Contractor’s Corner: Unique challenges in government and institutional projects – August/September 2024

By Dave Stafford

Most every commercial flooring contractor has thought about selling large government jobs or having institutional fixed-price contracts. They’ve heard the horror stories of complying with inflexible regulations or not getting paid. Some have pursued the government niche, GSA contracts or state and local opportunities as part of their commercial business. “Many are called, few are chosen” is a saying that’s apt. This month, I offer some suggestions and insight into this type of business.

BIDDING THE JOB
Most opportunities in this arena start with a Request for Proposal (RFP) or an Invitation for Bid (IFB) unless you are bidding to a general contractor. Even then, the general contractor may be bound by many of the same regulations. As you review the bid document, be sure you know which one you have in hand. Is this for a single delivery within a specific time or an Indefinite Delivery/Indefinite Quantity (IDIQ) at a fixed price for products and services? If over a set length of time, it will usually be annual or a specific term with renewals.

An RFP is where you may be asked to propose a solution for flooring products and services to install. Here, you can offer your own interpretation of what would best be suited to the scope of work based on the guidelines given and/or a site visit. This should include products, quantities, pricing, delivery time and performance within the context of options given by the buyer. Also, the dollar amount of the expected award is typically lower, perhaps under $25,000.

In the RFP, the buyer may have specified products, methods and certain latitude (“or equals”) and will indicate a “desired performance” timeline. With smaller-dollar projects, the buyer may have consulted with a competitor of yours to come up with the specified type of product and installation method. On larger jobs, an architect or designer will usually specify the manufacturer, brand, color, type-meant to be “descriptive but not restrictive”-and the method to install. Watch out for the something like this: “While ‘or equals’ may be considered, they must be submitted and approved by the designer at least 20 days before bid closing date, or they will be rejected in your bid.”

If you have a friendly architect or designer, they may be open to a better value, especially if delivery times are lengthy, or they have instructions to look for ways to save the owner money. Be prepared to offer the reasons for the change (better delivery or better prices and increased performance). If their response is chilly or outright antagonistic and you have a strong reason for the request, take it up with the buyer or owner. Most specifiers hate to make changes because it may affect their overall design, which means they may have to do a lot of extra work for free to accommodate your request.

In an IFB, the expected dollar amount of the award is higher, so the buyer has been required to carefully estimate the probable dollar amount of the award to be sure funds are available. Here, the bid specifies the amount, type, name of products, method of installation desired and required delivery times. Are you able to adhere to the fine print that details your requirements and time available for performance?

I once confused an RFP with an IFB and offered an alternate product and did not bid the specified items. While my bid was a better value for the entity, and I had the lowest price, it was summarily rejected because I ignored specs and did not bid as required.

An IFB is also where you usually get into bid bonds, performance bonds and liquidated-damages provisions for deficient delivery and installation. Particularly onerous is a $500/day liquidated-damages provision-meaning the buyer does not have to prove the amounts of damages, only the extra time taken by you for performance or delays-if you are behind schedule. I have seen most of the available profit lost because of delays and an inflexible buyer. I have also been the beneficiary of a project when the contractor could not qualify for a performance bond and another when I pointed out to the buyer at a public bid opening that a competitor did not proffer a bid bond as required.

The bid closing date for an IFB is rigid. If your bid is late, it will be rejected. With a large, important bid, I sometimes prepare two identical signed bids to be hand-delivered by different people, just in case. I once lost an annual contract because my project manager decided to stop for lunch and missed the deadline by two minutes. Lesson learned.

DETERMINING YOUR BID
Your approach to providing the best price and best value begins with reading the bid document and noting the bid closing date and the scope of work. Are you able to buy the products? Do you have a line of credit available for the purchase? Do you have the expertise and personnel for a flawless delivery and timely installation? Do your research on the buyer and client and their previous or similar purchases, if any. Dig deep enough and you can usually find out this type of information. If not public, just ask the buyer. “Hey, Joe, I’d like to give you a bid. Have you bought this item before? If so, what was the awarded price? How happy have you been with the current contract holder?”

Has the same company been awarded the contract several times? Do you sense a bias toward a particular contractor? When you’ve reviewed the bid parameters, can you submit a winning bid? Nothing beats the research you do before submitting a bid rather than after. I passed on one bid when the review showed that I would have to provide the product at my cost, overcharge for installation and pray for change orders.

In an RFP, find out if the award is going to be based strictly on price or a combination of price and other considerations, such as references or demonstrated expertise. Most often, the criteria will be price, since that is most easily defended by the buyer in case of protest and requires less work. There is always more leeway in making the award decision in an RFP. Will there be a public opening or an informal gathering of bids?

