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2001-131-Minutes for Meeting March 21,2001 Recorded 3/30/2001VOL: CJ2001 PAGE: 131 RECORDED DOCUMENT STATE OF OREGON COUNTY OF DESCHUTES *02001-131 * Vol -Page Printed: 04/05/2001 14:48:26 DO NOT REMOVE THIS CERTIFICATE (This certificate constitutes a part of the original instrument in accordance with ORS 205.180(2). Removal of this certificate may invalidate this certificate and affect the admissibility of the original instrument into evidence in any legal proceeding.) I hereby certify that the attached instrument was received and duly recorded in Deschutes County records: DATE AND TIME: DOCUMENT TYPE: Mar. 30, 2001; 8:09 a.m. Regular Meeting (CJ) NUMBER OF PAGES: 10 MARY SUE PENHOLLOW DESCHUTES COUNTY CLERK APUNCH 200 i 01 HAR 30 All $: 09 TES v , �, COUNTY CLERK 2� Board of Commissioners 0 A "kAA -� 1130 N.W. Harriman St., Bend, Oregon 97701-1947 (541) 388-6570 • Fax (541) 388-4752 www.deschutes.org Tom De Wolf Dennis R. Luke MINUTES OF MEETING Mike Daly DESCHUTES COUNTY BOARD OF COMMISSIONERS CONVENED AS THE CONTRACT REVIEW BOARD WEDNESDAY, MARCH 21, 2001 The purpose of the meeting was for the Board of Commissioners, acting as the Contract Review Board, to make a decision regarding a bid protest on the Knott Landfill Cell 2 project. Present were Commissioners Tom DeWolf, Dennis Luke and Mike Daly. Also present were Rick Isham, County Counsel; Mike Maier, County Administrator; Timm Schimke, Director of Solid Waste; and three citizens: Doug Cline of L & H Grading, Inc.; Jim Baker of JAL Construction; and George Holroyd, representing David Evans & Associates. Chair Tom DeWolf opened the meeting at 3:05 p.m. Commissioner DeWolf read his written statement regarding his decision on this matter (see Exhibit A, one page, attached). His statement ended with his decision to uphold the bid protest submitted by JAL Construction Company against the apparent low bidder, L & H Grading, Inc. Commissioner Luke stated that it is his opinion that this puts the subcontractor in the driver's seat, and one company could therefore mess with another. He indicated that he feels this is extremely unfair. He further stated that the intent of the legislature is unclear, and probably less than half of the legislators even read the bill before they voted on it. Minutes of Meeting Deschutes County Board of Commissioners Convened as the Contract Review Board Quality Services Performed with Pride Wednesday, March 22, 2001 Page 1 of 7 Pages Commissioner Luke stated that he disagrees with Commissioner DeWolf s decision; that the subcontractor has an opportunity to do the job, which they can decline if they wish. He said there is nothing written in any documents that the subcontractor would only do the whole job and not a portion of it. Commissioner DeWolf replied that Commissioner Luke is probably right, but that it was his understanding that what the legislature was trying to do is to put a stop to bid shopping. He further said that by not finding for JAL, he feels the Commissioners would be subverting the intent of the law. Commissioner Luke stated that this is much different than bid shopping; that this was an offer for TGL to do part of the job. Commissioner DeWolf replied that he didn't believe that L & H would have listed TGL, or that TGL would have sent them a bid, if there was no intent or anticipation of doing some or all of the work. He said it was the contractor's responsibility to list subcontractors who will do the work that the contractor wants them to do. L & H didn't make this clear, and, L & H did not submit documentation showing they only requested one part of the job from TGL. L & H received the same bid as all but one of the other bidders, and L & H is the only one that pulled out that one piece of TGL's bid. He further explained that L & H had the opportunity to submit evidence from whomever at L & H actually made the phone call to TGL; but now there are two pieces of evidence side-by-side that conflict. Commissioner DeWolf also stated that L & H had the opportunity to submit further information to the Board and didn't, even though he had requested it several times during the hearing conducted on March 14. He further said that Commissioners Luke and Daly both have extensive experience and background in this type of work, and have completely different opinions. It is a difficult situation, with limited information with which to make a decision. At that time Commissioner Luke asked, if you uphold the protest, is the intent to award protest period open again? Rick Isham responded that he hadn't extensively researched this particular point, but he looked at that section today. He said because a shorter time period was not established, there might be a need to issue a new intent to award. Minutes of Meeting Wednesday, March 22, 2001 Deschutes County Board of Commissioners Convened as the Contract Review Board Page 2 of 7 Pages Commissioner Luke asked if the protest is upheld, whether another protest could be logged. Additionally, Commissioner