New Mandatory Public Works Bidder Responsibility Criteria Effective July 23, 2017

The Washington Legislature adopted a new law (Senate Bill 5301) that adds an additional criterion to the list of mandatory bidder responsibility criteria that public agencies must verify and document before awarding any public works project, regardless of cost.  

Effective Date:  The new law became effective on July 23, 2017.  This means that public agencies must ensure that the required sworn statement is obtained prior to award of the public works project. 

Minimum Wage Compliance by Bidder:  The new law establishes a new criterion relating to the contractor's compliance with the state's minimum wage laws.  It also dictates that, prior to award, the contractor must sign a statement that they have not violated the law within a three year period.

• Criterion:  Here's the language from the law: "Within the three-year period immediately preceding the date of the bid solicitation, not have been determined by a final and binding citation and notice of assessment issued by the department of labor and industries or through a civil judgment entered by a court of limited or general jurisdiction to have willfully violated, as defined in RCW 49.48.082, any provision of chapter 49.46, 49.48, or 49.52 RCW."

• Documentation:  Here's the language from the law on what is required for documentation: "Before award of a public works contract, a bidder shall submit to the contracting agency a signed statement in accordance with RCW 9A.72.085 verifying under penalty of perjury that the bidder is in compliance with the responsible bidder criteria requirement of subsection (1)(g) of this section.  A contracting agency may award a contract in reasonable reliance upon such a sworn statement." The reference to subsection (1)(g) refers to the "criterion" paragraph above.

Methods for Verifying Bidder's Compliance:  There are a number of options, some better than others, for how a public agency can obtain the required sworn statement from the bidder whose bid is under consideration by the public agency for award. I recommend use of the first option listed below.

  Include Sworn Statement on Bid Form:  This option is the easiest administrative method and least risky option.  I recommend use of this option.  Under this option, a public agency would include the following statement as part of the Bid Form:  "The undersigned Bidder hereby certifies that, within the three-year period immediately preceding the bid solicitation date for this Project, the bidder is not a “willful” violator, as defined in RCW 49.48.082, of any provision of chapters 49.46, 49.48, or 49.52 RCW, as determined by a final and binding citation and notice of assessment issued by the Department of Labor and Industries or through a civil judgment entered by a court of limited or general jurisdiction."  In addition, the following language would need to be part of the signature block for the Bid Form: "I certify (or declare) under penalty of perjury under the laws of the State of Washington that the foregoing is true and correct."  This statement is necessary to comply with the provisions of the new law that dictates that the sworn statement must be in compliance with RCW 9A.72.085.

  Request Sworn Statement from Low Bidder:  Under this option, after bid opening, the public agency would request the low bidder submit the sworn statement after bid opening.  The Municipal Research and Services Center (MRSC) has developed a sworn statement for this purpose.  Click here to visit MRSC's website where you can click on the link for "model certification form."  This is an additional step for the public agency that can be eliminated by including the sworn statement on the Bid Form (see option above). While I don't recommend this option because it is an additional step, there is nothing inherently wrong with this option.

  Include Sample Sworn Statement in Bid Documents:  Under this option, a public agency would include MRSC's model certification form as a sample in the bid documents.  The public agency would still be required to obtain the signed form from the low bidder prior to award, which represents an additional step like the option immediately above. It could be confusing for bidders whether they are required to submit the sample with the bid or after bid opening.  I do not recommend this option.

  Require Separate Sworn Statement be Submitted with the Bid:  Using MRSC's model certification form, under this option, the bid documents would require that the signed sworn statement be submitted with the bid.  This is not a good option, as it increases the risk that a bidder (the low bidder) will fail to submit the sworn statement with the bid, thereby rendering the entire bid non-responsive and unable to be considered further.  Using best practices for public works bidding, public agencies should limit the number of documents submitted with the bid to the Bid Form, bid guaranty, subcontractors list if the project is estimated to cost $1 million or more, and any documents required by federal or state grant provisions. I strongly recommend that public agencies not use this option. 

