Saturday, September 1, 2012

State Contracts Often Exclude Local Contractors

Chip Woodrum: “Sealed bidding in almost all cases is better.”


One of the more significant issues facing the building community—especially the smaller businesses—is framed in a couple of acronyms: PPTA and PPEA.

Those are the Public Private Transportation Act and Public Private Education Act which take bidding out of the process of issuing state government road and education construction contracts. PPTA was passed in 1995 and PPEA followed later after some intense lobbying by some of Virginia’s largest general contractors and architectural/engineering firms, the companies that would (and have) benefit most. Contractors in this region generally will only comment off the record on the issue because, as one said, “If I spoke out, it could cost me any chance I have of ever getting any of those contracts.”

Off the record, though, they are furious about the large—and lucrative—contracts being consistently given to the same large firms. These smaller firms can actually counter the contract price once it is announced, but, as one contractor said, “You just don’t have the information to give an intelligent bid at that point. It would be a crap shoot, far too risky. That’s why it almost never happens.”

One Roanoke contractor said that larger firms hire marketing people specifically to develop relationships with localities or universities that are expected to have projects they want completed in the near or even far future. When the time comes to put an offer on the table, these companies get the call and “because it isn’t competitive, it usually costs a good bit more than it would under a bid process,” says a Roanoke contractor. “The owner likes it because the project can be done faster and without a lot of hassle and the contractor likes it because the profit margin is high.”

Elm Avenue interchange will get a $20 million facelift.
Former Virginia State Delegate Chip Woodrum (D-Roanoke) was among those who voted for the PPTA in 1995. Today, he opposes it. “Sealed bidding in almost all cases is better,” says Woodrum. “While it may sometimes be cumbersome and inconvenient, that is a small price to pay for transparency. The public always has a right to know how tax money is being spent. In the final analysis it’s their money.”

PPTA “was advanced as a way to marry the creative impulse of private enterprise with public money on large public projects and avoid the slower and more ponderous process of the Public Procurement Process, which included an advertised [request for proposal] and competitive sealed bidding. It was part of what I call the ‘Public Private Partnership Movement,’ which held that the sealed bid process was too bureaucratic and stifled creative approaches to public projects. I felt it presented a myriad of pitfalls to a proper procedure.”

Recent examples of the PPTA and PPEA include such non-educational and road projects as the Greenridge Recreation Center and the Roanoke Public Safety Building. The Blacksburg High School project came in at nearly $60 million under PPEA with Branch Construction of Roanoke getting the contract ($125 for three Montgomery County schools) and the reconstruction of Roanoke’s Elm Ave.-I-581 at $20 million were also under those programs. Most went to companies outside this region. The same is true for projects at the region’s colleges and universities, who spend a lot of money.

There is a loose confederation of smaller contractors who are working on getting PPTA and PPEA modified or repealed, but one member from this area laughed when asked if that was a possibility. “There’s a real inequity here and we want people to know it,” he says.

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