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Public Works Department 415 Diamond Street tel: 310 318-0661 Engineering Services Division Redondo Beach, California 90277 fax: 310 374-4828 www.redondo.org
March 8, 2022
PaveWest
11700 166th Street
Artesia, CA 90701
Subject: Beryl Street Drainage and Street Improvements Project from North Prospect Avenue to Flagger Lane, Job No. 41130
Dear Mr. Don Mangan:
The City of Redondo Beach ("City") has reviewed PaveWest Inc.'s ("PaveWest") bid that was submitted for the subject Project and discovered non-waivable material bid errors rendering PaveWest's bid nonresponsive. The City's review included review of your letter dated March 1, 2022 in response to a bid protest filed by Sully-Miller Contracting Company ("Sully-Miller"). Staff will recommend that the Council reject PaveWest's bid as nonresponsive and award the contract to the lowest responsible bidder submitting a responsive bid, Sully-Miller.
A review of the face of PaveWest's bid reveals a clear violation of the prime contractor self-performance requirement. This requirement is set forth in the American Public Works Associations Standard Specifications for Public Works Construction ("Greenbook"), Section 3-2 Self Performance which states "The Contractor shall perform, with its own organization, Contract work amounting to at least 50 percent of the Contract Price...' The Greenbook is incorporated as a Reference Standard in the Project Specifications,
and effect as though printed in this Specification..."
In reviewing PaveWest's bid and the subcontracting percentages set forth by PaveWest in the Designation of Subcontractors form submitted with its bid, it appears that at a minimum, PaveWest subcontracted approximately 81% of the work on the Project and will retain 19% of the work to self-perform. PaveWest states in its bid protest response letter dated March 1, 2022, that it inadvertently included 5% profits in their subcontractor proposal costs and identified its subcontractor TTS Engineering Inc.'s portion of work at 72% on the Designation of Subcontractors form when in fact the correct percentage should have been 40%. PaveWest states that the correct revised subcontract amount is equal to 49% of the total bid amount, which would leave PaveWest with 51% of the contract to self-perform. PaveWest bid showing self-performance of approximately 19% is in clear violation of the self-performance requirements on the Project - a material part of the bid as explained in greater detail below. As such, the City has no discretion to allow correction and waiver of the error.
Case law in the State appears to support this position. The court in Valley Crest Landscape, Inc. v. City of Davis (1996) 41 Cal.App.4th 1432, considered this very issue and held that the city was not authorized to allow the contractor to correct a mistake in listing out the percentage of work to be performed by subcontractors to bring the bid into compliance with a self-performance requirement on the project. In Valley Crest, the city's bid solicitation required the prime contractor to self-perform at least 50% of the work on the project. The low bidder submitted a bid that indicated 83% of the work would be done by subcontractors. The second low bidder objected that the low bidder's bid was non responsive due to the failure to meet the self-performance requirement. Upon being notified of the discrepancy, the low bidder responded that the subcontractor percentages were not correct and submitted new percentages totaling 44.65%. The court concluded that the low bidder was not entitled to change its bid in this manner and, therefore, the city could not lawfully award the contract to the low bidder. (See Valley Crest Landscape, Inc. v. City of Davis (1996) 41 Cal.App.4th 1432, 1435.) The issue involving PaveWest's bid is deemed to be analogous to the matter considered in Valley Crest. The City's bid specifications require 50% self-performance by the prime contractor. PaveWest's bid on its face reflects approximately 19% self-performance.
Although PaveWest submitted information indicating that the subcontractor percentages listed in the bid were in error, the Valley Crest decision makes it clear that this type of error is not waivable and, therefore, the City is not permitted to authorize PaveWest to now correct the error.
The City Council will consider the award of this contract at its meeting on April 5, 2022.
Staff will recommend that the City Council reject the bid submitted by PaveWest as nonresponsive and award the contract to the lowest responsible bidder, Sully-Miller.
Sincerely,
City Engineer
cc: Sully-Miller Contracting Company