In early May, the Metropolitan District Commission took the unusual step of awarding a wastewater contract to someone other than the low bidder.
The $7.5 million award to Vernon firm VMS Construction Co. immediately caused union officials — particularly the Connecticut Laborers’ District Council — to complain, calling it a waste of taxpayer dollars.
MDC officials decided to pick VMS Construction because the low bidder for the contract — North Branford firm Camputaro and Son Excavating — failed to list its intended subcontractors in its bid.
The dust-up offers a glimpse inside an issue that divides the construction industry.
While some companies revel in the steady work that comes from the public sector, issues stemming from governments’ long-held policy of awarding projects to the lowest responsible bidder send some of the most qualified firms screaming for the hills.
The problems related to public contract bidding have only been exacerbated as the economy retreated, and the number of private construction jobs decreased. As more would-be contractors flood the public market, competition for jobs increases, forcing companies to scramble to have the lowest bid.
“If the government isn’t going to go with the lowest bidder, they have to have a really good reason,” said Don Shubert, president of the Connecticut Construction Industries Association. “The low bidder doesn’t back off a job easily. Especially in this day in age, if you are the low bidder, you want that work.”
When conflicts arise over low bids in public contracts, they can delay the construction, especially if lawsuits are filed. The winning bidder also faces greater public scrutiny, as happened with VMS Construction over its wastewater contract.
The low bid public policy is why Bloomfield general contractor Bartlett Brainard Eacott avoids public sector construction altogether, said BBE President Jim Eacott.
“It is harder to keep a sleazy contractor out of the public sector, especially if they threaten legal action that delays a project,” Eacott said.
BBE was ranked this year as one of the top three general contractors in the state by the Connecticut Subcontractors Association. The firm has done extensive work in Connecticut for Aetna, The Hartford Financial Services Group, Stanley Black & Decker, Travelers and Greater Hartford YMCA.
To sustain itself long-term in the construction field, a company needs to build a good reputation for working collaboratively with all the many players in the construction of a facility, Eacott said. Having positive relationships with clients keeps them coming back.
Building that positive relationship in the public sector is much harder because governments can’t be as loyal when they are beholden to the low-bidder process, Eacott said.
In order to win a highly competitive public project, contractors will bid below their costs, Eacott said. After winning jobs, low bidders put in for change orders to increase their paydays, and they will cut expenses using low-quality subcontractors and cheaper materials.
“If we were ever to end up the low bidder on a public contract, I would say, ‘Oh God, what did we leave out of the estimate?’” Eacott said.
While the public sector can cause headaches, there’s also plenty of money to be made doing public projects.
Rhode Island general contractor Gilbane Building Co. gets 40 percent of its business from the public sector and has led projects such as the Connecticut Convention Center in Hartford and Rentschler Field in East Hartford. The Connecticut Subcontractors Association also named Gilbane one of the top contractors in the state.
The public sector market, particularly new school construction, sustained the company during the economic recession, said Jodi Brennan, vice president at Gilbane.
Connecticut and the rest of New England stress the importance of education and keeping educational facilities upgraded. For the past eight years, state funding to municipalities for school construction has remained strong.
Other than needing annual state certification, Brennan said the public sector isn’t terribly different from the private sector, only that there is more competition for public sector jobs.
Whether public or private, getting a construction contract is dependent on a combination of cost and reputation, Brennan said, except the public sector places a greater priority on keeping expenses low.
“Your performance record is important in both the public and private sectors, but the private sector has more leeway in relying more on performance record when selecting a contractor,” Brennan said.
The Connecticut state government is shaping up, though, Shubert said. The Department of Administrative Services is being much more rigid with contractors, making sure all the rules are followed.
In 2004, Connecticut’s Department of Administrative Services implemented a pre-qualification program for all contractors working on jobs valued at $500,000 or more using at any state money.
In order to obtain this necessary approval, contractors are rated on their experience, safety record, financial background and integrity, said Carlos Velez, DAS procurement program manager.
Nearly all the applicants for pre-qualification obtain the necessary 66.6 passing score or better on the 100-point scale, Velez said. If officials at a company know they will fail, then they don’t apply because the company stands to lose the application fee, which ranges from $600-$2,500.
“A lot of contractors don’t come to be qualified until there is a project they want to bid on,” Velez said.
Connecticut has 726 pre-qualified contractors. That number held steady for the past three years, since a large increase in 2007 when subcontractors were required to pre-qualify.
The program is particularly successful in smaller cities and towns using state money to fund a portion of their project. These municipalities don’t have the resources to check a contractor’s credentials and must rely on the DAS, said Velez.
“If traditional private sector companies are going to move to the public sector, they better have their act together,” Shubert said.
As private sector construction remains slow, more companies will continue to bid on the fewer available projects, driving down prices on those contracts. Since the public sector has more work, companies will continue to move into that realm, Shubert said.
“There is such excess capacity right now,” Shubert said.
BBE hopes to avoid the rush to the public sector, Eacott said. Even as the construction industry slowed in Connecticut, BBE gets enough work to sustain itself, thanks to its long-standing relationships with private companies.
“There are lots of games that are played in the public sector,” Eacott said. “We are not desperate enough to submit to all that.”
