New Policy Key To Construction Pact

May 14, 2004
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GRAND RAPIDS — The Downtown Development Authority awarded its first contract under its new construction policy last week. That policy, the Equal Business Opportunity (EBO), was the decisive factor as to which contactor got the award.

But it also means the DDA will pay more for the project.

Diversco Construction Co. Inc. got the board’s nod to build the second phase of the DASH 9 parking lot on Seward Avenue NW at Lake Michigan Drive. The DDA will take over the property from Catholic Secondary Schools next month, part of last year’s complex transaction that also included the YMCA.

The project will add 251 spaces to the lot and bring the total number of spaces in the soon-to-be super-sized lot to 494. The work should be completed by the end of August.

A half-dozen companies submitted bids for the project and Dykema Excavators had the lowest original bid, $821,112, or $12,154 less than the $833,266 bid from Diversco.

But under the new policy, bidders are given discount points across five EBO areas and Diversco outscored Dykema, 4.5 to 3, and that outcome reduced the Diversco bid by 4.5 percent to $795,769. The 3 percent discount earned by Dykema lowered that firm’s bid to $796,479, but it was still $710 higher than the discounted bid from Diversco.

“The first and second bids turned on that program,” said city engineer Bill Cole.

So even though Dykema submitted a lower original bid than Diversco, Diversco had the lowest discounted bid because it scored better in the EBO areas than Dykema — meaning Diversco got the contract.

The new policy offers discount points from original bids for supplier diversity, work force diversity, economic vitality, community partnership and environment. The largest discount a bidder can earn is 5 percent and the discount is directly subtracted from an original bid.

“They look at the discounted amount and they evaluate on that when they’re looking to make their award,” said Lauri Parks, a developer with the Equal Opportunity Department.

Dykema and Diversco both earned points for supplier diversity, meaning they included minority- and women-owned subcontracting firms in their bids. Dykema picked up 3 points, while Diversco received 3.5 points.

Diversco also earned a point in the community partnership area for attending an anti-racism summit, bringing its score to 4.5, while Dykema didn’t earn any points outside of supplier diversity.

It appears that the EBO policy may have accomplished what city officials intended it to do, and it did so on its very first try at the DDA — namely, reward contractors for embracing diversity rather than punishing them for not doing so. At least it’s a reward for Diversco.

“It’s a voluntary program, but it can make that kind of a difference,” said Parks of the award.

“The program is working,” added Cole.

Of the four other contractors that bid the project, only two earned a discount point and both did so in the supplier diversity category.

“I hope that other contractors take some encouragement from this and seek to get qualified,” said Mayor George Heartwell, also a DDA member. “I think this will make a good incentive.”

The EBO policy is replacing the Minority and Women Business Enterprise program for the remainder of this year as a pilot project. It could become the city’s permanent policy in 2005. The new policy, like the old one, doesn’t require the DDA to award a contract to the lowest bidder.

Diversco will get the construction contract for its original bid of $833,266, resulting in the DDA paying $12,154 more for the work than the Dykema bid would have cost the board.

Walker Parking Consultants of Kalamazoo, which designed the lot and conducted the site’s geological study, estimated the project would cost $931,675. When administrative and testing costs are included, with a 12 percent contingency, the total cost of the project can’t exceed $1.077 million.           

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