Other Mandatory Bidder Responsibility Criteria:  The new law adds compliance with minimum wage laws to the existing list of mandatory bidder responsibility criteria that public agencies must verify and document prior to award of any public works project.  The other criteria may be found in RCW 39.04.350.  Review your agency's practices to ensure that you have a process to verify and document the mandatory bidder responsibility criteria for all public works projects. 

Other New Public Works Laws:  See my blog from April 17, 2017 for a description of five new public works laws that do the following:

• Increases the dollar threshold for when a payment/performance bond may be waived
• Grants subcontractors additional rights to have retainage released early through a retainage bond
• Adds an additional criterion to the list of mandatory bidder responsibility criteria
• Authorizes Public Utility Districts to contract for on-call public works projects
• Authorizes transit agencies (public transportation benefit area authorities) to use Job Order Contracting

Presidential History Blog:  Check out my Presidential History Blog at PresidentialHistory.com and sign up for a free email subscription to it.

 

Mike Purdy's Public Contracting Blog
© 2017 by Michael E. Purdy Associates, LLC
http://PublicContracting.blogspot.com

Using Volunteers on Public Works Projects

In Washington state, RCW 35.21.278 addresses the question of when volunteers from a community service organization may be used on a public works project. 

Do competitive bidding requirements apply?  This state law enables certain types of public agencies to contract with certain community service organizations for certain public works projects without going through a competitive bidding process to select the community service organization.

What public agency types are covered?  The state law gives authority only to the following public agency types:

• County
• City
• Town
• School district
• Metropolitan park district
• Park and recreation district
• Port district
• Park and recreation service area

Other types of public agencies are not covered by this law.

What is a community service organization?  The law states that an authorized public agency may contract with the following types of organizations:

• A chamber of commerce
• A service organization
• A community, youth, or athletic association
• Other similar association located and providing service in the immediate neighborhood

What type of work can be performed?  The law provides that an authorized public agency can contract with an authorized community service organization for the following services:

• Drawing design plans
• Making improvements to a park, school playground, public square, or port habitat site
• Installing equipment or artworks
• Providing maintenance services for a facility or facilities as a community or neighborhood project
• Environmental stewardship project

Can volunteer expenses be paid?  The authorized public agency may reimburse the contracting association its expense.  "The contracting association may use volunteers in the project and provide the volunteers with clothing or tools; meals or refreshments; accident/injury insurance coverage; and reimbursement of their expenses." 

How much can the public agency reimburse for expenses?  "The value of the improvements, artworks, equipment, or maintenance shall have a value at least equal to three times that of the payment to the contracting association."  In other words, if the reimbursable expenses to be paid by the public agency for an improvement was $2,000, the value of the actual improvement would have to be at least $6,000. 

Are there other dollar limitations of how much can be reimbursed?  On an annual basis (not on a per project basis or community service organization basis), an authorized public agency may reimburse all community service organizations only up to a maximum of $25,000, or $2 "per resident within the boundaries of the public entity, whichever is greater."

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 - Lessons Learned from the White House Reconstruction Project

Barely Avoiding Disaster

Lessons Learned from the White House 

Reconstruction Project

During Harry Truman's Presidency

When and Where:

•  April 21, 2015 (3:00 pm to 4:30 pm
• Bell Harbor International Conference Center, Seattle, WA
• Sponsored by Puget Sound Chapter CSI (Construction Specifications Institute)

•  May 7, 2015 (time to be determined)
• Spokane Convention Center, Spokane, WA
• Sponsored by WASBO (Washington Association of School Business Officials)

Speaker:  Mike Purdy 

Description:  The groaning and creaking of the White House that Harry Truman thought were ghosts of previous Presidents haunting the famous residence turned out to be the complete failing of the interior beams and walls of the building that had been rebuilt after it was burned by the British in 1814.  Had action not been taken in the 1950s to gut and rebuild the entire interior of the building, it is likely that it would have collapsed in on itself bringing down the sandstone exterior walls as well.

