Tuesday, Sept. 28, 2004 | 10:38 a.m.
The competition for Clark County School District contracts can be fierce.
In the first weeks of this new school year, a protest over a bid for a planned elementary school overflowed into the Clark County District Court system, leaving one local contractor without the $14 million contract it was expecting and the school district paying nearly $30,000 more than the lowest bid.
At issue was whether Pace Contracting properly listed the subcontractors it planned to use in the construction of Kathy L. Batterman Elementary School in the southwest Las Vegas Valley. The second lowest bidder, Martin-Harris Construction, protested to the School District that it appeared that Pace "bid shopped" -- a practice that is in violation of Nevada statutes.
To bid shop is essentially an attempt to change the price and/or scope of a project after the sealed bids have been opened by the School District.
"It looked suspect to Martin-Harris and suspect to us, the staff, at the School District," said Fred Smith, director of construction management for the School District. "We recommended to the board that they go with Martin-Harris because it appeared to us this was an inappropriate listing of subcontractors, whether it was unintentional or not."
Officials with Pace contend it was a matter of perception and nothing was being done under the table.
When submitting a bid to the School District, general contractors must list any subcontractors that comprise 5 percent or more of the total bid. The amount quoted by the subcontractor to the general contractor is not listed, just that each will be receiving 5 percent or more of the total cost to build the school. The School District is prohibited from asking how much a general contractor will pay its subcontractors.
Within two hours of the sealed bids' being opened by the School District, a list of subcontractors that will receive less than 5 percent but more than 1 percent must be submitted to the district. Again, actual amounts subcontractors will receive for their work is not listed. The district requires a complete listing of all subcontractors.
Landing a contract with the Clark County School District can be a boon to any contracting company. For starters, it doesn't look like the work will dissipate any time soon. As the Las Vegas Valley continues to grow year after year, so does the number of schools needed -- last month 13 new schools opened in the valley. In 2003 the School District awarded more than $230 million worth of contracts for new and replacement schools, $10 million in school additions and another $21 million for modernizations.
Bid disputes are nothing new and are a common occurrence when so much money is at stake. But this time the district -- and a judge -- agreed with the protester, rival contracting firm Martin-Harris Construction.
"Bid protests and the board awarding to someone other than the low bidder is rather rare and unusual for us," Smith said. "It (bid shopping) does come up from time to time, but in my 13 years, this is the first time a protest was upheld for this very specific reason."
A district court judge denied Pace's request for a restraining order to halt the awarding of the contract to Martin-Harris, in essence upholding the School District's decision.
"We thought it would be overturned," said Thomas Fallon, president of Pace Contracting. "We were stunned he (the judge) ruled the way he did."
Pace lost the contract that it bid $14,338,514 on, and Martin-Harris was awarded the school contract for $14,367,500.
Officials with Martin-Harris declined comment, but paperwork submitted to the School District and filed in district court show that Martin-Harris accused Pace Contracting of incorrectly listing Sanpete Steel Corp. in the 1 percent category when in fact the subcontractor should have been listed in the 5 percent category and submitted with the original bid.
"The problem was that Pace had a bid from that steel construction company, which was an amount in excess of 5 percent of the contract, so they were obligated to list that contractor and failed to do so. That's what the court decided," said Bill Hoffman, general counsel for the School District.
Martin-Harris protested because Pace did not list a structural steel subcontractor in the original sealed bid, but allegedly relied on a bid from Sanpete Steel, documents show.
According to an affidavit provided to the court by Fallon, Sanpete officials allegedly told Fallon minutes before the bid was due to the district that the quote for the job would be more than $945,000. Because Fallon perceived that quote to be too high, he submitted the bid for the school, leaving a structural steel contractor off the list because Pace's plan at that time was to perform the structural steel work itself and thus did not need to include a subcontractor on the 5 percent list, according to Fallon's affidavit.
After the bid was submitted and it was determined that Pace was the lowest bidder, Fallon had several telephone discussions with Sanpete Steel officials. During those conversations, Sanpete Steel officials allegedly gave Pace verbal approval to list it as the structural steel erector, but only with a portion of the steel being supplied by the firm, and not to exceed 5 percent of the total job, Fallon, president of Pace Contracting wrote in a letter to the School District. Pace then listed Sanpete on its 1 percent subcontractors list that was submitted to the School District.
In a letter from Sanpete to Fallon, Sanpete denies allowing Pace to list it on the 1 percent list because it would not perform the work for less than $945,000 and would not perform just a portion of the work, according to material provided by Martin-Harris to the Clark County School Board.
Fallon said it came down to his word against Sanpete and Martin-Harris officials.
"(Sanpete) said they would split it out, but I didn't have that in writing," Fallon said.
Fallon said he will continue to bid on school contracts with the district.
"You lick your wounds and go on your way," he said.
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