Linn leaders ignoring a competitive bidding market

By Scott Norvell

To say that the competitive bid market for public construction is competitive would be a huge understatement.

Point in case, from Jan. 1 through June 15, the Master Builders of Iowa tracked more than 550 state, county and local construction projects that were bid through the Construction Update Plan Room Network.

The estimated value of these projects is

$635 million (according to the architects and engineers designing the projects), whereas - when totaled - the apparent base bid amount compiled by interested contractors came to

$535 million. That is 18 percent less than architect and engineer estimates.

This trend is very prevalent throughout the state, in which bids are coming in well under engineers' estimates. Also, if one were to track the number of general contractors on the bid lists, you would also find an unprecedented high number of interested bidders. Without question, the public owner and taxpayer are currently getting fire-sale prices on public works projects.

However, there are pockets of construction activity in which one would come away with a different take. For instance, the Linn County Board of Supervisors so far has required Project Labor Agreements (PLAs) on three projects. The first was the Options/Linn County Community Services Building, which did come in 23 percent under the engineer's estimate, but had only four bidders (two from out of state, two from Iowa) with the low apparent a Wisconsin-based firm with a Cedar Rapids satellite office.

The second is the Linn County Juvenile Justice Center, which was originally estimated as a

$4.5 million project and the low apparent bidder's price was $4.9 million - nearly 10 percent over budget and had only a handful of interested bidders.

Finally, the $11.5 million Linn County Jean Oxley Public Services Building was recently awarded at roughly

5 percent under budget estimates with six active bidders.

Such results run counter to what is actually happening in the current bid market in which there are an unprecedented number of interested bidders (many more than six, by the way) and running on an average

18 percent below architects' estimates.

Compare the aforementioned projects to other local and similarly sized projects, and you will find much different results. Iowa City, more specifically the University of Iowa, is one example in which the taxpayer is benefiting from extreme competition. For instance, the UI Dental Science Building came in 27 percent under the engineer's estimate of

$9.7 million. In Benton County, the same contractor who was 10 percent above estimates for the Linn County Juvenile Justice Center PLA project was 7 percent under budget on the new

$5.9 million law enforcement center. Similar projects have different results when PLAs are involved.

In comparing other knowledgeable and experienced owners, you will find similar examples. Iowa State University's Recreation Facilities Expansion and Renovation had an original estimate of $30.6 million - low apparent bid was $24.3 million. Likewise, the City of Clinton figured out how best to use taxpayer money and will get its $55 million Wastewater Treatment facility for

$37 million.

Some public owners boast of how they can manipulate Iowa's competitive bidding laws through the use of PLAs to ensure strong local bidder participation while getting qualified contractors bidding on local contracts. The numbers tell a much different story.

Linn County leaders are creating a public sector procurement policy that fails to recognize the market and would rather pander to politics and propaganda. Some may say “so good, so far,” but in the end it is the Linn County taxpayer who is being cheated.

Scott Norvell is president and CEO of Master Builders of Iowa. one of more than 100 chapters of the Associated General Contractors of America. Comments: snorvell@mbionline.com