Rebuilding the Interior of the White House

One would expect that a renovation project of this politically and historically significant home would have been an orderly and well managed project that would be completed on budget and on time.

The opposite was true, and the project was fraught with a host of problems including:

• Political feuding about design and budget
• An arbitrary contractor pre-qualification process that resulted in a low bid that was shockingly low
• Significant delays in the architect producing drawings for the contractor
• Change orders that busted the congressionally authorized budget and required the President to plead for more funds
• Delays in schedule
• Inadequate staffing of the project
• A labor strike
• And more...

The White House reconstruction project serves as a helpful reminder of how not to manage a public works construction project, and in the process teaches us a number of important lessons.

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

How Detailed Must Plans and Specifications Be?

In developing public works construction bid documents - for either a small or large project - what principles should guide the level of detail and completeness of the documents?

3 principles:  There are three basic principles that should help drive the level of detail for preparing the plans and specifications:

• Level playing field:  The documents should be clear enough so that all bidders are making the same assumptions about the documents and what is required, without relying on bidders to come to their own different conclusions.  Because we typically bid public construction projects and award based on the low bid, the scope, schedule, and terms/conditions must be specified by the public agency and not left up to individual bidders.

• Accountability:  The plans and specifications should be clear enough so that the public agency is able to hold the contractor accountable for getting the project that was intended and needed.  Without this level of clarity, it may be difficult to ensure that the contractor performs consistent with the agency's expectations and needs.

• Permits and codes:  The bid documents should be clear enough so that the design is in compliance with all building codes and the project is able to receive the necessary permits from the appropriate authorities.

Presidential History:

• Presidential History Blog:   While I will discontinue writing my 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

Figuring Out What Went Wrong With the Bid Process

Sometimes, the expectations of public agencies for a bid aren't met.  Perhaps only one or two bidders submitted a price, or maybe the bid prices were significantly higher than the funds available.  What are the options available to an agency to move a public construction project forward? 

Contact contractors:  One of the most important steps a public agency can take after bid opening is to talk with the bidders and determine why their prices were so high, and to talk with other contractors to find out why they chose not to bid the project. 

Questions to ask:  The following are some of the questions an agency might ask bidders and potential contractors about their bid prices and/or why they chose not to bid on the project:

• Ambiguity:  Were parts of the drawings and specifications unclear?  

• Schedule:  Was the project schedule unrealistic? 

• Risks:  Did contractors perceive the risk allocation for the project to be slanted too much toward the owner and disadvantageous to the contractor?

• Complexity:  Was the work to be performed high risk with new and untested tools for successfully accomplishing the work?

• Phasing:  Was the project structured in such a way that it includes complex phasing, scheduling, and staging of the work?

• Other projects:  Were there other projects being advertised at the same time, limiting the capacity of the contractors to bid on all of the projects?

• Federal requirements:  Were there federal requirements that discouraged competition or that inflated prices?

• Project duration:  Did the project duration require bidders to hold prices for a longer period of time that bidders were comfortable with?

• Insurance:  Were the insurance requirements too costly and/or difficult for contractors to obtain?

• Liquidated damages:  Did contractors view the liquidated damage amount per day as being too risky?

• Time of year:  Was the project bid at the wrong time of the year, resulting in higher prices?

• Labor and material prices:  Was price uncertainty and potential escalation a factor in the higher bid amounts?
  

Re-advertise the project: Based on discussions with the bidders and other contractors, an agency may take a number of steps:

• Change the requirements:  Modify the scope of work and other requirements based on concerns raised by the contracting community.

• Additives and Alternates:  Restructure the bid form to include Additives and/or Alternates as a bid protection tool so that all bids don't have to be rejected if there are adequate funds for awarding the base bid but not the Additive or Alternate work.

• Solicit contractors:  Reach out to qualified contractors and encourage them to submit a bid.

