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AGC, Contractors Express Concerns for New WMBE Plan

The City of Seattle’s new WMBE inclusion plan has been through a real-world bid process and the preliminary conclusion from AGC is that it’s a flawed plan that creates another hurdle to participation in City projects. On the other hand despite its flaws contractors will likely be able to meet the plan’s requirements.

The new “inclusion plan” promoted by Mayor McGinn replaces the “outreach plan” established in 2002. Prime contractors bidding on City of Seattle projects of more than $300000 must submit their plans for including WMBE firms with their bids. Plans are evaluated to assess whether the bidders good-faith efforts meet the Citys standard. In addition bidders for projects with an engineers estimate above $2 million will need to use a designated WMBE expert to develop and carry out the inclusion plan including recruitment and support throughout the contract. The expert can be a qualified person on the bidders staff or may be selected from a City roster of pre-qualified experts. (Click here for more info about the inclusion plan on the city’s website.)

A prime contractor’s WMBE plans must be deemed responsive or the contractor’s bid won’t be considered. The project award is based on lowest responsible bidder but only from among those whose WMBE plans are responsive.

To be deemed responsive a contractor’s plan must score 10 of 18 possible points on its inclusion plan. Six points maximum are awarded in each of three categories on the inclusion plan:

1. Proposed Subcontracting WMBE Goals requires the bidder to set a goal for the percentage of women and minority owned businesses that they plan to use over the duration of the project.

2. Scopes of Work and Supply Opportunities requires the bidder to identify WMBE subcontract and supplier opportunities and list the estimated value.

3. WMBE Contract Log requires the bidder to name the specific WMBE businesses that the bidder will contract with and their specific bid amounts.

Maximum scores for these elements depend on meeting or beating “reasonable Marketplace Availability of WMBE contractors as determined by the city.” The City’s Marketplace Availability calculation is based on two things: 1) WMBE participation on similar City projects in the past and 2) the average of the proposed WMBE goals of all bidders.

Because this marketplace availability is calculated after the bids are submitted a contractor won’t know how many points it will receive because Marketplace Availability is calculated only after the bids have been opened by the City.

This “shooting in the dark” aspect of the plan is a concern AGC contractors and industry attorneys raised with the City at a recent forum held at AGC. Another concern is that bona fide good-faith efforts of contractors could be punished by this plan.

To take a hypothetical (and extreme) example of how this could play out Contractor A could score maximum points for the first two elements (large goals) and thus be deemed responsive yet not actually contract with any WMBE firm. Contractor B might actually contract with many WMBE subs but not list enough WMBEs in the first two elements to gain enough points. Contractor B is clearly achieving the City’s ultimate objective yet its bid would not even be considered.

The City says that “gaming” the system (large goals yet few actual contractual arrangements with WMBEs) is prevented by the performance evaluation: At close-out the City will score the prime contractor’s performance on WMBE inclusion goals as part of this evaluation comparing the original percentage goals with the actual project WMBE utilization percentage. Disbarment from future City contracts is a potential penalty. But it is unclear how this process would work in practice or how realistic the threat of debarment actually is.

AGC will continue to discuss these issues with the City. Meanwhile because the City has required an outreach plan for years it does not appear that contractors are experiencing great difficulty in meeting the responsiveness requirements. But the inclusion plan is still very new and more experience with it could reveal additional problems.

For a more in-depth discussion of the WMBE plan read this Construction Law Blog by Ahlers & Cressman.

AGC members with questions about the inclusion plan or those who have experienced problems should contact AGC’s Seattle District Manager Jerry Dinndorf at 206-284-0061.

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