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Government Contracts

Started by Tillaway, June 04, 2002, 04:45:27 PM

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Tillaway

I have learned a few things over the past few years about contracts with government agencies, specifically the USDA Forest Service.

The lowest bidder gets the contract..... and loses money 85% of the time.  Case in point I found out what the implementaion contract price per acre went for on the Defensible Fuel Profile Zones I have been laying out.

Scope of work is three different treatments, Mastication (grinding brush and trees in the woods), Biomass (removing all trees between 3" and 12" and selected trees to 20" or 30" depending on unit silviculture), hand treatment (cutting all trees and brush up to 6" or 9", depending on unit or location and hand piling and burning piles).  Approximately 40% of the acreage treated in the Biomass or Mastication units will be hand treated because of proximity to stream courses (150' HD buffer on all stream courses including class III streams and all slopes over 35%).  The hand work was not split out from the bid item.  If you bid on the machine work you are responsible for the completion of the hand work.

Previous Biomass machine only operations go for about $450 acre and the logger keeps the material.  Mastication goes for around $300 an acre.  Hand treament as specified in this contract was estimated to cost about $1200 an acre using BLM's past experience.

The FS awarded the contracts at Biomass $295ish, Mastication $265, and Handwork $413 an acre.  Our own company experience doing hand brush work is that at least $1000 acre to cut pile and burn.  The FS contracting office phoned up all the bidders and warned them specifically about the scope of the hand work.  Never the less these are the bids that came in.  The FS knows for a fact the contract can not be done at these low prices.  So does one of the contractors we have talked to that didn't get the bid.  This contractors bid was in the $1000 acre range for the Biomass and Mastication units.  The FS person that was in on this that I have spoken to says the bids were all over price wise.  The final contracts were way below what they estimated the price should be.  He says that " We have put about 5 Biomass contractors out of business in the past few years on bids like these".

We have been looking at getting into the implementaion part of the DFPZ's but at these prices, were not gonna try. ::)
Making Tillamook Bay safe for bait; one salmon at a time.

swampwhiteoak

Is part of this because these treatments are new or at least greatly expanded?  In other words, why is it attracting so many lowballers?

Does anyone check if the contractor has workmans comp and isn't using a bunch of illegals?  Does any of this stuff actually get done at that price or is the guy gonna cut half an acre and figure out he was way too low?

Tillaway

SWO
D .... all of the above.  One contractor we bid against for our type of contracts uses high school kids to do the tree marking.  He does not pay them the government wage determined rates.

The FS does not check for compliance to wage,  any insurance (contractor carries liability insurance just long enough to get a proof of insurance document and then cancells), legal status, or overtime parts of the contracts.  The FS does not have to take the lowest bidder but if they don't, the low bidder challenges the contract and it winds up in court.  The delay is costly so the FS finds it cheaper to award to the low bidder and let them default.

My weekend is over so hi ho it's off to work I go.
Making Tillamook Bay safe for bait; one salmon at a time.

Corley5

We, DNR Wildlife Div, let bids for habitat work mainly bushhogging openings and buckwheat and clover plantings.  Sometimes the contractors make out really good.  They bid high not really wanting the job and if they get it they make a killing.  Other times newcomers bid way low and lose their a$$e$.  Last summer a newbie contractor bid a block of a 120 acres of mowing and fertilizing.  This is pretty simple work only requiring mowing the grass to a 4" height and top dressing afterwards and we supplied the fertilizer.  He would have made out OK if he would have had a bigger machine.  His 25hp Kubota and five foot bushhog just wasn't big enough.  He met the requirements of the contract and got it done on time but he spent a lot of long days and weekends to do it.  He did have a helluva tan when he was done :D :D ;D.  His bid of $48.00 an acre was ten dollars lower than the next closest bidder.  By the time you take out fuel costs for the tractor and his 50 mile drive to get to the job plus repairs and maintenance he didn't make very much for his time spent.  He didn't bid this year :o.
Burnt Gunpowder is the Smell Of Freedom

Ron Scott

Sometimes the high bidder needs to appeal the Forest Service Contracts if they can demonstate that they will save the taxpayer $$$$ due to quality work for the money in a timelymanner, less supervision and contract inspection needed by FS inspectors, Bacon-Davis wage rates are paid workers, etc.

I know the problem of the low bidder appealing so they are given the job, but make them justify acceptance of the low bidder in comparison to job performance and savings provided by the high bidder in full compliance to all contract rules and regulations. After all those contracts are several inches thick. Does the low bidder comply with all of it?? The playing field needs to be fair.
~Ron

Tom

I agree, Ron.  

Here is kind of a "but..."

I've seen  Government and Private contracts issued for bid that were written such that only the desired contractor could qualify.

One of the detrimental factors in Government contracts is their volume.  It would take a company with a "covy" of New York Lawyers to figure out the rules.

The company where I used to work lost a good Electrical company because of this.  They had, for years, shown up within minutes of our call to keep our computers on line.  They were proud of their service and we were proud of their work and charges.  It's  unusual to find a company that will crawl out of bed at 2am to fix a broken breaker.