Find more money:  Sometimes, even with changes to the plans and specifications based on information obtained from contractors, more funding is still necessary to make the project financially viable.
 
Minnesota's troubled project:  The City of West St. Paul, Minnesota recently rejected all bids on a street reconstruction project estimated to cost $20.7 million when just two bids were received and the low bid was $7.7 million over the engineer's estimate.  Click here to read a well-written and revealing article from TwinCities.com on the project and what the city learned about the bid 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

How Not to Implement Bidder Responsibilty Criteria on a Project

Establishing bidder responsibility criteria on public works construction projects can be a good idea.  It helps ensure that the low bidder is, in fact, capable and qualified to successfully perform the work.  Some public agencies, however, go about implementing responsibility in ways that are counterproductive and lack transparency. 

City of Des Moines, Iowa:  In September 2014, the City of Des Moines adopted what they grandiosely call the "City of Des Moines Taxpayer Quality Assurance Policy."  It only applies for building or facility projects estimated to cost more than $1 million.  In essence, it is intended to be a bidder responsibility law, but it is flawed in a number of ways:

• More Prequalification than Responsibility:  The law requires that all contractors interested in bidding on a project must complete and submit "no later than two weeks prior to the deadline for accepting bids" a "General Contractor Quality Assurance Questionnaire" and respond to 26 questions.  Establishing bidder responsibility is generally determined after bids have been opened to assess whether the low bidder is responsible.  The City of Des Moines' questionnaire begins to look more like a prequalification process.

• All bidders must complete questionnaire:  Unlike bidder responsibility practices, the City is requiring all bidders to complete and submit the questionnaire.  Because of the length and complexity of some of the questions, this may cause some bidders to decide not to bid on city work, thus reducing competition and increasing prices, or to bid on the project but increase their prices to recoup their costs in completing the questionnaire and to deal with the hassle of bidding with the City.

• Responsiveness vs. Responsibility:  The City's practice of requiring the questionnaire prior to bidding makes submission of the form a matter of responsiveness initially before an analysis is even made of whether the bidder is responsible. In other words, if a bidder fails to submit the questionnaire by the deadline, presumably their bid is non-responsive. Documentation of bidder responsibility should never be made part of the bid process, but requested of the low bidder after bid opening.

• Questionnaire is subjective:  The questions asked by the City are not actual bidder responsibility criteria, but collects information about which the City does not disclose what the basis will be of their evaluation of the questionnaire.  In other words, to properly implement bidder responsibility, there must be actual criteria and standards, so that anyone looking at the documentation submitted should be able to come to the same conclusion about whether the bidder met the criteria or not.  

Misguided effort:  The City of Des Moines' attempt to ensure responsible bidders is ultimately misguided.  It creates a subjective process that will discourage competition and increase costs. The policy also attempts to fix a non-existent problem.  According to the City's engineers, "in general, the City of Des Moines has not experienced major issues in its public bid construction program." Click here to read an excellent and more detailed analysis of the City's law from the law firm of Fabyanske Westra Hart & Thomson. 

Use bidder responsibility criteria:  The preferred method for implementing bidder responsibility is to publish actual criteria in the bid documents, and to then request documentation from the low bidder a certain number of days after bid opening demonstrating that they meet the criteria.  Criteria should be crafted in such a manner to not unduly restrict competition, but to establish a baseline threshold of the ability of the bidder to successfully perform the work.  Click here to read "Suggested Guidelines for Bidder Responsibility" published by the State of Washington's Capital Projects Advisory Review Board.

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

Should Work Be Bundled Together Into 1 Project or Broken into Separate Projects?

How do you define a public works construction project?  Should work for multiple subcontractor trades be bundled together into one larger project, or should it be broken into smaller separate projects?   

Issues with a bundled project:  There are a number of issues associated with bundling work into one project: 

• Liability:  The general contractor, instead of the public agency, assumes the liability for performance of the entire project in accordance with the contract documents.

