Selecting Subcontractors on GC/CM Projects

In Washington State, there is a spectrum of tools available for selecting subcontractors on a General Contractors/Construction Managers (GC/CM) public works project that impacts the potential quality and experience of the subcontractors.  

Chapter 39.10 RCW outlines GC/CM as an alternative public works contracting delivery method that is available for public agencies to use.

• Low Responsible Bid:  The traditional method for selecting subcontractors on a GC/CM project is for the GC/CM to publicly and competitively bid the various subcontract packages and award each package to the low responsible bidder submitting a responsive bid after negotiation of the Maximum Allowable Construction Cost (MACC) between the GC/CM and public agency.  Use of "specific objective criteria" must be used by the GC/CM and public agency to determine subcontractor responsibility (RCW 39.10.380 (2)). 

• Early Subcontract Bidding:  RCW 39.10.370 (2) and (3) outlines two variants of this low bid process that permit early bidding of some subcontract bid packages before the Maximum Allowable Construction Cost (MACC) has been negotiated between the GC/CM and public agency.

• Pre-Qualification of Subcontractors:  Rather than simply rely on awarding to the low subcontract bidder, another tool from RCW 39.10.400 permits the GC/CM and public agency to essentially pre-qualify what subcontractors may submit bids.  This process requires a public hearing to obtain input on the desirability of establishing "subcontractor eligibility" criteria before issuing a Request for Qualifications and evaluating responses.  Pre-qualified subcontractors may then submit bids and the subcontract package is awarded to the bidder with the lowest responsive bid.

• Selection of Mechanical and Electrical Subcontractors Through RFP Process:  RCW 39.10.385 became effective on June 10, 2010.  It permits the selection of the Mechanical and Electrical subcontractors through a process very similar to the process used by the public agency in selecting the GC/CM (qualifications and bidding on some prices, with the Maximum Allowable Subcontract Cost negotiated between the subcontractor and GC/CM).  I have written a summary outline of this new process which is available on my website.

If you have any questions about any of these processes or would like GC/CM training for your agency or company, please contact me.

Training: Introduction to Public Procurement

Introduction to Public Procurement

When:  November 8-10, 2010

Where:  Bellevue, Washington (City Hall)

Instructor:  Robin Rickard

Cost:

• Prices below are discounted price for early registration)
• $570 (NIGP Chapter and National Member)
• $570 (NIGP National Member)
• $745 (NIGP Chapter Only Member)
• $745 (Non-NIGP National Members)

Description:  The work of public procurement is no longer a clerical function performed independently by various people throughout different agencies or departments within a government entity.  This class provides an overview of the ever-changing profession by identifying fundamental concepts that will affect procurement in the public sector.
 
More Information and Registration, click here.

Are You Establishing an Estimate for Your Public Works Projects?

Are you establishing an estimate for your public works projects?  It's not only a good practice, but required for public agencies in the State of Washington (RCW 39.04.020), and undoubtedly in other states as well.

Why is development of an estimate a good practice and/or required?  Because most types of government agencies have different thresholds that impact the type of bidding process to be used, it is important to have an estimate to help choose the appropriate selection process.  In addition, if your project includes federal funding, many federal agencies require state and local agencies receiving federal money to develop an independent cost estimate prior to solicitation.

Do you have to publish your estimate for bidders?  Check your state and local laws to see what is required.  In Washington State, the estimate on a public works project is not required to be published (unless specific laws or policies related to your agency require it).  

• Why Publish the Estimate?  Some public agencies publish the estimate, or a range of the estimate, in their advertisement for bids, to give bidders a sense of whether the project fits within the size of projects they typically perform. Thus, the estimate serves as an important marketing tool.

• Why Not Publish the Estimate?  Other agencies do not publish the estimate in the advertisement for bids out of concerns that bidders will bid up to that amount, even if the cost of the work is less.  However, it seems to me in this highly competitive construction market that bidders will develop and submit very competitive bids, often even reducing their profit to nothing just in order to obtain the project and keep their workers busy. 

Is the estimate subject to public records disclosure?  In Washington State, even if you do not publish the estimate in your advertisement for bids, the estimate must be disclosed if your agency receives a public records request.  Check your state and local laws to determine whether the estimate is subject to disclosure upon request.

