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

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

Training on Construction Bidding and Contracting

I am teaching three courses for NIGP at various locations across the country.  If you're interested in having me teach any of these classes for your NIGP chapter or public agency, please contact Faye Jackson at NIGP directly at FJackson@nigp.org.  If you're within Washington state, contact me directly. Here's a description of the courses.

Maryland State Capitol
in Annapolis

When Bad Things Happen to Bids: Strategies for Ensuring Successful Public Construction Projects:   I was in Annapolis, Maryland on September 12, 2014 teaching this course.  Here's an outline of this one day course: 

Why Aren’t Bidders More Careful?

• Why Do Bidders Make Mistakes?
• Missing Bid Prices
• Conflict Between Numbers and Words
• Bid Calculation Errors
• Claims of Error

Is Your Bidder Playing Games?

• Bid is Too Low
• Incentive Payments
• Unbalanced Bids
• Conditioned or Qualified Bids

Will the Real Low Bidder Please Stand Up?

• Additive and Alternate Bids
• Tie Bids
• Responsive Bids
• Responsible Bidders
• Local Bid Preferences
• Bid Protests and Appeals
• Conflicts of Interest

What Can You Do to Manage Bidding?

• What Should Be on the Bid Form?
• Why Should You Limit Submissions with the Bid?
• On What Days Should You Not Receive Bids?
• When is a Bid Late?
• When Should You Take a Bid Guaranty?

Best Practices in Developing Public Construction Bid Documents:  I'll be teaching this course on October 27 in Savannah, Georgia.  Here's an outline of this one day course:

Principles of Preparation

Formats and Structures

• Organizational Structures
• Content Based Systems
• What Are the Pros and Cons of Using Industry Approved Documents?

Components of Bid Documents

• Advertisement for Bids
• Instructions to Bidders
• Bid Form
• Payment and Performance Bonds
• Bidding and Contract Reporting Forms
• Contract
• General Conditions / Specifications
• Technical Specifications
• Prevailing Wages
• Specialty Reports and Studies
• Addenda

Project Review of Bid Documents

• Do the Bid Documents Reflect Your Objectives?
• What Provisions Should You Tailor to a Project?
• Who Should Review the Documents Before Advertisement?

Long Term Review of Bid Documents

• Baseline Review
• Annual Review
• Internal and External Consistency
• Training

Document Management and Control

• How Can You Protect Your Standard Documents?
• Where Should the Standard Documents be Electronically Stored?
• Who Should Make Changes to Your Standard Documents?
• How Can You Keep Track of Changes?

Procurement Tools for Ensuring Contractor Performance on Public Construction Projects:  I'll be teaching this class on November 3 in Phoenix, Arizona and then again on November 17 in Hagerstown, Maryland.  Here's an outline of this one day course: 

Is the Contractor Qualified?

• Pre-qualify Bidders
• Establish Bidder Responsibility Criteria
• Specification Qualification Requirements
• Subcontractor Approval Process

How Can You Manage the Bidding Process?

• Develop Clear Bidding Documents
• Optional vs. Mandatory Pre-Bid Meetings
• Craft Clear Addenda
• Accept Bidder’s Claim of Error

How Can Bonding Companies Help?

• Bid Bonds and Other Bid Guaranties
• Performance Bonds
• Payment Bonds
• Warranty Bonds

What Financial Tools Are at Your Disposal?

• Withhold Retainage
• Determine and Assess Liquidated Damages
• Assess Actual Damages
• Obtain Release of Claims Prior to Payments

What Are Effective Construction Management Practices?

• Avoid Front-Loaded Schedule of Values
• Inspect Work Performed
• Review Pay Applications for Work Completed
• Manage Claims Process
• Control Change Orders Approved

Can You Evaluate Contractor Performance?

• Features of Effective Contractor Performance Evaluation Programs
• Using Results from Contractor Evaluations

When Can You Award Based on Price and Qualifications?

• Best Value Procurement
• Design-Build
• Construction Manager at Risk
• Job Order Contracting

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

When Should You Notify a Bidder of a Non-Responsive Bid?

