Blog – Info for Contractors!

An Invalid Subcontractor Agreement leads to a Bid Bond Headache

Be Careful in your Bond Agreements Below is a good article on a bid bond and how your bonds can be called into question by related deals.  Specifically, it is all about a side agreement that allows for the pooling of resources.  This arrangement is not a bad one, but one of the keys is that the bonded contractor was going to allow the other contractor to utilize their bond in order to perform the work.  That’s not necessarily wrong, but you do need to be sure that it doesn’t violate the underlying job documents. Main Street Project Halted Due to ‘Invalid’ Subcontractor Agreement The stoppage of a major construction project on Main Street St. Thomas has at least one senator calling for Public Works Commissioner Gustave James to come clean about the details and the suspension of millions of dollars in associated Federal Highway Administration funds. “I have managed to obtain a copy of the correspondence suspending the funding, and must say that I was deeply disturbed by what I read,” Sen. Jean Forde said in a statement Monday. “As such, I have written to Commissioner James in an attempt to get a complete picture of what has happened, why it happened, and what we can expect for the future regarding the Downtown Revitalization Project. In an economic and political atmosphere in which the Virgin Islands needs and will have to fight for every federal dollar we get, we simply cannot afford to leave monies on the table.” According to the letter from Federal Highway Administration official Michael Avery, funding for the project was suspended because of an unapproved partnership between contractor Tip Top Construction and subcontractor Prestige Building company, which he said was not prevously disclosed during the bid award process. While the Source has not been able to reach Public Works or Tip Top representatives for comment, it has, like Forde, also obtained a copy of the letter from Avery, which was sent late last week to both Public Works and Property and Procurement commissioners. According to the letter, FHWA said the contract executed for the project required a payment and performance bond from contractor Tip Top, which was able to satisfy the requirement through a “teaming agreement” with Prestige, executed last September. “Such a contingency is not acceptable since it was not disclosed during the Payment and Performance bond evaluation process, the teaming agreement was not submitted with the bid package and was not approved by VIPW (V.I. Public Works) during the award process,” according to the letter from Federal Highway’s Michael Avery. “In addition, Prestige is not a signatory nor an approved subcontractor for this contract.” Avery said that since the payment and performance bond appears to be invalid, Tip Top could be in breach of contract, which would consequently put the company in default. “Therefore, FHWA will suspend federal eligibility of this contract from the date of this letter until the matter is resolved,” Avery wrote. According to the contract documents, Tip Top […]

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Bid Bond Brouhaha

Below is a really good article on bids and how they can go awry.  As you can see, there are legal threats and lawsuits being planned by the contractors whose bids were not accepted.   The bids, like in many cases, were a wide range – going from $4.6 to $6 million.  It appears that several of the contractors were deemed “nonresponsive,” which is bid talk for “hey, you didn’t dot every I and cross every T.” Unfortunately, the contractors have some good defenses to this.  First, they are stating that the documents that were not submitted were not required by the bidder – but instead only by the one awarded the bid.  Thus, these documents cannot be used to disqualify one for a bid.  And it goes on. What’s the lesson in bid bond jobs? Easy.  Make sure that you have every I dotted and T crossed.  Then call the RFP place and ask questions.  It will save time and heartache later. ARCATA – For the second time in three months, the contract for a major Arcata project is being protested by contractors whose bids were declined. The contract award for the Humboldt Bay Trail North, which is Phase II of the Arcata Rail With Trail Connectivity Project, has been delayed, but that probably won’t interfere with the project’s April construction unless new legal threats are carried out. The project will link Arcata with Eureka via a three-mile, Class 1, ADA-compliant bike and pedestrian trail from Samoa Boulevard to the U.S. Highway 101/Bracut intersection. Located on the North Coast Railroad Authority’s disused rail easement, the trail is part of the Humboldt Bay Trail, and will become part of the California Coastal Trail. With the town section already complete, planners hope the 4.5 mile Arcata path will will lure commuters away from their vehicles and eliminate more than 60,000 car trips by offering a human-powered path between local destinations. Building the new segment will be lucrative for whichever contractor gets the job. Bids from five contractors were opened on Oct. 19, and they ranged from more than $4.6 million to nearly $6 million. The bid results. The lowest bidder, Stewart Engineering, was deemed “nonresponsive” and disqualified due to failure to include a “Non-Collusion Affidavit.” So was Steelhead Constructors, Inc., the third-lowest bid. That firm also failed to sign an addendum. The Non-Collusion Affidavit, required by state law, ensures that bids are not being submitted on behalf of others, that bids are genuine and not submitted to thwart or discourage other bidders. Basically, it helps keep the bidding process honest and transparent. The highest bidder, Wahlund Construction, was also deemed nonresponsive, but for a different reason – the “Concrete Structures” portion of its bid was left blank, rendering it incomplete. That left two responsive bidders, McCullough Construction and Mercer-Fraser Company. McCullough’s was the lower bid, and though its bid also contained flaws, the city deemed the errors more or less on the level of typos, and nonconsequential. A staff report […]

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