ConstructionPro Week, Volume: 3 - Issue: 33 - 08/15/2014

The Problem with Disguised Sole-Source Specifications

By Bruce Jervis

 

Sole-source or proprietary specifications are generally prohibited on public construction contracts. Private project owners are free to stipulate the precise product they want incorporated into their property. Public project owners are supposed to maintain open competition, specifying functional characteristics, not brand name or source of supply. But, public owners may also desire a particular product. What are they to do? In many cases, they write a disguised sole-source specification.

 

On a recent federal project, the contract specified an asphalt mix batched at a “local” source with at least five years of experience furnishing product to the federal facility in question. The contractor was entitled to propose its own mix design only if no such supplier existed. Not surprisingly, there was one qualified source. The contractor, which failed to protest the terms of the specification prior to bid submittal, was not allowed to propose an alternative source.

 

Contractors are not without recourse in this situation. A disguised sole-source specification can be challenged prior to bid submittal. This is costly, however, and the contractor has no assurance it will ultimately receive the contract. Many public contracts contain standard clauses stating that a proprietary specification merely establishes standards of functionality. But, the burden is on the contractor to show that its proposed substitute meets those standards.

 

What has been your experience? Do you encounter many disguised sole-source specifications? Are you able to detect those specs prior to bid submittal? I welcome your comments.

 

COMMENTS

I unfortunately encounter these all the time in my market here in Seattle. As I am in the roofing world, we have several well known entities that put the onus of "in-house" engineering into their specs (thereby flouting the testing as performed by FM and the ASCE approved uplift labs for this purpose, and taking on professional liability that is to be borne by the EoR on the project...) and also advancing ASTM performance vectors, like ASTMD-2523, who's only purpose is the intellectual evaluation of modbit sheets under lab conditions and has no field use stated in it's own synopsis! The best/easiest way to identify these is to look for "guide spec" indicators that are usuallly not struck by the Designer who elected to use them "as is" from their salesperson. These are usually the company name somewhere on the margins or having them directly listed in the QA portions as having some authority to approve/deny accessories used with their systems and similar "odd" language for "public" work. You will most often find these on Federal jobs (who frankly can disregard the "rules" applying to public works bidding and code compliance too!) so pay special attention to these as they are usually quite vague and this often helps hide the proporietary language as well.....
Posted by: Chad Brickner - Friday, August 15, 2014 12:18 PM


I would also respectfully recommend checking out the Roof Consultants Institute's "Operation Moonshot" literature they have available as it is directly related to this same issue and they have a lot of really cool resources to review on how to identify and combat this practice!
Posted by: Chad Brickner - Friday, August 15, 2014 12:21 PM


16 years designing, specifying and building equipment for the overhaul of nuclear submarines (see wfortuneco.com and NHcleanenergy.com). I wrote many performance specifications for various types of equipment and material. We always got what we asked for !

Apparently there are not many or no people in government that can write a good specification.

Also, I suggest that they start writing performance specs; call me 603 365 0251
Posted by: William Fortune - Friday, August 15, 2014 12:24 PM


I work for a provider of Div. 13 special purpose rooms, and see this nearly every day.

For example, certain components are specified by name, such as microprocessor controllers, for which a number of functional equivalents exist in the market. Yet only one provider has the ability to sell the particular proprietary component part that has been named--or the software that only works with that brand name--again, when functional equivalents or superior products are available.

I truly believe that in a fair and open competition, the architect/engineer should indicate the required physical and operational characteristics and attributes of an item, and be prohibited from limiting any major components by brand name. Substitution requests often place a disproportionate burden on smaller subcontractors, and determinations are often incredibly subjective, carried out by individuals with insufficient product knowledge. Not in the customer's best interest!
Posted by: Angela M. - Friday, August 15, 2014 12:29 PM


In the environmental consulting and services world, we see a lot disguised sole source solicitations. They are usually either very vague (with the preferred company having inside information not revealed to us) or very specific "must have performed these services in Building XXX within the past 2 years". We have actually won low bid on some projects only to be bombarded by a series of specific questions (not in the rfq) that seek to disqualify us. Once they find the right question, then they award to the preferred firm for the higher price with the justification that the low bidder was not qualified.
Posted by: Lee Gerald - Friday, August 15, 2014 12:39 PM


