When Was the Last Time You Read a Bid Bond?

Not all bid bonds are created equal.  

How much will the bonding company pay?  Most bid bonds have language noting that the surety will pay what is called a "penal sum," which is either expressed as a percentage of the bid amount, and/or with a not-to-exceed dollar amount.  If it has a not-to-exceed dollar amount, a public agency should calculate after bid opening whether the not-to-exceed amount meets the required percentage for the bid guaranty, typically 5%.  Here's some typical language from a bid bond regarding the dollar amount:

"...in the penal sum of five percent (5%) of the Principal's [Bidder's] Total Bid Price for the work, this sum not to exceed _________________________________________Dollars ($___________________) (hereinafter referred to as "penal sum") of lawful money of the United States, for payment whereof unto the Obligee [Public Agency]..."

When is a 5% Bid Bond not worth 5%?  Other bid bonds have similar language describing the penal sum, but limit the amount the surety will pay up to a maximum of 5% (or whatever percentage your agency requires), but not to exceed the difference in bid prices between the bidder covered by the Bid Bond and the bidder ultimately awarded the project.  Here's language from a Bid Bond describing when the surety will pay:

"...The Principal and Surety will pay unto the Obligee the difference in money between the total amount of the Bid of the Principal and the amount for which the Obligee legally contracts with another party to fulfill the Contract if the latter amount be in excess of the former, but in no event shall the Surety's liability exceed the penal sum hereof."

Read the bid bond:  If there is a requirement for a 5% (or other percentage) bid guaranty, public agencies should carefully read the language of Bid Bonds after bid opening to ensure that the bid guaranty amount is not limited and is really a full 5% Bid Bond

Adopt standard agency Bid Bond form:  One way to manage Bid Bonds is for public agencies to develop and adopt their own Bid Bond form and require it to be used by bidders.  This will ensure that the agency is protected to the full extent required.

When may an agency collect on a Bid Bond?  A public agency may collect on a Bid Bond (or other form of bid guaranty) only if the bidder has been awarded the project and refuses to execute the contract.

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

Job Opening: Contracts Specialist 2

University of Oregon

• Position:  Contracts Specialist 2

• Location:  Eugene, Oregon

• Closing Date:  April 15, 2013

• Salary:  $21.19 to $32.50 per hour
  

• Job Summary: This position will manage a wide variety of transactions and provide advanced administrative and technical support to the contracting functions within the Purchasing & Contracting Services Department, and to faculty and staff across campus by interpreting contracting policies, regulations, and laws. 

• 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

Design-Build Certification Workshop

In 2012, six projects were given approval by Washington State's Project Review Committee to use Design-Build as the project delivery method.  That represents a significant increase from the two projects that were approved in 2011.  As more public agencies turn to alternative public works contracting methods (Design-Build and GC/CM) for larger projects, it is important that public agencies and the contracting community be knowledgeable about this tool.  In Washington State, the Design-Build law for public agencies is described in RCW 39.10.

Training:  DBIA (Design-Build Institute of America) is sponsoring a week long workshop on Design-Build.  It is part of the process for obtaining certification by DBIA.

When:  April 29, 2013 to May 3, 2013 (7:15 a.m. to 5:00 p.m.)

Where:  Portland, Oregon (111 SW 5th Avenue)

Agenda by day:

• Fundamentals of Project Delivery
• Principles of Design-Build Project Delivery
• Design-Build Contracts & Risk Management
• Post Award Design-Build
• Certification Exam Prep

Cost:

• $2,150 for DBIA members
• $2,750 for non DBIA members

Information and registration:  Click here.

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

Monitoring Prevailing Wages on Federally Funded Projects

Federal funding for public works construction projects brings with it requirements for monitoring to ensure that the contractor and all subcontractors are paying their workers at least the prevailing wage rate applicable for the type of work performed.

