Bids 101: Meeting the Vendors in Person at the Job Site
May 19, 2015 — Last week, we took a look at the bid proposals that come back from the companies you reach out to. In this third installment of a multi-part series we will be taking a look at the vendors. Before any bids are submitted, the board, its managing agent, and its architect or engineer will meet with the vendors at the job site. This is to show vendors the physical location and answer questions they may have. It also allows the board to go over job specifics and clarify any issues. Finally, the board can see samples of materials.
"With each contractor," says Rosemary Paparo, director of property management at Buchbinder & Warren, "we discuss, among other issues: the background and ownership of the contractor, whether any portion of the job will be subcontracted, how the job will be staffed, how the project manager and foreman will be chosen, how the contractor plans on scheduling the job, how many other jobs the contractor typically runs, and, of course, if the contractor is flexible on any prices."
Should you meet with vendors individually or all at once? "I have mixed feelings toward having all of them together," says Skyline's senior vice president Matthew Kraus. "I've seen it where competitors are attacking each other and I've seen it where it's worked pretty well." Either way, boards and their professionals should be as prepared as possible while also remaining flexible. "You might learn something from one bidder and ask it of the other people," he says.
Outside of meetings, however, boards should never communicate with the bidders. There should be one person appointed as liaison, generally the managing agent or engineer/architect. The board should be involved, but should not be the communicator. That can lead to confusion and can cause problems.
Opening Up
Your managing agent or engineer/architect will also be the one to receive vendors' bids. "The bids should come back in sealed envelopes and opened at the same time to ensure that if one bid comes in first, no one leaks it to a different contractor to give that contractor the opportunity to bid lower," says Steven D. Sladkus, a partner at the law firm Schwartz Sladkus Reich Greenberg Atlas.
This is a little different from having trusted vendors you work with repeatedly, where the board feels confident that for jobs of a certain size it's okay to award a contract without a bidding process. "There's that old saying, 'The cheapest is not necessarily the least expensive,'" says Warren Schreiber, president of Bay Terrace Cooperative Section 1 in Queens. "If you've a contractor that you've a good working relationship with and maybe five jobs out of six they've come in as the lowest bidder, do you want to jeopardize the relationship by giving the seventh job to somebody else for a few dollars' difference? That's not easy to answer," he observes. "I understand the playbook [says] that every single time, you go through the bidding process. In a perfect world, absolutely. But not everything is black and white – there are always those grays, and a good board has to be able to deal with those gray areas. That's not to minimize the importance of having bids but it does sort of depend on the scope of the job."
Next week: Changes to the vendor bids