Constructing A Solid Contractor Policy

July 7, 2006
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COOPERSVILLE — The West Michigan Construction Alliance has graded the contractor policy the city of Grand Rapids uses to award building projects as fair — one that is better than most, but not as solid as it could be.

"As a former educator, I'd probably give you a C-plus or a B-minus," said WMCA consultant Ed Haynor to city commissioners.

"If you think a C-plus or B-minus is acceptable, that's OK, because it's a passing grade. But I think the public expects to have you do an A job," he added.

Haynor is familiar with public policy. He is a board member for Newaygo Public Schools and serves on the Newaygo County Regional Education Service Agency. He is pushing for the city to adopt what WMCA calls a responsible contract policy.

Haynor is also familiar with projects that "didn't go so well" because the Newaygo groups didn't have a strong policy in place at the time.

"Typically, public entities take the low bid," he said. "They don't necessarily look into the qualifications of companies in regards to their track record and in regards to their financial capability."

A case in point is the bizarre city hall project in Flushing on the east side of the state. In 2003, Flushing officials hired Direct Building Development LLC to build its $1.5 million headquarters. But during construction in December 2004, company owner Randal Rester simply walked off the job site — which brought construction to a halt and ended up delaying the project by a year.

Rester opened a gourmet coffee shop in Farmington the following June, but closed it seven months later and hasn't been seen since.

A month after Rester went into the coffee business, Flushing hired Siwek Construction to finish the project. The insurance company that bonded Rester's firm paid the new contractor and subcontractors, and then sued Rester last October. Hanover Insurance won a judgment of nearly $800,000 in May, but hasn't been able to collect because Rester can't be found.

The year Flushing hired Rester, his company was fired from a library expansion project because he wasn't able to secure the required bonding for the job.

"So I've been going around to public entities in Michigan, schools and, in some cases, city governments, townships and county government, to try to get them to either establish a responsible contractor policy or strengthen what they already have," said Haynor.

The latter is what Haynor would like to see the city do. He went over a list of criteria that the city could use to pump up its policy and then offered city commissioners a sample policy that contained a handful of new standards.

For instance, Haynor pointed out that the city partially protects itself against having to file lawsuits as it bans a company from winning a bid if a builder owes the city money.

"But what they don't do is they don't look at the track records of companies to find out if companies are typically being sued by people for not performing," he said.

"If you've got contractors coming before you in the pre-qualification process, and they're being sued or they sue a lot, I think there could be indications that maybe they're not a very good company."

Haynor also indicated the city needs to delve deeper into the ratio of experienced workers and apprentices that a contractor would bring to a job and require companies to identify which training programs a firm's crew has gone through. He also suggested that the city add testing of on-site workers for drugs and alcohol and require companies to document its experience modification rate for workers' compensation insurance.

Commissioners told staff to continue talking with WMCA about beefing up the current policy, with the goal of creating a draft resolution for a revised policy within the next few months. And should those talks actually produce a new policy, Haynor said he would take it to other public officials in the region and try to convince them to adopt it.

"What I'm trying to get is a model sample that I can take to other governments. And with Grand Rapids being the second largest city in Michigan, if I had something in hand …"

Haynor told the Business Journal that he isn't an expert on construction, but that he is confident talking about public policy.

"I think I'm somewhat of an expert on policy because I've been a board member for over 20 years. I think it's important that public bodies have certain standards, and I think having standards on selecting construction contractors is a wise public thing to do," he said.

Haynor also said he was impressed with the reaction he received from commissioners.

"I thought those guys are probably fairly effective in understanding their responsibility and looking at it in serving the citizens of Grand Rapids, rather than looking at it from a political standpoint. That's a key for me; that's what I look for."    


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