SMETHPORT — McKean County officials say no performance and
payment bonds, no contract. The apparent low bidder says he was
given to understand no bonds were needed. The officials maintain
it’s the law and bidders are supposed to know. The contractor is
threatening legal action, and his attorney has suggested the McKean
County Commissioners are exposing themselves to a personal
surcharge for the “excess cost.”
That was the situation that prevailed Saturday after Harold G.
Carr of CDMS Architectural & Engineering Consultants, St.
Marys, McKean County Commissioners’ solicitor Daniel J. Hartle and
CDMS’s attorney had exchanged letters on the matter in the past
several days.
As it stands, the second lowest bidder, Bob Cummins of Bradford,
will rebuild the upper set of steps at the McKean County
Courthouse, having been tapped for the work the week before last
after CDMS had was deemed to have washed out of full execution of a
contract with the county based on its low bid.
At issue is the requirement that contractors doing work for
government or government agencies in Pennsylvania provide
performance and pay bonds on projects costing $10,000 or more. Bid
bonds may be required or not, at the option of the governmental
unit or agency, but performance and pay bonds are mandatory, by
statute.
CDMS’s position has been that bonds were not required because
they were not listed among requirements in bid advertising. The
county’s position is that it is a given that performance and pay
bonds are a requirement, and contractors bidding on such projects
are expected to know the lawful requirements within which they bid
or do the work.
When bids on the steps replacement project were opened on May
10, CDMS’s bid was $37,514, with an alternate or possible add-on of
$2,417 if it were found necessary to replace the “head ends” on the
steps — something that might not be known until the project was
well under way.
Bob Cummins of Bradford bid $48,268, and Carl E. Swanson, also
of Bradford, bid $69,000.
During the McKean County Commissioners meeting that followed the
bid opening, county maintenance supervisor Ken Bush, who was
present, reviewed the bids for the steps project and those for
another project, air conditioning for the small court room. At a
later point in the meeting he reported that, based on his
preliminary review, the bid documents appeared to be complete, and
the bid amounts were within the range that had been forecast by
those who had planned and designed the projects.
Two weeks later, at the May 25 meeting of the commissioners, it
was reported that CDMS had not been willing to furnish a
performance bond at its expense. The commissioners insisted that
the bond must be furnished, and that by refusal or failure to
furnish the bond, CDMS was indicating inability or unwillingness to
provide the assurances required by law. Therefore, either the
project could be rebid, or the commissioners had the option to
offer the contract to the second lowest bidder, if this was done
within the effective period for the bid to be “good.”
The commissioners decided it was better to go to the second
lowest bidder, rather than delay the project. Also, there was
concern that the amounts of the bids opened May 11 had been
published and would be known to prospective second round
bidders.
In a letter dated June 2, Carr wrote to the commissioners saying
he hoped to get “some clarity as to where things stand in respect
to the courthouse stairs project.”
Carr wrote, “We are extremely distraught in what we have been
reading in the press, and would like to know just who is
responsible for this misleading information being published.” He
said CDMS had not balked at anything.
“The fact is we have been in constant contact with Mr. Bush on
this matter. When this project was originally put out for bid there
was no mention in the newspaper, the outline specifications, or at
the pre-bid meeting about any bonds being required.” Carr added
that he had inquired about bonds and was told they were not being
required.
Carr’s letter recounts a sequence of events with the company
receiving a “notice to proceed” letter “without any notations,
concerns, perceptions, or mention of bonds.” That was on May 11,
Carr says, but late on May 12 the commissioners’ office contacted
him verbally, requesting what Carr describes as “the change in
terms of contract.”
Carr says CDMS has “no problem complying with your post contract
request for bonds. However, I will once again state BONDS ARE NOT
FREE. Since they are now being requested, after the award of the
contract, we have offered to supply them as an extra, which you
have declined.”
Carr notes that in a letter from the commissioners dated May 27,
“it is specifically stated that if we do not supply you the
requested bonds by June 4, 2010 at no cost to you, you will now
award the contract to Cummings (sic) Construction at a cost of over
$10,000 higher than our bid.
“I am puzzled on how this gentleman who never bothered to show
up it (sic) the pre-bid conference, somehow knew to include the
bonds in his price, even though they were not required. I am even
more puzzled at the fact that we have offered to purchase and
supply the bonds at an extra cost which is still thousands of
dollars less than Mr. Cummings (sic) and the Commissioners have
‘balked’ at this post bid and contract extra,” Carr’s letter to the
commissioners concluded.
Hartle’s reply, dated June 3, concludes with the opinion “that
contractors should have knowledge of this requirement in the same
manner in which any bidder is charged with assumed knowledge of the
applicable laws such as The Prevailing Wage Law.”
Elsewhere in his letter to Carr, Hartle says “8 P.S. Section 191
et seq., entitled The Public Works Contractors’ Bond Law of 1967,
requires performance and pay bonds for this type of project.
“The fact that the Commissioners, or their delegate, did not
require a bid bond is irrelevant to the requirement for performance
and pay bonds as set forth in this ‘Act’ as stated above,” Hartle
wrote.
Hartle noted that he was e-mailing his reply because CDMS’s
deadline for furnishing the required bonds was the following
day.
In a letter dated June 4, Carr’s attorney, Thomas Wagner of
Meyer & Wagner, St. Marys, wrote, “I note that Section
193.1(a) of the Public Works Contractors Bond Law of 1967 requires
that a contracting body (the County Commissioners) not award a
contract until the contractor furnished the bonds. In this case, at
a pre-bid conference my client was advised that no bonds were
required.”
Wagner also states that at the May 11 meeting the commissioners
awarded the bid without first requiring the bonds.
Wagner wrote that his client had offered to provide bonds at the
expense of the county, estimated at $1,500. He pointed out that in
rescinding the award to CDMS and going to the “next highest” (sic)
bid “which was more than $10,000 higher than my client’s bid,” the
commissioners are exposing themselves to a personal surcharge for
the excess charge. A personal surcharge is a mechanism for making
officials personally responsible for extra public expense caused by
their improper exercise of their authority.
The cited Pennsylvania law is similar in many respects to the
federal Miller Act. Originally the Pennsylvania “Bond Law” applied
to public works projects costing $5,000 or more. Later the
threshold was hiked to $10,000.
It provides that for public works contracts above the threshold,
for the construction, reconstruction, alteration or repair of a
public building or facility, or for highway work, the prime
contractor must furnish a performance bond and a payment bond.
The Act provides that each performance bond must be for 100
percent of the contract amount, and must be issued by a surety
company that is authorized to do business in Pennsylvania. A
performance bond is conditioned on the faithful performance of the
bonded contract.
The payment bond is for the protection of those supplying labor
or materials in connection with the covered contract.
The bonds protect the contracting body — in this case, McKean
County, through its governing body, the board of
commissioners.