• Schedule:  The general contractor, instead of the public agency, is responsible for scheduling the work of the subcontractors in an appropriate sequence in order to complete the work on time. 

• Warranty:  Maintenance and warranty issues are simplified by having the general contractor as the public agency’s single point of contact for resolving warranty issues.

• Small Businesses:  May negatively impact the use of small, disadvantaged, minority, and women owned businesses who might not be able to bid a larger project. 

Issues with separate projects:  There are a number of issues associated with breaking work down into separate projects: 

• Schedule:  Managing the schedule for multiple subcontractors takes staff time for public agencies.

• Expertise:  Managing and overseeing all of subcontractor trades requires a level of expertise that may be beyond that of a government project and construction manager.

• Time for Managing Subs:  More administrative time is required for the public agency to manage all facets of construction with multiple subcontractors, rather than having the contractor manage it all.

• Audits:  Multiple contracts may result in more exposure to audits and potential violations of ordinances and policies.

• Procurement Regulations:  Splitting projects under bidding thresholds may violate procurement regulations, or at the least, give the appearance of inappropriate actions on the part of public agencies.

• Streamlined Award:  Splitting a project into smaller bids may be a more streamlined process for internal approval of an award, requiring fewer levels of approval.

• Cheaper:  No markup of subcontractor costs results in reduced direct costs for the public agency.

In the news:  A city manager in Georgia recently separated work out into multiple smaller projects less than $20,000 each in order to avoid obtaining approval of the city council for a larger project.  City of Covington city manager Leigh Anne Knight, also argued that it was done to save money, an argument that is difficult to prove.  The city’s planning director acted as the construction supervisor for the projects, leading the city council and mayor to assert that the planning director’s time would be better spent performing his duties as planning director.  The council will consider defining by ordinance what constitutes a “project.”  For more information about this story, click here.

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: Public Works Bidding and Contracting

2 Day Class on "Public Works Bidding and Contracting"

Mike Purdy

When:  February 26-27, 2015 (8:00 am to 5:00 pm) 

Where:  Kennewick, Washington 

Instructor:  Mike Purdy 

Training Outline:  This two day "Public Works Bidding and Contracting" class will cover the following subjects:

• Types of Public Works Contracts
• What is a Public Work, Ordinary Maintenance, and Maintenance?
• On-Call Public Works Contracts and the State Auditor's Office
• Small Works Rosters
• Developing Bid Documents
• Bid Receipt and Opening
• Bonds and Insurance
• Bid Responsiveness
• Bidder Responsibility
• Bidding and Award
• Prevailing Wages
• Change Orders
• Retainage and Contract Close-out

Cost:

• $140 - WA NIGP Chapter members
• $180 - Non-WA NIGP Chapter members

Sponsored by:  Washington State Chapter of NIGP

Information and Registration:  Click here. Don't delay as decision whether there are enough registrants to hold the class must be made in the next week or so.

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

What is "Bid Shopping" and "Bid Peddling"?

John P. Ahlers

Well known and respected Seattle construction attorney John P. Ahlers has written two very helpful blogs on everything you need to know about "bid shopping" and "bid peddling."

Rather than attempt to repeat the concepts, I refer you to his to his very readable and well written blogs as noted below that not only defines these practices, but explains Washington state law (RCW 39.30.060), the Subcontractor Listing Statute that applies to all public works projects estimated to cost $1 million or more. 

A Primer on Bid Shopping in Public Contracts - Part I

• Bid Shopping Defined
• Defense to Promissory Estoppel
• Subcontractor Listing Requirement (Public Works Contracts)
• Does Listing a Subcontractor Convey Acceptance of its Bid?

A Primer on Bid Shopping in Public Contracts - Part II

• Subcontractor's Private Right of Action
• 2002 Amendments to the Subcontractor Listing Statute
• Reasons for Substitution Exempted Under the Subcontractor Listing Statute

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

What Requirements Still Apply for Emergency Public Works Contracts?

