How Much Are Bidder Qualifications Worth?

The San Antonio Housing Authority (SAHA) recently paid $94,000 more for a construction project because they took the second lowest price, instead of the lowest price.  The second lowest price had better overall qualifications.

Best Value Selection:  SAHA defended their action stating that their evaluation process was not based on the awarding to the low bid, but they assigned points to the bidders based on other factors, including the following, that would ensure they obtained the best value contractor:

• Oversight and Planning
• Scheduling
• Safety and Warranty
• Price
• Strength of Section 3 participation
• Contractor's Women and Minority Business Enterprise plan

Different from Bidder Responsibility:  Rather than just evaluating the qualifications of the low bidder based on bidder responsibility criteria, SAHA assigns points to each of these criteria and then awards to the contractor with the highest number of points, even though their price might not be the lowest price.  

Protest:  SAHA's practice recently led to complaints being filed by a contractor whose bid was $94,000 lower than the bidder awarded the project.  According to SAHA, the protesting bidder's scores on the non-price related factors were not as high as the contractor's who was awarded the project.

What is permitted?  Not all agencies are authorized to conduct a best value selection process using a Request for Proposals for construction projects.

More information:  Click here for more details about the SAHA controversy.

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

Training: Washington State Contractors Claim and Lien Law

Saphronia Young

Washington State Contractors Claim and Lien Law

When:  August 21, 2013 (10:00 a.m. to 11:30 a.m)

Where:  Bellevue, Washington (City Hall, 450 110th Ave NE) 

Speaker:  Saphronia Young, Attorney

Cost:  Free

Register:  Send an email to Mayvis Schwab at MSchwab@bellevuewa.gov with the name(s) and company/agency of who will be attending.

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

Free Prevailing Wage Training

Awarding Agency Prevailing Wage Workshops

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

Cost:  Free

Classroom Training Dates and Locations: (Basic Training from 9:00 a.m. to 11:30 a.m.; Advanced Training from 1:00 p.m. to 3:30 p.m.)

• August 13, 2013 (Yakima, WA)
• August 15, 2013 (Tumwater, WA)
• September 6, 2013 (Lynnwood, WA)

Webinar Training Dates:  (Basic Training from 8:30 a.m. to 11:30 a.m.; Advanced Training from 1:00 p.m. to 4:00 p.m.)

• August 20, 2013
• August 22, 2013

Information and registration:  Click here.

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

Job Opening: Procurement Coordinator in Vancouver, WA

C-TRAN (Vancouver, Washington)

• Position:  Procurement Coordinator

• Location:  Vancouver, Washington

• Closing Date:  Open until filled

• Salary:  $4,661 to $6,618 Monthly
  

• Job Summary: This position is responsible for the coordination and management of the public procurement process for all supplies, equipment, services, and materials required by C-TRAN, the public transit agency for Clark County.

• For More Information and to Apply:  Click here.

Mike Purdy's Public Contracting Blog 

© 2013 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

New Prevailing Wages Effective August 31, 2013

The Washington State Department of Labor and Industries published updated prevailing wages on August 1, 2013.  According to WAC 296-127-011, the new prevailing wages will become effective 30 days later, or on August 31, 2013.

 

Effective Date for Projects:  For any public works project with a bid submittal deadline of August 31, 2013 or later, the new wage rates will be in effect.  For projects advertised prior to August 31, 2013, but which have a bid submittal date of August 31, 2013 or later, public agencies should issue an addendum with the revised prevailing wage rates.  To look up the new wage rates, visit Labor and Industries' website.

 

Current Prevailing Wages:  Projects with a bid opening date of August 30. 2013 or earlier are governed by the current prevailing wage rates dated March 3, 2013.  Since March 3, 2013, Labor and Industries has published one correction to prevailing wages that are noted on their website.

 

Notifying Contractors of Applicable Wages:  It is important for public agencies to make sure that the correct prevailing wage rates are either included in the bidding documents for any public works project bidding on or after August 31, 2013, or that the bidding documents reference L&I's website and include other information.  See my previous blog entry on incorporation of the prevailing wage rates by reference.

