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MINUTES

 

DESIGN BUILD

Board of Directors’ Meeting

November 17, 2011



 

Members Present: Marc Monteleone, Chairman
                                Roy Smith
                                Woody Thrasher 
                                Mary Jo Klempa
                                Ron Spradling
Department of
Administration:
     Donna Lipscomb

Others Present:     Micheal Evans, Department of Administration
                                Lloyd Miller, Lloyd W. Miller Architect PLLC
                                Michael Mills, Mills Group
                                Mike McKechnie, Mountain View Solar
                                Mark Deem, Pro 1 Electric
                                David Bruffy, Mountain Line Transit
                                William Brewer, Brewer and Giggenbach

Members Absent: Rodney Clay



 

 

The meeting was called to order and a silent roll call was taken and it was determined that a quorum was present.

Approval of Minutes:

Roy Smith moved for the approval of minutes of the November 3, 2011, meeting. Motion seconded by Ron Spradling. All voted in favor and the motion passed and the minutes were approved.

New Business:

Presentation by Monongalia County Urban Mass Transit Authority

David Bruffy addressed the board. He provided the board with the original bid bond. Mr. Bruffy stated that he wanted to share three things with the board regarding the procurement process. He indicated that when they started this project they decided to go the design build method of construction because it would be the quickest. By being the quickest it would give them the biggest bang for the taxpayer dollers. It also gave them the best quality project because the project would be figured out ahead of time. It would also make sure the taxpayer finances were protected. The longer the project takes the more cost to the taxpayers. There is a return on investment as soon as the project is completed.

As Mr. Bruffy sees the situation, the board has three choices here in the emergency meeting. One is to reaffirm their decision of two weeks ago, to throw out all the bids or to approve MTV Solar as the most qualified. He stated that MTV Solar’s proposal is the only one that lets them do it quickly and provide the best quality work. He advised that the bid bond was a concern of theirs but they have a performance bond that is indeed protecting taxpayer dollars. Mr. Bruffy requested that the board approve them to proceed with the project with MTV Solar being the most qualified. He stated that the transit authority board does not see an issue with the bond and wants to proceed with MTV Solar. Mr. Bruffy advised that his board did not authorize him to move forward with the second bidder pending this boards reconsideration. They requested him to send the letter that is in the packets requesting approval to proceed with MTV Solar.

Mr. Spradling stated that the board did not throw out all the bids, only the one from MTV Solar. Mr. Thrasher stated that his concern is that it is standard operating procedures that they follow state laws. Chairman Monteleone advised that the board does not have the ability to change state code or modify the procedures. The board’s position is that the bond was unresponsive so the board can’t change the law. Mr. Bruffy advised that none of the projects that came to this board was perfect. He identified issues concerning the other bidders. He stated that GA Brown had all the information included but did not have the actual certificates for business licenses for registed engineers. March Westin’s proposal was required to have a solar installer listed and they didn’t. Mr. Bruffy stated that it was not their intent to dot all the I’s and cross all the T’s, it was to protect the taxpayer’s interest.

Mr. Bruffy stated that MTV Solar looked very good on the qualitative proposal but had an irregularity in the bid bond. He indicated that it is their intention to make this project move forward with MTV Solar without violating the statute. Chairman Monteleone stated that he appreciated that, but the board does not have that ability. He further stated that it is the responsibility of the criteria developer to develop the specifications and look at each proposal to assure they meet the requirements. The response of MTV Solar should have been thrown out and not even looked at since they did not meet the criteria. Mr. Smith indicated that the board’s understanding was that everything was done properly in the first phase but the second phase had an issue. The board can not collectively approve moving forward with MTV Solar without an appropriate bond.

Mr. Bruffy advised that he was completely blind on the specifications. He relied upon them and they allow them to waive technical irregularities. Chairman Monteleone stated that the bid bond was not a technical irregularity. Mr. Spradling advised that in his opinion MTV Solar did not provide a bid bond. It was provided by a subcontractor. Chairman Monteleone advised that when it was opened and there was no bid bond it should have been thrown out then. Mr. Bruffy stated that the specifications did not state it had to be in the name of the main contractor. Chairman Monteleone indicated that the statute at 5-22A-11 is clear that the design builder must provide a bid bond. Attorney William Brewer questioned whether the statute allowed anyone on a multiple team provide the bond. Mr. Spradling stated that MTV Solar did not provide a bid bond and it should have been thrown out then. Mr. Brewer stated that the specifications did not require it. Mr. Brewer questioned whether there is a regulation that defines design builder other than the team as a whole? There was a discussion regarding the definitions and what the statute says.

