Yesterday morning, I read a confusing story ($) about a bug in the Sound Transit bid system, and how a contractor was using it as a reason to ask for a rebid of the North Link tunnel contract.
During the bidding process, communications are sometimes made to bidders about changes. In this case, nine days before the bid window closed, Sound Transit posted a change to the schedule on which contract payments are made – they would no longer withhold 5% of payment until the end of construction. Payments on these projects are often doled out on a schedule anyway, so this just shifts that schedule a little.
There was a glitch in eBid, where notification of this document likely wasn’t emailed to most contractors. They still could see it appear in their dashboard, they just didn’t get a notification.
The low bid for the contract, at $440 million, came from JCM. Shortly after, Traylor Frontier-Kemper, the same contractor that discriminated against African-American workers on the University Link tunnel contract, requested that the bid process should be restarted due to the bug.
The problem is, their bid was $465 million. Remember, this change was just a matter of *when* payment is made – so assuming it really would have an impact on their bid, I think the largest possible impact would be interest on 5% of $465 million over the construction period. That’s nowhere near enough to make up the $25 million difference in the bids. In fact, even if you assumed the 5% was completely lost (which is stupid, I’m just illustrating the point), they’d STILL only be about $23 million lower.
Sound Transit denied their rebid request – in the denial letter I was shown, Sound Transit even confirms TFK had downloaded the documents before bid closure and had personal assistance from a Sound Transit employee to confirm they had access.
Now TFK has started a PR attack – first getting stories in the Seattle Times and DJC with headlines threatening that the tunneling “may be delayed,” including a quote in the Times from TFK general counsel Steve Owen likening Sound Transit to the “Keystone Kops.” Then, their PR firm sent STB a press release saying “Northlink” (sic) “faces possible rebid”.
I followed up with the PR firm – could the document they claim to have missed possibly lower their bid by $25 million? They replied with a message from Owen, a near-boilerplate of talking points about unfairness, rather than directly answering my math question. I followed up and gave them several more hours yesterday to answer it, but as of the time of this posting, they have not.
To me, it seems like TFK wants to rebid now that they’ve seen everyone else’s work, but the reasoning they’re using doesn’t hold up. Hopefully, Sound Transit will reject this attack.
16 Replies to “Losing Bidder Attacks Sound Transit”
More than anything, this just illustrates TFK’s negligence and whinging. They should be blacklisted from bidding for any future contracts.
I wouldn’t go that far, but this kind of behavior should definitely be weighted in bids.
Previous history can get avoided by filing as a new corporation, and may carry ex post facto issues when a competitive bidding process is already in progress. Fines and a cancellation clause may be more effective. All three would be best.
A cancellation clause could add a year or two to a Link project. They know that once they win these bids, they’re in. :(
Ownership of a corporation is pretty easy. Identify the owners who have primary/significant interest. If they’re involved in any other bidding entity, their bid is rejected. Piss poor behaviour should never be rewarded.
It’s odd when a company that could have already filed for an injunction tests the waters of public opinion first. The next step is, if the public opinion goes against them, they go shopping for an outside venue in which to file suit. For that reason, I urge not to get inflammatory while the company sorts out their legal strategy. Let them have their day in court, let it be fair, and let it be here in King County.
The company better be prepared to pay court costs and triple damages if their case is found to be without merit, as ST has tended to have their legal ducks in a row.
I think they’re hoping to make Sound Transit weigh the cost of the PR hit against the cost of a rebid. In this case, a rebid might (I think) affect critical path of North Link, so they know it’s a big stick, but they also know they don’t have a prayer in court.
I’m trying to lower the cost of the PR hit by giving Sound Transit a media counterpoint.
Traylor waited for the day before the JCM contract is being considered by ST’s capital committee to land these pieces. It’s incredibly slimy – I think they tried to stall me to keep my piece from coming out before the committee today.
Did STB get the original media release at the same time as the Times?
No. They didn’t send it to us for at least a day.
“I think they’re hoping to make Sound Transit weigh the cost of the PR hit against the cost of a rebid.”
Which is stupid, because when does a government agency get beat up by public opinion for saving taxpayers $25 million?
If Sound Transit has clear data showing TFK is descriminating against African Americans, ST should just not allow TFK to bid at all. Still, I’m not sure why that even has any bearing on this “re-bid” nonsense (which really is nonsense).
When we wonder why it takes so long to build projects here, we need look no further to these ridiculous bidding laws.
I’m not supporting this company, but I think the restructuring it does make a difference.
Having money upfront, before completion, means a contracting firm…operating on thin margins…can have the cash to pay for labor and materials upfront.
If they had to borrow money, they’d be paying business loans, or maybe paying more to other suppliers for the benefit of getting access to resource without paying immediately.
It sounds like this is about a $2 million difference on a $465 million bid when the winning bid came in at $440. It’s not significant enough to rebid.
If money is the only factor, then no.
But maybe this competitor hoped offer more for the same price — faster delivery, better quality materials.
Just speculating, but there is a lot to the bid and construction process.
An interesting, if anecdotal, book about the subject:
Good Guys, Wiseguys, and Putting Up Buildings: A Life in Construction
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