Its a Bad Idea…

I have been doing this blog for almost 3 years. In that time I have done my best to not directly disagree with TDOT policies. However, on the issues of the “Small Purchase Procedure” for consultant selection I am going to have to take a stand.  You can find here Policy301-01 on page 18 of the updated policy on how to select consultants.

The issue is this: The TDOT Local Program Office is instructing most local governments for STP funded, locally managed projects to use the small purchase procedure instead of following a standard Federal Qualifications Based Selection process. The threshold for this process is if you estimate that the engineering fees are going to be less than $150k, which covers over half of the locally managed projects out there.

The way that would work is that you (the local government) email or call a minimum of two TDOT pre-qualified engineering firms. Ask them for a “price negotiation” and then award “to the firm whose proposal is most advantageous to the program with price and other relevant factors considered. ”

Pretty easy huh? Ask for two firms to send in their price proposals, and pick the one you want. No need to advertise in the newspaper. Get two bids and pick who you want, right?

Here are the list of problems that I see with this in practice:

  1. The Federal regulations surrounding Consultant selection are pretty clear that they DO NOT want engineering consulting services bid out. It is against the law. Now from the homework that I have done it looks like with smaller projects under the $150k fee limit it looks like you can skim under the radar by doing the Small Purchase Procedure.
    I think that it is risky for local governments to skate this close to the law.
  2. TDOT does not follow this policy when selecting consultants for TDOT work. If the Department does not follow this procedure, how can they in good conscience recommend it to local governments? Granted most of TDOT’s consultant contracts are way over the $150k limit, but I think that the point is still valid.
  3. You don’t get the best firm for the job when you base it on price. I will explain.

You may be thinking, well why not bid it out (besides that whole its against the law thing)? Here is why: You don’t get the best firm for your money. Lets say you have firm “A” who knows what they are doing, is fairly familiar with the process, and knows just how much work it is going to take to get your project done. They give you their qualifications and a fee proposal of $75,000. Then you have engineering firm “B” that has done some TDOT work, but has never worked with a locally government to managed a TDOT Locally Managed project before. They are not familiar with all the work that is involved. But they send in a cover letter that has a bottom line price of $50,000. 

So firm “B” is the cheapest right? The lowest bidder? 

Or are they going to hit you with change order after change order when they figure out just exactly how much work is required? How much of their time, and your money, is going to be required for them to learn the process. How much longer is the project going to end up taking? How much risk is the local government taking on for the potential mistakes that this firm can cost everyone? How much more aggravation and headache is the local government setting itself up for? How much more hidden costs will hit the bottom line? Lets be honest, when there is a money quote on the table it changes everything.

 

As with most things, you get what you pay for. Helping you walk your project through the maze that is the TDOT Locally Managed Program Process is not simple or easy. You want someone who can get the job done, with the minimum amount of headache.

Some of you out there may question my motivation and credibility. I am a consultant, and I of course would like for my firm to get selected on a given project we are going after. Fair enough.

But I also care about the people and communities that we work for, and those we would like to work for. I think that the Small Purchase Procedure does them a disservice. I don’t think that it is good for them. Remember, through the regular Qualifications based selection process, you don’t have to hire the #1 firm on your qualifications list if you can’t agree on price. The local government is still in the drivers seat.

I also don’t think that this is a good policy for engineering consultant groups either. I think this could encourage a “race to the bottom” (who can do be the cheapest) mentality. The problem is that you might win. How would you like the engineer you talk to on the phone for your project be calling you from a call center in India? Sound familiar?

The dirty little secret is this: There are only a handful of TDOT Pre-Qualified Engineering firms that specialize in Federally Funded, Locally Managed TDOT Transportation Projects.  And when you get right down to it our fees are pretty close to each other. None of us will be  the cheapest, but we will get the job done.

Is A2H the cheapest firm for every job? I certainly hope not. Is A2H the best value for your money, offering the best one on one customer service in the State of Tennessee? Damn straight we are!

As a local government you have a choice of which engineering firm to hire, and a choice on how to select them. My recommendation is to follow the standard qualifications based selection process. You negotiate price after you rank the firms. That is the process which will create the best outcome, whether or not your select A2H.

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About arran375

I work for Askew, Hargraves, Harcourt and Associates, Inc. here in Nashville, Tennessee. The short version of what I do is that we help local governments spend the Federal funds they get from TDOT on road, and bridge projects.
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