Construction bidding change tabled

Assembly decides it needs more time for plan intended to save costs

Posted: Tuesday, July 29, 2003

Juneau Assembly members voted Monday night to table a measure that would put a charter change on the ballot. The change, if passed by voters, would allow the city to authorize alternative processes for awarding construction bids.

"In the interest of the hospital and their desire to get a project underway, I think we've gotten in a time crunch, and I feel we haven't had enough time to provide you with the information you need to make an informed decision," City Manager Rod Swope told the Assembly.

Supporters of the measure say the proposed change is aimed at lowering the high cost of large city-building projects, such as construction of schools and the city-owned hospital.

Local contractors and union representatives met with the city last week. Many voiced opposition to the charter changes, saying the measure was too broad and would take jobs away from local businesses, Swope said.

"I think a lot of concern was expressed. One, they didn't understand the concept. And they were concerned it might preclude local trade folks from jobs and construction," Swope said.

The Assembly would have had to pass the measure before late August for the charter change to appear on the October ballot. On Monday, the body voted to send the measure to be reviewed by a committee of city staff, school staff, local contractors and union representatives. The Assembly will take up the subject again in March of 2004.

"It would seem that our bidding process needs work, and we are paying a lot more for things to be constructed. We need ways to reduce costs, and I don't think this is the only way," Assembly member Stan Ridgeway said. "I hope this task force looks at other ways to manage this process."

Under city law, construction projects are awarded in a "design-bid-build" method. Projects are designed first, the city advertises for contractors and contractors deliver sealed bids. The charter requires that the city award the contract to the lowest bidder. A general contractor then oversees the project and hires subcontractors.

With the charter change, the city could consider a number of bidding procedures.

Rod Wilson, a city architect in charge of the hospital renovation and expansion, has been pushing for a method described as a "construction manager with a guaranteed maximum price." Under this method, a construction management firm would act as an intermediary between the city and the subcontractors, handling the design and making recommendations for design changes to accommodate cost overruns.

Though there could be some unexpected changes in the project, the construction management firm would be expected to deliver the project for the set price.

The construction manager method would be a good solution for Bartlett Regional Hospital's renovation and expansion project, Wilson said. Four contractors qualified to bid on the project. One bid came back, and it was $11 million over the hospital's $29.7 million construction budget.

Mark Cady, of the Local 2247 Carpenter's Union, showed up to the Assembly with plans to testify if the body didn't table the measure. He said that changing the bidding system wasn't the best way to deal with construction project cost overruns.

"The city needs to have an estimator that estimates in the real world," he said.

Cady added he felt most contractors and laborers understood the measure.

In the city's current bid procedure, a general contractor oversees the project. In recent years, smaller, local subcontractors bidding on large projects have been required to pay higher premiums for larger bonds.

In construction projects, subcontractors must buy performance and payment bonds to cover costs of labor and materials in case they default on their contract. Many local subcontractors are too small to acquire necessary bonding. Contractors then have to look for larger subcontractors outside Juneau. Bringing people in raises project costs.

Wilson has said the construction manager method would make it easier for some smaller local subcontractors to bond, because the construction management firms put up the bonding. But local contractors and subcontractors worry that construction management firms might look elsewhere, at contractor and subcontractors they have used before.

Carla Meek, owner of Juneau Electric, one of the city's electrical subcontractors, attended the meeting with the city and expressed a similar concern.

"I'm just concerned the construction manager format will allow the construction manager to exclude local contractors from the building process in favor of the people he is used to doing business with," she said.



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