As public procurement methods and statutes have evolved, the evaluation of bids and proposals has become less objective. Procurement authorities no longer simply determine the low bid and the financial responsibility of the low bidder. There are now judgments regarding the better technical approach, the relative risk and the “best value” to the public project owner.
These determinations necessitate more elaborate evaluation criteria. But the procuring authorities do not always adhere to the criteria or apply them consistently. That was illustrated in a recent matter before the Supreme Court of Ohio.
A public project owner included prior “violations” of the prevailing wage law as an evaluation factor. The owner rejected the low bid, submitted by a non-union contractor, and announced award of the contract to a higher price union contractor. The rationale was that wage complaints had been filed against the low bidder. But none of the complaints had resulted in a finding of wrongdoing. Was it reasonable to treat these complaints as “violations?”
I invite your comments from both the bidding perspective and the public procurement perspective. As evaluation criteria become more elaborate, is objectivity being maintained or does the process simply confer more discretion on the procuring authorities?
Featured in next week's edition of Construction Claims Advisor:
- California Court Addresses Change Order Pricing Methods
- Change Order Dispute Did Not Justify Refusal to Convey Project
- Construction Manager Had No Obligation to Contractor
Bruce Jervis, Editor
Construction Claims Advisor
This is typical of the liberal mentality of government workers who are themselves increasingly unionized and increasingly obligated policy-wise to union friendly positions. The non-union contractor is obviously guilty if for no other reason than he is non-union. "Prevailing" wages for the most part are identical to local union wage agreements no matter how many union workers there are in the area. I find this infuriating! But the current federal administration will only exacerbate these sorts of conditions.
Dana Madsen, P.E.
Posted by: Dana Madsen | 04/01/2010 at 01:01 PM
I would argue that it is not reasonable to evaluate a bid based on aleged violations of the prevailing wage law. Alegations of prevailing wage violations is a common tactic of unions when targetting a non-union contractor. There does not necessarily need to be an actual violation, simply a disgruntled employee or union mole willing to file a complaint.
By rejecting the bid of a contractor charged but not found guilty of wage rate violations the government agency becomes comlicate in the attack by the union against a non-union contractor.
Posted by: Walt Tack | 04/01/2010 at 01:25 PM
I think we do not have enough information on this case to objectively evaluate it. The comments above are not based on stated facts but on their personal political bias against unions - warranted or not. We need all the facts presented or comments streams like these just cause unneeded dissention.
Posted by: Susan Hopkins | 04/01/2010 at 01:32 PM
I agree with the above. Allegations are not grounds for not awarding to a low bidder. It seems the public was done a great dis service if all the facts presented are accurate and complete.
Posted by: Gordy Love | 04/01/2010 at 01:33 PM
First off I am sick to death of people conflating all UNIONS into some kind of government workers monolith. It is a SKILLED Trade union that is under discussion in the case above, not ACORN or the GSWorkers Union, or the Damnable Teachers Union. Just a point of clarification to start with..
As to the main question at hand...
As long as non union unprofessional contractors are allowed to skirt laws that are there to protect skilled labor we will never see quality pricing or proper profit margins. This is not a "liberal" decision, but one based on the fact that more often the non union contractor I have to compete against has barely skilled or barely literate or barely American workers working slave wages and slave hours. Some or alot of these contractors demand pay givebacks from their workers by threat of Job loss when on projects that have wage protections. The whole industry is hurt by this UNion and NON union alike .
I am a right wing, Tea Party American SubContractor, I am also a UNION Sub-contractor. My people are highly skilled, well trained, professionals with Retiremant packages, Health and Welfare, and Safety protections. They have Protections against unscrupulous contractors bilking them of their pay. So if you find it infuriateing that the Construction industry cant get its profit margins and wages growing again you can blame NON Union underpaid, undertrained workers, workers flooding the market from the southwest. Im not sure I agree with the mere accusation of wrong doing being a standard, in fact I dont. But if the question is should contractors have their ability to win bids based on their ethical reputations. I say here here, and keep those high standards coming....death to the bottom feeders and trunk slammers.
JCox GMA Inc. Phila PA
www.guildmaterialapplication.com
Posted by: Joseph Cox | 04/01/2010 at 01:40 PM
Susan- It's a Supreme Court case in Ohio- it's public knowledge.
