage for subcontractors, suppliers, workers, and three state agencies (Revenue, Employment Security, and Labor and Industries) for taxes and premiums must come from the payment bond instead.

• Notify state of acceptance:  Even though no retainage may be withheld on these projects, the public agency must nevertheless notify the Departments of Revenue, Employment Security, and Labor and Industries of final acceptance for such contracts over $35,000.

• Affidavits prior to final acceptance:  For these federally funded transportation projects, the Affidavits of Wages Paid for the contractor and all subcontractors must be submitted prior to final acceptance by the public agency.

• "Shall" to "must":  There are numerous changes throughout the bill modifying "shall" to "must." 

Evaluating the low bid for purchases before taxes: Under Engrossed Substitute Senate Bill 5110, a local government authorized to impose sales and business and occupation taxes may award a contract for supplies, materials, or equipment to a bidder submitting the lowest bid as calculated before the application of local sales and business and occupation taxes.

Water-Sewer Districts - Payment and Performance Bonds:  Senate Bill 5186 will permit Water-Sewer Districts to require that payment and performance bonds on its public works contracts name the water-sewer district as the protected party (obligee) rather than the state.  Prior to passage of this bill, all payment and performance bonds for a Water-Sewer District were technically required to name the state as the obligee.  Up to this point, only cities and towns have had the ability to have themselves and not the state named as the obligee.  While this bill fixes the problem for Water-Sewer Districts, there are a host of other types of public agencies that, by practice, require payment and performance bonds to name the agency as the obligee, notwithstanding the language of RCW 39.08.030.

School Districts - Bid thresholds:  Engrossed Substituted House Bill 1633 increases thresholds for public bidding and performing public works with school district personnel.  The dollar threshold above which bidding for a public work is required will be increased from $50,000 to $100,000.  The dollar threshold below which a school district may use its own staff to perform a public work is increased from $40,000 to $75,000. 

WSDOT - Use of Job Order Contracting:  Under the provisions of  House Bill 1768, the Washington State Department of Transportation (WSDOT) will be added to the list of public agencies authorized to use Job Order Contracting as described in Chapter 39.10 RCW.  With the passage of the bill, WSDOT will be able to use Job Order Contracting for "the administration of building improvement, replacement, and renovation projects only."

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

State Seeks Members for Project Review Committee

The Washington State Capital Projects Advisory Review Board (CPARB) is seeking letters of interest from individuals knowledgeable in the use of Design-Build and GC/CM (General Contractor/Construction Manager) procedures, to serve three-year terms on its Project Review Committee (PRC).

What is the PRC?  The PRC reviews applications of public agencies interested in being approved to use either Design-Build or GC/CM on a public works project.  Click here for more information about the PRC.

PRC openings by industry sector:  

Open Seats:  

• 1 Constructions Trade Labor
• 1 Private Sector

Expiring July 1, 2013:  

• 1 Design Industry - Architect
• 3 General Contractors
• 1 Specialty Subcontractor
• 1 Construction Manager

More information:  

• Click here to read CPARB's recruitment notice.  Letters of interest are due by April 30, 2013.  CPARB will vote on selections at its May 9, 2013 meeting.

• Click here to go to CPARB's website 

• Click here to go to PRC's website

Emergency PRC meeting:  The PRC will meet on April 25, 2013 to consider applications from Snohomish County and Sound Transit.  The next regularly scheduled meeting of the PRC is for May 23, 2013.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Upcoming Training, Networking, and Legislative Events

Bid Schedules and Bid Forms:  Free training sponsored by MRSC and APWA's Contract Administration Subcommittee.  In four locations around Washington state: Renton (May 2, 2013), Yakima (May 9, 2013), Camas (May 16, 2013), Everett (May 23, 2013).  10:00 a.m. to 3:00 p.m.  The workshop will explore the varying methods used by public agencies in developing bid schedules and bid forms, and determining the basis of award on public works construction projects.  Click here for more information and registration.

New Design-Build Legislation in Washington State:  Whether you're a public agency thinking about using Design-Build, or a contractor working in or interested in this market, you'll benefit from this timely update from a panel of experts involved in drafting and negotiating the changes in the Design-Build law - RCW 39.10 (Robynne Parkinson, Eric Smith, Bob Maruska, and Dan Absher).  DBIA Seattle breakfast meeting.  May 8, 2013 from 7:15 a.m. to 9:00 a.m. at the Harbor Club (801 Second Avenue). Cost: $65 for DBIA members; $90 for non-DBIA members.  Click here for more information and registration.
  
Business Opportunities Workshop:  Designed for consultants interested in doing business with Seattle Public Utilities.  Thursday, April 18, 2013, 2:30 p.m. to 5:00 p.m., Seattle Municipal Tower (Rooms 4050/4060).  Information about projects and upcoming consultant contract opportunities to do business with SPU.  Network with other consultants.  More information and questions, contact Vicky Schiantarelli at (206) 684-7821 or by email at vicky.schiantarelli@seattle.gov.  Space is limited.  Click here to register for this free event.

Capital Projects Advisory Review Board (CPARB):  May 9, 2013 from 9:00 a.m. to noon in Olympia.  Open to the public. Click here for more information about CPARB.  The agenda for the meeting will be posted soon.