 

No Incorporation by Reference of Federal Wages:  For federally funded projects, the actual federal prevailing wage determination must be physically included in the bidding and contract documents, and may not be just included by reference.  In order to eliminate confusion on federally funded projects, it's best to also physically include the state prevailing wages in the bidding and contract documents, even though it is permitted that Washington state prevailing wages may be incorporated by reference.  

 

Differences Between Federal and State Wages:  On federally funded projects, both federal and state prevailing wages apply and the contractor is required to pay the higher of the two wages for any classification of labor.  

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

The Risks of Requiring Use of Specific Subcontractors

Not all subcontractors are created equal.  There are good ones and ones that a public agency may prefer not be used on their projects, based on past performance issues.

The Question:  May a public agency require use of a specific subcontractor, or prohibit use of certain subcontractors?

Risks:  Here are three risks associated with asking or requiring a contractor to substitute a subcontractor they have planned to use with a different subcontractor:

• Cost:  Since the contractor's bid was based on the use of specific subcontractors, requiring the contractor to use a different subcontractor may result in added costs to the contractor that the contractor will want to pass onto the public agency.  In essence, the substitution request or requirement of the public agency represents a changed condition from the bid documents in which the contractor was free to select their own subcontractors.  

• Liability:  If a public agency dictates the use of a specific subcontractor and there are any problems associated with the subcontractor's performance, the contractor will assert that the public agency is responsible for any added costs, since the contractor was forced to use a subcontractor not of their own choosing.

• Third party action:  The substituted subcontractor may take action against both the contractor and the public agency, alleging that they were improperly removed from the project.  Depending on the outcome of such an action, that could end up in court, the public agency may be required to pay damages to the substituted subcontractor.

Strategies:  One of the best strategies for ensuring that qualified subcontractors are used on the project is to establish bidder responsibility criteria related to subcontractors that the contractor would need to demonstrate were met prior to being deemed a responsible contractor and being awarded the contract.  In Washington state, RCW 39.04.350 permits public agencies to establish supplemental bidder responsibility criteria that may relate to the qualifications and experience of the contractor, subcontractors, and key personnel.

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

What is Bid Rigging?

Many public agencies require that bidders submit, as part of their bid a signed "Non-Collusion Affidavit" or "Non-Collusion Declaration."  Sometimes it is a separate form and sometimes it is part of the bid form.

Features of Non-Collusion language:  Here are some of the key elements and statements that bidders are frequently asked to agree to as part of signing a Non-Collusion Affidavit:

• No action in restraint of competitive bidding:  Bidder has not, directly or indirectly, colluded, conspired, connived, or agreed, entered into or offered to enter into any combination, collusion, or agreement to receive or pay, or otherwise taken any action:
• In restraint of free, competitive bidding.
• To fix the bid price of any other bidder
• To fix any overhead, profit or cost element of the bid price

• No solicitation of sham bids:  Bidder has not induced or solicited any other bidder to put in a false or sham bid.

• Genuine bid:  Bidder agrees that their bid is genuine and not collusive or sham.

How does Bid Rigging work?  When a bidder signs a Non-Collusion Affidavit, they are agreeing they are not participating in any form of bid rigging.  Here are five different pictures of what bid rigging looks like in practice:

• Bid price sharing:  Bidder A shares its proposed bid price, so that Bidder B can submit a higher price to ensure that Bidder A is the low bidder and is awarded the contract.

• Bid suppression:  Bidder A agrees to suppress its bid and not bid so that Bidder B can be awarded the contract.

• Bid rotation:  Bidder A and Bidder B both bid but take turns to submit the lowest priced bid to be awarded the contract.

• Bid withdrawal:  Bidder A withdraws its bid to leave Bidder B as the only bidder.

• Non-conforming bids:  Bidder A deliberately submits a bid that does not comply with the bid documents so that Bidder B can be awarded the contract.

In each of the scenarios described above, the losing bidder may be awarded a subcontract by the successful bidder, or it may receive a financial payment from the successful bidder.

More information:  I am indebted to Shila Dorai Raj, CEO of the Malaysia Competition Commission, for the description of the different bid rigging scenarios that I've adapted and noted above.  Click here to read her article on "Zero Tolerance for Bid Rigging."

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