Audit finding:  Unfortunately, it's fairly common that public agencies receiving federal funding are not aware of these requirements.  The Washington State Auditor's Office recently issued audit findings against the Oroville Housing Authority in Okanogan County, Washington for failure to obtain and review weekly certified payrolls from the contractor and all subcontractors.  According to the audit, "the Housing Authority spent $2,371,300 in grant funding in 2011, approximately 76 percent of which was paid to the contractor."  

What should be reviewed?  Public agency staff should be trained in the complexities of federal prevailing wages and what should be monitored.  Here's a quick list of some of the things that should be reviewed as part of the process of monitoring payment of prevailing wages.

• Frequency:  Are you collecting payroll reports weekly from the contractor and all subcontractors?

• Subcontractors:  Do you have a system for determining what subcontractors are working on site?

• Reviewing payrolls:  Are you reviewing the certified payroll reports on a weekly basis to ensure that prevailing wages are being paid to the workers?  As part of your review, are you evaluating the following: a) whether the classifications reported are appropriate, b) the hourly wage rate is at least the prevailing wage rate, c) the proper overtime rates are being paid, d) apprentices are registered apprentices who may be paid less than the journey-level wage, e) the payroll report is signed by an authorized individual?

• Documenting your review:  Are you documenting your review of the payrolls by marking the payroll reports?

• Weekly pay:  Are you monitoring to ensure that the contractor and their subcontractors paying their workers on a weekly basis?  This is required by the federal Davis-Bacon Act.

• Worker interviews:  Are you interviewing a representative sample of workers on-site, asking them questions about what work they are performing and how much they are being paid?  Are you correlating this information with what is reported on weekly payroll reports?

• Invoices:  Do you have a process that ties in your approval of a contractor's monthly pay application and invoice with your review and approval of the weekly payroll reports?

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

Developing and Managing RFPs and RFQs

I spoke last week at the Washington Municipal Clerks Association (WMCA) conference on Developing and Managing RFPs and RFQs.  Here's an outline of the 1.5 hour session (a very fast-paced overview), which I also teach as a full day class:

Planning the Procurement

• When to Use an RFP, RFQ, or ITB
• Qualifications Based Selection (QBS)
• Solicitation Documents
• Solicitation Method
• Scope of Work
• Evaluation Criteria
  

Conflicts of Interest

• May the designer also bid as a contractor?

Standard RFP/RFQ Provisions

• Schedule
• Submittal Requirements
• Conversations Before Advertising
• Questions and Changes - Addenda
• Federal Provisions

Evaluation Process

• Evaluation Committee Membership
• Orientation Meeting for Evaluation Committee
• Provide Documents to Evaluation Committee
• Ethical Issues
• Review and Scoring of Proposals
• Interviews
• Sample Interview Evaluation Criteria
• Attendance at Interviews
  

Contract Negotiations

• Scope of Work
• Hours
• Staff Allocation
• Fully Loaded Hourly Rates
• Markup Percentages
• Overhead

Contact me:  If you're interested in talking about me providing this training to your agency or association, please contact me.

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

Job Opening: Buyer

City of Seattle

• Position:  Buyer

• Location:  Seattle, Washington

• Closing Date:  Tuesday, April 2, 2013 at 4:00 p.m. Pacific Time

• Salary:  $31.16 to $36.30 per hour
  

• Job Summary: This position is one of eight buyers who provide centralized purchasing for the City of Seattle and reports to the Purchasing Manager.  The Buyer is assigned a contract portfolio, with a group of related commodities and contracts, many of which require extensive ongoing contract administration.  The Buyer may also be assigned to lead special projects, which may include policy research, WMBE programs, or environmental initiatives or other social responsibility initiatives of the City.

• 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

Job Opening: Sr. Contract Administrator

Port of Seattle

• Position:  Sr. Contract Administrator

• Location:  Seattle, Washington (Port Headquarters, Pier 69)

• Closing Date:  Monday, April 15, 2013 (midnight - Pacific Time)

• Salary:  Minimum $66,359 - Midpoint $82,953
  

• Job Summary: Manage the procurement contract process for routine Service Agreements from inception to closing.

• 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