Blue Book Network Showcase:  Free networking and educational event for the design and construction community.  May 9, 2013 (3:00 p.m. to 7:00 p.m.) in Seattle, Washington at the Bell Harbor International Conference Center.  Click here for more information and registration.

GC/CM Training Workshop:   Whether you're a public agency interested in exploring use of GC/CM or a contractor or designer, this two day training event will outline the basics and best practices of GC/CM (General Contractor/Construction Manager) as authorized by RCW 39.10.  May 30-31, 2013 in Seattle at the AGC Building.  8:00 a.m. to 5:00 p.m.  Cost: $350.  Sponsored by AGC Education Foundation, University of Washington, and Mechanical Contractors Association of Washington.  Click here for more information and registration.

Construction Owners Association of America (COAA) - Washington State Chapter Workshop:   June 5, 2013.  9:00 a.m. to noon at the University of Washington's Waterfront Activities Center (3900 Montlake Blvd.).  Presentations on a) Coyote Ridge LEED Gold Prison Performance Comparison with David Jensen and b) COBie (Construction Operations Building Information Exchange), BIM, GIS and other Digital Adventures at the University of Washington with Eric Smith.  Cost: $30 for COAA members; $35 for non-COAA members.  Click here for more information and to register.

City of Seattle Reverse Vendor Trade Show:  Companies interested in doing business with the City of Seattle can learn about upcoming solicitations, sustainable purchasing, and business-to-business opportunities for Goods and Services, Consulting, and Construction.  July 30, 2013, 10:00 a.m. to 2:00 p.m. at Seattle Center Fisher Pavilion (305 Harrison Street).    Click here for more information and registration.

Institute for Supply Management (ISM) Conference:  98th Annual International Supply Management Conference in Dallas/Ft. Worth, Texas.  April 28-May 1, 2013. Keynote speaker: Condoleezza Rice.  Click here for more information.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Legislation Introduced to Extend Alternative Public Works Contracting Methods

Legislation was introduced into the Washington State Legislature last week that would extend the use of GC/CM (General Contractor/Construction Manager), Design-Build, and Job Order Contracting for eight additional years beyond the June 2013 expiration date.  

CPARB leadership:  The companion House Bill 1466 and Senate Bill 5349 were the result of months of work by the Reauthorization Committee of the Capital Projects Advisory Review Board (CPARB).  

Nature of changes:  The changes proposed have broad consensus support by various industry stakeholders, and are generally clarifications and clean-up of the law. For a summary of some of the key changes, click here.

JLARC report:  The state's Joint Legislative Audit and Review Committee (JLARC) had been scheduled to meet on January 23, 2013 to consider and approve a proposed December 5, 2012 final report from staff, but the meeting was cancelled.  JLARC's review is part of the legislative process for reauthorizing RCW 39.10.

Hearing Scheduled:  A hearing has been scheduled on SB 5349 before the Senate Government Operations Committee for Monday, February 4, 2013 at 10:00 a.m.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

GC/CM Training on January 31-February 1

2 Days of Training on GC/CM (General Contractor/Construction Manager)

GC/CM is one of three alternative public works contracting procedures authorized by Washington State law (RCW 39.10).  The generic name for this method of contracting, and as it is known elsewhere in the country, is Construction Manager at Risk.

Who should attend?  If you represent a public agency and you are exploring whether to deliver an upcoming project through GC/CM, attendance at the training will be very helpful for you.  Likewise, if you represent a contractor or subcontractor and are interested in doing work for agencies with GC/CM projects, understanding how it works is very important.  

Structure of the training:  The training is a good overview of the GC/CM process and some of the issues involved in implementing it.  There will be presentations by industry experts, hands-on class exercises, and plenty of time for questions and answers with a panel.  I will be one of the presenters and will also be on the panel.

When:  January 31 and February 1, 2013 (8:00 a.m. to 5:00 p.m.)

Where:  Seattle, Washington (AGC Building, 1200 Westlake Ave. N.)

Cost:  $350

Capacity:  44 seats available (as of January 5, 2013)

Sponsored by:  AGC Education Foundation, University of Washington, and Mechanical Contractors Association of Western Washington

Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Report Recommends Reauthorization of Alternative Public Works Contracting Laws

JLARC recommendations:  In a December 5, 2012 proposed final report, the staff of the Washington State Joint Legislative Audit and Review Committee (JLARC) has recommended that the three alternative public works contracting methods of Design-Build, General Contractor/Construction Manager (GC/CM), and Job Order Contracting be reauthorized prior to their termination on June 30, 2013.  JLARC will meet in January to vote on adopting the report.

CPARB recommendations:  JLARC's review of RCW 39.10 (alternative public works contracting) was required by the Legislature and their recommendations will be important for the Legislature in considering reauthorization of RCW 39.10.  In addition, the Capital Projects Advisory Review Board (CPARB) made decisions and voted at their meeting of December 13, 2012 on specific language of the proposed reauthorization legislation.  Click here for a markup draft of the RCW 39.10 that CPARB considered along with a number of specific policy issues identified in the comments.  Not all of the items were approved by CPARB.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com