In an IFB, the basis for an award will be stated somewhere in the bid document. If not specifically stated, it usually means the best price will win the bid, so long as the bid is “responsive,” meaning that bid specs were followed, bids were submitted on time, in proper format, signed by an appropriate officer, and bid bonds, samples or technical references were included. I have also seen cases where the buyer implemented a weighted scoring system such as 50% price, 30% technical factors, 20% references and experience. This way, the buyer has leeway to exercise some judgment when making a critical award, especially in a high-profile buy. An awful experience is to have the low bid but be judged deficient in other areas. “Yes, you had the low bid, but you did not have enough history providing this product or experience in managing such a large project.” You can fight such a subjective award, but you are unlikely to win.

In all cases, determine if you have the “right price” for a majority of products-most installation costs will be similar in the same geographic area. You can find out by asking the mill reps or checking around with your friendly competitors. “Ah, well, you’d be at some disadvantage on this one, Dave.” Or, “As far as we’re concerned, this is a ‘jump ball’ between our key dealers.”

When you know the facility manager has helped craft the scope of work, that can give you a slight edge to understand his or her motivation. Although the buyer, purchasing agent or contracting officer may say that they determine the award, there will always be critical input from the actual user who has the funding before an award is made. If bids are coming in too high or too low, this raises doubt about the quality of the specs. A minor oversight may result in an amendment; a major one may lead to outright cancellation of the bid. When the apparent low bidder is on the “sh*t list” for previous transgressions with the user, that may help the buyer look for ways to avoid making the award to them.

SECURING THE JOB
Some bid opportunities may require you to demonstrate technical expertise and competence in installation. Use your pre-verified references, company brochures, case studies, a testimonial letter and links to Google reviews. References, even though strong, are only as good as your last job. I once got burned on this because I failed to call my client in advance and find out her degree of angst on our last job. “Yeah, Dave will deliver the job, but I had to do a lot of screaming on the last one to make him finish on time.” (Of course, there was no mention of the faulty HVAC or other trades in the way, hampering our work hours.)

Some bids will provide for acceptance of alternate bids or multiple awards as a backup. This is more common with some institutional/government (schools and municipal) bids for annual or multi-year contracts. This is a way to avoid the dilemma of accepting the low bid and then finding out the contractor cannot or will not perform as needed. It also reduces the need to cancel a contract and go through the agony of a rebid. Here is the wording I suggested to one buyer: “Buyer reserves the right to make one or more alternate awards if, as or when needed after a review of all responsive bids. Any secondary award shall have the same force and effect as the primary award, and owner may determine their usage at his sole discretion.”

Always attend if there is a public bid opening. In smaller, less formal openings, the buyer may review each bid for missing items and mistakes and open the door for nitpicking other bids. “Did their bid include the required bid bond? Were alternative products submitted in lieu of the stated products? Was the bid conditional in any way? Has the delivery time been specified? Is the company able to supply the specified product confirmed by a letter from an officer of the manufacturer? Was technical expertise demonstrated (brochure and references furnished with the bid)?” Bids have been ruled “non-responsive” and tossed out for negative answers to these questions.

After your bid is accepted, conversations with buyers are always a good idea, even if a public opening. Point out possible flaws, if known, in other company offerings. Running a D&B report on the competition may help. Look at their credit or other tangible items; ask around about their reputation for on-time project deliveries. Pose questions for the buyer to think about before an award decision is made.

If you are not the low bidder, before the award is made, ask, “How does our bid look to you?” or, “What would it take for us to get the award on this contract?” I’ve gotten a myriad of answers over the years, from, “Nothing-you gave it your best shot,” to, “Money is really tight, can you propose a less costly product that will perform?” “If we relax the time for performance, will that make a difference?” “Would you be open to accepting an award as our alternate?”

Buyers will generally talk with you, so it is best to be prepared with a whole list of questions. Whether they are willing to share details will vary. If you don’t ask, you may never know how close you came to a win. I once said to an unfriendly buyer, “Kevin, I’ve been a key dealer for this mill for over 15 years, have a large credit line, and my prices should be in line; I also included the required 5% overage in attic stock.” His response was, “Huh, I better check that out.” As it happened, that is why the other bid looked so good; no attic stock was included in their bid pricing.

The futility of most protests is that you are attacking the judgment of the buyer. That is why the time to make your case is before, not after, an award is made. I would guess that a protest is successful less than 10% of the time. There are too many loopholes to skirt, and significant regulations that can be brought to bear to prevent overturn of an award. The real damage in a protest is not only the time and money spent in filing one, but the ill will you’ll generate with the buyer. When the bid is a large dollar, time sensitive bid and a protest is filed, the process comes to a screeching halt. Monies appropriated for the project may be lost, and the job could be abandoned. Don’t burn your bridges with mill reps, other competitors and the buyer over one lost bid. Be gracious and leave them with a smile-there are always other bids.

Copyright 2024 Floor Focus

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