Competition saves taxes and budgets on public projects. As staff architect in a public agency I cannot legally write a proprietary spec - except when standardization has been established by the maintenance department (uniform master keying, faucet replacement parts, etc.). We encourage substitution requests that are truly equal, and if equal, I include them in an addendum…and add them to my base spec for the next project. This sharpens everyone's pencil for bidding and protects our limited funds. I encourage others to pursue transgressions against limiting completion on public work, at the local, state, and federal levels.
Posted by: W. Jody Heady, AIA - Friday, August 15, 2014 1:52 PM


This is a big problem when a certain film is specified. Generally the major film companies will not sell you the film. They only sell to the distributors who do their own installation, there by limiting the job only to that one company. Frustrating.
Posted by: Masters Window Tinting - Friday, August 15, 2014 4:35 PM


Engineering firms that state they cannot write a proprietary spec are erring in judgement and in their thoughts. Their job is to bring " Value" to projects, not just "Low Bidders". Spec what they know is right for the project for the best management practice! Why else do most municipal projects allow for the opportunity to not accept the lowest bidder
Posted by: Pete Miller - Saturday, August 16, 2014 6:29 PM


Yes. The first step is knowing HOW to write a performance based specification that is OPEN

The second step is substitution requests. But you should have your substitution provider call the designer of record directly to PROPERLY EDUCATE them as to why their product is an "approved equal"

And lastly, the discussion is about public contracts. If you have an issue, detail that issue in writing and send it to that agencies director, copy all the local news stations, radio stations, senator, House of representatives, chamber of commerce, etc. That way EVERYONE is aware that a public agency is disguising sole source practices
Posted by: Daniel Waller - Sunday, August 17, 2014 1:45 AM


As the owners rep I deal with this all the time. My specs always state or eaqual and I try to accommodate, new better solutions but, sometimes I only want a specific type or model for maintenance or IT performance. What I build needs to be maintained for years to come. Just a different side of the story.
Posted by: Steve - Sunday, August 17, 2014 3:47 PM


We specify water and wastewater treatment equipment, including pumps, instrumentation and controls for both public/government and private sectors. Generally we specify a minimum of three manufacturers and add the phrase "or approved equal. This provides sufficient competition and does not disqualify any manufacturer who can meet the specification. In some cases, the Owner requests one manufacturer in order to match an existing established manufacturer for standardization, O&M and spare parts inventory purposes. Then and only then would sole-source be considered. In these cases a waiver would be required for public/government projects.
Posted by: Craig Hamilton - Monday, August 18, 2014 8:51 AM


This is an age old problem. I worked for a federal agency for 26 years in various positions dealing with construction procurement and now have almost 20 years in the construction management world, again on Federal work.

if a federal agency has a legitimate reason to be proprietary there is a process called Justification and Approval (J & A). The justification is developed at the agency level asking for the product and the Approval has to be made at a level high enough to prevent a conflict of interest. This is a 4 page document with supporting attachments. I did many and all were approved. The general experience is that very few are approved and that is due to inadequate justification.

As in general government workers are by definition "lazy" and not highly technically qualified it is easier to weasel in a disguised spec usually written by the supplier they met at the 19th hole that says heh, I can get my product used for you. I never resorted to that tactic but did my job and properly edited the guide spec to get the performance I needed.

When I received a variance request on a allowed

3 products are equal, the red flag went up. Almost always they were $ driven not performance driven. Again my lazy co-workers would approve on the basis they were saving tax money instead of really evaluating. I found the evaluation was easy as in a very short time the real motive was revealed.

Now in the contractor world, there is never time in the proposal stage to develop "Or Equals" so you price the item they want and move on. After that if you win who cares. At that point the real money is in value engineering proposals.

Ron
Posted by: Ron Vietmeier - Thursday, August 21, 2014 12:48 AM


I rarely accept a sole source request unless it is a machine part or something that has been standardized and even then there is generally some competition from several suppliers. In construction we prefer using the term "basis of design" whereby we name a specific product both for its performance criteria and physical properties. Sometimes we have lazy A&E's who are too quick to accept substitutions and we wind up with change orders because it causes redesign costs.
Posted by: John Kida - Thursday, August 21, 2014 9:42 AM


 









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