Contract with America – Sounds Good Here’s How You Get One

Contract with America – Sounds GoodHere’s How You Get One Gene Kalb, Fencebids John Feerick, Premier Fence LLC February 8, 2011

Introduction Millions of dollars are spent by federal, state and local governments on fences and access control products. This session gives a brief overview on how to find the bids; what to do once you find them; how procurement officers evaluate and award the bids; how to get paid; and more. Your participation is encouraged. We want to hear from you what your experiences have been.

Agenda • What the government buys • Finding the bids • Bidding on the bids • Winning the bids (secrets to success) • Production • What about the people? • Job Hazards • Cash Flow • Closing

What the Government Buys • Prisons • Military Bases • Playgrounds • Post Offices • Schools • Borders • What have you found that the government needs to be fenced?

Finding the Bids • Federal • Military bases • Post offices • Department of Highway • Prisons • National Parks • Bureau of Land Management • State • Prisons • Highways • Airports • Local • Schools • Parks • Playgrounds • Conservation land

Federal Bids • By law, all jobs >$25,000 must be published for bid • Jobs are published on federal websites • www.fedbizopps.gov • Have you used this site?

Searching the Site: Challenges • Basic vs. Advances search • How do you sift through the hits? • Search Fenc* = >900 hits • Are the results meaningful? • Geographic limits: what’s missed • Data input • What’s in a name? • Misspellinggz • Singular vs. plural • Many sources put in the data • Once the job is found, register and track a contract, amendment, and update

Tips & Techniques • Start with a lot of stuff • There’s only so much that can be weeded out electronically • You really need a human eye

State Bids • There is no single repository of state bids • 50 states means 50 different procurement sites • Some, but not all, work cooperatively • All States have different rules & techniques • Focus on the ones you’re interested in • Limitations • Not very good • Not intuitive • States contract out with private vendors to do their procurement databases • Some require registration and a fee to search

Local Bids • Some have websites for procurement • Some just advertise in local newspapers • Challenges • Each has their own rules • There is no uniform format • Very few are computer-savvy: many are procurement people from a different era who have been thrust into the electronic age

What Can You Do? • What do YOU do? • Search the federal, state, local sites yourself Alternatively….

What Else Can You Do? • Use Paid Services • Monthly fees add up (start at ~$30-$50 each and go up from there) • Many still contain a lot of “noise” Alternatively….

Fencebids • Organized by region • Minimizes noise • Links to all jobs • Emailed every Friday • Free subscription • www.fencebids.com

Bidding on the Bids(aka, You Can’t Go Broke Saying No!) • What to do after getting the plans and specs or receiving an invitation to bid? • Construction risks include: • Business relationships – Production • Economy – People/Work Force • The Contract – Job Hazards • Bid Errors – Cash Flow • All risks must be identified & managed

Look at Risks: Business Relationships Business relationships must be solid • Bank Officer • Lines of credit & insights into current financial markets • Construction Lawyer • Contract terms & conditions • Insurance Agent • Contract Insurance requirements, indemnification & risk transfer • Bonding Company • Bonding program based on financial strength to bid on the job • Suppliers • Availability of materials & payment terms on some projects • Don’t forget: they’re managing their own risks Identify and quantify your capital needs to obtain the growth you require

Look at Risks: The Economy • Contractor should evaluate health & stability of overall economy • How will outside factors affect business over the next 12 months? • Access to credit for small business has been difficult (if not impossible) • There has been some easing lately • Ask yourself: • What is the current environment for financing rates? • Will it cost you more in the future to finance your contracts or receivables? • Is the economy creating situations where your customers are taking on too much debt and may not be able to meet their obligations if there is a sudden downturn leaving you holding the bag?

Look at Risks: The Contract • Terms & Conditions contain more info than the technical specs • Can be a minefield for the unwary • Typically protects the owner (awarding authority) or General Contractor when things go wrong • Look carefully at the “boiler plate”!!! • Payment terms: • “Payment to subcontractor is specifically contingent upon contractor receiving payment from owner.” • May vary from state to state • Be mindful when working with Awarding Authority (public agency) - What are the payment procedures? • - Risk transfer: • Are you responsible for indemnifying listed parties even if loss was caused by them? • Are there increased limits or coverage? • Do you have to have them as an additional insured on a primary and non-contributory basis? • What is the “defend clause”? Expensive. Continued…

More on the Contract Boiler Plate • Change Order Procedures and Mark Ups • What are they? • Specifications • Are there requirements for a performance spec? • Is there an extended warranty or guarantee period? • Are they explicit or vague? • Completion Time • Along with the Liquidated Damages, is it realistic? • Do work hours impact your schedule? Continued…

Finally, on the Contract Boiler Plate… • Training Requirements • Are there background checks? Do they have costs? • Are there project safety training requirements? • Additional Contract Provisions • Federal Gov’t references various FAR rules • Municipalities reference specific General Laws • General Contractors reference “flow down provisions” If in doubt, walk away. You Can’t Go Broke Saying No!

