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Elizabeth Nelson's City Council Blog

I write a City Council newsletter with my summary of agenda items coming before City Council. Sign up to receive it first via email, or read it here later on this blog.

Picking & Choosing Contractors

This week’s Council agenda included a contract for work on City infrastructure: CA-3 would have approved a contract with E.T. MacKenzie to replace a water main and resurface streets at Mosley and Third.


CA-3 Resolution to Award a Construction Contract to E.T. Mackenzie Company for the Third & Mosley Water Main and Resurfacing Project ($1,299,999.25) (ITB No. 4702)

https://a2gov.legistar.com/LegislationDetail.aspx?ID=5461172&GUID=2C11E4A1-3E7C-446F-BBF3-94E34E74B12E


Staff bid this contract out in December and approval was recommended in order to complete work this year, before the start of the next football season. A majority of Council voted to postpone a decision. Council discussion of CA-3 highlighted a problem about which everyone in our community should be aware and concerned.


BACKGROUND

In an election last November, voters in Ann Arbor approved a charter amendment to change the City’s procurement policies. The amendment removed charter language that referenced lowest price (i.e. “lowest responsible bidder”) and replaced it with language describing “best value.” At our January 3, 2022 meeting, Council approved the ordinance changes necessary to implement the charter amendment. I supported both the charter amendment and the ordinance changes.


The new procurement policy featured prominently in Council discussion of CA-3 this week. Several of my colleagues insisted that the success of that ballot initiative was reason to challenge the staff-recommended contract and award it to another vendor. My colleagues argued that because this policy was approved in November, it should be applied in this case. City engineer Nick Hutchinson explained at our meeting:

“This contract, along with a couple more that we’ll have coming forward in the next month or so were let under the old procurement system. They were issued in December before the changes to city code went into effect. They are the last vestiges of the old procurement system that are working through the system right now.”

Whether or not the City should retroactively apply a new procurement policy - i.e. reach back and apply a new standard to contracts that were already under review before that standard was law - would be a legitimate question for debate. Nick Hutchinson offered meaningful feedback about the consequence of doing that, what it might mean to delay approval of this contract. He explained that timing is more sensitive in this particular neighborhood:

“The Third and Mosley area is very close to the football stadium and we would want to make sure that work is done by the end of August, so it makes our timeframe a bit tighter. Also, with the later bid-letting, I would expect that we would see higher bid prices as well.”

INFORMED DECISIONS

Staff is helpful to Council in alerting us to the potential impact of the decisions we make. In the two months before this contract landed on our Council agenda, City staff reviewed hundreds of pages of documentation from multiple bidders in order to arrive at a recommendation. At our meeting this week, the contract was introduced by Nick Hutchinson, who answered pre-submitted questions from Council Members.


The 163 page bid proposal from E.T. MacKenzie referenced by City staff can be found as an attachment to item CA-3:

https://a2gov.legistar.com/View.ashx?M=F&ID=10538052&GUID=6015F174-D816-48F2-8CDD-1104B2D4F205


Question: Do we know how the bidder assesses skills and qualifications of employees?

“In response to that question, the contractor provided information that is found on page 123 of their submittal. I don’t have time to read through that whole thing right now but I will direct you to page 123 of that attachment.”

Question: Are we aware of any safety or environmental violations incurred by the bidder that may be relevant to this project? Do we gather this information for all bids?

"The contractor submitted a list of OSHA safety citations from the last five years, which is shown on page 65 of their submittal. There are only a few items on this list and they appear relatively minor in nature. Also, engineering staff is not aware of any environmental violations by MacKenzie and we have worked with them on multiple occasions for the past few years and have not encountered such issues. That information is gathered for all bids”

Question: Are we aware of any quality assurance programs used by the bidder?

"We haven’t had any issues with water main projects in the past. In recent years, we did have some sanitary issues, but that’s a different contractor, different kind of work. For this submittal specifically, MacKenzie submitted a quality control plan which begins on page 128 of their submittal.”

TALKING POINTS versus FACTS

In discussion of this contract - immediately after hearing these answers - several Council members simply contradicted or ignored the information provided by staff. Three different Council Members repeated talking points that had been refuted by Hutchinson moments earlier. Below are statements and characterizations from my colleagues, juxtaposed with the facts:


Council Member Eyer:

“We have really no knowledge of how people are trained and assessed at this company.”

Facts: As referenced by City staff, page 123 of this contractor’s bid proposal includes fifteen bullet points on training assessment protocols, plus additional explanation about training and procedure.


Council Member Eyer:

“I have serious concerns about this contractor. There are four serious OSHA violations by this contractor in the past few years.”

Facts: The contractor recommended by City staff had one OSHA citation that was considered “serious”, and three judged to be "other-than-serious". For more information on these categories, visit the OHSA website:

https://www.osha.gov/publications/fedrites


Types of Violations

  • WILLFUL: A willful violation is defined as a violation in which the employer either knowingly failed to comply with a legal requirement (purposeful disregard) or acted with plain indifference to employee safety.