Posted by: Carol R. | 04/01/2010 at 01:45 PM
In my view, the discussion of Union vs Non-Union is departing from the basic issue that needs to be considered. The "Instructions to Bidders" should have clearly stated the basis for the "Award" and those should have been the only criteria that should have been considered. The "Ground Rules" should not change after the bids are submitted.
If "prior violations" of prevaling wage laws was a stated criteria for evaluation, then "prior violations" should have been considered. A "complaint" is not a "Violation" and using a criteria different that contained in the bidding documents is inappropriate and unfair.
Posted by: Dick Eustis | 04/01/2010 at 02:06 PM
Non Unions are cheating demanding payback from their employees and unions are sneaking in non union employees and paying off the BA's. This is what this industry has boiled down to. Now it's a matter of getting the FBI involved. That or just take pleasure in watching these companies go under. Question is: How does the honest American contractor get ahead?
Posted by: A. Bost | 04/01/2010 at 02:12 PM
MY COMMENT IS TO DANA ABOVE:
YES PV WAGES ARE VERY SIMILAR TO UNION SCALE. THE DIFFERENCE IS THE FRINGES/UNION ARE PAID DIRECTLY INTO THE EMPLOYEES BENEFIT PACKAGE WHEREAS THE NON UNION EMPLOYEE IS PAYED THE FRINGE DIRECTLY AS A WAGE. SO INSTEAD OF MAKING $24 AN HOUR HE OR SHE MAKES 31 AND SOME CHANGE OR BETTER DEPENDING ON TRADE.
I WOULD BET/ACTUALLY I KNOW THAT THE MAJORITY OF THE NON UNION EMPLOYEES DO NOT HAVE HEALTH CARE COVERAGE OR 401K OR PENSION PLANS. BUT THEY GET THE MONEY..IN FRINGES....I BELIEVE THOSE FRINGES SHOULD BE RECOVERED AND CONTRIBUTED TO A HEALTH CARE PACKAGE.FOR THE NON UNION EMPLOYEES...MAYBE MY TAXES WILL GO DOWN.,...
AS FAR AS A UNION TACTIC AGAINST NON UNION OUTFITS... THATS BULL...UNION CONTRACTORS ARE HELD TO A HIGHER STANDARD OF CHECKS AND BALANCES...THEY ...THE UNIONS AUDIT MY BOOKS ANNUALLY..
BACK TO THE SUBJECT: IF YOUR DRIVING DOWN THE ROAD AND YOU GET A TICKET...ITS ON YOUR RECORD...
UNTIL IT FALLS OFF....
Posted by: RANDY | 04/01/2010 at 02:14 PM
Everyone here is missing the key issue- owners will look for mechanisms to remove a Bid from a contractor they do not want to work with. Having been directly involved with a Bid in Ohio where a poor Contractor was the low bid and the Owner underwent an extensive evaluation to determine how they could invalidate the bid. In that case they chose to accept the Bid but spent a great deal of time and money to monitor the Contractors performance who I might add ultimately did a good job in part because they knew the owner was looking for evidence to be able to exclude them in future work.
If it is legal to include violations, and I think it is, then it is a valid mechanism for evaluation. We include criteria such as experience building a type of facility which those who do not have that experience would state is unfair. Another anology is the use of an arrest record- employment forms as if you have been arrested, not always if you have been convicted.
In this case the Owner seems to be concerned that they are not drawn into a legal case when a Contractor fails to meet law and pay appropriately and that is reasonable to me- to use a qualification as a means to avoid risk.
There are some excellent software packages that allow for an owner to establish a set of criteria for evaluating a contractor and a bid in a quantitiatve method using seperate subject matter experts for the evaluation which can take out the personality factor of the equation. We used these for the London Olympics and they work very well but are dependent ultimately on the quality of the evaluation criteria and their weight.
Posted by: James Deane | 04/01/2010 at 03:02 PM
You're missing the fact most public entities are not nearly sophisticated enough to have a clue how to rationally select the best value to begin with.
