Public Agencies’ Antiquated Bid Letting Process Is Reaping Few Comers


Why aren’t contractors bidding on as many public-sector projects these days?

There are myriad factors making public work unattractive at this time, according to Steve Bannes, professor and program director of graduate studies in construction management at Washington University in St. Louis.

“The majority of government contracts are required to bid competitively using the design-bid-build project delivery system,” says Bannes. “Contractors bid the project exactly as it is designed and the lowest responsible, responsive bidder is usually awarded the work. This delivery system allows the owner to define and control the design through the architectural consultant.”

During a time when there remains an abundance of private-sector construction opportunities, however, the traditional design-bid-build projects are attracting few takers, and in some instances no bidders. Case in point: the multi-phase expansion of America’s Center, St. Louis’ aging downtown convention center. Only one bid was submitted for phase one, and that bid from Ben-Hur Construction was $40 million or 50 percent over the owner’s expected budget. When the city let the phase two RFQ, no contractors responded.

“The traditional design-bid-build delivery system fails to address today’s market conditions and asks the general contractor to assume additional risk as a result of inflation, workforce and supply chain issues,” Bannes says. “It also tends to underestimate owner/architect budgets and establishes an adversarial vendor relationship with the owner. This antiquated delivery system, paired with the length of many public projects, is a primary factor in driving away bidders.”

Another drawback contractors face when debating whether to pour time, energy and money into responding to a public project letting relates to confidentiality or lack thereof. Tom Huster, president of heavy highway contractor KCI Construction, says if the public agency rejects the bid responses and opts to re-let the contract, each and every initial bid submitted by a contract becomes public record for all to see.

“Everyone now knows your price,” says Huster, “so now you’ve got a target on your back and it makes it very difficult to bid that same job a second time.”

Huster and other St. Louis-area contractors have repeatedly asked the Missouri Dept. of Transportation to modify its reporting to say “x percent over budget” rather than revealing the dollar-specific bids, but the agency has said it cannot comply due to transparency laws.

“With the volume of private-sector work that’s still out there,” Huster says, “we’re picking and choosing what makes sense for us to chase. Many times these days, that’s no longer public work.”

Leonard Toenjes is President of the Associated General Contractors of Missouri.

“There’s a whole different dynamic occurring in the public sector than there is in the private sector right now,” says Toenjes. “With a school district, for example, the time between an engineering firm’s gathering initial estimates, presenting that to the school board, gaining more numbers as to what size bond issue to present before voters, getting it on the ballot for approval and then putting the project out for bid, a lot of time transpires. When the bids come back, it often becomes readily apparent that the engineer’s initial estimate didn’t adequately account for inflation. Now the school district is looking at being able to only build two gymnasiums rather than three. Who is responsible for that discrepancy? The contractor sometimes looks like the bad guy because he can no longer build the project.”

Toenjes says he has seen a number of contractors who have to go back to public agencies and provide all the back-up documentation to substantiate what is today’s reality in terms of the cost of materials and more.

“If I’m a general contractor on a four-year project that I bid back in 2019, there is no way I saw this (inflation) coming,” he says. “I can go back to the owner and renegotiate some sort of arrangement, or I’ll likely have to pull off the job because I can no longer afford to buy the materials. Maintaining an open, honest dialog and working with people you can trust is never more important than it is now.”

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