Bidders often make mistakes in not submitting all required documents or filling out forms properly.  So when should a bidder be notified that their bid is non-responsive?

Options for notification:  A public agency could notify the bidder of a non-responsive bid at the following points in time:

• Sooner:  As soon as the irregularity is identified and a decision has been made that the bid is non-responsive.

• Later:  When the public agency recommends an award of the contract to another bidder

Sooner is better:  Generally, it is better to notify a bidder of a non-responsive bid as soon as the determination has been made that the bid is non-responsive. One of the advantages of doing this is that it helps to protect the project's schedule.  In other words, if a public agency waits until the time of an award recommendation, and a protest is made then, the protest could end up delaying award and the start of the project.  By notifying the bidder early, if they do protest the non-responsive determination, it provides the public agency with more time in which to address the protest, and hopefully keep the project's schedule.

What bids are non-responsive?  If the irregularity in the bid is material, the bid should be rejected as non-responsive.  If the irregularity is immaterial, public agencies have discretion whether to accept the bid as responsive or reject it as non-responsive.  The test as to the materiality of an irregularity is whether it gives one bidder a substantial advantage or benefit not enjoyed by other bidders. 

Case-by-case determination:  Talk with your attorneys and evaluate potential non-responsiveness issues on a case-by-case basis.  It is important to maintain the fairness and equity of the competitive bidding process, and so material irregularities should not be waived and those bids should be rejected as non-responsive.

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

Is An Unreasonably Low Bid Non-Responsive?

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

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

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

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

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

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

Why You Shouldn't Ask About a Bidder's Qualifications...with the Bid

Most public agencies awarding a public works construction project are required to award to the bidder with the lowest responsive bid.  This is the traditional model of low bid also known as "Design-Bid-Build." 

Is the bidder responsible?  But the low bidder may not necessarily be a responsible bidder.  See my previous blog on the subject.  To assess whether a bidder is a responsible bidder, the bidder should meet specific, relevant, and objective criteria established in the bid documents.

4 reasons to not ask for qualifications with the bid:  There are four main reasons why public agencies should not request documentation of a bidder's qualifications, or how they meet responsibility criteria, with the bid.  Instead, this information should be requested from the low bidder after bids have been opened.

• Non-responsive bids:  By asking for bidder qualifications with the bid, there is a risk that a bidder (perhaps the low bidder) may fail to provide some or all of the information required.  If the information must be submitted as part of the bidding process, the lack of submitting this information would render the bid non-responsive.  Non-responsive bids may result in protests, delays, and higher project costs.

• Burden to bidders:  Asking for bidder qualification documentation with the bid requires all bidders to submit this documentation, which often takes time for bidders to pull together.  The best practice is to request this information only from the low bidder (or if there are schedule concerns from maybe one or two other bidders), which means it would be submitted after the bid submittal deadline.

• Focusing on bid price:  If you ask for bidder qualification information to be submitted with the bid, this takes away valuable time from bidders to focus on preparing the most competitive bid price.  The process of developing a bid is often a last minute process.  Bidders wait until minutes before the deadline to obtain subcontractor and supplier bids who are delaying the submission of their prices in order to avoid having bidders "shop" their bid prices for a better deal with another subcontractor. 

• Limited number of bidders:  As bidders evaluate what projects to bid on, they will often make the decision to bid on projects that have fewer bidding requirements.  Bidders have limited time and staffing to prepare bids and requiring too much information to be submitted with the bid may reduce the number of bidders who submit bids (which may result in higher prices).

State laws vary:  Individual states have different laws and requirements about bidder responsibility.  In Washington state, public agencies may develop and use Supplemental Bidder Responsibility Criteria in assessing whether the low bidder is responsible.  RCW 39.04.350 describes the process and the Suggested Guidelines for Bidder Responsibility of the Capital Projects Advisory Review Board (CPARB) provides helpful suggestions and tools regarding bidder responsibility.

Summary:  It is important to obtain qualified contractors on public works construction projects, and this can  be accomplished through evaluating the responsibility or qualifications of the low bidder.  By keeping the bidding process as uncomplicated as possible, public agencies reduce the risk of non-responsive bids, avoid burdening all bidders with requirements, allow bidders to focus on developing competitive prices, and limit the risk of reduced numbers of bidders who opt to bid on less complicated projects.