Posted by: Nemo | 04/01/2010 at 03:23 PM
This comment is from a non-union contractor: the prevailing wage law does not slant toward anyone, union or non-union. The vast majority of violations of prevailing wage laws are union companies. You read that right ... the non-union people must submit certified payrolls and they can't get away with anything. It's the union contractor that typically does not meet the requirements due to 1. the way they value their benefits, 2. because they don't pay enough in cash, and 3. they pay money for things that are not "approved" plans.
The issue here, as has been noted by several writers, is whether or not it is fair to use these issues to evaluate a bid. Here in KY they started using your WC multipler for 5% of the factor for award to penalize those who aren't safe. You goona blame that on the union boogey man, too?
Posted by: Tom Matthews | 04/01/2010 at 04:51 PM
Another comment from both sides:
I worked for the Union after my hard work I was thanked by being laid off, put in for a card in my local union for three years nothing I worked for open shop since then and currently own my own as for quality,safety,knowledge, and legal status in the US we get an A+ status. I would pit these guys against any union shop not only would the job be professional, the job would be done 30% faster,putting money in dare I say the bad word the owners pocket and their own. The statements of the union workers quality of work supercedes open shop workers is a used up statement please try to come up with a new one. We have had to come behind Union and open shop jobs and staighten them both out. What I have found out is the Company is only as good as it's employees and owner period.
Posted by: LJ | 04/02/2010 at 03:37 AM
Randy - Can you tell me more about the software packages that allow for an owner to establish a set of criteria for evaluating a contractor and a bid in a quantitiatve method? What software have you used? We are looking at using best value and I'd like to look at software packages on this. Thanks.
Posted by: SJ | 04/02/2010 at 05:04 AM
SJ- search online for bid evaluation or tender evaluation software. Most are UK or EU based such as TAP. The software allows you to manage the distribution of information and weighting of evaluation criteria but you still have to come up with the criteria and weights.
Posted by: James Deane | 04/02/2010 at 06:20 AM
I am not qualified to comment on the case at hand, just to offer some comment on the overall process. I've been a Construction Consultant for 37 years. I live in Florida, a Right to Work state, where both union and non-union firms work without too much problem, despite what everyone thinks they know about Florida. Those situations are isolated, and only noteworthy because of the media.
I agree with James Dean about Public Entities not qualified to evaluate bids. Often, the "committee" is made up of purchasing and other generalists who haven't a clue.
Several ways to keep the "trunk slammers" according to Joe Cox, out of the process. Start with a Payment and Performance Bond. If they are disreputable, they probably have poor financing, or at the very least, they will have to pay more for their bonds. Safety can be evalauted by the Worker's Compensation Modification Rates available from the contractor's insurance company. Anything approaching .75 or higher, indicates a problem. Won't the economics of survival eventually settle the matter when these people self destruct?
Lastly, Why not bid private work vs. Public? Perhaps you don't spend any money on marketing and rely instead on RFP's in the Public Sector where you can save that cost too. Pitiful to think knowing that today you must do whatever is good for your firm, not simply what is expedient. Good Firms attract good workers. Treating them fairly keeps them. Reputation and recommendations should be subjective points of evaluation also. Get more information input into the bidding system in order to ferret out the hidden agendas and costs, and the bad boys will not be able to hang in with the good guys.
Hey, I thought Federal Work required Davis-Bacon wage rates?
Posted by: Rich Allen | 04/02/2010 at 07:36 AM
Another way to "equalize" the bidding would be to adopt the European and other foreign countries (South Africa I know about, I lived there for awhile), where the Architects use a secondary Professional called a Quantity Surveyor. Once the project is completed by the Architect, but before bidding, the Quantity Surveyor does a COMPLETE takeoff of materials down to the last nail and brick-tie. They then Stamp and Seal the document, certifying that if the Bidding Contractor uses their numbers, the project can be done with those material lists, and now you have eliminated one of the "subjective" variables so the only thing left of importance is your labor and soft costs, equipment rental/depreciation etc. It is much harder to hide anything now. Subjectivity is virtually dictated by all sorts of break-out items in order to seriously compare contractors, because everyone already knows the material costs.
We probably will never see this system, but it is very interesting to watch it in play and see what goes on in the decision processes.
