“Local Workforce Important to Bid Process”
by
Jayne Snyder
Tim Clare
&
Chris Beutler
The Journal Star editorial, “Bidding behind the veil” argues that local sub-contractors should be able to compete on an equal basis with national firms in bidding for arena contracts. The members of the Joint Public Agency (JPA) agree. That is why we chose the Mortenson-Hampton proposal for bidding arena sub-contractors rather than the City’s traditional e-bid process.
Lincoln residents have many goals for the arena’s construction. They want to control costs and deliver the best value to taxpayers. They want quality work so the Arena has a long and productive life. They want the arena to open on-time and on-budget as promised.
Like the editorial board, they also want to make sure that the public money invested in the arena supports local labor and local businesses. It doesn’t make sense to send our locally generated dollars out of state.
The City’s traditional e-bid process does not allow for the consideration of local businesses and workers as one of the criteria for determining subcontractors. The City’s traditional e-bid process REQUIRES hiring the firm with the lowest, responsible bid. No preference can be given to bidders who will employ local workers.
The arena is attracting nationwide attention from the building industries hard hit by the national recession. Under the City’s traditional e-bid process, a Chicago-based subcontractor could be awarded an arena contract, even if its bid was only a few dollars cheaper than those submitted by firms that employ Lincoln workers. The JPA was concerned that this lack of flexibility could result in Lincoln tax dollars going to out-of-state workers instead of our local businesses and labor force.
The Mortenson-Hampton process also allows the evaluation of several important factors in choosing sub-contractors:
- safety records
- experience in building similar projects
- quality of work
- use of technology to increase efficiency
- a record of meeting schedule demands
The City’s e-bid system also does not permit the ongoing negotiation that will help Mortenson-Hampton drive down costs and ensure the City receives best value. After a bid is submitted, Mortenson-Hampton could not force subcontractors to “sharpen their pencils” in order to find additional savings. This added leverage is the key to getting subcontractors to compete and ensuring the best value at the best price. While “lowest bid” sounds good, it sets a standard that cannot be lowered further, a detriment to taxpayers.
The Governor and the Legislature recognized municipalities’ need for flexibility. The “construction-manager-at-risk” (CMR) procedure they passed into law allows for the type of bidding proposed by the arena project’s CMR, Mortenson-Hampton.
The Mortenson-Hampton proposal best meets the priorities of the public and the JPA. It allows Mortenson-Hampton to conduct a more thorough evaluation of the subcontractors. They can negotiate for lower prices, even after bids are submitted. They can consider all the criteria that are hallmarks of long-term project value, including commitments to utilize our local workforce.
The vast majority of large, complex, publicly-funded projects around the country successfully use this type of process. Recent examples include Target Field in Minneapolis, Sprint Center in Kansas City, the KFC Yum! Center in Louisville, the FedEx Forum in Memphis, and Salt River Fields in Phoenix.
The concern about transparency in the process is valid. That’s why the JPA adopted the following amendments that strengthen public notification:
- All evaluation criteria will be clearly stated in the RFP’s.
- After awarding contracts, the scorecard and evaluation of ALL subcontractors will be published at haymarketnow.com.
- The names of all subcontractors who respond to the Mortenson-Hampton proposals.
- The JPA reserves the right to have a member attend all proceedings where the subcontractor evaluation and scoring process is conducted.
The final agreement will allow the transparency the public needs to examine Mortenson-Hampton’s rationale for their sub-contractor selections. It also preserves their ability to consider factors such as the use of local businness and labor in their decision-making process.
It is important to remember that if Mortenson-Hampton exceeds the construction cost limit, they are responsible for paying cost overruns. They have great incentive to hire the best subcontractors at the best possible price, creating the best outcome for Lincoln and its taxpayers. The result will be a world class arena for Lincoln.