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

Why Bidders Are Never Non-Responsive

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

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

Responsiveness questions:  Here are some of the common questions that should be asked about whether a bid is responsive and in compliance with all of the requirements of the bid documents, or whether a bid is non-responsive:

• Bid submission location:  Was the bid submitted at the correct location identified in the bid documents?

• Timeliness of bid submission:  Was the bid submitted prior to the deadline established in the bid documents?

• Signed bid form:  Was the bid form signed?

• Bid guaranty:  Was a bid guaranty or bid deposit (bid bond, cashier's check, certified check, cash) in the appropriate amount submitted with the bid?

• Bid prices:  Does the bid include a bid price for all items identified on the bid form?

• Bid form blanks:  Were all blanks on the bid form filled out completely?

• Addenda:  Were all addenda acknowledged on the bid form?

• Bid exclusions:  Did the bid include any exclusions or conditions different from the requirements of the bid documents?

Material vs. Immaterial Irregularities:  Should all bids with irregularities automatically be rejected as non-responsive?  Not necessarily.  There's a difference in the type of bid irregularities.  Some are material and others are immaterial.  In other words, a material irregularity in a bid is one that is significant and gives a competitive advantage or benefit to one bidder not enjoyed by other bidders.  Material irregularities in a bid should result in the bid being rejected as non-responsive and not considered further.  On the other hand, an immaterial irregularity in a bid does not give one bidder a competitive advantage or benefit not enjoyed by other bidders.  A bid with an immaterial irregularity may be accepted as responsive, or at the discretion of the public agency, may be rejected as non-responsive.

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

Different laws on responsibility:  Laws differ regarding the amount of discretion a public agency may have in determining that the bidder with a low responsive bid is or is not a responsible bidder.  There is a spectrum of authority for public agencies in establishing bidder responsibility:

• Significant discretion:  Some public agencies have broad discretion and judgment in making the determination of responsibility

• Limited discretion:  Some public agencies permit a bidder responsibility analysis within certain bounds.  For example, in the State of Washington, all bidders on public construction projects must meet a half-dozen mandatory bidder responsibility criteria before being awarded a project.  In addition, agencies in Washington are permitted to establish additional relevant bidder responsibility criteria on a project-by-project basis to be used in making a responsibility analysis.  RCW 39.04.350 governs bidder responsibility in the State of Washington. 

• Almost no discretion:  Some public agencies must almost always award to the bidder with the low responsive bid, regardless of capability or past performance concerns. 

Check your language:  I often see language in bid documents that notes the intent of a public agency to award the project to the "lowest responsive and responsible bidder."  This type of language blurs the important distinction between responsiveness and responsibility.  Instead, bid document language should reflect that the agency will award to the "responsible bidder with the lowest responsive bid," or something similar. 

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

The question:  "Why are bidders never non-responsive?"  Bidders are never non-responsive, even though their bid may be non-responsive.  A bidder, however, may be determined to not be a responsible bidder, making them ineligible to be awarded a project. 

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

Training: Bid Responsiveness and Bidder Responsibility

Bid Responsiveness and Bidder Responsibility:  Responsiveness and Responsibility.  They sound very similar but are very different concepts.  This training will provide key background information and examples on how public agencies should evaluate whether bids are responsive or non-responsive, and how to help ensure that the low bidder is a responsible bidder. 

Where and When:  Four training sessions in Washington state, all from 10:00 a.m. to 2:30 p.m.

• Renton (October 31, 2013)
• Yakima (November 5, 2013)
• Camas (November 13, 2013)
• Everett (November 21, 2013)

Cost:  Free 

Instructors:

• Mike Purdy
• John Carpita, MRSC

Sponsored by:

• APWA Washington Chapter, Contract Administration Subcommittee
• MRSC (Municipal Research and Services Center)
  

Information and registration:  Click here.

