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« Grants on the Way for Getting Habitat for Humanity Homes Green-Certified | Main | First Wave of Construction Professionals Receive Accreditation Through BIM Education Program »

11/18/2011

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Do They Ever?? I have been in the construction claims consulting business for over 30 years. I have never seen contractors more fearful of pressing the government and owners to act responsibly. Cases In point:
1. Corps of Engineers, Jacksonvillle District. 1.5 million $$ claim filed for Differing site conditions and delays. First response of the Corps was to threaten an unsatisfactory performance rating which is a death blow for "responsible" contractors.
2. Corps of Engineers, Savannah District. Claim filed over two years ago. Settled 6 months ago. Still looking for the money. Prime has not wanted to pressure the Corps because "we still have to do business with them".
3. NAVFAC North Carolina. Subcontractor directed to do change order work in Excess of $500,000. Still not paid anything 2 years later. NOthing. Nada. Prime will not allow sub to meet with the Navy because they do not want to "upset" the Navy, their customer.
4. The tactic is not limited to Governments. Large Industry has learned the tactic. At a 5 Billion dollar steel plant in Alabama, there are repeated stories of intimidated Contractors being forced to give up rightful extra charges thru the threat of discontinued business opportunities. One supplier was actually thrown off the site because of a "business dispute". All other suppliers and contractors were directed not to utilize that supplier for work on that site. Very intimidating for anyone considering standing up for themselves.
5. These issues will continue until the Industry returns to the American System of competition. Low Bidder wins. Today it is run by the Golden Rule. The bureaucrat with the Gold Rules.

There is no dearth of good examples of manipulation of contracting, and manipulation gone awry, but to begin to understand this problem, we need to determine why contracting officers resort to this manipulation. Up until the early 1970s, US Department of Defense (DoD) agencies employed large numbers of construction inspectors to accept work by direct inspection. In 1961, the Armed Services Procurement Regulation (ASPR) directed that all Armed Services (i.e. DoD) contracts over $10,000 employ “Contractor Quality Control (CQC).”

Using inspection to accept work is pretty straight-forward. Using Quality Control, however, was not so straight-forward, as it involves contracting officer monitoring of the contractors quality control system rather than monitoring the work. The initial effort to move to CQC was a noble one, but it lacked training for specification writers and contract administrators, and it lacked some essential tools needed to perform the appropriate monitoring. Some 40 years later, the CQC system is no better than it was in the early 1970s.

Following are some excerpts from the DoD guidance document for using Quality Control in lieu of inspection for acceptance, MIL-Q-9858a QUALITY CONTROL of Dec 1963:

“…The program shall assure adequate quality throughout all areas of contract performance; for example, design, development, fabrication, processing, assembly, inspection, test, maintenance, packaging, shipping, storage and site installation.

“…All supplies and services under the contract, whether manufactured or performed within the contractor's plant or at any other source, shall be controlled at all points necessary to assure compliance to contractual requirements. The program shall provide for the prevention and ready detection of discrepancies and for timely and positive corrective action…”

“…The program shall include an effective control of purchased materials and subcontracted work. Manufacturing, fabrication and assembly work conducted within the contractor's plant shall be controlled completely…”

Instead of the CQC system and the contracting officer “monitoring,” “detecting,” and “controlling,” the contracting officer generally takes a completely hands-off approach to process control, and is left at the mercy of the contractor’s documentation that may be deficient in many ways, but might as well be in a foreign language.

When a contracting officer creates a level playing field for its contracts, there will be little need for any manipulation of bidders, as those contractors not intent upon, and capable of, performing satisfactorily will be discouraged from bidding. The level playing field is the holy grail of contracting, but ironically, most contracting officers, by their own action and inaction, prevent the level playing field from ever developing.

I’ve just about given up trying to discuss this with contracting officers, as the prevailing thought is that the CQC system has been broken for so long that if it was so easy to fix, some smart wizard would have done so many years ago. I can’t speak for failure of those contracting wizards, whoever they are, but I'm pretty sure that competitive bidding can be fixed so that manipulation is not necessary.

"The responsibility determination is controversial because it occurs after bids have been opened and prices exposed."

I have worked in the construction field for over 30 years, 21 of it as an owner's rep for both private and public entities (6 years in state government and 12 years in the federal government.) I have never experienced a source selection process that opened bids prior to evaluating a contractor's qualifications. The premise that public owner's rig the bidding process is totally without evidence in my 21 years of experience. (Note - I have never worked for USCOE or NAVFAC.)

To determine "responsible" you must review the bid submitted with the contractor and confirm that they have the scope of work referenced and identified in the bid documents after you open the bids. You need to site with the low bidder, the only way to find that out is to open the bids.

If a contractor is to have a laborer on site for 40hrs a week to clean up the site and after meeting with them you discover they didn't carry the costs for the laborer, than they are NOT the "responsible" low bidder. If the error is large enough you may want to confirm if they would like to withdrawal their bid. But that’s it, no further confirmation into responsible is necessary nor justified.

"Experience" now that’s a grey area up for personal interpretation.

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