KEEPING OUT THE RIFFRAFF: CITY OF RALEIGH BIENNIAL PIPELINE CONSTRUCTION PREQUALIFICATION
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1 KEEPING OUT THE RIFFRAFF: CITY OF RALEIGH BIENNIAL PIPELINE CONSTRUCTION Aaron Brower, P.E., City of Raleigh Eileen Navarrete, P.E., City of Raleigh Taylor Barto, E.I., City of Raleigh ABSTRACT In an effort to maintain high quality infrastructure, and in response to potentially avoidable issues over the last few years on several construction projects, the City of Raleigh Public Utilities Department (CORPUD) has embarked on a contractor prequalification process for all of its new pipeline construction projects. The goal of this process is to prequalify as many high quality contractors as possible to complete work on Public Utilities projects. Prequalification is an inherently time consuming and lengthy process. Given the volume of pipeline projects bid by the Public Utilities Department each year, prequalification for each individual project is not practical. Instead, CORPUD has advertised one Request for Qualifications (RFQ) that would include all of its pipeline projects for the next two years. The RFQ was advertised in January 2014, and 25 contractors submitted qualifications packages. Contractors were permitted to submit qualifications for pipeline construction up to 36 inches in diameter as well as pipeline construction larger than 36 inches. They were also able to submit qualifications for fiberglass pipe installation. In addition, contractors were able to qualify into several different financial categories in accordance with their individual project and total bonding capacity. Contractors had to submit several types of detailed information for review, including claims records, financial viability, and overall project performance. Special emphasis was placed on each contractor s safety record and safety program. KEYWORDS Prequalification, Bidder, Contractor, Pipeline, Construction INTRODUCTION Over the last several years, the City has had multiple issues with pipeline contractors that could have resulted in litigation. These issues generally occurred on projects where the contractor was not familiar with the City or the local area. Problems on these construction projects included schedule, permit compliance, site restoration, working outside contract hours and locations, and safety. In the past, the City has been reluctant to disqualify contractors after bids have been received, with only a few exceptions. Despite checking the references provided by unknown contractors, the City has often not learned of a contractor s past issues until similar ones begin showing up on its own projects. Engaging in a prequalification process allows the City to fully vet each contractor before bidding on a project. Prequalification under North Carolina General Statue (f)(2) is defined as a process of evaluating and determining whether potential bidders have the skill, judgment, integrity, sufficient financial resources, and ability necessary to the faithful performance of a contract for construction or repair work. The limited economy seen over the last several years increased the number of bidders per project, which increased competition and decreased project costs. More competition is usually a benefit to the owner. A problem with such an environment is receiving bids from more unqualified contractors than usual and them being the low bidder because they were willing to take more risk or didn t have a clear understanding of the scope of work. Unqualified in this sense refers to a lack of resources or experience to properly complete a project on schedule. This problem also increases the chance for change orders or
2 litigation, which no longer reduces cost to the owner. North Carolina law requires State and local governments to accept the lowest qualified responsible bidder. Several components were considered to be involved in the prequalification packet for evaluation. The ones that proved to hold the most value to CORPUD to remain objective include: experience with previous projects, resources, litigation history, business attributes, and safety. With these core values in mind, a non-point and point valued scoring system was developed and outlined in the Request for Qualifications (RFQ) in an effort to remain fair, consistent, and transparent with clear expectations. The goal of this process was to prequalify as many high quality contractors as possible to complete work on Public Utilities projects. METHODOLOGY The RFQ was sent out in January 2014 and twenty five contractors submitted qualification packages. The RFQ was written to be as clear and direct with requirements as possible, keeping the outcome objective, transparent, and defendable. Components of the RFQ were divided into non-point rating items and point rating items, all of which line up with the expectations outlined in the definition of prequalification in GS Non-point rating items included responsiveness to RFQ, debarment status, contractor s license, bonding capacity/statement, and project performance. Only responsive applications were considered and evaluated as stated in the RFQ. By submitting an application, the Applicant certified that neither it nor any affiliated entity were currently debarred from submitting bids or had otherwise agreed not to submit bids on contracts with any government or business entity. The Applicant was required to provide a copy of their North Carolina Contractor s License, or provide a statement indicating that they were able to acquire one before submitting a bid on a project. To prove bonding capacity, the applicant had to provide a signed statement from its Surety stating that, based on present circumstances; the surety would be willing to provide bid, performance, and payment bonds for the Applicant in connection with projects in the estimated range for which the Applicant is applying. Emphasis was placed on past performance on Public Utility