What Happens If You Get an Audit Finding?

Audits are a part of everyday life for those managing government contracting and purchasing.  State and local governments, as well as the federal government, have auditors that audit to ensure that public agencies are complying with various laws, regulations, internal agency policies and procedures, and grant provisions.

What are some of the impacts of an audit finding?

• Negative Publicity:  Depending on the nature of the finding, it may be front page news.  As such, it casts your agency in a negative light from the public's perspective, and becomes a political issue as elected officials and administrators attempt to tighten up your agency's practices to prevent future problems.

• Personnel Actions:  Again, depending on the nature of the finding, it may result in agency employees being subject to disciplinary action, including personnel warnings, suspension without pay, and even termination.

• Loss of Grant Funding:  Some applications for grants will require agencies to disclose any audit findings, and such findings may impact a decision for an award of a grant.  Granting agencies want to make sure that those they are awarding grants to are managed properly.

• Procedural Changes:  Some audit findings are the result of an oversight that indicates a lack of internal controls to ensure that proper procedures are followed.  Other audit findings occur because an agency doesn't have policies and procedures in a particular area.  In either event, an audit finding will result in changes to how an agency operates to ensure tighter controls, and to prevent future findings.

• Follow-up Scrutiny:  An agency that has received an audit finding may be scrutinized more closely in future years by the auditor to ensure the agency has corrected the problems.  In Washington State, an audit finding may also lead to a Performance Audit of part of the agency's operations.  

Practical Tips:  Know what laws, regulations, internal policies and procedures, and grant provisions apply to the contracting and procurement of goods and services for your agency.  Obtain necessary training of your agency personnel.  Establish clear checks and balances to ensure compliance. 

Lean Construction Dinner Meeting

Concrete Evidence that the Lean Approach Saves Time and Money

When:  Tuesday, October 5, 2010 (5:30 p.m. to 8:00 p.m.)

Where:  Seattle, Washington (222 Yale Avenue North, 2nd Floor, North Conference Room)

Speaker:  David MacNeel, Baker Concrete

Sponsored by:  Lean Construction Institute, Cascadia Chapter

More Information and Registration: Click here.

Registration Deadline:  September 30, 2010

Bid Protest on Wisconsin City's Alternate Bid

The second low bidder on a City of Burlington, Wisconsin project to construct a parking garage downtown has filed a bid protest with the City, claiming the City should have awarded the project to them with an alternate bid price that was lower than the base bid price awarded to another firm.

Alternate Bid Lower Than Base Bid:  Metro Parking Structures, LLC submitted a bid for an alternate bid (using pre-existing materials versus new materials in the base bid) for $2.044 million.  The City chose not to exercise the alternate bid using pre-existing materials and thus awarded the project to Riley Construction for a base bid amount of $2.09 million.  Metro's bid for the base bid was $2.31 million.  Riley Construction has already begun work on the project.

City's Action:  The City Council met in closed session on September 21, 2010 but made no decision on the bid protest.  Based on the information I have on this project, it appears the City was well within their rights to award to Riley Construction as the low bidder on the base bid.

For more information, click here to read an article on the bid protest from MyRacineCounty.com.

Practical Tip:  When awarding a contract based on a bid that includes alternate bids, a public agency should decide on the merits of the construction option whether it intends to exercise the alternate or only award the base bid.  The determination of the low bidder should be based on comparing the low base bid prices of all bidders, or the low bid alternate prices of all bidders, depending on which option is selected.  For a more detailed discussion of this issue, visit my blog posting for August 26, 2009.

Pierce County (WA) Purchasing Forum

Pierce County, Washington is sponsoring a free Purchasing Forum on Friday, October 1, 2010 from 8:00 a.m. to noon.

• Learn first-hand how to register and compete for contracts with select federal and state government agencies, schools, and public entities in Pierce County.
• Ask questions of a panel of government purchasing agents.
• Meet one-on-one with purchasing agents
• Meet and interact with Pierce County business owners and managers

For more information and to register, visit the website of Pierce County's Economic Development Division.