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Low bid rejected on a technicality, while higher bidder gets a pass

Two bids on the same contract had flaws. Guess which one got the go-ahead from Baltimore's Board of Estimates?

piyush goel addresses board

Piyush Goel addresses the Board of Estimates today. To his left is City Comptroller Joan Pratt and City Council President Jack Young. To his right is Thomas Corey, the minority compliance director.

Photo by: Mark Reutter

Would Baltimore City Hall reject the lowest bidder of a $1 million-plus contract on a technicality, then allow a higher bidder with a more significant flaw to win the award?

That’s what happened today when the Board of Estimates rejected a low bid because a single number was missing from a document, but accepted a higher bid whose “non-compliance” with Maryland tax authorities was deemed correctable.

As a result, a veteran local contractor (Potts & Callahan) won the contract, a newcomer from Washington, D.C., learned a lesson about Baltimore contracting, and taxpayers will fork out an added $169,407 for the demolition of the ex-Greyhound bus station on Baltimore’s West Side.

Goel Services’ low bid of $1,057,593 to tear down the bus station was deemed unacceptable by the city’s Minority and Women’s Business Opportunity Office (MWBOO) because it failed to include the exact dollar amount assigned to a minority subcontractor on a bid document.

Instead, the company – a federal contractor that only recently began bidding in Baltimore – included the percentage of the total award.

Simple multiplication would have permitted MWBOO to do the math and fill in the blank. But such work is not within the purview of the office, and the omission constituted “a material defect on a [minority] goal,” Thomas B. Corey, MWBOO director, told the spending board.

Thus the contract went to the next lowest bidder, Potts & Callahan, even though its bid also violated rules administered by MWBOO.

Specifically, Potts & Callahan’s minority subcontractor, Page Technologies Inc., was “not in good standing” with the Maryland Department of Assessments and Taxation, MWBOO concluded, according to the written agenda reviewed by The Brew.

Typically, “not in good standing” means a company owes taxes to the state.

But after making that determination, MWBOO ruled that Potts & Callahan “will be allowed to substitute an approved MBE [minority business enterprise] if Page Technologies Inc. is not in good standing at the time of the award.”

Low bidder Goel was disqualified for not including the "Subcontractor Amount $" in his bid. It only included the subcontract percentage of total contract. (Photo by Mark Reutter)

Low bidder Goel was disqualified for not including the "Subcontract Amount $" in his bid. It only included the subcontract percentage of total contract. (Photo by Mark Reutter)

In other words, Potts & Callahan can change its minority contractor, rather than be disqualified for presenting an out-of-compliance contractor.

Board Rejects Protest

Piyush J. Goel lodged a protest before the spending board. He said the problem with his company’s bid could have been fixed “by a two-minute call” to his office.

MWBOO’s Corey countered that there were no exceptions to the rule that both the percentage and exact amount of dollars to be assigned to a minority contractor be disclosed on the document, “Part B: MBE/WBE and Prime Contractor’s Statement of Intent.”

(Well, not exactly, Corey acknowledged. If a bid pertained to a “requirements contract,” the subcontract amount could be omitted on the document. “But this was not a requirements contract,” Corey declared.)

Goel asked the board to approve his bid contingent upon his compliance with minority goals, which he said he fully intended to honor.

But City Solicitor George Nilson told Goel that rules are rules. While not wanting to spend money unnecessarily, Nilson recommended that the board accept MWBOO’s findings and reject the protest. (MWBOO is part of the City Solicitor’s office.)

The panel voted unanimously to approve Nilson’s motion.

Mayor Stephanie Rawlings-Blake, Comptroller Joan Pratt and City Council President Bernard C. “Jack” Young did not comment as to their reasons for rejecting the protest.

Part of “Superblock” Project

The contract involves demolition of the vacant, five-story Greyhound station on West Fayette Street. The structure is on the Superblock site where the city has condemned all of the buildings on a large block centered at Lexington and Howard streets.

Calling Superblock a top priority of her administration, Rawlings-Blake and other members of the spending board recently approved the third extension of a land disposition agreement with Lexington Square Partners, the developers of the site.

The city’s demolition of the Greyhound station will save the developers the trouble and cost of tearing down the building, which is slated to be replaced by an apartment tower.

Potts & Callahan included the subcontract dollar amount. However, its subcontractor, Page Technologies, is "not in good standing" with the state, a violation of MWBOO rules. (Photo by Mark Reutter)

Potts & Callahan included the subcontract dollar amount. However, the subcontractor Page Technologies is "not in good standing" with the state. (Photo by Mark Reutter)

M.J. “Jay” Brodie, head of the Baltimore Development Committee (BDC), said the cost of the Greyhound demolition will be factored into the price that Lexington Square Partners will pay for the land, if the deal is completed.

“Welcome Back”

The Brew has been documenting the at times seemingly arbitrary actions of MWBOO under the leadership of Shirley A. Williams (here and here). Corey was named the office’s chief following Williams’ retirement last month.

A 12-year veteran of city government, Corey served as MWBOO chief for a short period when Williams was deputy director of the Department of Public Works.

Most recently, Corey was the senior counsel of the city’s employee pension systems.