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

Demystifying Public Works Bidding and Contracting

On September 5, 2013, I was in Ephrata, Washington providing an all day training session for the Grant County Public Utility District staff on Demystifying Public Works Bidding and Contracting.

Here's an outline of the training I provided:

Types of Public Works Contracts

• By agency staff
• Advertised Public Works
• Small Works Roster (Limited public works)
• On-Call Public Works
• Alternative Public Works (GC/CM, Design-Build, Job Order Contracting)
  

Bid and Agency Limits on Performing Public Works

What is a Public Work? 

• What is Ordinary Maintenance?
• Is Maintenance a Public Work?

Why Aren't Bidders More Careful?

• Why Do Bidders Make Mistakes?
• Missing Bid Prices
• Conflict Between Numbers and Words
• Bid Calculation Errors
• Claims of Error

Is Your Bidder Playing Games?

• Bid is Too Low
• Unbalanced Bids
• Conditioned or Qualified Bids

Will the Real Low Bidder Please Stand Up?

• Additive and Alternate Bids
• Tie Bids
• Responsive Bids
• Responsible Bidders
• Local Bid Preference
• Bid Protests and Appeals

When You Don't Want a Check

• Purpose of Bid Guarantees
• Types of Bid Guaranties
• The Risks of Checks
• Are Bid Guarantees Required on Small Works Roster Projects?
• Amount of Bid Guarantees
• Restrictions on Bid Bond Amounts
• What is a Power of Attorney?
• How Much Does a Bid Bond Cost?
• When Should You Return Bid Bonds?
• Checklist for Bid Bonds

Payment and Performance Bonds

• Purpose of Payment and Performance Bonds
• Why Should You Get 2 Separate Bonds?
• Bonds vs. Insurance
• Are Bonds Required on All Public Works Projects?
• When Should the Bonds Be Obtained?
• What Happens if You Fail to Get the Bonds?
• Should the Bonds Cover Change Orders?
• Should the Bonds Cover Sales Tax?
• Are Bonds Ever Forged?
• What Happens if the Contractor Defaults?
• Checklist for Bonds

When Bad Things Happen During Construction

• Front Loaded Schedule of Values
• Dealing with a Change Order Artist
• Prevailing Wages Not Paid
• Subcontractors and Suppliers Not Paid
• Work Not Completed on Time
• Punch List Work Not Completed
• Warranty Work Ignored by Contractor

Public Works Contract Close-out

• Who Does Retainage Protect?
• Completion Dates
• Filing, Renewing, and Releasing Claims
• Pre-Claim Notices
• Foreclosure and Payment
• Release of Retainage
• What Happens if There's Not Enough Retainage
• Check Your Bidding and Contract Documents

Questions:  If you'd like to talk about me providing this training for your agency or association, please contact me.

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

What Happens if a Contractor Can't Provide Evidence of Insurance?

Public works construction bid documents include a variety of provisions, some technically describing the work to be performed and some addressing administrative issues.  One of the administrative requirements relates to requiring the successful bidder to provide evidence of insurance as described in the bid documents.

When should insurance documentation be provided?  Evidence of insurance should be provided by the successful bidder after award, but prior to contract execution (signing of the contract by the agency after the contractor has signed it).  As soon as the contractor and public agency execute or sign the contract, the public agency picks up potential liability, and thus it is important to have the evidence of insurance prior to contract execution.

What is acceptable evidence of insurance?  Bid documents must be specific about the type and amounts of insurance required, as well as what constitutes acceptable evidence of insurance.  Bidders can then factor in the cost of providing the appropriate insurance into their bid price.  Acceptable evidence of insurance consists of a certificate of insurance listing the type and amounts of insurance required, and an additional insured endorsement.  The additional insured endorsement is critical in order to protect the public agency.  In the event of a claim, without an additional insured endorsement, the public agency would not have any protection under the contractor's insurance policy.

When a bidder can't provide insurance documentation:  What happens if the bidder that has been awarded the contract is unable to provide acceptable evidence of insurance for the types and in the amounts required in the bidding documents?  One of the conditions for contract execution should be submission of appropriate insurance documentation.  If the awarded contractor is unable to provide the insurance documentation, which should be described as a requirement for contract execution, the public agency could collect from the bidder's bid guaranty.  The bid guaranty ensures that the bidder, if awarded a contract, will enter into a contract with the agency and provide the insurance and bonds required.

