2011 2:00:00 PM

Monday, October 24, 2011 2:00 PM
Legislative Building, 745 4th Street, Sparks, NV 89431

General Business: 6.3

Title: Consideration and possible rejection or affirmation of bid protest concerning City of Sparks Bid #11/12-004 - 2012 Permanent Patch program.

Petitioner/Presenter: Dan Marran, CPPO, C.P.M. - Contracts and Risk Manager/Dan Marran & Shirle Eiting

Recommendation: It is recommended that the City Council reject the protest made by West Coast Paving.

Financial Impact: There is no relevant cost to the hearing of the protest being offered. However, if the protest is upheld and the contract is eventually awarded to the protesting party, that action would result in an additional contract cost of $3,450 above the cost of the apparent low bidder.

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: The City of Sparks received 2 bids for the 2012 Permanent Patch Program (Bid #11/12-004). The bidder that was ranked second has filed a formal protest with the City concerning the responsiveness of the apparent low bidder. The issue of the protest is directly due to new language added to NRS by SB 268 of the 2011 session of the Legislature and how local agencies and contractors are varying in their interpretation of that language. City staff believes that the apparent low bidder (Q & D Construction) is in substantial compliance with the law and that the protest made by West Coast Paving should be rejected.

Background: Background (Bid & Protest): On September 28, 2011, the City of Sparks publicly opened Bid #11/12-004 for the 2012 Permanent Patch program. Bids were received from: Q & D Construction: $142,350 West Coast Paving: $145,800 After reviewing bids with the Community Services Department, the Purchasing Division posted a “Recommendation to Award” notice on the City website on September 29, 2011, indicating that recommendation would be made to award the contract to Q & D Construction. This posting “starts the clock” on the bid protest period as defined in the bid document as well as NRS and Sparks Municipal Code. This section allows for a protest to be filed by any person who submitted a bid on the project in question, within 5 business days of that “Recommendation to Award.” On October 6, 2011, the Contracts and Risk Manager received a notice of protest (via e-mail) from Phillip Kreitlein, legal counsel for West Coast Paving, asserting their concerns regarding the responsiveness of the bid supplied by Q & D Construction. This e-mail is attached to this staff report as “West Coast Letter #1.” City staff met to discuss this issue on October 10th and determined that the best course under existing laws/ordinances was to schedule the protest for hearing before the City Council. Q & D Construction was put on notice that the City had received a protest and the details of the issues expressed so far. Subsequently, the City received a letter from Paul Georgeson, legal counsel for Q & D Construction, outlining their general response to the issues brought in the protest. This letter is attached to this staff report and titled “Q & D Letter.” Both legal firms were offered the opportunity to elaborate or formalize their claims in order to organize the facts for this staff report. Counsel for West Coast Paving provided a more formal letter on October 13, 2011 and that letter is attached to this staff report as “West Coast Letter #2.” Per NRS 338.142 “A notice of protest filed in accordance with the provisions of this section operates as a stay of action in relation to the awarding of any contract until a determination is made by the public body on the protest.” Therefore, this item has been scheduled before considering the award of this project under another item of the October 24 meeting of the City Council. Further, the same section of NRS notes that, “A person who makes an unsuccessful bid may not seek any type of judicial intervention until the public body has made a determination on the protest and awarded the contract.” Background (Sub-Contractor Listing): From the perspective of City staff, the primary issue of the protest arises out of an interpretation of NRS 338.141 which was amended by SB 268 in the 2011 session of the Nevada Legislature. Specifically, Section 13 of the Bill added new requirements concerning how sub-contractors are to be listed in bids. In bids for public works, general contractors are typically required to provide lists (at the time of their bid or shortly thereafter) of sub-contractors they intend to use on the project. This is done for the benefit of the local agency and the sub-contracting community so that sub-contractors are not switched later in the project, generally to the benefit of the general contractor. This is a process generally referred to as “bid shopping” which is illegal. Previous to this bill, the working assumption in the construction industry was that any work not listed on the sub-contractor lists would be performed by the general contractor awarded the contract. However, Section 13 of SB 268 now requires general contractors to self list their own companies for the work they anticipate they will be self-performing, much in the same manner they previously listed sub-contractors. This new requirement (effective as of 7/1/11) and the various interpretations of how it should be read and implemented has resulted in multiple local agencies receiving bid protests, being sued, or under the threat of either, rejecting entire bids. The City of Sparks rejected all bids for the Lyyski Sewer rehabilitation in August when it was determined that none of the bidders self listed for work to be performed. Section 13 of SB 268 has been attached to this staff report as “SB 268 Section 13 and 14.” Section 13 details the sub-contractor listing requirements under NRS 338.141 as currently amended with the relevant sections highlighted in yellow. Section 14 details the bid protest language as it is currently amended under NRS. All other language outside of these sections has been blacked out.

Analysis: It is the belief of City staff that the bid protest should be rejected for the following reasons: 1) Sub-Section 4 of NRS 338.141 sets forth 2 reasons for finding a bidder non-responsive with respect to the sub-contractor listing. Outside of listing a non-licensed contractor, the other potential reason for non-responsiveness is the timeliness (or lateness) of submittal of the required lists. In this case, both bidders submitted the required 5% listing and 1% listing at the time of bid opening. Those lists are attached to this staff report as “Q & D Subcontractor sheets” and “West Coast Contractor Sheets.” 2) The 5% listing provided by Q & D is complete in the verbiage provided by the bidder in that they self list themselves for “All Work Except Striping.” They complete this detail on their 1% list by detailing who the striping contractor will be and the value of that work ($3,600). When taken together, the 2 lists detail all companies that will be working under any awarded contract. 3) The purpose of listing sub-contractors on a bid for public works is to establish and communicate the types of trades on the job and to identify the firms that will be providing the work under those trades. This is done at the time of bid so that a general contractor who is the apparent low bidder cannot go out to the market after apparently winning a bid and continue to shop the market, looking for cheaper sub-contractors, thereby pocketing a larger profit. This practice is illegal and the requirement to provide sub-contractor listings is one of the tools used to further discourage this practice. In the case of this bid, it is clear who the firms are that would perform work under any resulting contract. To this point, staff believes; 4) Q & D Construction is in substantial compliance with the purpose of NRS 338.141 which is established to discourage bid shopping by general contractors after it is apparent they are in position to potentially win a public contract.

Alternatives: The City Council may uphold the protest made by West Coast Paving and direct further action. If it is determined to uphold the protest, the subsequent Agenda Item, awarding the bid to Q & D Construction will need to be addressed under the “alternatives” section of that item.

Recommended Motion: “I move to reject the bid protest made by West Coast Paving, Inc. concerning the bid for the 2012 Permanent Patch program (Bid #11/12-004).”

Attached Files:

Q&D Letter.pdf

Q & D Subcontractor Sheets.pdf

West Coast Subcontractor Sheets.pdf

SB268-Section 13 and 14.pdf

West Coast Letter 1.pdf

West Coast Letter 2.pdf

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