When a public agency has declared an emergency and waived competitive bidding requirements for a public works construction project, what is being waived is the contractor bidding and selection process.  In other words, under an emergency contract seeking bids is not required.  

Not enough time to conduct a bid process:  The nature of emergencies dictates that there is not sufficient time to conduct a bid process without raising the risk that individuals may be injured, property damaged, or that the essential functions of government may not be fulfilled.  The definition of an emergency public work varies by state. In Washington state, it is defined in RCW 39.04.280. 

What is required for emergencies:  The following is a list of some of the requirements that still apply for emergency public works projects.  Generally, only the selection process is waived through the emergency declaration.  While this list is based on Washington state law, portions of it may also apply for other states, depending on their specific requirements:

• Declaration of emergency:  A formal declaration of an emergency must be made.  See RCW 39.04.280.

• Bidder Responsibility:   The mandatory bidder responsibility criteria of RCW 39.04.350 still apply for emergency contracts.

• Contract:  There should still be a public works contract documenting the various requirements and the dollar amount of the project, even if it is for a time and materials, not-to-exceed amount.

• Prevailing wages:  Prevailing wages must still be paid consistent with the requirements of RCW 39.12.

• Intent:  A Statement of Intent to Pay Prevailing Wages must be approved by the Department of Labor and Industries and filed with the public agency prior to making any payments to the contractor.  A separate Intent must be completed for the contractor and each subcontractor, regardless of tier.

• Affidavit:  An Affidavit of Wages Paid must be approved by the Department of Labor and Industries and filed with the public agency prior to making payment of retainage to the contractor.  A separate Affidavit must be completed for the contractor and each subcontractor, regardless of tier.

• Bonds:  A payment and performance bond must be submitted to the agency for the work, in accordance with RCW 39.08.

• Insurance:  The amounts and types of insurance required on a public works project are governed by each agency and not by Washington state law. 

• Retainage:  Retainage should be withheld from each progress payment.  See RCW 60.28.  The only exceptions to not withholding retainage is if a retainage bond is submitted by the contractor or if the contractor was selected through the Limited Public Works process under the Small Works Roster (for public works projects less than $35,000), in which case there would have been no need to waive the competitive bidding process.

Timing of emergencies:  While the above items are still required under Washington state law for an emergency public work, agencies must ensure that health, safety, and property are protected and that an agency's essential functions continue to serve the public.  Sometimes, due to the emergency nature of the project, it is important to get a contractor on the job site immediately, perhaps in the middle of the night, to address the emergency.  In such a case, often some of the paperwork requirements are addressed after the fact. 

Emergency procedures:  Washington state law does not have exemptions for public works requirements on emergency projects, other than for the actual bidding and selection process.  It is important that each public agency have clear emergency public works procedures that will dictate:

• Compliance:  The timing of compliance with the requirements of state law.

• Authorization:  Who within the agency is authorized to declare an emergency and waive competitive bidding.  This person or persons should be available at any time, which is why it is often problematic to dictate that only an elected board or council may waive competitive bidding.
  

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

Training: Demystifying Public Works Bidding and Contracting

Demystifying Public Works Bidding and Contracting

When and Where - 8:00 am to 4:30 pm:

• November 24, 2014 (Yakima, WA, 33 S. 2nd Ave), or

• December 1, 2014 (Tumwater, WA, 6005 Tyee Dr. SW)

Instructor:  Mike Purdy 

Sponsored by:  WASBO - Washington Association of School Business Officials 

Cost:

• $200 for WASBO members
• $240 for non-members
• Cost includes workshop materials and lunch

Register and more information:  

• Click here for Yakima

• Click here for Tumwater
  

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

Training: Construction Project Scheduling & Delay Claims

Construction Project Scheduling & Delay Claims

When:  November 21, 2014 (9:00 am to 5:00 pm) 

Where:  

• Seattle, WA (Hilton Seattle, 1301 6th Avenue), or
• Live Webcast from your office 

Cost: 

• $425 - Government/Non-Profit
• Other cost categories  

Agenda:  A faculty of 8 highly qualified instructors will address the following issues.