  • SERIOUS: A serious violation exists when the workplace hazard could cause an accident or illness that would most likely result in death or serious physical harm, unless the employer did not know or could not have known of the violation.

  • REPEATED: A Federal agency may be cited for a repeated violation if the agency has been cited previously for the same or a substantially similar condition and, for a serious violation, OSHA's regionwide (see last page) inspection history for the agency lists a previous OSHA Notice issued within the past five years; or, for an other-than-serious violation, the establishment being inspected received a previous OSHA Notice issued within the past five years.

  • OTHER-THAN-SERIOUS: A violation that has a direct relationship to job safety and health, but is not serious in nature, is classified as "other-than-serious."

Ryan Stanton of MLive reported in more detail:

https://www.mlive.com/news/ann-arbor/2022/02/ann-arbor-council-debates-13m-contract-to-fix-bumpy-neighborhood-streets.html

Records show four OSHA citations for eight safety violations in the past five years: one citation from 2017 with two violations listed as “accident/fire prevention,” one citation with one violation from 2018 listed as “improper angle of repose,” another citation from 2018 with four violations listed as “broken fire extinguisher, CPR, annual excavator inspection” and one citation with one violation from 2019 listed as “no safety manual on site.” The “improper angle of repose” citation, which was categorized by OSHA as a “serious” violation, is the only one that shows a penalty fine, which was $7,000 initially and then $2,400. The company was cited for being in violation of a safety standard that states, “When benching the side of an excavation, the vertical rise shall not be more than 5 feet and the step back shall extend at least to the angle of repose as required by table 1.”

Council Member Song:

“I’m worried about the issues being raised tonight, particularly if it means that there are considerable safety concerns. I would think that if we would engage a contractor who doesn’t prioritize safety and has serious OSHA violations as being something that we should be collectively concerned about over cost savings.”

Facts: Nick Hutchinson was clear in describing these OSHA violations as “relatively minor in nature.”


Council Member Radina:

“It’s not just about the speed, but also the quality with which some of these projects are happening.”

Facts: Page 128 of the contractor’s bid proposal includes an organization chart to illustrate supervision and accountability within the company, and an additional three and half pages of explanation regarding quality control measures. As Nick Hutchinson had explained earlier:

“We haven’t had any issues with water main projects in the past. In recent years, we did have some sanitary issues, but that’s a different contractor, different kind of work.”

Increasingly at our Council meetings, there is a willingness to make speculative or wholly unfounded statements, rely on colleagues to repeat and affirm those statements, and ultimately shift our conversation far away from facts or reality. As a political strategy, it is extremely dangerous. A bandwagon of repeated mischaracterizations comes together quickly for maximum impact; the task of correction and fact-checking is much more tedious and time-consuming.


LEGITIMATE PROCESS

It is highly irregular for City Council to substitute their own vendor preferences outside of a legitimate bidding process, but it has happened once before. Last year at our March 15, 2021 meeting, staff recommended a contract with a company called DiPonio and one of my colleagues (CM Eyer) sponsored a substitute resolution, awarding the contract to Bailey Excavating. You can find that resolution here:

https://a2gov.legistar.com/LegislationDetail.aspx?ID=4854822&GUID=BDA72646-7FD9-4779-8711-802504767EA3


At this week’s meeting, Council Member Eyer criticized the contractor recommended by staff:

“There are often violations that are found, but this particular contractor had twice as many as the next lowest bidder and the next lowest bidder also much more closely fits our best-value criteria.”

In this case, the price difference between the recommended contract with E.T. MacKenzie and the next lowest bidder was relatively insignificant (just $60,000). As reported by MLive:

Bailey Excavating Inc. was the next lowest bidder with a price of $1.36 million, followed by Fonson at $1.48 million. Two other companies bid about $2 million.

This week marks the second time that Council Member Eyer has advocated on behalf of a specific vendor that did not earn a City contract through the regular bidding process. Coincidentally, both instances directed work to the very same contractor.


INTEGRITY MOVING FORWARD

It is remarkable for any member of Council to second-guess staff choice of vendors for specific construction contracts like these. It is more remarkable for a Council Member to advocate on behalf of a specific vendor (twice). My experience on Council is relatively short, so I asked City staff: is this normal? Has this ever happened before? The answer to that question was no. Last March was the first time this has happened in at least the last fifteen years.


We have a formal bidding process for a reason, so that vendors are not chosen on a whim or for political reasons. I endorsed a City Charter amendment precisely because awards of City contracts must follow a legitimate procedure. Our City bidding processes assume some level of fairness and integrity. We rely on City staff to apply the same standards to every bid from every contractor.


I will continue to advocate for City policies that prioritize fair compensation, safe working conditions, and quality work in City contracts. I supported and endorsed amendments to our City Charter so that our bidding process can reflect those values and award contracts accordingly. Picking and choosing vendors at the Council table - outside of a formal bidding process - is not a strategy I will ever support.