Mr. Bruffy believes that since the specifications did not require it to be in a particular member of the teams name that this was a technical irregularity. Mr. Bruffy advised that the RFP allows them to waive a technicality. Chairman Monteleone pointed out that the statute at 5-22A-11 requires the design builder to provide a bid bond. The design builder is MTV Solar. Mr. Brewer believes that the design builder is the entire team as this is a joint venture and is multiple entities. Chairman Monteleone stated that the design builder is the team leader and in this case it is MTV Solar. Mr. Brewer asked if there was a regulation that said that. He indicated that this process has a design build team that comes together and the RFP did not require the bond be in a particular member of the team’s name. The definitions of design builder indicates this is a joint venture. Chairman Monteleone advised that what was submitted is a conditional bond from a subcontractor.

Ms. Klempa questioned why they did not provide a bid bond. Could they not provide one? Mr. Bruffy questioned that as well and that is why he wasn’t willing to move forward as the owner without the surety they were protected. Ms. Klempa stated that a performance bond is not the same thing as a bid bond. Mr. Bruffy agreed, but it assures the project gets completed. Mr. Brewer again stated that this is a technical flaw and the RFP allows them to waive it. He does not see that the bond that has been submitted is invalid in any way. It is simply a matter of correcting the name on the bond. You have a project that the end user wants that meets their expectations and this technical issue the owner is willing to waive. The error can be corrected. There is nothing that says the bond must be in the name of the lead on the team so, therefore, this is technical. Fixing the technical error will allow the process to move forward with a good quality proposal and not abandon the process. That is the intent of the section in the RFP for a waiver.

Mr. Brewer stated that 5-22B says a bid can be thrown out when all criteria is met. It would be hard for him to say they should throw this out. Mr. Spradling stated that they did not have a valid bid bond originally and this should have stopped then. Chairman Monteleone advised that Mr. Miller should never have let the costs be opened when there was not a valid bid bond.

Mike McKechnie, with MTV Solar, stated that they are a medium sized solar company and they reviewed the RFP and looked at any evidence that they did anything wrong. They did not find anything in the RFP they did not abide by. They did exactly what the RFP asked and they spent a lot of time and money and did everything asked of them. They gave the commitment to the proposal and did exactly what was requested.

Chairman Monteleone asked the board members if they had any questions. No members had any further questions. Chairman Monteleone advised that he reviewed the information provided to him from the Design-Build Board, and he has also done some limited independent research regarding the entities involved. He reviewed the West Virginia Design-Build Procurement Act ("Act") contained at WV Code §5-22A-1 et seq.

As to the question of the bid/proposal submitted by MTV Solar for the MCUMTA Solar Power Plant Project ("Project"), it is Chairman Monteleone’s opinion that the Design-Build Board was correct in ruling that the bid/proposal was nonresponsive, and must be rejected for the reasons set forth below:

Section 11 of the Act requires that the design-builder "furnish a bid bond not to exceed five percent of the maximum cost of the design-build contract". It also states that "[i]n the event the proposal is accepted and the design-builder fails to execute the design-build contract, the bid bond will be forfeited."

In furtherance of those requirements, the RFP Documents for the Project expressly required that each design-builder submitting a proposal furnish a bid bond no less than 5 percent of the bid amount. The Project Information document stated, in section 1.07 PROPOSAL SECURITY, that "Proposals shall be accompanied by a security deposit as follows: 1. Bid Bond of a sum no less than 5 percent of the Bid Amount." Similarly, the Instructions to Proposers state, in Section 1.02 REQUEST FOR PROPOSALS, at Subsection F. Proposal Security (Bid Bond), that "[e]ach proposal must be accompanied by proposal security made payable to the Monongalia County Urban Mass Transit Authority as described in Section 00 0102 Project Information. The Bid Bond shall be included in the sealed envelope with the Cost Proposal[sic]." Also, the Instructions to Proposers, at Section 3.13 PROPOSAL SECURITY, state as follows:

A. Proposal security must be in the form of a Bid Bond.

B. Bid Bonds: Issued by a surety meeting the requirement of the General Conditions and Supplementary General Conditions.

C. The proposal security of the successful proposer will be retained until such proposer has executed the Agreement, furnished any required contract security, and met the other conditions of the Notice of Award, whereupon the proposal security will be returned.

D. If the successful proposer fails to execute and deliver the Agreement and furnish the required contract security within 15 days after the Notice of Award, Monongalia County Urban Mass Transit Authority may annul the notice of Award and the proposal security of that proposer will be forfeited.

The Supplementary General Conditions detail the requirements for the Bid Bond. They provide, on page 5 of 6, that the General Conditions are to be modified to add a new Section !.11.5.3 BID BOND, which states:

Each bid shall be accompanied by a bid bond, payable to the Owner for five percent (5%) of the total bid issued by an A.M. Best, A-or better rated surety company listed on [sic] most current Federal Register, Circular 570, and authorized to do business in the State of West Virginia and signed or co-signed by a resident West Virginia agent. Should the bidder refuse to enter into a Contract with the Owner on the terms stated in the Bidding Documents or fail to furnish bonds covering faithful performance of the Contract and all obligations arising thereunder, the full amount of the Bid Security shall be forfeited to the Owner as liquidated damages, not as a penalty.