DeWolf asked if it is upheld, can L & H protest? Rick Isham replied that this would likely be addressed by a lawsuit, not by a protest. L & H cannot protest in this particular situation. Commissioner Daly then read his written statement into the record (attached as Exhibit B, two pages). He began by stating again that he has a potential conflict of interest. He has known the principals of JAL Construction for a number of years, and had a customer relationship with them years ago. He said that the problem with this bid situation seemed to stem from poor communication between L & H and TGL. He ended his statement by indicating that he upholds the protest by JAL Construction. Rick Isham asked Commissioner Daly if he has any current financial connection to JAL; Commissioner Daly replied no, that he is basing his decision on his interpretation of the law. He said that he is also following County Counsel's advice so that he could be properly defended if a lawsuit comes about. Commissioner DeWolf stated that Commissioner Daly should not base his decision solely on Legal Counsel's advice, but should make the decision based on his own beliefs, and that Legal Counsel will defend him in any case. DEWOLF: I move that Legal Counsel be directed to prepare a written decision finding in favor of the protestor, JAL Construction. DALY: Second. VOTE: LUKE: No. DALY: Yes. DEWOLF: Chair votes yes. Commissioner Luke stated that the #2 bid didn't show as large a number of subcontractors, and asked if this has to be examined before issuing the intent to award. Mr. Isham replied that the bids from the different bidders are not exactly comparable; if it seems valid on its face, you would normally issue a notice of intent to award without reference to looking behind the disclosures. You would not investigate the disclosures until a protest is filed. Minutes of Meeting Wednesday, March 22, 2001 Deschutes County Board of Commissioners Convened as the Contract Review Board Page 3 of 7 Pages Commissioner Luke asked if there is a law that says general contractors have to disclose, but the contracting body doesn't have the right to look at that unless there is a protest. He stated that this does not make any sense at all to him. Rick Isham replied that the contracting body has two rights that it chose not to exercise in this contract. The first is the right to prequalify all persons who will be providing labor. Mr. Isham stated that the Commissioners specifically asked the question at the hearing of why this wasn't done, and Mr. Friesen of G. Friesen and Associates replied it would be too cumbersome. Mr. Isham further said that the Commissioners also have the right, which they chose not to exercise, after the apparent low bidder was identified, to require each of the subcontractors to meet the qualifications requirements of the contractor. Mr. Isham further explained that Mr. Friesen testified that the choice was not to do that; the choice was to enter into a contract, initiate the work and then decide if they are not qualified. Mr. Isham stated that what you are doing in a situation where the subcontractors have to meet qualifications and that information is submitted on a list, before you make your determination of an intent to award, you determine that they have in fact listed people who are qualified to do the work. If they list people who are not qualified to do the work, then they have not have listed the people who will do the work under the required qualifications. It appears that these documents were written so that the people are actually doing the work before you decide whether they are qualified. He further said that it appears that these documents are written somewhat backwards. Commissioner Luke said that the Board just threw out a bid because the general contractor listed a subcontractor who has stated that he will not do the work. From what Mr. Isham has said before, there were probably subcontractors in the second bid that were not mentioned at all, such as electricians and fencing contractors. Rick Isham replied that the electricians' work and the fencing work would both be in the $30,000 range. The amounts of the subcontractors to be listed are 5% of the bid price, which is about $80,000. So the explanation for the non -listing of the minor subcontractors is that even they were listed for whatever reason on a number of bids, they didn't have to be because they did not meet the $80,000 threshold for having to be listed, as is specified under the law. Minutes of Meeting Deschutes County Board of Commissioners Convened as the Contract Review Board Wednesday, March 22, 2001 Page 4 of 7 Pages Commissioner Luke said that this means the Board cannot look to see if the state law regarding subcontractors was followed because of the way the County's bid was written. Rick Isham said he asked that specific question during the hearing because in building projects the County has always required that the subcontractors be qualified before entering into a notice of intent to