Many contractors are now passing on million-dollar projects

contractors are passing on bids

Hard to believe, but it is true!  Procurement officials report that many government solicitations are receiving insignificant interest or no interest at all from government contractors.

Because competitive bidding is essential to public procurement, that’s a huge problem. Competition ensures that taxpayers get the best value when products and services are procured.

When a public entity only receives a couple of bids or no bids at all for a project, officials are left scrambling. In most cases, the only thing to do is to restart the bidding process. Delays are not only time-wasters, they are costly. Occasionally, a procurement delay results in the loss of funding that had been allocated.

A recent survey of 550 procurement officials reported that 44 percent said they are not receiving enough bids or proposals. Only 9 percent reported receiving more than enough.

There are many examples similar to what is happening in Arkansas. The state’s Department of Transportation (ArDOT) reports that it is not getting the desired number of competitive bids. At least 47 projects have received inadequate responses or no responses at all.

The city of Del Mar, California, intended to turn a portion of Surfside Race Place into an 1,800-seat concert venue. The Del Mar Fairgrounds, where the facility is located, got a preliminary estimate of $11 million in costs for the project.  Officials, however, expected that number to increase when plans were finalized.  Eight contractors came to a “job walk” that the city hosted but only two companies actually responded to the request for proposals (RFP) which had a short timeline. The city received several requests to extend the response time but declined. Now city officials are scrambling and there’s a possibility that both proposals may be rejected. If that happens, there will be at least an eight-to-10-month delay while the project is redesigned and a new procurement is planned.

The city of Oberlin, Ohio, planned to construct a 2,175-square-foot pavilion near an underground railroad area. The first phase of the project included the installation of underground utilities, sidewalks, a parking lot and ground preparation. That contract was awarded and the work was completed. But, when bids were due for the second phase last week, city staff was shocked to learn that not a single proposal had been submitted.

Bids for Auburn’s Nevada Street bike lane and sidewalk project were also due last week, but no proposals were received. Last year, the city broke the project into two phases due to its high cost. The first phase was completed and the City Council voted to move forward with the second phase. Now however, because of the lack of interest from contractors, the city will lose $800,000 in state funding for the $2.9 million project. That will likely force the city to abandon the project completely.

There are many reasons why public officials see less competition for projects.  One reason is that experienced contracting firms tend to focus on projects that are large, well-marketed and designed with longer response timelines. Smaller projects rarely are marketed extensively, so many firms are unaware of the opportunity.

Another reason for a lack of competition is that public officials are busy and they discourage meetings with potential vendors. They may not realize that most contracting firms will pass on any project if a company representative has not been able to get a meeting with someone at the government entity. That’s because the cost and resources required to develop and scope a project and then prepare a bid are extremely costly and time-consuming. With no internal meeting, most companies will simply pass.

Competition ensures fair pricing and quality services.  Public officials who are responsible for solicitations should be especially careful to take note of what enhances competition and to develop practices that benefit all parties.

Collaboration is a very good thing when it is successful!

Mary Scott Nabers

Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a unique public affairs firm that specializes in procurement consulting, market research, government affairs and public-private partnerships (P3s). Mary is also co-founder of the Gemini Global Group (G3), a firm that works with national and international clients on business development, P3s and other types of government objectives.

A recognized expert regarding P3s, Mary is the author of Collaboration Nation - How Public-Private Ventures Are Revolutionizing the Business of Government. Her book explores this growing trend and describes a number of best practices for successful projects as well as the importance for both parties to respect the cultural differences of the other.