Top Audit Findings for
Competitive Bidding
Puget Sound Finance
Officers Meeting
November 14th 2012
Purchasing
Folks Aren’t
Allowed to
Retire
Ημερήσια διάταξη
(Agenda)
Four Audit Areas That May Trigger Findings:
1. Uniform Exemptions
2. Federal/State Debarment Lists
3. Change Orders
4. On-Call Contracts
SAO 's Number One
(or so it seems) Finding
THE PROJECT OR PURCHASE SHOULD HAVE BEEN
COMPETITIVELY BID!
 A uniform exemption under RCW 39.04.280 either
doesn’t apply or has been misapplied and the
purchase or project should have been competitively
bid.
 The purchase or project exceeded the agency's bid
limits and should have been competitively bid.
 A change order is for work not in the scope of the
original contract and should have been competitively
bid.
What Does Competitively Bid Mean?
Level 1 - Advertisement, sealed bids, formal bid opening
 Anyone who hears about the bid may submit a bid, as long
as they are qualified - or responsible.
Level 2 - Request for informal bids, sealed bids (recommended),
opening may be informal.
 Those vendors or contractors selected from the
appropriate roster (vendor or small works) may submit an
informal bid, as long as they are qualified - or responsible.
Level 3 - Request for written or telephone informal bids, informal
bid opening.
 Preferred qualified - or responsible vendors or contractors
are invited to submit an informal bid.
Issue #7
Use of an emergency declaration for non-emergencies.
The Town did not solicit bids for the $55,776 Pennsylvania
Avenue South water main project. The project included a
water line extension and electrical work for new homes.
The Council approved the project as an emergency repair;
however, it does not meet the requirements of an
emergency repair and should have been competitively bid.
Or use their small works roster. (Level 2)
Or possibly, since the project is less than their bid limits
(Level 3)
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Issue #6
Use of emergency declaration to add work to an existing
contract.
Three of the change orders, totaling $270,703, were to
repair damaged pipes. The District indicated the repairs
were an emergency, which would be appropriate for this
situation. However, these pipes were in locations outside
the neighborhoods included in the project and should have
been separately contracted.
The emergency resolution should have awarded a
(new) separate contract to the existing contractor.
7
Issue #5
Piggybacking purchase of equipment from another agency
without verifying that that agency followed its bid laws and
RCW 39.34.030(5).
The District purchased equipment during the audit period
totaling $521,570. The District entered into inter-local
agreements with two other fire protection districts to piggyback
on their bids. Using the piggyback process, which allows the
District to use the bid results from the other districts, the
District purchased two fire engines totaling approximately
$394,000.
When piggybacking on other bids, the District should have
ensured the other districts followed their competitive bid laws.
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Issue #4
Declaring sole source for a public works contract (not an
emergency declaration).
On June 11, 2009, the District waived competitive bidding
on a $146,055 construction project by declaring the
contract ”sole source”. State law does not provide for a
sole source exception for public works unless the entity
declares an emergency. The District did not do so and
should have competitively procured the contract.
Or use their small works roster. (Level 2)
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Soon to be available on PSFOA website
Available now at http://www.apwawa.org/Uploads/forums/Bid%20Law%20Exception%2
0Workshop.pdf
Issue #3 (a)
Did not check federal suspension/debarment lists for
purchasing or public works contracts.
• Federal requirements prohibit grant recipients from
contracting with or making sub-awards to vendors who
have been suspended or debarred from doing business with
the federal government.
• The City is required to verify that all vendors receiving
$25,000 or more in federal funds have not been suspended
or debarred.
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Issue #3 (b)
Did not check federal suspension/debarment lists for
purchasing or public works contracts.
• The City can obtain a written certification from the
vendor or insert a clause into the contract where the
vendor states it is not suspended or debarred.
• Alternatively, the City may review the federal Excluded
Parties List issued by the U.S. General Services
Administration. https://www.epls.gov/
• This requirement must be met prior to entering into a
contract with the vendor. We found the City paid one
vendor $49,000 and another $36,000, and did not verify
the vendors were not suspended or debarred.
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Issue #3 (c)
Did not check state suspension/debarment lists for purchasing
or public works contracts.
