Cohasset Sewer to be Monitored by AG’s office

The Town of Cohasset was informed by the Attorney General, Business and Labor Bureau, that the Cohasset Sewer Commission had indeed failed to comply with competitive bidding laws and that for the ensuing year the Attorney General will monitor construction procurement undertaken by the Sewer Commission starting October 1, 2011.

The rest of this blog is the report filed with the Town written by Deborah A. Anderson, Assistant Attorney General. (Cohasset Sewer).

The Protestor, Karen Quigley, is a citizen residing in the Town of Cohasset and a former Cohasset selectman. Quigley and representatives of the Town attended the hearing and presented testimony and evidence. Additional documents were provided through August 1 and the record then closed.

Quigley argued that the Town’s Sewer Commission failed to comply with the competitive bidding laws by bid-splitting, by paying more for emergency sewer services than the low bid figure, and by failing to properly bid sewer projects worth over $10,000.  Ms. Quigley also argues that the Consulting Engineer, Daniel Coughlin, performs procurement activities outside of his role of consulting engineer.

For the reasons that follow, I find that the Commission did not follow the competitive bidding laws by failing to properly bid out contracts worth more than $10,000. I find that the emergency sewer services contract should have been bid with estimated quantities. I further find that the Commission impermissibly paid the low bidder for the emergency services contract more than he bid. I also find that Mr. Coughlin inappropriately used a “last best offer” approach to bidding and performed procurement functions in the past. Finally, however, I find that the evidence did not prove an intent to bid-split on the part of the Commission, but that the replacement of old sewer pipes should be bid as one project.

The Protest is therefore Allowed.

STATEMENT OF FACTS

            In June 2010, the Commission solicited quotes for on call “emergency response sewer repair services.” There were no estimated hours in the solicitation. The solicitation was not advertised in the Central Register or the local newspaper. The solicitation called for hourly crew rates and “all support vehicles” among other items. Four quotes were received. Rosano-Davis Sanitary Pumping (“Rosano-Davis”) quoted $150 an hour for weekday and weekend work and $200 for holiday work. Ross Rosano quoted $295 for weekday work, $322 for weekday work from 5:00 P.M. to 7:00 A.M., $349 for weekend work and $403 for holiday work. McDougall Brothers quoted $468 for weekday work, $559 for weekday work from 5:00 P.M. to 7:00 A.M., $559 for weekend work and $614 for holiday work. Iaria Brothers quoted $682 for weekday work, $756 for weekday work from 5:00 P.M. to 7:00 A.M., $756 for weekend work and $830 for holiday work. Rosano-Davis was awarded the contract, which ran for a twelve-month period until June 30, 2011. On-call emergency services will now be performed by the plant operator, United Water.

In addition, the Town’s consulting engineer sent out a letter to all bidders on July 7, 2010. In it, the engineer stated that he “will be sending out a letter to all bidders notifying them of the results and to the three ‘Not-Low’ bidders asking if they can meet the low quote. If they can, we will place them on a revolving response list.”

A review of the invoices submitted by Rosano-Davis discloses that it billed the Town for the rental of a pumper truck at $135 per hour in addition to charging the hourly rate submitted in its quote, despite the solicitation’s requirement that “all support vehicles” be included with the quote. The emergency services billed out by Rosano-Davis for FY 11 was $18,799.65,

The Town is in the process of digging up and replacing old sewer pipes. As the Commission gets easements from the property owners, it bids the work out piecemeal. On October 28, 2010, Rosano-Davis invoiced the Town $8,200.00 for one project. On January 6, 2011, the Town received three separate invoices from Rosano-Davis for $18,110.00, $5,825.00, and $245.00. Ms. Quigley argues this is bid-splitting. The $18,110.00 project was not bid out.

Daniel Coughlin, P.E., of Coughlin Environmental, is the Commission’s consulting engineer. Mr. Coughlin has held that position since 2005. In FY 2009, he was paid $1,057,013.38; in FY 2010 he was paid $620,766.22; in FY 2011 he was paid $379,333.89. There has been no competitive process for consulting engineer services since Mr. Coughlin assumed the position. Ms. Quigley argues that Mr. Coughlin is providing procurement services that go beyond the scope of his consulting engineer contract. The Town has acknowledged that Mr. Coughlin should not have opened the quotes for the emergency services contract at his office, with no Town representative present. Ms. Quigley also alleges Mr. Coughlin performs other services that are not engineering services, such as preparing easements and corresponding with ratepayers.


ANALYSIS

  1. Procurements over $10,000

            The Town paid Rosano-Davis $18,799.65 in FY11 for emergency services. It was also invoiced by Rosano-Davis for $18,110.00 for replacement of old sewer pipes on January 6, 2011. On both of these dates, the threshold for solicitation of written quotes and advertisement in the Central Register and on the Town’s website or bulletin board was $10,000. See M.G.L. c. 30, § 39M. The Commission violated M.G.L. c. 30, § 39M when it failed to properly advertise and bid out this work.

