Why the D91 ‘no-bid contract’ issue isn’t actually an issue
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IDAHO FALLS — As another round of voting on school bonds approaches in Idaho Falls School District 91, some misinformation is still persisting.
One of the points of contention between those in support and those against the bond is the no-bid contract issue.
The two-part $99.5 million bond would allow for the construction of a new Idaho Falls High School, transform the existing IFHS facility to a career technical school, and remodel Skyline High School.
D91 Taxpayers, a group opposed to the bond, is accusing the school district of giving out contracts to a construction manager without taking any bids on the projects in the district.
During an East Idaho Newsmakers, D91 Taxpayers representative Lisa Keller said the school district should have used a bidding process to select the construction manager for the project and not the Request for Qualifications process that led to the school district selecting Bateman-Hall as the construction manager for the project.
A Request for Qualifications is a public request for construction management companies to send government entities written proposals showing past experience with large construction projects and other qualifying factors. Each proposal is reviewed by a selection committee that ranks the construction managers from most to least qualified.
“They did not get bids, they went and used that Request for Qualifications,” Keller said. “Bateman-Hall went out and looked at things. But before Bateman-Hall did that, they’d already signed a contract with them.”
EastIdahoNews.com reached out to Keller to clarify how D91 Taxpayers wants the school district to select a construction manager.
“We are not requesting a single way to do this,” Keller said. “We don’t feel the Construction Management/(General Contractor) Method is necessarily the best way to go. We’re not saying they should simply bid out Construction Management/(General Contractor) bids. We’re saying that they should revisit the whole construction management (general contractor) process as a whole.”
When asked what, out of the four methods available in Idaho, the school district should use, Keller responded, “Well, we get the bids first.”
But that’s not how things work in Idaho.
Idaho Associated General Contractors CEO Wayne Hammon said Idaho law does not allow public entities to select a construction manager based on bids. Bateman-Hall is a member of Idaho Associated General Contractors.
“The law specifically forbids (the school district) from doing what the opponents are saying they should have done,” Hammon said.
Idaho Code 67-2320 requires any government entity to hire construction managers based on their qualifications, and not on bids.
Bids do come into the equation — just at a later time.
In Idaho, there are four construction contracting methods allowed, but only three where bidding is required. In each method, the bidding only begins after the project has been designed and only with subcontractors and suppliers for all construction work, materials and equipment.
The following is a list of construction contracting methods in Idaho. None starts with bidding.
Construction Manager/General Contractor Method
Being used by D91
- Government entity hires construction manager/general contractor using a Request for Qualifications.
- Construction manager/general contractor is involved in design process.
- Government entity and construction manager/general contractor agree on a guaranteed maximum price.
- Construction manager/general contractor handles bid process with government entity involvement. Awards work to lowest bidders.
- Construction manager/general contractor acts as general contractor during construction.
Traditional Design/Bid/Build Method
- Government entity using a Request for Qualifications hires an architect or engineer to design the building.
- Subcontractors submit bids directly to the general contractor.
- Work is awarded to lowest-bidding contractors.
- Government entity is responsible for each contractor and for contract administration.
Construction Manager Method
- Government entity selects a construction manager using a Request for Qualifications.
- Construction manager coordinates design process as an advocate for the government entity.
- Government entity handles bidding process.
- Construction manager oversees construction directly.
- Government entity acts as general contractor, architect and designer.
- Government entity contracts with a single contractor to get the entire job done.
- Government entity will use when quality of contractors is questioned.
- Projects built this way are typically smaller.
D91 Taxpayer’s counterargument
One of District 91 Taxpayer’s arguments is other schools and specifically, Rigby High School were built by initially bidding out the design and construction of their high school.
But that’s not entirely true. Jefferson Joint School District 251 used the traditional Design/Bid/Build method, District 251 officials told EastIdahoNews.com.
The district’s board chose NBW Architects to design the building before Bateman-Hall won a bid to act as general contractor on the project. The general contractor then hired subcontractors.
Why most districts now use the Construction Manager/General Contractor Method
In 2014, Idaho added Construction Manager/General Contractor Method to the code book after similar laws were enacted in several other states. The method was made legal after an amendment to the Idaho Public Works Construction Management Licensing Act.
The method has the advantage of giving the project to an experienced contractor with a specific maximum cost negotiated by the two entities. The maximum price puts all the risk on the construction manager to keep prices low, rather than the government entity.
Hammon said the Traditional Design/Bid/Build Method is best used for routine maintenance, repairs and remodels, rather than large construction of new schools. With the traditional method, when a contractor goes over budget the district owes them more money, Hammon said. But under the Construction Manager/General Contractor Method, any additional costs above the negotiated maximum fees has to be absorbed by the contractor.
“You bring the general contractor to the table early as your construction manager,” Hammon said. “So before your architect designs a building that can’t be built. Or before the engineer puts the HVAC duct through the middle of the gymnasium where nobody wants to see it. Or before there’s any problem at the site, you have a contractor there at the table. As they’re designing it, he can say, ‘Yeah, I can do that,’ or ‘No, I can’t do that,’ or ‘If you do that, it’s going to cost you XYZ, but if you do it this other way, I can save you some money.'”
Hammon said changes to the project are really the most expensive part of building a new school. He also said that’s one way low-bid contractors can make up their money in the standard method — by requiring the government entity to pay for every unexpected change.
He said the Construction Manager/General Contractor Method removes the incentive for the general contractor to submit costly change orders.
“Because he’s guaranteed a maximum price … every change order he submits costs him money instead of making him money,” Hammon said.
Following the East Idaho Newsmakers story, Bateman-Hall requested the opportunity to rebuff some of the accusations made by D91 Taxpayers.
Bateman-Hall co-owner Aaron Johnson agrees with Lisa Keller that Bateman-Hall will be paid 5.5 percent, roughly $5.7 million.
“(But) this isn’t profit,” Johnson said. “Overhead is a substantial amount of that fee. Again, we’re at risk not to exceed price.”
Below is a statement Johnson issued on behalf of Bateman-Hall regarding many of the claims made by D91 Taxpayers.