Irrevocable letter of credit is not acceptable as a bid bond.

A certified cashiers [sic] check is not acceptable as a bid bond.

Personal securities are not acceptable as a bid bond.

MTV Solar’s bid was accompanied by a bid bond in the appropriate amount, but that failed to name MTV Solar as the principal. Instead, the bid bond named an entity known as "Pro 1 Electric LLC" as the principal, and stated further that the bond was conditioned on the award within 30 days of a contract for "Electrical Installation" to Pro 1 Electric LLC. Pro 1 Electric LLC is not the design-builder or proposer submitting a bid for the Project; it is identified in MTV Solar’s Qualitative Proposal as its electrical subcontractor. A check of the business database maintained by the West Virginia Secretary of State shows that Pro 1 Electric LLC and MTV Solar (which is actually named Mountain View Solar & Wind LLC) have no commonality of interests, no shared members, and no shared principal offices. Consequently, MTV Solar failed to comply with the Act’s express requirement that it, as the design-builder, furnish a bid bone, and failed to comply with the requirements of the RFP Documents and the Instructions to Proposers in that regard, as well.

MTV Solar’s failure to provide an appropriate bid bond not only violated the express requirements of the Act and the RFP Documents, but also contravened the very purpose underlying the bid bond requirement. In the event MTV Solar defaulted on its obligation to enter into a Contract with the Owner, the Owner’s right to recover against the bid bond is uncertain, at best, thus negating the bond as bid security. In addition, allowing MTV Solar’s bid to be considered in these circumstances gives it the right, unavailable to other bidders, to decide whether it wants the contract or not. It can refuse to enter into the contract with the Owner with no sanction or loss. Thus "two bites at the apple" option is contrary to the fundamental policy of competitive bidding.

There are other problems associated with MTV Solar’s bid bond. It was apparently not an original, and it is not clear from the face of the bond whether it was appropriately signed or co-signed by a resident of West Virginia agent. Moreover, the bid bond as provided to me lacks several of the features typically associated with surety bonds, such as a power of attorney stating that a person signing the bond is actually an attorney-in-fact for the surety. It is not necessary, however, to address these various issues at this time, given the obvious and fatal failure caused by the lack of identity between the bidder and the bond principal.

The general rule applicable to bid bond deficiencies of the nature of the one presented here is that the bid/proposal must be rejected. Such a deficiency is not considered an informality that can be waived, even though it does not affect price, quality, quantity, time of delivery, or changes in the work. The rationale for this rule is that articulated above; allowing the bidder the option to withdraw its bid with impunity breeds fraudulent practices and unfair bidding. Accordingly, it is Chairman Monteleone’s opinion that MTV Solar’s proposal must be disqualified and rejected as nonresponsive.

Mr. Smith moved that they reconsider their decision to throw out the MTV Solar proposal. Motion seconded by Mr. Spradling. All voted in favor and the motion passed. Mr. Smith then moved that they not change their prior decision. Motion seconded by Mr. Spradling. All voted in favor and the motion passed and the proposal of MTV Solar was again found nonresponsive and thrown out.

Mr. Smith stated that he understood the problem but the board could not change things and felt that the board did the right thing. Mr. Duffy questioned what the appeal process was. Chairman Monteleone stated that the minutes would be provided to them as soon as possible do they would have the basis of the board’s opinion. Once the Intent to Award is issued they have 72 hours to file a protest. Ms. Lipscomb requested she be allowed to circulate the minutes by e-mail to get them approved so another meeting would not be necessary. Chairman Monteleone gave such approval.

Mr. McKechnie questioned the board as to whether they believed the criteria developer did a good job writing the specifications in the RFP. Chairman Monteleone indicated he could not answer that as he was not involved in that process.

Chairman Monteleone questioned Mr. Miller as to how they approved the contractor since their license is for electrical and residential and not commercial. Mr. Miller stated that they just made sure they had a license. The valid license must be in the correct classification. Chairman Monteleone advised Mr. Miller that he plans to send the license to the contractor licensing board to see if they are licensed for commercial. He also advised Mr. Miller that the board will start monitoring the Criteria Developer going forward.

 

Old Business:

 

There was no old business to come before the board.

 

Other Business:

Chairman Monteleone requested that the WV Statute, the RFP Project Information, the RFP Instructions to Proposers, the RFP Supplementary General Conditions, the Bid Bond, the letter from Mr. Bruffy dated October 28, 2011, the e-mail of November 11, 2011, from Mr. Miller to Chairman Monteleone, and the West Virginia Secretary of State business and licensing documentation be attached to the minutes and made a part thereof.