LITTLE ROCK — A Colorado contractor whose bid for a large highway project fell short last week miscalculated part of the bid, but Arkansas highway officials were required to fix the error, resulting in the contractor being the lowest bidder.
After the mistake was corrected, Interstate Highway Construction Inc. of Englewood, Colo., was found to have the lowest bid — just less than $26 million — to rebuild a 7.3-mile section of Interstate 530 from south of the Pulaski County line to the Jefferson exit in Jefferson County.
Last week, when the Arkansas Highway Commission opened bids on that and 16 other projects, APAC-Tennessee of Memphis was found to have the low bid. But its nearly $27 million bid and all other bids had to be reviewed for accuracy by state highway officials before becoming final.
Glenn Bolick, a spokesman for the Arkansas Highway and Transportation Department, could not recall in his 10 years with the agency a miscalculation in the cost of the logistics associated with gearing up for a project resulting in a new low bidder, but those miscalculations have occurred infrequently in the past without changing the low bidder.
“It happens,” he said. But “we’ve never known it to be a big problem.”
Agency officials had no choice but to award the contract to Interstate Highway, based on the Arkansas 2003 Standard Specifications for Highway Construction, or the “spec” book, a nearly 900-page tome that contains all the specifications and rules with which contractors must comply when submitting bids for projects.
On Page 386, the “spec” book states that “In no case shall the amount bid for the item of ‘mobilization’ exceed 5 [percent] of the total contract amount for all other items listed in the proposal.” To underscore the aforementioned point, it is printed in capital letters.
The next sentence reads: “Should the amount entered in the proposal for this item exceed 5 [percent], the Engineer will reduce it to the maximum allowed amount to determine the correct total bid.”
Mobilization involves preparatory work on a project, including the movement of personnel, equipment, supplies and incidentals to the project site and for the contractor’s field offices, which typically are commercially built trailers or prefabricated buildings.
When state highway officials reviewed the bids, they found that Interstate Highway had used an amount for “mobilization” that exceeded the 5 percent, Bolick said. Department officials, as they are required to do, corrected the figure, he said.
Before the mistake was found, Interstate Highway’s base bid was $26,358,666.73. That amount was lower than APAC-Tennessee’s bid amount, $26,998,300.01. But the bids were submitted for a contract that included bids for work time, part of an effort to encourage projects to be completed more quickly. Under those contracts, bidders must submit not only a price for what it will cost the department but for how many days the project will last.
Any days over that amount will cost the contractor $25,000 each day, department officials said. For every day under, the company will receive an incentive worth $25,000 per day. The incentive-disincentive program is capped at 43 days. But work on the project in the winter season, Dec. 21 through March 15, won’t count against those days. The project is expected to be completed by late 2013, according to the department.
Interstate Highway bid 210 days while APAC-Tennessee said it could do the project in 175 days, thus its “amount for award consideration” was $31,373,300.01, under a formula the department uses to calculate the cost of “work days.” Interstate Highway’s “amount for award consideration” was $31,608,666.73, or $235,366.72 more than Interstate Highway’s bid.
Once agency officials corrected the error, Interstate’s “amount bid” was $25,984,673.23. Its “amount for award consideration” was $31,234,673.23, or $138,626.78 below the bid by APAC-Tennessee.
Efforts to reach representatives of either company were unsuccessful Monday.
Department officials speculated that Interstate Highway could have received a better price for concrete or another major item after it had prepared its bid, Bolick said. Company officials could have changed its total bid based on the new information but forgot to go back and recalculate the “mobilization” cost based on the new information, he said.
“That’s the reason we go back and double-check,” Bolick said.
Arkansas, Pages 7 on 10/25/2011