RCW 39.06.010 - No agency of the state or any of its political
subdivisions may execute a contract:
• For two years from the date that a violation is finally
determined, with any person or entity who has been
determined by the respective administering agency to
have violated RCW 50.12.070(1)(b), 51.16.070(1)(b), or
*82.32.070(1)(b).
• During this two-year period, the person or entity may
not be permitted to bid, or have a bid considered, on any
public works contract.
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Issue #3 (d)
Practice Tip (for PW, Purchasing can be similar):
1. Use a bidder responsibility checklist such as that found
in Appendix D of the CPARB's Suggested Guidelines for
Bidder Responsibility
2. Include both the federal and state debarment/
suspension checks as a box on the checklist.
3. (MOST IMPORTANT) Attach all supporting
documentation for all checklist items to the checklist.
• Including dated printouts of the applicable portions
of the federal and/or debarment webpage checks.
Issue #2 (a)
Change orders for work outside project scope.
 State the scope of the project in terms of implementing the city's master
sidewalk plan, with a prioritized list/map of sidewalks in the contract documents
that exceeded the funds tentatively available, even if detailed plans are not
provided for all of the sidewalk sections.
 State a range of quantities for each unit price item that covers the possibility of
additional funds becoming available (and project segments added), with the note
that unit prices apply throughout the range.
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Issue #2 (b)
Change orders for work outside project scope.
 If the DOE grant was imminent, the city could have shown the landscaping and
irrigation as an additive alternative and secured prices for this work in the original
bidding process.
 State in the Contract Documents, particularly in the Bid Proposal, that the
additive alternate will be added to the project through a change order as funding
permits.
 CAUTION: Think carefully about adding additive alternates during a project if
doing so would change the order of which contractor would have been the low
bidder at the time of bid.
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Appendix H8 in Purchasing, Bidding, and
Contract Management Sourcebook:
http://www.mrsc.org/subjects/pubworks/sourc
ebook/sourcebooktoc.aspx#H
Soon to be available on PSFOA website
Issue #1 (a) On-Call Contracts
“Traditional” Public Works Contracts




Fixed Scope (Point A to Point B or Renovate City Hall)
Predictable Quantities Within Project Scope
Readily Determinable Project Cost
Specified Time Frame For Completion
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Issue #1 (b) On-Call Contracts
On-Call Contracts
 Indeterminate Scope
 Unpredictable Quantities
 Task Orders or Mini-Projects Are Requested on
As-Needed Basis
 Contract Amount Is Not Guaranteed
 Contract Time is on Calendar Basis, Not Based
on Project Completion
 Contracts are Generally 1-2 Years
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Issue #1 (c) On-Call Contracts
System-Wide Maintenance Contracts
 Maintenance activities or repairs that are planned in
advance and budgeted.
 These contracts are usually on an annual basis, with
optional renewals, but multi-year contacts are also
common.
 The project scope references an annual work plan for
system maintenance or master plan for improvements
 Actual work performed depends on the budget amount
available in relation to the bid prices.
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Issue #1 (d) On-Call Contracts
Blog Posts
• Mike Purdy - SAO Opinion on On-Call Contracts
• MRSC - On-Call Contracts Not Kosher
• MRSC - Some On-Call Contracts ARE Kosher
(http://insight.mrsc.org/ )
(Soon to be available on PSFOA website.)
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Issue #1 (e) On-Call Contracts
Notes:
•
•
•
•
On-call A/E and personal service contracts ARE kosher.
SAO said " On-Call contracts are not specifically authorized
in state law."
Contracts for system-wide maintenance/repair contract
are not on-call contracts.
On-call contracts below an agency’s bid limits are
permissible for many agencies. For details on this, please
look at Best Practices for Small On-Call (Work Order)
Public Works Contracts.
(Soon to be available on PSFOA website.)
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Questions?
More Information?
John W. Carpita, P.E.
Public Works Consultant
Municipal Research and Services Center
2601 Fourth Avenue, Suite 800
Seattle, WA 98121-1280
206-625-1300
Fax: 206-625-1220
jcarpita@mrsc.org