projects, when applicable, which included demonstrating management, manpower, and expertise in pipeline projects. Project performance was broken down into these categories: fiberglass pipe, pipe up to 36 inches, pipe greater than 36 inches, contracts up to $2 million, contracts $2 million to $10 million, contracts $10 million to $20 million, and contracts greater than $20 million. Each applicant was asked to indicate under which of these it wanted to be reviewed. A minimum total score of 80% on the point rating items was required for prequalification. Point rating items were listed as personnel qualifications/experience, references, financial data, safety performance, claims/final resolutions/judgments, failure to complete applicant, and failure to complete partner/officer. Points on each category were scaled based on their importance. For example, safety data and procedures are extremely important to Public Utilities and were given greater weight to the total score when compared to everything else listed. Safety performance was asked to be represented by Experience Modification Rating (EMR), Days Away, Restricted, or Transferred (DART), and OSHA data. Information such as safety performance and financial data was compared to industry standards in order to scale from unfavorable to most favorable. Other information was judged on a more qualitative scale. Experience explanations were reviewed with special attention drawn to the categories with which the applicant asked to be prequalified. The references were called with questions regarding construction managers, designers, adherence to schedule, quality of completed work, and overall cooperation and coordination. Evaluation of the Applicant s failure to complete projects was primarily based on the number of occurrences and the explanations for the failure to complete in conjunction with the references on those projects. Public Utilities reserved the right to adjust the scale, depending on the number of qualified applicants due to this being the first prequalification of this nature. Public Utilities also upholds City of Raleigh s policy towards the encouragement to bidders to use small disadvantaged minority and women-owned businesses as subcontractors. RESULTS
3 Several staff members from CORPUD reviewed the proposals and CORPUD also enlisted three different consulting firms to independently review the proposals to demonstrate that qualifications were not identified as a result of favoritism and it also increased transparency. Results were released in May 2014 with City Council s approval. Overall there were 22 of the 25 applicants prequalified. Three Applicants chose to withdrawal their applications from being prequalified. Items that would cause an Applicant to not be prequalified include lack of staying on schedule, nonrelated references, limited utility experience, poor reviews from references, and discrepancies with OSHA records. The intent of the RFQ was for contractors to identify all safety citations that had been levied over the past five years. Once review of the prequalification packages began, it was obvious that some contractors reported citations company-wide, some contractors reported only on the utility division, and some had discrepancies in general with the information that was posted on OSHA s website. It is important to specifically state in the RFQ what the prequalifying entity wants to review. DISCUSSION During the latest legislative session, the North Carolina General Assembly revised the law associated with prequalification of contractors by State and local governments through a complete overhaul of N.C.G.S , Session Law The old law allowed prequalification of contractors by local governments for any construction project with no specific guidance on how to perform that prequalification process. The new law identifies specific criteria that a local government must meet in order to prequalify for a construction contract. The new law was a result of a study prepared by the joint Purchase and Contract Study Committee. The Committee found that the existing statutory language was too broad and open to subjective interpretation, and the use of prequalification by local governments was inconsistent. If local governments choose not to prequalify, the local government is required to use the responsible bidder standard to evaluate bids after they are received to determine if the contractor is qualified to the work. The new law specifically prohibits prequalification of contractors unless all of the following apply: 1) one of the following contracting methods is used: separate-prime bidding, single-prime bidding, dual bidding, 2) an objective prequalification policy is adopted by the governing authority (i.e City Council), applicable to all construction or repair work, prior to the advertisement of the contract for which prequalification is to be used; and 3) an assessment tool and criteria for the specific project has been adopted, which must include the prequalification scoring values and minimum required score for prequalification on that project. If local governments meet the requirements above to allow prequalification of contracts, specific requirements of the prequalification policy itself include: (1) The prequalification policy created by the governmental entity must be uniform, consistent, and transparent in its application to all bidders. (2) All bidders who meet the prequalification criteria must be prequalified to bid on the construction or repair work project. (3) The policy must clearly state the prequalification criteria, which must comply with all of the following: a. Be rationally related to construction or repair work. b. Not require that the bidder has previously been awarded a construction or repair project by the governmental entity. c. Permit bidders to submit history or experience with projects of similar size, scope, or complexity. (4) Clearly state the assessment process of the criteria to be used.
