Requiring government agencies to pick the lowest bidder sounds awfully good in theory. When tax dollars are at stake, it seems like common sense to go with whichever contractor can offer the best …
Requiring government agencies to pick the lowest bidder sounds awfully good in theory. When tax dollars are at stake, it seems like common sense to go with whichever contractor can offer the best price.
And to be sure, there are advantages to such a process: Contractors are on notice that they’d better put their best offer forward, and there’s little room for quibbling about fairness, because it’s all a matter of cold, hard numbers.
However, defaulting to the cheapest proposal also has its shortfalls. For one thing, price is not always synonymous with value, as not all contractors are created equal; any shrewd shopper can tell you that paying more money up front for a higher quality product or service can sometimes save you in the long run.
And then there’s the whole issue of shopping locally — which came up in the construction of the Wyoming Game and Fish Department’s new office in Cody.
When the Game and Fish Commission opened bids on the project in December, they found a shockingly tight group of bids. The lowest four offers on the $8.8 million project fell within $90,000 (1%) of each other, with the two lowest bids separated by just $8,587 — or 0.097%. It was a Utah-based firm, BHI, that came out on top (or, technically, on bottom), edging out Groathouse Construction of Cody by that fraction of a percent.
Wyoming law gives a 5% preference to in-state contractors on public infrastructure projects, but that didn’t help Groathouse, because BHI has an office in Rock Springs and qualifies as a Wyoming company, too.
A group that advocates for Wyoming businesses, 307 First, had questioned BHI’s ties to the state, noting that the company’s Rock Springs office has been for sale for some time; it also appears that only one BHI employee works out of the building.
However, BHI dismissed the complaints as sour grapes — saying it’s had crews operating in Wyoming for two decades and had 73 employees working in the state in December. Meanwhile, a Wyoming Department of Workforce Services investigation reaffirmed the company qualifies for the in-state preference.
Given the findings, the Wyoming Game and Fish Commission voted unanimously to award the contract to BHI as the low bidder last month. But the decision wasn’t without a protest from then-Commissioner David Rael of Cowley, who would have preferred to give the job to Groathouse.
“State money needs to be spent with state residents,” Rael said, adding, “We’re mandated by law to award this contract, but I hope legislators are listening and we can do something to avoid this in the future.”
In the wake of the kerfuffle, lawmakers might be tempted to tweak Wyoming’s residency requirements, but the better idea would be to simply give decision-makers some discretion in awarding bids.
It seems absurd that a board, commission or council’s only role in the bidding process is to affirm that, in this case, $8,831,913 is a slightly smaller number than $8,840,500.
Hiring a contractor for a public project is far different from a private job, but let’s put this in the context of a household budget: If you collected quotes for a new fence and one offer came in at $8,832 and the other at $8,841, it’s fair to assume the $9 price difference wouldn’t even be a factor. You would choose whoever you felt was the best for the job — and, all things being equal, you’d probably be more likely to pick the Park County contractor over a company from somewhere else.
Similarly, with the bids effectively coming in as a tie, it would have made a lot more sense to award the Game and Fish’s new Cody office to a Cody firm.
Certainly, the last thing anyone wants to see is government agencies rejecting a slew of low bids; in many cases, that would only raise costs and concerns of fairness. But both those problems could be mitigated by limiting the amount of discretion. For instance, lawmakers could require that the selected contractor remains within a certain percentage (such as 5%) of the low bid; they could also lay out certain criteria that must be met before a government body can choose a higher bid — such as a demonstrated benefit to the community the project will serve.
The Legislature would need to tread carefully to avoid subjective and contested decisions. However, as the recent debate over the Cody Game and Fish office shows, the current law doesn’t always lead to the best processes and results, either.