award, after the bid opening. Commissioner Luke asked if a contractor lists a subcontractor who cannot do the work, are they then disqualified. Mr. Isham responded that the major subcontractors should be prequalified before the notice of intent to award is issued, especially for the big-ticket items. To properly prequalify, you can be prequalified with the State of Oregon for the scope of work that you are intending to do. The statute says that we automatically are required to accept that. We then prequalify the rest. Commissioner DeWolf asked why this different approach was used. He stated that the County needs set standards, and the consultants that the County uses should follow them as well. Mr. Isham replied that this is a relatively new law, and he would like to protect Deschutes County, avoid meetings like this and not be forced to have to interpret this new law in the absence of any precedence set by anyone else in the state. Commissioner DeWolf said that there has been poor communication on the part of the two companies, L & H and TGL, and that the process needs to be cleaned up. No one could have anticipated this particular problem. Rick Isham said that right now the County's standard is to prequalify the general contractor only. He further stated that every general contractor who bid on this job was either prequalfied with the state or submitted prequalification documents to the County. Commissioner DeWolf asked why the County can't require that a statement from each of the subcontractors detailing what they will do - their scope of work and the dollar amount - be included. Mr. Isham replied that the County will put a statement on the prequalification of the subcontractors that would require a sworn statement that they have verified that they are qualified, and also the scope of work they will do. Minutes of Meeting Wednesday, March 22, 2001 Deschutes County Board of Commissioners Convened as the Contract Review Board Page 5 of 7 Pages Commissioner Luke stated that both the subcontractor and the general contractor have responsibilities. Mr. Isham said that the legislature has passed laws to change something to do with the relationship between the general contractor and subcontractor, and the law was written for the benefit of the subcontractor to eliminate abuse. If a law is meaningless, this can't be assumed. If you can just list anyone because you have a price, and you think that you are going to figure out who your subcontractors are later, then the law is meaningless. Mr. Isham went on to say that it does put the greater burden on the general contractor, and changes the way the general contractor has to do business. This type of situation doesn't benefit the County at all. Commissioner Luke said that the subcontractor should bear some responsibility for not following the rules. Rick Isham explained that the County gets subcontractor disclosure statements without the CCB numbers; some of L & H Grading's subcontractors didn't list their CCB numbers. This was one of the requirements. It was not raised in the protest and the Board didn't have to deal with this particular issue. Out of the eight first-tier subcontractors listed, many of them did not have all of the CCB numbers listed. In the future the County is going to require that they have to list all the CCB numbers; or, if there is no subcontractor involved, the general contractor must state that it's not applicable. Otherwise it will be considered non- responsive. Commissioner Luke stated that if the contractor cannot follow the rules, it should be thrown out. Mr. Isham replied that things have changed as a result of the new law. Commissioner Daly said that in his decision-making process, he placed a lot of weight on the statement that the subcontractor will do the work. Rick Isham stated that everyone who bid on the project will receive a copy of the decision. Minutes of Meeting Deschutes County Board of Commissioners Convened as the Contract Review Board Wednesday, March 22, 2001 Page 6 of 7 Pages A brief discussion then occurred regarding the time period involved in issuing another intent to award. At approximately 3:40 p.m. Chair Tom De Wolf recessed the meeting until the next day, Thursday, March 22, at 9:30 a.m. DATED this 21" Day of March 2001 for the Deschutes County Board of Commissioners. Tom DeWolf, Chair ennis R. Luke, Commi11 ssioner ATTEST: Recording Secretary Minutes of Meeting Deschutes County Board of Commissioners Convened as the Contract Review Board Mi Wednesday, March 22, 2001 Page 7 of 7 Pages Knott Landfill Cell 2 Bid Protest Decision This has been a very difficult issue for me to reach a definitive conclusion. Based on the evidence that has been presented, I believe that there has been poor communication between L&H Grading and TGL, Inc. I believe that L&H Grading acted in good faith when they thought TGL, Inc. would perform a specified amount of work, namely Item 8. I also believe the TGL, Inc. believed they were bidding on a total scope of work that included items 7, 8, 9 and 