Following Proper Contracting Procedures Results in Cost Savings Benefit

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Pismo Beach, Bello Street Veterans Building

Following Proper Contracting Procedures Results in Cost Savings Benefit

by Tony Morelli, Southwestern Regional Compliance Manager.

It was recently brought to my attention that the Public Works Director for the City of Pismo Beach would ask the City Council to approve an upcoming agenda item regarding a change order for a grading and paving contractor, in the amount of $137,380.00.

Upon additional research, I discovered that the intended change order was for their Bello Veterans’ Hall Parking Lot Project. This was located on the same street as their Bello Street Paving Project currently underway by a grading and paving contractor per his original contract issued by the city for $124,554.00.  Somewhere along the way, city staff asked the contractor for a quote to also pave, stripe and install wheel stops in their Bello Veteran’s Hall Parking Lot. The contractor provided an additional estimate to do the extra work for $137,380.

I reached out to the city to inform them that they really needed to bid-out the Bello Veteran’s Hall Parking Lot Project, since it obviously was a separate project and not a part of the original scope of work issued to the paving contractor. I further advised the city that contract change orders are generally written when their needs to be changes to the original contract, usually brought about by unforeseen circumstances and MUST fall within the original scope of the work. Since this was not the case, the Bello Veterans’ Hall Parking Lot Project should be competitively bid-out to comply with California’s Public Contract Code (PCC. 100); which reads: (C) To provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices and (D) To eliminate favoritism, fraud, and corruption in the awarding of public contracts.

Since their City Council meeting was taking place in a couple of days, I made a “formal request,“ asking the city to please remove that agenda item from their upcoming agenda and formally bid the Bello Veterans’ Hall Parking Lot Project out separately.

The City Manager responded with the following statement; “We take very seriously our responsibilities in public contracting matters, and we always strive to ensure compliance with applicable law.  Since the City has adopted the California Uniform Public Construction Cost Accounting Act, (CUCCAA) procedures pursuant to Public Contract Code Sections 22000 et seq. This election allows the City to utilize alternate informal procedures for public projects of $175,000 or less.  While we do not believe the City has acted improperly, out of an abundance of caution, we will be removing the item from the City Council’s agenda to allow staff sufficient time to ensure that the City’s informal procedures were correctly followed with respect to this project.  Thank you again for your input”.

In my final response, thanking them for complying, I also took a moment for an educational opportunity to share with them and clarify the guidelines related to the informal bidding process for projects between $45,000 and $175,000 dollars. Projects within this range can be informally bid with a shorter advertising time. The city may also use their informal bidders list to obtain bidders without public advertising, only if this list is advertised annually and maintained accordingly. The city would still be required to bid the project out to more than one contractor on there list, but they wouldn’t have to go through the entire formal bidding process. The use of change orders, however, to award new work (beyond the original project scope) to existing contracts, especially large dollar amounts, or those that exceed the original contract amount are not acceptable, nor would they be considered proper use of the change order process.

Just recently the city did informally re-bid that project and six contractors bid on it. It was awarded to a long-time local area contractor for $113,940, resulting in a $23,440 savings to the city and local tax payers. When followed correctly, the Public Contracting Code process works to the benefit of everyone!

Finally, although CIFAC monitors public agencies for contract compliance, it should also be noted that CIFAC is a resource that Public Agencies can call upon for questions, concerns or clarification related to Public Works Contracting. Contrary to what Public Agencies may believe, CIFAC would prefer to assist them with contracting issues, as opposed to taking enforcement actions.


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