We had a management change and the new management, in its "wisdom",  required that all work be bid.  That put an end to the service from this one small company that we had used for over ten years.

The maintenance supervisor, seeing an opening and backed by the new managements rules allowing the bypassing of middle management, created contract requirements that favored his uncle's  company.  It was also peculiar how his Uncle's bids would come in last and one dollar low.

When I left the company, there was not one of the original 'maintenance/service/utility' type companies still on the job and none of them would or could operate "on call".

I had occasion to speak with the owner of the Electrical company a couple of years later and he said that "not only was it difficult to qualify but the contracts were so convaluted that they just were'nt worth the hassle", so they quit.

There needs to be good faith on both sides of the table.

Ron Scott

I agree on that! It would also help sometimes if the writer's of the contracts really knew something about the work to write reasonable specs.

"It's hard to build a bicycle while you're riding it".

~Ron

treefireguy

Not exactly true...(the 85% losing money)   I have been involved in this stuff for over 12 years working part time for one for the big contractors in fuels mitigation.  Now that I am retired from the fire service I am doing it full time. It is NOT easy.   From what I have gathered,   there are a few "Big Guys" who get a vast majority of the contracts. And they do NOT lose money.  There are a bunch of little guys out there trying to get into the game and just can't, due to name recognition, funding issues, reference issues, whatever.  The HARDEST part of jumping into the government contracting game is waiting to get paid.   I have waiting over four months to get paid for work done.   That's my record.  The average is two months.   I have borrowed money from every orifice of my life to fund payroll, rental, transport and equipment,  supply funds, (all of these things HAVE to be paid ).. The contractor has to wait.. for months, to get paid.  It sucks, and most people can't do it.   The few of the "Big Guys" I deal with are all multi-millionaires.  They figured out the game.   I'm still digging my way out of a mud pit

CCC4

WOW! I know we as Arkansans are sometimes considered backwards...but WOW! I cut hundreds of acres a year of Government bids and as for here, I see tons of things different. For one...the highest bid gets the bid. Depending on what agency, say USFS, COE, or AG&F...there is always overcut and money to be made...especially if roadwork gets bid out to the buyer. As far as treatments...depending on what size roadway and amount of traffic, I am mandated to only melt the tops. Sometimes we just pull them further into the set. Sometimes say like on USFS bids along well travelled roads I am mandated to cut all belly limbs and unmarketable slash every 4ft. We are permitted to run over 5.5 and less..personally I like to cut it rather than bow it, but on USFS they most of the time don't want the bow overs cut...they say they don't want clearings. As far as "Green Zones" I sometimes get a 50ft. buffer line on streams and dry creek beds with exposed rock meaning at one time water was flowing.

As far as making money...COE claims NO job bids of theirs should ever undercut and I have seen huge overcuts on most of the jobs I have done. Actually the only crappy job bid I have seen was done by one particular project manager for AG&F...absolutely horrible marking and mostly junk was marked...I did several hundred acre for this guy just recently.

I know we are less restricted than most states, but here, there is always money to made on Government timber.

CCC4

On another note, my boss beats out most "Big Guys" such as Deltic Pine etc....they don't even bid, they own too much timber already.

beenthere

treefireguy
You dipped way back in the archives for this thread.  ;D

i'm not saying what I'd like to say, but you may remember when the Gov't purchasing was forced to award contracts to "minority" companies.. maybe still is, but doesn't sound like it from your post.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

Spartan

Around here, the mills pay 80% of what they pay us gypos for logs, just in stumpage on FS sales recently.  Not fair on two counts.
according to my contractors that hired me.  Of the last 3 FS sales they did, which were rodside hazard removal (how they term it)  they were winning bid (obviously) and were in the red every time.  They will not do them anymore.

FS sales are not designed to make money for the logger, they are designed to meet protocol for the FS (that's my opinion from what I have seen and experienced).

We even had a local office here, laugh at us when we asked to put a road in to access private (15 ft across a corner) and had the gall to say to us, we are trying to get of anything timber related.  Word for word from their mouth.

So you tell me if they have any vested interest in working with a logger.

Rocky_Ranger

This discussion found a fork in da road and took it; there are two different contracting tools at work here.  One(the original discussion) is talking about service contracts - driven by the Service Contract Act (Tillaway's discussion).  Then there is a response by CCC4 that is talking about the Timber Sale Contracts.  Timber sale contracts are not governed by Davis/Bacon, and that makes a huge difference is wage rates.  By the way CCC4, I'm a "displaced" Arky too and have a tie back to the "Land of Opportunity" in owning timberland.  The low bid (service contracts) can be major problems but the FS has went to "best value" awards in later years that can get the "low ballers" out of the award legally.  Timber sales speak for themselves - it's the high bid that gets the prize.  Of course stewardship sales are another chapter, and  LONGER DISCUSSION......
RETIRED!

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