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Wednesday, February 22, 2012

Fostering competition fosters savings

City saves on sewer plant engineering
Burgess & Niple of Akron will serve as the engineering firm for the Phase I improvements to the city wastewater treatment plant, with the cost considerably less than what was originally estimated.

The city Utilities Commission agreed Tuesday to accept the company's proposal for a fee totaling 11.5 percent of the project cost, per the negotiated agreement reached with Utilities Department administrators.

The original estimate for engineering was set at 20 percent of the estimated construction cost of $2,319,000, or $472,600. Utilities Superintendent Don Weingart said that equates to a savings of at least $200,000 from the original budget.

Utilities Commission Chairman Geoff Goll thanked the staff for the hard work they did to secure an engineering firm, saying the results of that effort are "a tremendous savings on the project."

They were able to get competitive interest, commission member Bob Hodgson said. The department followed Ohio Revised Code and sent out 41 requests for engineering statement of qualifications from potential engineering firms and received nine statements of qualifications.

It is definitely "hard work", as the Commission Chairman said, to, as the ABA Model Procurement Code compels us, "foster competition". But with savings like these, it has its rewards.

There was another interesting item in that news article. Unfortunately, not enough information was provided to know more about it, but it does illustrate a point often made that, in procurement as most other exacting things, definitions count.

In this case, the article kept using the term "bid", and not, it seems without cause. Nevertheless, the story reports how, of the many "bids" solicited, the top 5 qualifying bidders were selected, and asked to price bids. That process is more akin to a request for proposal process under Guam law: if you rank bidders, you choose only the best and first negotiate with that one to try to attain a "fair and reasonable" price (or compensation).

Here's how it went after that:
Before the bids could be opened, a letter was received from the American Council of Engineering Companies of Ohio, protesting the procurement process set out in the solicitation of bids. The organization claimed the solicitation of bids was in violation of Ohio Revised Code, which requires the department to negotiate a contract with the firm ranked as most qualified to perform the services.

Weingart said they sought an opinion from city Law Director Brooke Zellers, who suggested they not open the bids, but they could keep the process moving by reviewing the bid of the top-ranked firm and negotiating with them for a "fair and reasonable compensation."

According to Weingart, the law on these type of contracts changed in August 2011 and including the word bidding, with his department interpreting that to mean that bidding was allowed. They followed the advice of Zellers and did not open the other bids.

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