• 30 Minutes to CPM Proficiency
• Basic Scheduling Concepts for Delay, Acceleration and Mitigation
• Primary Legal Concepts for Delay Claims
• Cost Analysis for Schedule and Delay Claims
• Addressing Project Delays - Public Sector Perspective
• Contracting Strategies for Schedule Issues
• Interesting Projects and Lessons Learned
• Dispute Resolution and Arbitration of Schedule & Delay Claims

Information and registration:  Click here for more information and to register for this training, sponsored by The Seminar Group.

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

Proposed NJ Law Would Require Disclosure of Construction Bidders Lists

The New Jersey Assembly has passed a bill that would require local public agencies to publicly disclose the names of possible bidders on public construction projects.  Currently, such disclosure is voluntary.

Disclosing names of potential bidders:  Bill A947 would require local public agencies to make public (if requested) the names of parties who have received a copy of bid documents, once three or more parties have received the documents.  Failure to do so would prohibit the public agency from accepting bids, and the project would have to be readvertised.  Agencies could also comply with the proposed law by publishing the names of potential bidders (parties picking up a set of the bid documents) on the agency’s website. 

Legislative support:  The bill passed the Assembly on June 23, 2014 by a 59-16 majority.  It has been sent to the Senate Community and Urban Affairs Committee (S2216).  Deliberation in the Senate could occur any time during the next 16 months.

Support for the bill:  A947 is being promoted by state labor groups and small businesses who argue that knowledge of potential bidder identities prior to the bid submission deadline will allow small businesses (particularly women and minority owned businesses) to “have timely access to bidders on public projects so that they can submit subcontracting bids to those bidders for the purpose of enabling those bidders to put together their lowest possible bids to the benefit of the local contracting unit.”  

Opposition:  Local governments oppose the change as, in their view, such forced disclosure may contaminate the sealed bidding process and lead to bid-rigging and collusion.  There is also concern that overall costs will increase due to litigation.

Precedents:  There are a number of public agencies in New Jersey where public disclosure of the bidders list is standard practice.  However, there is no set number of bid document recipients to trigger disclosure.  Also, in a closely related New Jersey court case (O’Neill Electric Co., Inc. v. theBoard of Chosen Freeholders of the County of Warren, 1997), the NJ Appellate court ruled that such required disclosure of the bidders lists would “facilitate collusive or bid-rigging arrangements” and not be in the public’s best interest.

Additional information:  The following links provide more information about this issue:

• A947 – Text of the bill that passed the New Jersey Assembly

• New Jersey State League of Municipalities position statement opposing bill

• Wayne, NJ Council votes to oppose bids bill, by Deborah Winters, August 28, 2014, www.NewJersey.com

Should list of potential bidders be disclosed?  Different public agencies clearly have different practices on this issue.  Generally, I think it is best practice that public bidding be a transparent process.  This would suggest making the bidders lists available publicly.  However, in regions where this practice may encourage collusion, it may be wiser not to disclose the names of firms who have picked up the bid documents. 

Should number and names of bidders be disclosed?  Beyond the issue of the bidders lists, in order to prevent collusion and inflated prices, public agencies should not disclose the number of bids that have been received or the names of the bidders who have submitted bids.  It is at this point, rather than simply the names of bidders who have picked up bid documents, that collusion and inflated prices are more of a risk.  Some bidders are known to arrive at the bid submittal location with two bids and they submit one bid based on their competition.

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

Upcoming Training at NIGP Forum in Philadelphia

I will be teaching two all-day courses in August just before the start of NIGP's Annual Forum in Philadelphia:

• When Bad Things Happen to Bids: Strategies for Ensuring a Successful Public Construction Project (Friday, August 22, 2014)

• Tools for Ensuring Contractor Performance on Public Construction Projects (Saturday, August 23, 2014)

Information and registration:  To see an outline of each of these classes and/or to register, click on the links above.

