Transcript Public Hospital Districts Property and Public Works Web

Public Hospital Districts
Public Works Web
Conference
Association of Washington Public Hospital Districts
Presenters
Brad Berg
Attorney
Foster Pepper & Shefelman, PLLC
Taya Briley
Director, Legal Services
Association of Washington
Public Hospital Districts
Goals
• Provide an overview of legal
aspects of public works contracts
• Consider various public works
bidding options
• Highlight related public works
issues
• Review possible future bidding
alternatives
• Questions and answers
Project at Happy County Public
Hospital District No. 1
• Rural public hospital district
• Facility constructed in 1960
• Periodic updates and renovations
• Needs new imaging services
department and remodel of
adjacent patient wing
• Estimated cost of $5 million
Typical Project Development
• Hire architect, engineer, project
manager
• Draw up plans and specifications
• Estimate cost
• Bid project
• Select and hire contractor
• Build the project
General Requirements of
Public Works Contracts
Contracts with Architects and
Engineers
• Publish requirements for
professional services in advance
– each occasion
– general announcement of projected
requirements
• Make request for qualifications
• Consider qualifications and needs
• Negotiate with most qualified firm
Licensing Requirements
• Contractor must be licensed
• No violations of public
works laws within the past
two years
Prevailing wage
• Must be paid on public works
contracts
• Determined by Washington State
Labor and Industries
• http://www.lni.wa.gov/prevailingwa
ge/default.htm
Public Works Contract
Requirements: Continued
• Performance bond
– Must cover certain persons
– Options for:
• $25,000 or less
• $100,000 or less
• Recommendation that bond cover
entire cost of project
Contractor Payments
• Timely payment
– date specified in contract or
– 30 days after receipt of proper invoice
or goods or services
• Notification if unsatisfactory
performance
• Interest required if payment
wrongly withheld
Retainage
• Retention of funds to
– Address claims arising under the
contract
– Ensure taxes are paid
Release of Funds
• Contractor may request to reduce
amount of retained funds to 100
percent of remaining work at any
time
• After contract work completed
– Release of funds to contractor 60
days after request
– Continued retention of funds only for
certain reasons
District Duties on Contract
Completion
• Notification of Department of
Revenue
• No payments from retained funds
prior to Department of Revenue
authorization
• Payment to Department after all
liens against retained funds are
paid
Public Bidding
Bidding Public Works Projects
• Public works projects and materials
purchases in excess of $50,000
must be publicly bid
• Public bidding is not required for
purchase of equipment or supplies
• Publication requirements if work
over $25,000 executed by means
other than contract
“Bid Splitting”
• Bids may not be split in order to
– avoid complying with public bid
statutes
– qualify for small works roster or
limited works processes
Exemptions to the Bidding
Requirements
• Requirements for purchases of
materials may be waived by the
board of commissioners if:
– Single source of supply
– Special facilities or market conditions
• Requirements may be waived for
purchases or public works in event
of an emergency
Traditional Bidding Process
• 13 day notice
• District provides plans and
specifications
• Bid proposal security required
• Projects over $1 million-identification of certain
subcontractors required
• Bids publicly opened at date and
time provided in notice
Traditional Bidding Process:
Evaluating the Bids
• Bid is awarded to the lowest
responsible bidder or to best bidder
• No award may be made in excess
of estimated cost of the work
• Board of commissioners can reject
all bids
Traditional Bidding Process:
Awarding the Contract
• Once contract is awarded
– Bid proposal security returned
– Performance bond required for
“winner”
• Security may be forfeited if
contract is not entered into
within 10 days
Identifying the Successful Bidder
• Lowest responsible bidder
– Based on hospital district’s plans and
specifications
• Best bidder
– Based on bidder’s own plans and
specifications
Lowest Responsible Bidder
• In addition to price consider
– Ability, capacity, and skill
– Reputation, experience, efficiency
– Ability to work in specified timeline
– Quality of previous work
– Previous compliance
– Other information
Choosing the Lowest
Responsible Bidder
• Award generally made to lowest
bidder meeting statutory factors
• Establishment of qualifications in
the bid proposal is critical
• Criteria must be related to the
project needs
Choosing the Best Bidder
• Consider the same factors used
to select the lowest “responsible”
bidder
• Permits selection of a bidder that
submits a superior design even
though the price may be higher
Protests
• May happen for a variety of
reasons
• Once the hospital district has
entered into a contract, the protest
is considered moot
• Proposed legislation would prevent
a hospital district from entering
into a contract for a period of two
days
Change Orders
• Alteration to project not provided
for in bid specification
• Some change orders must be rebid
• Determine whether to re-bid on a
case by case basis
Questions???
