On May 6 at 3 p.m., county officials opened the responses to four separate projects they needed addressed.
A flooring contract received just one responsive bid. So, too, did two roofing contracts. Finally a painting contract tallied two separate offers.
When Houston County commissioners approved three of the contracts the following week, two of them expressed concerns about the lack of competition for county projects. So did Sean Curtis, the county’s building maintenance manager.
“We had people come to the pre-bid conference. Then people don’t bid,” he said. “We do it by law. (The bid) goes out everywhere. You would think more people would bid on it.”
The problem extends past the county, too.
According to Charlotte Langford, the City of Dothan’s purchasing agent, 67 of the 209 contracts/purchases (32 percent) the city awarded in the past two years had either just one or two bidders. With competition a key fundamental in capitalism, the dearth of acceptable bids could affect the value of the taxpayer dollar.
So what has limited the number of offers? Officials note the sheer volume of available work, project variations, and even necessary tenets of the state’s bid laws themselves play a role in the trend.
Bid law requirements
The Code of Alabama contains two separate bid laws – the general competitive bid law that applies to supplies, materials and services and a public works bid law that addresses road, sewer, building and other related projects.
One stipulation of the public works bid law requires potential bidders to possess a general contractors license for projects valued at $50,000 or more. Obtaining one of those is a stringent process, said Marty Robbins, president of Marty Robbins Roofing.
“When we redo a license each year, we have to send financial paperwork. You have to show financial stability,” he said. “It’s more than filling out a form and sending a check.”
The licenses themselves can hinder the number of available contractors for government contracts and purchases. Robbins, whose company recently landed a roofing contract with Houston County, said the state issues limits on contract values and types of work performed with each license.
“For instance, we can do sheet metal and roofing but not necessarily build a building,” he said.
The requirement for a general contractors license theoretically ensures companies who can satisfactorily complete the projects compete for the bids. It does have impacts on various projects, though, like one the City of Dothan recently awarded.
Dothan Public Works Director Charles Metzger said city officials wanted to find a landscaping group that could mow rights-of-way on major thoroughfares like Ross Clark Circle. Since the contract easily topped $50,000 – the final value approaches $208,754 per year – the general contractors license provision and other project stipulations likely prevented many companies from offering their services, Metzger said.
The city offered the bid three times in a six-month period beginning late last year. One company, Gulf Breeze Landscaping of Mississippi, provided the sole bid at the last letting.
“When you take a brush, it’s a broad sweep. Sometimes there’s some unintended consequences as a result,” said Peter Covert, Houston County’s chief administrative officer. “There are certain aspects of the bid law that may seem a handcuff to the business of running a government, but I think they’re there for the right reasons – and that is to ensure that the public has an undue impression that there may be some shenanigans going on.”
Labor shortage, project variations
While the bid law requirements may diminish the number of companies competing for government contracts and purchases, Mother Nature has recently played a factor, as well.
“Since Hurricane Michael, there is a lot of work to go around, a shortage of workers and waiting lists for repairs to be made,” Langford said. “Finding and keeping the labor force required to work is one issue companies face. The cost of mobilization to bring their crews and equipment to Dothan to stay for an extended period may affect their ability to submit a competitively priced bid.”
Pres Register, Houston County’s attorney, agrees.
“Michael, for contracting things, for certain has not helped,” he said. “Most of that labor is not here. It’s in Florida.”
While Hurricane Michael has generated thousands of construction projects locally, the area’s economy has, as well. Covert mentioned home builders are constructing several subdivisions in the Dothan area, which affects the number of available roofers, painters and electricians among other professions.
Additionally some city and county projects may include some provisions that challenge contractors’ abilities to bid for projects, Robbins, Register and Metzger said.
“(If) you have a flat roof, (there) may be specialized equipment needed,” Register said. “There may be other issues, based on the project itself, (which) could limit responses.”
Could changes help?
Some tenets of the bid laws provide the government with some flexibility, including the “local preference zone” established in the competitive bid law. Local governments, at their discretion, can award purchasing contracts to local businesses who do not submit the lowest bid in an effort to reinvest in their communities.
Dothan utilizes a 3 percent local preference for businesses in the city limits, while Houston County implements a 5 percent preference for businesses based in Houston County. The law allows Dothan to expand its preference to include businesses in the metropolitan area and could be changed with action from the Dothan City Commission, Langford noted.
While expansion of the preference zone could increase competition, Langford said it may not necessarily pay dividends given the city would essentially pay more for the same goods.
Covert also wonders if an expansion of the preference – even further than state law allows currently – would even help. He believes local preference plays little factor into the lack of competition seen in governmental bids.
“To me, the more competition, the better. The question would become why wouldn’t those people bid just generally?” he said. “They have a plate that’s full, or there may be some projects that require sub-specialty licenses that they don’t have.”
Register noted the state’s attorney general also adjusts the amounts required on public works bid bonds – money that ensures a bidder will fulfill his or her obligation – each year. Those changes, which consider a variety of factors, attempt to ensure the public’s money is used properly.
“It’s in response to ‘Are we doing a good job of being accountable to the citizenry while allowing the government to function as expeditiously as possible?’” he said. “What are you getting, and more importantly, what is the citizenry getting in return?”