Other locations:  I've also taught these classes in other states around the country and will be teaching them later this year in Maryland, Colorado, Texas, and Arizona.  In addition, I teach a class entitled "Best Practices in Developing Public Construction Bid Documents" and will be teaching it later this year in Texas and Georgia.

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

Court Strikes Down Apprenticeship Utilization Requirements on Public Construction Projects

Many public agencies throughout the country require that contractors on public construction projects use a certain percentage of apprentices on the projects.

Federal court rules against city program:  On July 16, 2014, a federal court in Boston struck down an apprenticeship utilization ordinance for the City of Quincy, Massachusetts, arguing that it violated federal law (ERISA).  The decision by the U.S. Court of Appeals for First Circuit will have impacts on similar apprenticeship programs in the states covered by the First Circuit court, including Massachusetts, Rhode Island, Maine, New Hampshire, and Puerto Rico. It may also, in time, have impacts on similar programs across the country.  Click here for a news article on the court decision.  Click here to read the full court decision.

Shortage of construction workers:  It's no secret that many older construction workers are reaching retirement age, and that young people are not flocking to fill the vacancies and anticipated vacancies in the years ahead.  Many argue that apprenticeship utilization requirements are necessary in order to attract young workers to enter the field.  It seems to me, however, that the solutions to the shortage of workers goes much deeper than simply requiring apprenticeship jobs on public construction projects.  That, in and of itself, will not be compelling to convince a young person to enter the field.  There are much deeper reasons why construction is not attractive to young people today.

Lawsuit brought by open shop contractors:  The City of Quincy's ordinance was challenged by a coalition of merit shop (non-union) contractors who argued that the requirement for utilization of apprentices enrolled in a state-approved apprenticeship training program effectively limited competition to union contractors.  Unions generally sponsor and have state approval for most construction training programs.  

Limited competition:  Ronald N. Cogliano, the president of the Merit Construction Alliance that brought the lawsuit stated that "When you artificially limit competition in any market, prices go up.  Fewer bidders means higher prices."

Importance of trained workforce:  There's no question that it is in everyone's best interest that the construction workforce be appropriately trained.  Apprenticeship training programs are often seen as a means to accomplish this.  

Conflicting policy objectives:  With a shrinking construction workforce and the need for a trained workforce, unions have been strong proponents of apprenticeship utilization requirements.  Such requirements, however, often restrict competition to union contractors who have access to union sponsored apprenticeship training programs.  Thus, there are conflicts between policy objectives of ensuring competition and having a trained workforce.  From my perspective, the public is best served when the procurement process is open, fair, and transparent.

Keep competition open:  Any solution to ensuring a trained and sufficient construction workforce must ensure that competition does not exclude non-union contractors from bidding.  Any time competition is restricted, whether it is for an apprenticeship program or a local preference program, it will ultimately result in higher prices to the public.  In promoting apprenticeship utilization requirements, union proponents should develop programs that ensure a trained workforce and do not restrict competition to union contractors only.  The union argument that non-union contractors may participate in the union apprenticeship programs is fraught with major challenges, and is not an acceptable option for many non-union contractors.  

Educate young people:  Perhaps the real solution is not to mandate utilization of apprentices on public projects, but to let the market dictate what workers are used, while at the same time endeavor to educate young people on the advantages of a pursuing a career in construction.  

Washington state:  In Washington state, RCW 39.04.320 requires that 15% of the workforce on public works projects estimated to cost $1 million or more be performed by apprentices enrolled in a state approved apprenticeship training program.  The state law only applies to the state Department of Transportation (WSDOT), institutions of higher eduction, the state Department of Enterprise Services (DES), and school districts.  Some cities and counties have voluntarily adopted apprenticeship utilization requirements on their public works projects.

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