Posted by: Rich Allen | 04/02/2010 at 07:42 AM
I just wanted to bring a European example into this discussion. In Denmark we have a national system af key performance indicators for both contractors and consultants. Each company has a 'track record' showing their past performance in ability to meet deadlines, defect rate, accident rate and cusomer satisfaction.
All clients within government and social housing are required to use these track records in the procurement. This is a rather simple and fair method to bring past performance into the procurement.
If you would like to know more about the Danish System, please contact me.
By the way - I agree with Carol R. The "Instructions to Bidders" should have clearly stated the basis for the "Award".
Posted by: Peter Hesdorf | 04/02/2010 at 07:56 AM
This is and always has bee a hot topic. Davis Bacon wages (and Convict Labor laws) are supposed to LEVEL the field allowing the efficiency, okay maybe the blown estimate, to prevail. My work puts me to owner and contractor sides. How frustrating in both is talking to a super in English and getting shrugs back (often faked). Project field control? yeah right.
Most regional shopping centers and mega-projects are willing to pay a premium for Time, Cost, and Schedule issues. In the end, the non-union guys want to work in the big sandbox and union guys would love to profit from lower wages. Contractor ratings make sense because they either indicate ignorance of the law (competence), willfully violating the law (Dishonesty), or risky finances, poor quality, and not staying in the project spec's and schedule (performance). You know, the way you would eliminate subcontractors.
Subjective? unfortunately cheating and dishonesty is NOT confined to contractors or owners sides. Remember the Golden Rule! Dem's dat got the gold, make all the rules. It's their money (or they think it is) and within (Again, Mostly) the Law will spend it how they want
Posted by: Ron Zucker | 04/02/2010 at 09:12 AM
In Washington, if a low bidder on a publicly funded project has BEEN FOUND to have violated prevailing wage requirements, the public owner is legally barred from enterin in to a contract with them. This Ohio case (I didn't read it) seems to be based on complaints recorded, but not necessarily substantiated. Bear in mind that substantiating underpayment, or forced under-the-table kickbacks, etc. is tough.
Posted by: Joel Niemi | 04/02/2010 at 11:23 AM
The days for Unions are long gone. Free enterprise drives market prices. Despite this obvious fact, we have a Liberal Chief in Obama, who has already drafted an Executive Order to insert PLA's into federal contracts over 20M. Federal agencies are implementing this DESPITE the fact there is no promulgation of the Exec Order in the Federal Acquisition Regs. So NON-union ktrs...write your Congresspersons. We are breaking our own rules at the federal level every day!!!
Posted by: angD | 04/02/2010 at 01:08 PM
Union Shops like mine have to submit wage reports on prevailing wage jobs just like everyone else.
I also noticed no-one commented on my point about all of construction is down because of so called "free" markets. No such thing when the Government allows an open border immigration policy (and now provides healthcare for them as well) with out the Trade unions construction would never provide respectable wages, we'd all be "pharoes slaves"
I say the more qualifications needed to bid the better,
I also really liked the european system of materials take offs presented with bid packages, that would be incredibly helpfull.
Posted by: Joseph Cox | 04/03/2010 at 05:15 PM
Most of the Union Bosses who have been paid off or cut deals have gone to jail. Locals 825 "op engineers" in NJ , Local 14 in NY
Local 1030, blah blah blah. The biggest joke is that NY union operators get stamps for their benefits and they can trade them for whatever! Drinks at a bar
! And the CAGNY (contractors assoc) supports this It's all BS; these highly paid operators will end up without bennies.. and the contractors have paid a fortune for them to get them!
Posted by: Ethan Turner | 04/03/2010 at 05:58 PM
roar
Posted by: Peter Austin | 04/05/2010 at 04:00 PM
The entire premise is a set-up. It would be illegal for a government agency to throw out a bid based on unproven allegations.
It a non-union contractor bid was rejected then he was guilty of some violation or another.
Who does Bruce think that his audiance is. Anyone in the industry knows what the legal requirements are.
Let's start over. "It was good that the agency threw the contractor's bid out because he had been found guilty of previous wage violations." Now comment on whether or not the contractor should have been given the bid anyway. No!
Posted by: Richard Slawson | 04/06/2010 at 02:41 PM