“Best value contracting is a rising trend in the construction industry, and that’s a good thing for Laborers,” says Armand E. Sabitoni, LIUNA General Secretary Treasurer, New England Regional Manager and Labor Co-Chairman of the LHSFNA. “We should promote it at every opportunity.”
Best value contracting (BVC) is transforming the way project owners and governments do business, specifically the way construction customers select contractors for projects. Traditionally, specs were issued, and contractors submitted sealed bids. The lowest bid got the job.
Safety Qualification Issues
Safety Past Performance
- Three-year history of fatalities
- Three-year history Recordable Injury Incidence Rate
- Three-year Lost Workday Incidence Rate
- Three-year Experience Modification Rating (EMR)
- Nature of EMR: interstate, intrastate, monopolistic state, dual rate
- Five-year safety citations, violations or warnings from regulatory agencies with details
- Five-year record of safety and health investigations with details
- Five-year record of bid disqualifications with details
Current Safety Capability
- Identify responsible company safety personnel
- Include all written safety and health programs
- Identify mandatory safety training for employees, supervisors, technical/professionals, foremen, craft workers, new hires with details
- Nature of bidder’s safety training (who provides, how must invested, how much time devoted, steps to ensure effectiveness)
- List of specific courses and requirements
- List safety equipment provided
- Regular safety audits
- Toolbox safety meetings or other regularly scheduled safety meetings
- Written substance abuse program with conditions that require screening or testing
- Written hazard communications program
- Regular safety inspections
- Policy on investigation of incidents
- Policy on investigation of near miss incidents
- Disciplinary policy for violations of safety rules or policy
- Incentives to promote safe work practices
- Means and methods to evaluate safety qualifications of subcontractors, specialty contractors and individual independent contractors
That system, inevitably, was abused by many contractors who submitted intentionally low bids, won the contracts and then – with the owners feeling the pressures of a partially completed project – pursued excessive change orders and fee increases. Work ended up costing more, took longer and, often, led to unnecessary and costly injuries among the workforce.
To address this abuse, owners and governments moved first to pre-qualifying and responsible contractor policies (RCP). Under this regime, potential bidders first answered a series of questions about their work history and current practice. Based on their answers, they were rated, and any unqualified applicants were eliminated. Those remaining – the qualified contractors – then bid on the project, and the lowest bid got the work.
The RCP system was a step in the right direction, but it only eliminated the worst performers without providing support to the best. Once a certain threshold of qualification was reached, everything still boiled down to the lowest bid.
BVC takes a major extra step. Like RCP, BVC also asks a series of questions regarding performance capability – such as past history of on-time completion records, health and safety practices, intent to use subcontractors and training programs – but the respondents are rated from top to bottom based on their responses. Then, after all of this information is collected, the owners or government officials consider price and qualification ratings. In the final analysis, the project is awarded to the contractor offering the best combination of price and qualifications. Low bid is no longer the sole determining factor.
“This is highly significant for contractors who invest in areas like training and safety,” says Sabitoni. “When the total value of union labor is taken into account, union contractors have an edge. Our members are better-trained. They work more safely and produce a better, on-time product. As a result, LIUNA signatory contractors have better track records for getting the job done right, and they can win BVC projects despite a somewhat higher bid.”
However, as Washington attorney Gerard M. Waites, an expert in best value contracting issues, points out, “The devil is in the details. How well a BVC process works for union contractors depends on the types of evaluation factors used and the kinds of questions that are asked in the contractor evaluation and scoring process.” One key area of investigation that is often addressed inadequately is safety.
On behalf of the Center to Protect Workers’ Rights (CPWR), Waites recently reviewed 47 screening documents provided by an array of owners. He found that, among 34 public owners, only seven used qualification documents that evaluated safety in a comprehensive manner. “This indicates that considerable opportunities exist to extend the focus of screening documents in ways that will enhance the bid competitiveness of union contractors,” says Sabitoni. Such changes can improve project delivery for project owners.
“Owners are one step removed from actual construction,” continues Sabitoni. “The process of construction isn’t as important to them as the end result – the structure, its on-time completion and its cost. However, events keep proving that safety-related breakdowns in the construction process end up having enormous impacts on the final outcome and on the owners, themselves.”
Waites cites some examples. In 2002, Virginia’s Department of Transportation was forced to suspend the state’s largest ($650 million) and most important road project after two workers were killed over a two-week period. A year earlier, the U.S. government imposed a record $10 million fine on a construction pipeline company whose conduct led to a massive rupture and explosion that killed three workers and polluted waterways. In 2000, an Idaho businessman was sentenced to 17 years in prison and fined $6 million for exposing employees to life-threatening hydrogen cyanide gas during a clean-up project.
Poor safety performance leads directly to delays, higher costs, bad publicity and, occasionally, criminal liability.
“These kinds of outcomes are getting the attention of owners,” Waites says, “as are the successful efforts of some of their peers [for instance, see Construction Industry Institute: Lessons for Success (LIFELINES, Fall 2003)].
Best Value Contracting, with an appropriate emphasis on health and safety qualifications, is a way for owners to better control their own projects while also encouraging a broader, stronger approach to safety among construction contractors and the industry, in general. Such policy changes benefit everyone: owners, contractors and workers on the front lines.
Waites has developed a Model Contractor/Subcontractor Safety Qualification Statement (see box below) that interested owners can use as part of a larger BVC qualifications questionnaire. Another useful resource is New Developments in Best Value Contracting & Design Build Delivery, prepared by the Ohio Valley & Southern States LECET. The document summarizes the case for BVC and includes a number of useful attachments. For more information about it or best value contracting, in general, contact the LHSFNA Occupational Safety and Health Division.