How to Get Better Subcontractors on Your Public Projects

Balancing quality, competition, and legal requirements in subcontractor selection for public projects.

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Have you ever wished you could disqualify a subcontractor listed on your public works bid?  Navigating the disqualification of subcontractors during construction bids is a delicate task, especially in the highly regulated and litigious environment of public works. The decisions made must align with the Public Contract Code and other related regulations, while also being informed by precedent-setting court cases. Below, we outline practical considerations and best practices for getting the right subcontractors to ensure your project is constructed well and finished on time.

1. The Procurement Method Can Help

Depending on what you are experiencing in your community and your bids, the type of procurement method being used significantly impacts how subcontractor qualifications can be managed:

• Hard Bidding: In this approach, the lowest bid wins, and the general/prime contractor assumes full responsibility for selecting subcontractors to include in their bid and manage their performance. Here, your options to influence subcontractor selection are limited.  Even when the pool of subcontractors are vetted and limited by prequalification the risk remains with the general/prime contractor for selecting the right subcontractors to perform the work.

• Alternative Methods (e.g., Lease/Leaseback, Design/Build, etc.): These offer more control over subcontractor qualifications. Requirements can be integrated into the RFQ/P (Request for Qualifications/Proposals) and the resulting contract, allowing the agency to enforce these standards from the outset.  Additionally, since the selection is often based on best value, the contractor has less pressure to select the cheapest subcontractor and can look for the best performing one at the right price.

2. Setting Qualifications Instead of (or In Addition to) Prequalification

Setting qualifications required to do the work is a good control method.  If your agency decides to set specific qualifications for either the subcontractor’s firm or individuals doing the work, these should be clearly outlined in the project specifications to avoid potential disputes and to facilitate getting the quality and workmanship you need.  Once you set criteria for performance you will be able to enforce it along the way through award and delivery.

• Experience / Special Certification Requirements: Consider stating qualifications such as, “At least 1 worker in a lead position must hold a certification in fiber optics with at least five years of experience when installing or modifying the fiber optics cabling and related work. Resume must be provided prior to start of work.”  It is likely that the specific person to be assigned to the project is unknown until after contract award.

• Subcontractor Licenses: We state the license for the prime bidder, but we can also put requirements into the specifications for the subs.  For instance, specify necessary licenses in the specifications, e.g., “All electrical work must be provided by a subcontractor holding a C-10 license.  This will be verified post-bid prior to award.”  A subcontractor’s license is knowable post-bid, so it is a reasonable time to verify it.

Remember, licensed contractors in California already have legal controls over who can do specific work and limits general and trades ability to work outside their expertise already. 

For instance, if the project is replacing HVAC units and the electrical work would otherwise be considered as minor associated with the primary work and you add the requirement for a licensed electrician, this could add cost.  Make sure what you ask for is truly needed on each project.

4. Guarding Against Bid Protests

Bid protests can arise when bidders make assumptions. To mitigate this, when and how proof of qualifications is required should be explicitly stated in the Instructions to Bidders:

• Post-Bid Verification & Timing: Requesting proof after bid submission minimizes the potential for protests. Indicate when this proof of meeting special requirements is needed, such as “Post-Bid”, “Prior to award” or “Before work commencement.”

• Provide a Special Requirements Form: Additional requirements should be specific, clear, and there needs to be a way for the awardee to prove compliance.  Consider providing a form in the front-end documents that lists all of the special requirements from the specifications that the provider of the work must meet.  Include reference to where they can find the requirement (spec # or plan sheet) for each one.  State that the form shall not be submitted with the bid and is only required post-bid when requested by the Agency.  Getting this post-bid avoids complicating the bid day itself and reduces the risk of bid protests which are solely based on what is received on bid day.

• Listing Law Considerations: Remind bidders, (perhaps on the requirements form if you choose to use one), that the qualified entity may or may not be listed for Listing Law purposes, especially if the work scope falls under the listing law threshold or is tiered. The one-half of 1% subcontractor list requirement is primarily intended to prevent bid shopping and protect the rights of listed subcontractors unless a substitution is necessary, not for verification of qualifications.  It is not advised to use the Listing Law form for special certifications.  This is why a separate form is advised.

• Transparency: Whatever you decide to do to get better work quality, clearly communicate to bidders any special qualifications in the bid documents and adhere to them during bid evaluation, post-bid vetting and during onsite work.

• Avoid Unnecessary Competition Limitations: When making decisions to require special qualifications public agencies should work to ensure these requirements are reasonable, necessary and doesn’t unfairly limit competition to only one or two firms.

5. Seek Legal Counsel

Before implementing any new bid strategy, it’s crucial to consult with legal counsel specializing in public works. This ensures that your practices are legally sound and align with public contract laws. Disqualification or limitation attempts perceived as politically motivated or not directly beneficial to the project’s quality can lead to legal challenges and project delays.

Final Thoughts

Getting qualified and experienced subcontractor on your project is vital.  However, disqualifying subcontractors, particularly if the basis was not clear in the requirement documents, is not a straightforward process in the context of public works and hard bidding.

It’s essential to strike a balance between ensuring high-quality work and maintaining a fair, competitive bidding environment. By clearly defining qualifications, understanding the constraints of your procurement method, and seeking expert legal guidance, you can navigate this complex terrain effectively.

Remember: Your primary focus should always be on what benefits the project and upholds public trust in the procurement process.

This discussion highlights issues that often appear during solicitation. QualityBidders specializes in helping agencies connect with prepared, qualified contractors and subcontractors.  https://www.colbitech.com/qualitybidders