A practice to avoid:  I'm aware that there are some public agencies that require all bidders to submit with their bid a form signed by the bidders' insurance broker stating that the broker has read the bid documents, and that if awarded a contract, the contractor would be able to comply with the insurance requirements.  This practice is not necessary, is not a good practice, and may unnecessarily result in non-responsive bids.  If a bidder fails to provide this form with the bid, the bid would be declared non-responsive, resulting in a higher bid price to award to the second low bidder.  By signing the bid form, the bidder should be agreeing to language stating that they have read and understood the bid documents and have incorporated into their bid price all necessary costs, including the cost of the required insurance premiums.  Failure to provide the insurance documentation would result in the public agency collecting from the bidder's bid guaranty.

Limit submissions with the bid:  It is a best practice to limit submissions required with the bid.  Refer to my earlier blog posting on this subject. 

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

Training Last Week

Last Thursday, I was in Vancouver, Washington where I presented three training workshops at the annual conference of WASBO (Washington Association of School Business Officials).  Here are the three topics I taught on:

What is the Davis-Bacon Act?  Complying with Federal Prevailing Wage Requirements:  Public works construction project with any federal funding require that the contractor and all subcontractors comply with federal prevailing wages, in addition to state prevailing wages and regulations.  Public agencies must monitor and enforce compliance with these requirements.

• What is the Davis-Bacon Act?
• Check Your Federal Grant Requirements
• When Do Federal Prevailing Wages Apply?
• Federal vs. State Prevailing Wages
• Effective Date for Prevailing Wages
• Types of Prevailing Wage Rates
• Fringe Benefits
• Apprentices
• Public Agency Responsibilities
• Reviewing Payrolls
• Typical Compliance Problems 

Public Works Contract Close-out: Bonding, Retainage, and Claims:  How should public agencies handle claims filed against the retainage and payment bond, and when should retainage be released to the contractor?

• Retainage and Payment Bonds
• Completion Dates
• Filing, Renewing, and Releasing Claims
• Pre-Claim Notices
• Deadlines for Filing and Renewing Claims
• Foreclosure of Claims and Payment
• Priority of Claims Against Retainage
• Release of Retainage

When Bad Things Happen to Bids: Strategies for Ensuring a Successful Public Works Project:  The public works bidding process is fraught with potential for mistakes, protests, and appeals.  What can public agencies do to help prevents such problems?

• Why Aren't Bidders More Careful?
• Why do Bidders Make Mistakes?
• Missing Bid Prices
• Conflict Between Words and Numbers
• Bid Calculation Errors
• Claims of Error
• Is Your Bidder Playing Games?
• Bid is Too Low
• Unbalanced Bids
• Conditioned or Qualified Bids
• Will the Real Low Bidder Please Stand Up
• Additive and Alternate Bids
• Allowances
• Tie Bids
• Responsive Bids
• Responsible Bidders
• Local Bid Preferences
• Bid Protests and Appeals

Contact me if you are interested in discussing bringing training to your agency.  In addition to the training noted above, I can provide training on a wide array of other public procurement and contracting issues.  Please contact me if you would like to discuss training.

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

Training: "When Bad Things Happen to Bids"

I was in Milwaukee, Wisconsin last Thursday providing public works training at the Spring Conference of the Wisconsin Association for Public Procurement (WAPP), an NIGP chapter.  The conference was held in conjunction with V.A.L.U.E., a cooperative purchasing program in southeastern Wisconsin. 

Mike Purdy and Jesse Jackson
at Chicago's O'Hare Airport

Surprise in Chicago:  On a layover at Chicago's O'Hare Airport on Wednesday on my way to Milwaukee, I ran into Jesse Jackson who was there catching a flight also.  He very graciously agreed to pause for a picture with me.  It was an amazing experience - something totally unexpected!