10. I believe both firms share responsibility for the poor communication. That said, at the public hearing, I stated clearly that I was looking for evidence from both firms to back up their positions. L&H claimed that they asked for a bid for the liner only. TGL claims they were asked for a total bid (all four parts). Neither side has provided definitive proof that their position is correct. The question that must be answered is: Who has the ultimate responsibility to get the disclosure listings "right?" My determination is that since the General Contractor is the entity with whom Deschutes County contracts, the General Contractor is responsible and they hold primary responsibility for assuring that the subcontractors listed on the form will be doing the work. To conclude otherwise would render the subcontractor disclosure process a meaningless act. As a County Commissioner, I am obligated to uphold the law. This particular law, as established by the Oregon Legislature, was created in order to give increased security to sub -contractors. It was created to eliminate "bid shopping." It specifically requires bidders to list the subs that "will do the work." Nick Kwake, the principal of TGL, Inc, in a sworn affidavit, has said that he was asked to bid on a scope of work that included four items and that L&H selected only a portion of the bid, contrary to his understanding of what was being requested. L&H has not provided any evidence, other than hearsay evidence, that another individual, working for L&H asked for a bid only on the liner portion of the work. The parties were told to provide further evidence. L&H Grading had the opportunity to also submit a sworn affidavit from the individual who called Nick Kwake, but they failed to do so. Ultimately, in the absence of any other evidence, an affidavit submitted on behalf of the protester (JAL) is stronger evidence than the hearsay statement from the L&H Grading. Once the protestor shows that a subcontractor was listed that will not do the work, the burden of proof shifts to the General Contractor to show in the protest proceedings that their bid was responsive when submitted. It was L&H's responsibility to make sure they had subcontractors who will perform the work. It was L&H's responsibility to clear up any misunderstandings with subcontractors before listing the subcontractors on the reporting form. By not getting a commitment from TGL, Inc. to perform the work before listing TGL, Inc., L&H must bear the ultimate responsibility of any misunderstandings, miscommunications or other contractual problems between the General Contractor and the Subcontractor. Otherwise, in my opinion, the law established by the Legislature is meaningless. L&H is the General Contractor, and, based on the evidence in the record, did not list a subcontractor that will do the work in their bid document. Therefore, the bid of L&H is not responsive, and the bid protest should be upheld. I will vote that Legal Counsel be directed to prepare a written decision finding in favor of the protestor, JAL Construction. 1�(4 I Y-0i/or ----------------------------- KNOTT LANDFILL CELL #2 IMPROVEMENTS BID PROTEST DECISION First, I want to make it clear again that I have a potential conflict of interest. I have known the principals of JAL Construction for a number of years. I have been a customer of their's and they were a customer of mine a number of years ago. I would not consider any of them close friends, but we have done business togather in the past. This was a tough decision. After hearing all of the evidence, I feel that there was no intent on anybody's part to do any bid shopping. It seems unfortunate that there may have been some miscommunication between the Sub Contractor TGL INC and the General Contractor L&H Grading. I have discussed this case with County Council Rick Isham, and looked at the law very carefully. The law seems clear in that there were three elements that need to be present to make a bid valid. 1. The Name and Address of each sub contractor 2. The CCB registration number if Required by the CCB. 3. The amount of the contract of the subcontractor. Further, the law requires that the contractor listed is the one who WILL BE furnishing labor or materials in connection with the public improvement. The words used in the statute are Will Be, Not May be. We have testimony from the SubContractor TGL Inc. that they will not do part of the job or part of the bid submitted to the General Contractor. The amount listed by the General Contractor on his Subcontractor list appears to be for only part of the contract, and did not comply with the statute. Further it does not appear that TGL is willing to do the contract at all. County Council Rick Isham has advised me that he feels the Bid was not responsive by L&H Grading and therefore should not be considered. How can I go against Councils advice and expect him to defend me in any further litigation. My vote is to uphold the protest by JAL Construction. Michael M. Daly Deschutes County ommissioner