4 (5) Establish a process for a denied bidder to appeal, to be completed prior to the opening of bids and which would allow sufficient time for a bidder subsequently prequalified to submit a bid on the contract. (6) Outline a process by which the basis for denial of prequalification will be communicated in writing to a bidder who is denied prequalification. If the governmental entity opts to prequalify bidders, bids submitted by any bidder not prequalified shall be deemed nonresponsive. This subsection shall not apply to bidders initially denied prequalification that are subsequently prequalified pursuant to a protest under the governmental entity's prequalification policy. The new law is effective for contracts awarded on or after October 1, CONCLUSIONS Several laws and requirements that are placed upon governmental entities while having good intentions can sometimes place those entities in situations that are not beneficial to the public. Prequalification of contractors for public construction projects is a tool that governmental entities have to keep out the riffraff in a low bid wins environment. Prequalification still isn t full proof as even some of the most qualified contractors can have that project. Changes to law surrounding prequalification provide a good guideline for governmental entities to use when prequalification of contractors is desired. Those same changes in the law will certainly modify the way that prequalification of contractors are conducted. In the City of Raleigh Public Utilities Department s case, it will no longer be able to use a blanket prequalification for all of its pipeline projects as the new law requires the entity to prequalify on a project by project basis. Unless the law can be modified to include blanket provisions for projects of similar scope such as pipeline projects, the City will now have to determine when prequalification of contractors is appropriate as the resources required for prequalification on all contracts would be too extensive to perform for every individual pipeline project.
5 APPENDIX A Scoring Sheet for CORPUD Biennial Pipeline Construction Prequalification Applicant Name: EVALUATION SUMMARY A. NON-POINT RATING ITEMS Category Satisfactory Unsatisfactory 1. Responsiveness to RFQ 2. Debarment Status 3. Contractor's License 4. Bonding Capacity/Statemement 5. Project Performance a. Fiberglass Pipe b. Pipe up to 36 inches c. Pipe greater than 36 inches d. Contracts up to $2 million e. Contracts $2 million to $10 million Contracts $10 million to $20 f. million g. Contracts greater than $20 million B. POINT RATING ITEMS Weight Grade (0-5) Total 1. Personnel Qualifications/Experience 3 2. References a. Designers/Construction Managers 4 b. Owners i. Adherence to Schedule 3 ii. Quality of Completed Work 4 Overall iii. (cooperation/coordination) 3 3. Financial Data 4 4. Safety Performance a. EMR/DART/OSHA Data 5 b. Company Safety Program/Policies 5
6 5. Claims/Final Resolution/Judgments 4 6. Failure to Complete - Applicant 4 7. Failure to Complete - Partner/Officer 3 Grading Scale: Total Score: 0 = Unfavorable, 1 = Questionable, 2 = Below Average, 3 = Average, 4 = Above Average, 5 = Most Favorable = 0.00 Total Score Possible Score Overall Grade (%) Comments: Unsatisfactory 0 Fiberglass Pipe 0 Pipe up to 36 inches 0 Pipe greater than 36 inches 0 Contracts up to $2 million 0 Contracts $2 million to $10 million 0 Contracts $10 million to $20 million 0 Contracts greater than $20 million 0 Total Score 0 Total Percent 0.00 Comments Test
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