Developing Public Works Bid Documents:  In Milwaukee, I did an hour long training session on "Best Practices in Developing Public Works Bid Documents."  Here's a high level outline of my presentation:

• Principals of Preparation
• Formats and Structures
• Components of Bid Documents
• Review of Individual Projects
• Document Control
• Long Term Review
• Training

When Bad Things Happen to Bids:  In the afternoon, I provided 3.5 hours of training on "When Bad Things Happen to Bids: Strategies for Ensuring a Successful Public Works Project."  Here's an outline of the interactive presentation:

• Why Aren't Bidders More Careful?
• Why do Bidders Make Mistakes?
• Missing Bid Prices
• Conflict Between Numbers and Words
• Bid Calculation Errors
• Claims of Error

• Is Your Bidder Playing Games?
• Bid is Too Low
• Unbalanced Bids
• Conditioned or Qualified Bids

• Will the Real Low Bidder Please Stand Up?
• Additive and Alternate Bids
• Tie Bids
• Responsive Bids
• Responsible Bidders
• Local Bid Preferences
• Bid Protests and Appeals

• What Can You Do to Manage Bidding?
• What Should be on the Bid Form?
• On What Days Should You Not Receive Bids?
• When is a Bid Late?
• When Should You Take a Bid Guaranty? 

Interested in this training?  If you are interested in me providing this training for your agency, NIGP chapter, or other professional association, please contact me.

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

Not All Bidding Irregularities Are Created Equal

Bidding irregularities fall into two main categories: material and immaterial.

Material vs. immaterial:  A material irregularity is one that provides a substantial benefit or competitive advantage to one bidder not enjoyed by other bidders. Material irregularities must be rejected as non-responsive.  Immaterial irregularities, on the other hand, do not provide one bidder with a substantial benefit or competitive advantage not enjoyed by other bidders.  A public agency has discretion whether to declare a bid responsive or non-responsive if it has an immaterial irregularity.

Case-by-case:  Actually making the determination of whether a particular irregularity is material or immaterial is generally a case-by-case analysis, because the facts in each situation may vary to result in a different answer.  Public agencies should consult with their attorneys to make this decision.

Bidding documents:  If the bidding documents have specific language indicating that bids will be declared non-responsive if certain things occur or don't occur, a public agency will generally be bound by that mandatory language.  This could result in bids being declared non-responsive that otherwise might only contain an immaterial irregularity.  On many issues, it is better to state in the bidding documents that failure of the bidder to take a certain action "may result in the bid being declared non-responsive."  This preserves an agency's flexibility to examine the specific facts and assess whether the irregularity is material or immaterial.

Bid Opening:  The role of the person reading bids at the bid opening should be to disclose to those in attendance what has been submitted, not submitted, signed, or not signed.  If there is something read or noted at bid opening that constitutes an irregularity, the person reading the bids should note that the bid will be evaluated after bid opening to determine whether it is responsive or non-responsive, rather than attempting to make a decision during bid opening.  At bid opening, all of the facts may not be known and there has not been adequate time to evaluate the circumstances.

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

Public Works Training in Wisconsin

l'll be traveling to Milwaukee, Wisconsin in mid-March to provide public works training at the Spring Conference of the Wisconsin Association for Public Procurement (WAPP), an NIGP chapter.  The conference is being held in conjunction with V.A.L.U.E., a cooperative purchasing program in southeastern Wisconsin.

When:  March 14, 2013

Morning Session:  From 11:00 a.m. to noon, I'll be speaking on "Best Practices in Developing Public Works Bid Documents."  Here's a high level outline of my presentation:

• Principals of Preparation
• Formats and Structures
• Components of Bid Documents
• Review of Individual Projects
• Document Control
• Long Term Review
• Training

Afternoon Session:  From 1:00 p.m. to 4:30 p.m., I'll be speaking on "When Bad Things Happen to Bids: Strategies for Ensuring a Successful Public Works Project."  Here's an outline of the presentation that encourages participation by attendees:

• Why Aren't Bidders More Careful?
• Why do Bidders Make Mistakes?
• Missing Bid Prices
• Conflict Between Numbers and Words
• Bid Calculation Errors
• Claims of Error

• Is Your Bidder Playing Games?
• Bid is Too Low
• Unbalanced Bids
• Conditioned or Qualified Bids

• Will the Real Low Bidder Please Stand Up?
• Additive and Alternate Bids
• Tie Bids
• Responsive Bids
• Responsible Bidders
• Local Bid Preferences
• Bid Protests and Appeals

• What Can You Do to Manage Bidding?
• What Should be on the Bid Form?
• On What Days Should You Not Receive Bids?
• When is a Bid Late?
• When Should You Take a Bid Guaranty? 

