Water Tank Painting: When is Competitive Bidding Not Competitive?

[XLFD]

Perhaps when the deal has already been made.

This summer the City of Ludington put out a request for proposals (RFP) for painting the Brye water tank out by Home Depot.  Does this sound familiar?  Around Christmas time of last year, the City had already budgeted a static amount to paint the water tower, saying that they already had talked with the contractors, Utility Service Maintenance (USM) who painted the two in-town water towers for the hyper-inflated price of over $1.2 million.  Here was some of last year's budget ramblings telling everyone that USM was to paint the Brye Tank.

 

 

Sure the City Manager will tell you that this tank and those two other towers will be painted twice by that contract (that's definitely not in the contract, nor would it be a logical way of doing business for USM), or that the near-meaningless service contract for those ten years justifies spending a million more on such a contract. 

 

What is known is that both towers were painted by subcontractors:  the Gaylord tower was painted professionally by a work gang of Mexican immigrants in 2010, and the Danaher tower was painted unprofessionally and too late in the year by another out of state sub-contractor who also painted some of the neighbors' cars in 2012, two years late.  Both towers used to have some character and color, both now are vanilla with the same emblems we had before.  One can't help but ask:  where did the extra million go?

 

As stated before in these December 2012 threads, watertankgate-no-bids-no-bargain-nobody-s-business and shay-competitive-bids-or-not and especially anatomy-of-an-administrative-appeal, we find that City Manager Shay states quite plainly at the meeting that they have not yet sought any bids for the Brye water tank contract, and yet, again quite plainly the bids were in that meetings councilor packet, itemized fully: 

 

 

And compared with the estimates a company made allegedly in 2006 (five years after this tank was last painted), a company that does not paint water towers.   Even more suspicious, the $238,000 price tag only reflects the first five years of the ten year contract proposed, which altogether added up to $326,000-- $88,000 more of our City's tax money. 

 

But this is basically a rehash of last year's bargaining, in which the City stated it would be getting in a contract with USM, a contract that was all set, even though Shay said there would be competitive bidding this year.  And there was.

 

On July 23, the City posted a RFP for this project:  RFP Brye Tank.  It said that proposals needed to be completed before August 14, fifteen business days.  Pages 8-11 of the proposal directly mimic the terms of contracts that USM draw up, which fits in nicely, since their bid has already been submitted at least eight months before.  But why select all these bonus features to a simple water tank which looks in good shape as we speak?  The City painted it for under $60,000 in 2001, and it hasn't needed any maintenance, would probably not require maintenance for several years.  So why spend over 500% more on it now for these nominal services USM provides?

 

It needs also be noted that the RFP above necessitates the painting of the tank in ten years, but USM contracts never say this.  They say that towers/tanks should be painted about every ten years, but never include a second painting on the tenth year in the contract, like this RFP states.  Why would they do that when they can make a new ten year contract the tenth year with another paint job done many years before it's needed?  It's a gold mine, for somebody, not the taxpayers. 

 

Consider if this contract was worded like the last one, we have a contract for this tank that should be starting on September 1, 2013, since the contract was okayed by the council on September 9.  Let's say they start painting today, October 2, 2013.  Now, this contract ends August 31, 2023, so if they recoat in September of 2023, the tenth year but outside of this contract's ten years, they need a new maintenance contract with the City.  USM is living within the contract since they said they would recoat in ten years, and If the City doesn't pony up to a new contract, it will remain unpainted.  That option wasn't contemplated by the RFP, which mandated a second coating.

 

Another company did reply in the short span with a proposal, however, as noted in the September 9, 2013 minutes: 

 

 

Note that the USM 'sealed' bid amount is the same to the exact dollar as the unsealed bid they put out in September 2012, one year previous.  It should be noted also that whereas the proposal for Fedewa, Inc. is included in the council's packet, the 'sealed' bid and proposal of USM is not, however this familiar sheet is updated:

 

 

With comparisons between the two.  Fedewa Inc. is like a 'normal' water tower painting company who recently contracted with Allegan to power wash one and paint another water tower for a little over $100,000:

 

 

Lowell, Michigan also had a favorable result from Fedewa in February of 2012:

 

 

Look at that, it costs under $160,000 to paint the inside and outside of two comparably sized water towers in Lowell and Allegan, including a power wash of another one, yet costs us over $1.2 million to paint our City's two water towers.  But you don't get those ten year contracts normally with Fedewa, but I'm sure if they ever required routine inspections and washouts in the next ten years, it would almost definitely cost under $40,000.  Again we see that million dollar difference in the two Ludington water towers paint jobs.

 

We also notice in both downstate examples that Dixon Engineering once again is not in the painting business, so was not qualified to give a bid back in 2006 or ever, but which the City used to show what a savings USM would be over someone else. 

 

And here they try that once again, and one can only imagine what cost would be charged by Fedewa if we would have just asked for a paint job to be done in 2014 and the addition of the "needed" improvements.  This is a low to the ground water tank outside of the City of Ludington that looks freshly painted except for a couple of scrapes caused by loose fixtures, surely the painting itself can't cost more than Allegan's or Lowell's water tower painting costs.  One can figure that maybe it would be about the same amount we footed in 2001 adjusted for inflation (about $60-70,000), but what is a quarter of a million dollars in waste for the contract the City was going to give to USM no matter what Fedewa or others put forth. 

The water tower and tank contracts show exactly how the City can make a $300,000 project into a $1.5 million plus project-- and do so way before the project needs even to be contemplated.  The previous tower project had exactly no competitive bidding, this tank project had a sham sealed-bid selection process, where the outcome was already known last year.  One can't help but say ad infinitum, that this is not in the public's interest.