  1. 2.     Estimated quantities

In addition, the June 2010 quote process for emergency services was flawed.  The quote process should have included an estimated number of hours of emergency service.  Here, there was no evidence that the Commission estimated the number of hours that would be worked during the year or provided bidders with that essential information. See Langone Pipeline & Utility Construction v. Westfield Gas & Electric, Attorney General Bid Protest Decision (May 1, 2007) (estimated quantities were not shared with the bidders; re-bid ordered where it was impossible to determine who the low bidder was given the lack of estimated quantities).  We will not order a re-bid in this case, however, since United Water now provides emergency services.

  1. 3.     Pumper Truck

Rosano-Davis billed the Town separately for the rental of its pumper truck, in addition to the quoted hourly rate. This was contrary to the bid, which directed the bidders to include all support vehicles in their bids. The fact that Rosano-Davis would still be the lowest bidder if the rental of the pumper truck is added to its crew rate is irrelevant – the Town paid Rosano-Davis more than it should have.

  1. 4.     Last Best Offer Approach

Mr. Coughlin reportedly sent out a letter to the three high bidders for the emergency services contract, asking if they could match Rosano-Davis’ low bid. This “last best offer” approach is contrary to M.G.L. c. 39, § 39M, which requires award to the lowest eligible and responsible bidder based on the bid submitted in response to the initial solicitation.

  1. Bid-splitting

Bid-splitting is intentionally dividing a procurement into two or more procurements for the purpose of evading a bidding law. See M.G.L. c. 149, §44J(3), and Inspector General’s Procurement Bulletin, June 1995. The Inspector General cites the following as an example of bid-splitting: “[I]f you frequently solicit telephone quotes from the same vendors for highway materials that you use regularly, like sand and gravel, you should seriously consider advertising for bids. You will get better prices, save time and paperwork by making larger, less frequent purchases, and promote integrity in the process.” Obtaining the lowest possible price and maintaining a fair and open bidding procedure are core purposes of the competitive bidding laws. See Interstate Engineering v. Fitchburg, 367 Mass. 751, 757 (1975).

The Commission is replacing old sewer pipes as it obtains easements from the property owners, not all at one time. The Town has paid invoices for work apparently performed in October 2010 and January 2011. It appears that the Commission has a rational basis for splitting up the work, since it receives easements from property owners at different times. Although there does not seem to be an intent by the Commission to evade the procurement laws or to bid-split, this work should be bid out as one project by the Commission.

  1. Mr. Coughlin’s Services

Engineering services are exempt from public bidding under M.G.L. c. 30B. The Inspector General, however, has recommended that there be a competitive process for engineering services at regular intervals:
Although it may make sense to retain a design consultant to provide services whenever needed, the designer’s responsibilities and fee structure should be clearly spelled out in the contract, which should be competitively procured at regular intervals. It is not advisable to continue a long-term consultant relationship for two reasons: first, relying on the same designer year in and year out impairs the owner’s ability to evaluate the quality of the designer’s work; and, second, the designer has little incentive to keep its fees within a competitive range.

 

The Inspector General’s Design and Construction Contracting Seminar, (2001), page 29 (emphasis added).

In addition, the services that are exempt are engineering services, and not such things as preparing easements or corresponding with ratepayers. The Town has acknowledged that Mr. Coughlin improperly performed procurement services with regard to the emergency services contract. The Town should be mindful of these limitations to the engineering exemption when scrutinizing invoices from Mr. Coughlin or his successor.

FUTURE COMPLIANCE & MONITORING

            This protest has revealed evidence of multiple instances of non-compliance with the public construction bidding laws. Public officials overseeing procurement of construction and other services are responsible for the expenditure of millions of taxpayer dollars each year. For this reason, it is vital they understand the public procurement laws as well as the principles of transparency, open competition and anti-favoritism they are intended to serve. It is also vital that they adhere to the laws.  In response to this protest, and to its credit, the Town has acknowledged some of its mistakes.  It is essential that the Town take further steps to assure compliance in the future.  The Town should consider giving its chief procurement officer supervisory responsibility regarding Sewer Commission procurements.  In the alternative, the Town has agreed to obtain procurement training for a member of the Sewer Commission or an employee of the Commission. The Inspector General offers a series of procurement seminars leading to the Massachusetts Public Purchasing Official designation. This would be an excellent and affordable source of training for Town officials and the Town should act swiftly to ensure that this procurement training take place as soon as possible. Further, this Office is also available as a resource to provide guidance on better procurement practices.

Since much of the work giving rise to the protest has been performed, in order to ensure proper adherence to the bidding laws prospectively, this Office will monitor construction procurement undertaken by the Sewer Commission for a period of one year, starting October 1, 2011. Effective October 1, 2011, and subsequently, on January 1, 2012, and thereafter on a quarterly basis, the Cohasset Sewer Commission shall provide the Bid Unit of this Office with a list of contracts for construction into which it has entered in the preceding three months. The list shall include the following information:

  • The construction work to be performed;
  • The name of the successful bidder;
  • The cost of the contract(s) involved and anticipated start date/duration; and,
  • The bid process undertaken (c. 149, §§44A-J or c. 30, §39M)

For the foregoing reasons, the Protest is Allowed.

© Copyright 2011 Tanna K, All rights Reserved. Written For: Tinytown Unleashed
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  1 comment for “Cohasset Sewer to be Monitored by AG’s office

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