The Weather?  I've been looking at weather reports for Milwaukee every day and there have been many days when it's been very cold with snow.  We'll see what it's like when I am actually there in mid-March!

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

Court Case on Bidder Responsibility

Questions:  The following are some of the bidder responsibility related questions that an appeals court dealt with in a bid protest from a Spokane Housing Authority window replacement project:

• Is it important that a contractor have a certain number of years experience performing similar work?

• What if the contractor's employees have the experience but not with the company?  

• What if the main subcontractor who will be performing the work has the requisite experience?  

• Does an award constitute a contract?  

More Information:  Seattle construction attorney, John Ahlers, has written a good summary of this case in his Construction Law Blog.  Click here to read more about the case that was decided by the Court of Appeals in December 2012.  

Skyline Contractors, Inc. v. Spokane Housing Authority, 2012 WL 6057471 (Dec. 6, 2012)

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

When Bad Things Happen to Bids

Training:  When Bad Things Happen to Bids: Strategies for Ensuring a Successful Public Works Project

When:  This training will be offered in four locations, each from 10:00 a.m. to 2:30 p.m.

Mike Purdy

• February 7, 2013 (Renton, WA)
• February 12, 2013 (Yakima, WA)
• February 21, 2013 (Camas, WA)
• February 28, 2013 (Everett, WA)

Instructor:  Mike Purdy

Outline of Training:  

• Why Aren't Bidders More Careful?
• Why do Bidders Make Mistakes?
• Missing Bid Prices
• Conflict Between Numbers and Words
• Bid Calculation Errors
• Claims of Error

• Is Your Bidder Playing Games?
• Bid is Too Low
• Unbalanced Bids
• Conditioned or Qualified Bids

• Will the Real Low Bidder Please Stand Up?
• Additive and Alternate Bids
• Tie Bids
• Responsive Bids
• Responsible Bidders
• Local Bid Preferences
• Bid Protests and Appeals

• What Can You Do to Manage Bidding?
• What Should be on the Bid Form?
• On What Days Should You Not Receive Bids?
• When is a Bid Late?
• When Should You Take a Bid Guaranty?

Information and Registration:  Click here for more information and to sign up for this free training.

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

When Does Bidder Responsibility Become an Issue of Bid Responsiveness?

While responsibility always relates to the bidder, and responsiveness relates to the bid, public agencies that require documentation of bidder responsibility be submitted with the bid unnecessarily complicate the bidding process.

3 Problems:  There are three problems associated with requiring that bidder responsibility documentation be submitted with the bid:

• Non-Responsive bids:  If a bidder fails to submit the bidder responsibility documentation with the bid, the bid would be considered non-responsive.  Thus, the bidder's qualifications or responsibility would never even be evaluated because the bid would be non-responsive.

• Required of all bidders:  Requiring that bidder responsibility documentation be submitted with the bid requires all bidders, not just the low bidder, to assemble and submit the documentation.  This is a lot of work for bidders, especially since the agency will only evaluate the responsibility documentation for the low bidder.

• Reduces focus on developing a good bid price:  Public agencies should limit what must be submitted with the bid.  It is in the public agency's best interests to simplify the bidding process so that bidders can focus in the last frantic minutes before the bid deadline on submitting a competitive bid price, and not having to remember to submit additional extraneous materials.

What should be submitted with the bid?   I think it's best to limit what is required to be submitted with the bid to the Bid Form, a Bid Guaranty, and anything else legally required to be submitted.  I have talked with many public agencies who require a significant number of other items to be submitted with the bid.  Many of these items are not required by the terms of a grant of agency regulations, but are more a matter of practice, and can just as easily be submitted after the bid deadline by the low bidder. 