Winning the Bid: Secrets to Success • Watch out for Bid Errors or Omissions • Probably the most common error for the novice commercial estimator as well as the over confident seasoned estimator. Don’t Assume! • Contract Documents change over time and assumptions can be very expensive. • Consider establishing an estimatingchecklist to ensure you are recovering overhead and job costs within your bid.

Sample Estimating Checklist • General Conditions • Existing Site Conditions: Clearing, Access, Soil Conditions etc. • Availability of Facilities : Water, Electricity, Emergency Services etc. • Utility Obstructions: Overhead or Underground • Permits, Fees & Taxes: Building Permit, Tax Exempt, Special Fees, etc. • Weather: Winter Conditions, Water Tables, Wind etc. • Insurance: Limits, Special Coverage, etc. • Bonds: Are bonds required? • Completion Time & Liquidated Damages: Do you need to account for stringent requirements? Are the risks worth it? Do you need to cover overtime costs for accelerated scheduling? • Labor: Special labor requirements – Union, Prevailing Wage, Training etc.

Sample Estimating Checklist (continued) • Bid Documents • Have you reviewed the “boiler plate” • Drawings – Review drawings for conflicts & completeness • Specifications – Review specifications for conflicts & completeness • Addenda – Received and Acknowledged all addenda • Clarifications – Submit in writing any questions, you have . Document it!

Sample Estimating Checklist (continued) • Estimating • Check actual quantities versus bid quantities. • Request supplier pricing and receive it in writing. • Account for price escalations. • Are materials readily available? Identify long lead items. • Establish realistic production rates. Compare to historic. • Establish job overhead recovery requirements. • Identify equipment needs. • Identify labor needs. • Identify home office overhead. • Check for math errors. • Have all contingencies been accounted for?

Sample Estimating Checklist (continued) • Bid Submission • Have you supplied all required information for bid documents? • Is bid form complete and accurate? • Is bid bond, if required, signed? • Is bid form signed by owner or officer? • Deliver by specified time in accordance with contract documents.

Final Secrets to Success • By establishing an estimating checklist you will establish a procedure for your self or your employees that will eliminate the oversight of costs that should have been factored into the bid. • In some instances you will find that the costs associated with the general conditions will be a significant amount that will make or break a job if they are overlooked or omitted.

Production • Complete the work on time & stay profitable • Productivity is a key management role • Productivity should be tracked & recorded • Allows contractor to build historic database for future bidding opportunities • Track through job costing process • Record activities • Measure contributing margin for job • Helps you decide whether to bid again in future

People • Work Force: • Do you have a talent pool to draw from? • Could a chain link crew install a high security fence? • Evaluate your work force frequently • Provide cross training as necessary • If in doubt, walk away: You Can’t Go Broke Saying No! • People in General • Individual behaviors can impact project completion • Unscrupulous individuals can ruin your reputation

Job Hazards • Identify and remove job hazardsin workplace and job sites! • Training helps manage costs • Test yourself: • What would the cost of an injurybe to my company? Insurance?Lost productivity? Morale? • Think of your loss ratio and safety record • Train, train, train, then train again!

Cash Flow • Set up cash flow projections for the job. • Evaluate your customer’s ability to pay • If working for an awarding authority (public entity), ensure funds are encumbered and appropriated • If working as a subcontractor, know how the project is funded • Familiarize yourself with payment clauses • Stay on top of receivables • Have a contingency plan if you don’t receive payments timely. • If in doubt, walk away: You Can’t Go Broke Saying No!

Summary • These are our experiences, but they may ring a bell • Suggested Reading: Survival in the Construction Business: Checklists for Success. Thomas N. Frisby • Use the AFA • Many benefits offered by the Association • Knowledge & relationships you develop will help you navigate through your business and life. • Thank you

Contract with America – Sounds Good Here’s How You Get One