Fierce disagreements about the fairness of the Best-Value bidding process adopted by the Pennsylvania Department of General Services (DGS) have taken the issue from the job site to the courtroom.
The DGS has received heat from the Associated Builders and Contractors of Pennsylvania (ABC) since April when it approved a new process of using best-value requests for proposals pertaining to complex construction projects valued at more than $5 million.
The state’s best-value process calls for bids to be scored based on their price, minority-owned or woman-owned status and technical package, which includes criteria such as a contractor’s track record. The bid price will determine 60 percent of a company’s score with the technical package accounting for 30 percent and participation by women and minorities making up the remainder.
“Best-value contracting is the same competitive procurement process that the Commonwealth uses to select every other professional service,” said Frank Kane, press secretary of the DGS in Harrisburg. “In fact, construction professionals are the last group of professionals not selected through the use of competitive proposals in Pennsylvania. We expect best-value contracting to reduce the cost of delivery for our capital projects in a number of areas.”
However, the ABC maintains the DGS policy will actually reduce the number of interested bidders on construction projects, thereby decreasing competition and increasing the cost of construction projects at the expense of taxpayers. A complaint filed by the ABC in the Commonwealth Court in October alleges the state’s newly adopted process fosters favoritism and is a poor substitute for hiring contractors based only on competitive bids.
“ABC is not opposed to the concept of best value, but believes it should be done in an open and objective manner supported by all stakeholders in the public works construction industry, not a small segment of the market, which is being done by a best-buddy policy,” said Hank Butler, government affairs/lobbyist of the ABC of Pennsylvania. “This is a secretive and subjective bidding process that will significantly hinder competition and increase the cost of taxpayer construction projects.”
Butler said the ABC was informed in May 2004 that DGS officials were considering the implementation of the new bidding plan. ABC had asked to be part of the development process, but DGS denied the request and unveiled its new plan in January.
Kane said the DGS began its effort two years ago to analyze the data from capital construction projects for the previous five-year period. He stressed that the DGS rewrote its policy to incorporate ideas from contractors and other private sector groups after an extensive period of public meetings attended by ABC representatives, as well as several hundred contractors and other industry professionals. DGS also met privately on two occasions with ABC representatives.
“After several meetings with DGS, it was clear that they were not willing to work with the ABC and, therefore, the ABC sees no alternative but to scrap their policy,” added Butler. “Pay-to-play and political kickbacks have become all too familiar terms to taxpayers. ABC of Pennsylvania exhausted all efforts to work with the administration and had no other alternative but to challenge this effort through the legal process. When billions of taxpayer dollars are at stake, our public officials must do everything in their power to create a system that shines an open and strong light on the process.”
In the past, DGS has awarded construction projects to private contractors by using a competitive and public bidding process to ensure the state gets the best prices in an open system. The ABC maintains the best-value plan would not only allow the state to select more expensive bids, but would also let a subjective five-person panel choose the winners.
Kane said the DGS has no intention of amending its plan, although improvements and modifications will be made as necessary in consultation with the construction industry after the process is used four or five times. The first project that was bid under the best-value process was the Foster Student Union Building at Cheyney University of Pennsylvania in Cheyney. The project was awarded in the third quarter of 2005.
“The DGS Public Works unit is moving toward best-value contracting because we have experienced a number of challenges that the previous system simply does not allow us to address,” noted Kane. “Additional costs and change orders can quickly escalate, increasing the final cost of public works projects to Pennsylvania’s taxpayers.
“Bids submitted under the old system can be misleading. Both direct payments to contractors and the indirect costs due to missed schedules, increased administrative overhead and poor performance are almost always substantially higher than the original bid upon which the Commonwealth made its decision to award.”
Kane does not anticipate the new plan will impact the construction industry because it is the same process that has been used in the private sector for several years.CEG