What are the risks?  The more items that must be submitted with the bid, the higher the risk there is for a public agency of non-responsive bids and/or bid  protests, both of which may delay the project schedule and/or cost the agency additional money in the form of a higher bid price or costs to defend a bid protest.

When bidder responsibility becomes responsiveness:  Bidder responsibility requirements become an issue of bid responsiveness when the low bidder fails to submit required responsibility documentation with the bid.

Evaluate:  Evaluate your agency's practices and what you require to be submitted with the bid.  Are there ways to limit these submittals?

Mike Purdy's Public Contracting Blog 

© 2012 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

When:  

• June 19-20, 2012 (9:00 a.m. to 4:00 p.m.) - Yakima, Washington (17 seats available)

• June 27-28, 2012 (9:00 a.m. to 4:00 p.m.) - Ridgefield, Washington (15  seats available)

Instructor:  Mike Purdy

Class Outline:

• Types of Contracts
• Bidding
• Bid Receipt
• Bid Guaranty
• Bid Responsiveness
• Award
• Bidder Responsibility
• Contract Execution
• Prevailing Wages
• Construction
• Change Orders
• Close-out
• Alternative Public Works Contracting

Sponsored by:  Washington Cities Insurance Authority (WCIA)

Cost: 

• Free - WCIA Members
• $175 - Non-WCIA Members

Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

What is a Material Irregularity in a Bid?

When a bidder fails to submit a required document with its bid, does that render the bid non-responsive, or may the omission of a required document be considered as an immaterial irregularity, and the contract awarded to them?

This is the question that the City of Scranton, Pennsylvania is wrestling with now.  Under the City's blight removal program, an invitation to bid was developed for the demolition of 13 homes throughout the city.  

Bid protest:  After bids were received in February 2012, the City awarded a contract to the low bidder, Shea Demolition, for $121,375.  The second low bidder, Scartelli Construction Services then filed a bid protest, alleging that Shea failed to submit its qualifications and a schedule for the work with its bid, as required in the bidding documents.

Internal City dispute:  The City Controller ruled that Shea's bid was non-responsive and that the project needed to be re-bid.  The City's Office of Economic and Community Development disagreed with the Controller, arguing that the qualifications were not necessary since they knew of Shea's reputation, and that the schedule wasn't critical since the City had provided six months for the work to be completed.

Responsive or non-responsive?  Is the City Controller or the Office of Economic and Community Development correct?  The Controller's attorney stated that "The law on bidding is clear.  Whether the requirements contained in a bid invitation are met is not a discretionary matter."  Is he right?  It really all depends on the nature of the irregularity in the bid.  In this particular situation, without having seen the bidding documents, it appears that the Controller's position is probably correct and that the failure of Shea to submit their qualifications and schedule with the bid is a material irregularity.  Whether the Controller's position that the project must be re-bid is correct versus awarded to the second low bidder is a matter of the City's policy and the budget for the project.

What is a material irregularity?  How should you make a determination whether an irregularity in a bid is material or immaterial?  Generally, the test as to materiality is whether it gives a substantial advantage or benefit not enjoyed by other bidders.  Since the City of Scranton required certain documents to be submitted with the bid, these became requirements.  A bidder failing to submit them has an advantage or benefit that other bidders don't have.  They have additional time because they don't have to prepare their qualifications and schedule.  In addition, they have the theoretical advantage of deciding after bids are opened whether to take the project (arguing their bid is responsive) or not (arguing that the irregularity is material and their bid is non-responsive).  This is a decision for public agencies only to make.

What should be required with the bid?  In order to help decrease the risk of bid protests, and to provide bidders with as much time as possible to prepare and submit their bid, my practice has always been to only require a few documents to be submitted with the bid: the bid form, a bid guaranty, and anything else legally required to be submitted with the bid. Adding other requirements to the bid submission creates a risk of non-responsive bids.

More Information:  For more information about the City of Scranton's situation, click here to read an article from thetimes-tribune.com.

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com