Small Works Roster and
Limited Works Options
Small Works Roster
• Projects estimated to cost under
$200,000
• Provides simplified alternative to
traditional public bidding
• Small works roster for materials
purchases under $15,000
Small Works Roster Components
• Adopt a resolution and policies
• Establish roster(s)
• Meet licensure requirements
• Fulfill publication requirements
• Establish master contracts
(optional)
Small Works Roster Procedures
• Telephone, written, or electronic
quotations from contractors
• Invitation for quotation includes
scope and nature of work
• Invite all appropriate contractors
on roster or 5 appropriate
contractors
• Work opportunities equitably
distributed
Small Works Roster Procedures:
Continued
• Additional requirements for
projects over $100,000
• Bid quotations are open to
inspection
• Publish list of contracts awarded
for real property improvements
• Model small works roster is
available
Limited Public Works Option
• Projects under $35,000
• Limited usefulness for public
hospital districts
• Still a good method to follow
• Certain contracting requirements
waived
Limited Works Procedures
• Small works roster and advertising
requirements do not have to be
followed
• Solicit bids from three contractors
on roster
• Equitably distribute work
opportunities
• Maintain list of contracts awarded
Related Public Bidding
Considerations
Hospital District as Landlord:
Bidding Requirements
• A gray area
• Improvement followed by lease to
private party triggers prevailing
wage requirements
• Short term lease and
improvements made for public
purposes creates a “public works
project”
• Otherwise, case by case analysis
Hospital District as Tenant:
Bidding Requirements
• Work by landlord may not have to
publicly bid
• Greater than fifty percent of
project used by hospital district
triggers prevailing wage
requirements
Hospital District as Tenant:
Bidding Requirements, continued
• Considerations:
– Whether improvement is made by
landlord to avoid public bidding
– Length of lease
– Useful life of improvements
– Significance of improvements to
hospital district
– Whether improvement is property of
landlord
Contracts for Building
Engineering Systems
• Alternate bidding processes
provided in statute
• Competitive process
• Request for proposals process
Penalties
• Remedy for willful and intentional
violation:
– not less than $300 civil penalty and
– joint and several liability for damages
to the district
• Attorneys fees may be awarded to
prevailing party in public works
dispute
Conflicts of Interest Prohibited
• A consideration for commissioners
and “municipal officers”
• Contract made in violation of
statute is void
• Officer is subject to civil penalty of
$300 and may be subject to
forfeiture of office
The Future?
Alternative Public Works Options
• Used by many types of local
governments
• Probably soon available to public
hospital districts
• AWPHD sponsored bill to grant
authority to public hospital
districts
General Contractor-Construction
Manager Option
• Complicated projects
• Promotes collaboration
• Fixed price
• Example: remodel of occupied
hospital wing
Design-Build Option
• Large standardized project
• Little design consultation required
• Example: medical office building
Resources
• Municipal Research Services Center
– www.mrsc.org/Subjects/PubWorks/pb/pb.aspx
– Manuals, examples, forms,
information
• Association of Washington Public
Hospital Districts
– www.awphd.org
– Public Hospital District Legal Manual
Questions???
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