Today marked his first appearance before the board in his new capacity. His return elicited a hearty “Welcome back, Mr. Corey!” by Rawlings-Blake after he finished his presentation.

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  • Flamingolady56

    Sadly, business as usual.

  • Unellu

    Piyush Goel — poor guy, no matter how he handled this he would have wound up screwed.  Destiny had it in for him.  The last guy called Piyush who made it in American politics did so by changing Piyush to Bobby—Bobby Jindal is who I am talking about.  What’s in a name?  A rose by any other name is still a rose?  You gotta be kidding!.  A Piyush by an anglicized name is not a Piyush and that means a lot in the American landscape.  Remember all the slurs about Barack Hussein Obama?  Name can bring you fame or name calling.  It can grind you to a halt in this country depending on who the master is you must satisfy to get ahead.  And if you claw your way to the top somehow the mob will wait below for your tumble.  Sinister but true.  This guy is brown–a shade too light to be Black and a shade too dark to be White–he is betwixt–between– a rock and hard place–he is less than a minority–he is a “mini”ority–he is a crumb–not a slice of anything–in India he would be upper caste–here he is lower caste–with the Board of Estimates–he is the lowest caste, forbidden from the Eden of Contracts reserved for the veterans of the bidding “wars”–those veterans-before in jalopies, now in Rolls Royces.  Unanimous–every decision made by this Board is unanimous.  Are there no dissenters?  Where is the NAACP?  Isn’t Piyush colored dark enough?     

  • PCCP

    you  guys know nothing about bidding. there is almost no way for a contractor to find out if his subcontractors are in good standing with the state. is the contractor now required to call the state on every subcontractor they might use while at the same time try to win a job? the state mbe website does offer some guidance into this, but their records are not up to date and there are hundreds if not thousands of mbe contractors in just about every good and service you can think of.

    what Goel wanted to do was absolutely ridiculous and circumvents competitive bidding as it pertains to the mbe process. It wouldn’t fly for ANY public agency. if you are a subcontractor and you want to do the job you fax out pricing to the other general contractors. or the gc will tell a sub certain assumptions to make and the mbe ( or any sub) will cater their proposal to that amount. but that’s the whole point: there always is a proposal or a memorandum of understanding. I would never write down a sub without calling them the day of the bid and telling them how much the dollar amount was and what it was for.

    if you think favoritism is bad now, and poor Goel deserves a break wait until the usual suspects employ this tactic regularly. 

    mbe is a total joke, so i don’t disagree with that premise. 

  • Richard

    I’m starting to wonder why a city with the financial problems that Baltimore has would reject lower bids on public works projects for ANY reason. Yes, having minority participation in these projects is a laudable goal, but I think you would have to be crazy to think that it trumps economic common sense. And I would like to know what having minority contractors really does to improve the economic situation for Black Baltimoreans who are in need of a job. Do these rules dictate that a certain percentage of low income black men and women who actually live in Baltimore must be involved in these projects and get decent work at a decent wage? It doesn’t seem so. I have the feeling that this is more about greasing the palms of well connected contractors who then turn around and hand out big financial donations to the likes of SRB and Joan Pratt. The whole thing is sickening.

  • Maryland Esquire

    @PCCP.  Anyone with access to the internet can find out if a company is in good standing from the State Department of Assessments and Taxation (SDAT) website.  
     
    The area in which the dollar amount needed to be inserted should have been the exact dollar amount of the proposed contract.  Subcontracts are not normally priced as “26% of the prime contract,” rather they have an actual dollar amount.  The lack of a dollar amount suggests that there was no subcontract agreement in place.

    The correction that P&C was allowed seems consistent with State policy.

    If consistent with established rules that, by definition, is not arbitrary. 

    • PCCP

      I didn’t know that M.E. I will use that in the future. Thank You.

    • Anonymous

      From B Brew: Other documents in the Goel bid file — such as the signature of the subcontractor on the page reprinted above and on other pages — suggest that there was a subcontract agreement in place.

      As a matter of policy, might it be judicious for MWBOO — and advantageous to the taxpaying public — to give a low bidder who seems to have a minor error or omission the opportunity to correct the error instead of simply tossing out the bid? After all, there is contact between city agencies and bidders all the time when the city adds an addendum or clarifies a detail, sometimes after a bid is submitted. -MR

  • Unellu

    PCCP,
    You are obviously a contractor who has been through the process.  Goel did not put the exact dollar amount down for the subcontractor he was going to employ.  Instead he put a percentage amount.  In the labyrinthine underworld of contractors and subcontractors, according to you, he has made an irredeemable error.  That’s crazy.  You tell us that it is impossible to find out, among the huge maze of subcontractors, who is in good standing and who is not, hence Potts and Callahan, it shall be for the demolition derby on the Greyhound Station, even though Potts and Callahan found themselves a subcontractor who was in violation of state tax rules.  You say what Goel did –not getting the subcontractor pricing straight —before his meeting with the MBE is a tactic if employed by the devious would decimate this murky process.  Man, you’re joking! 

    By default Potts and Callahan landed in the same place as Goel.  Their subcontractor was not in good standing with the state.  Hence they have to get a new subcontractor and this subcontractor has to fax them out HIS pricing and they have to strike a new agreement with him and present it to the Board of Estimates.  And the BOE is ready to wait for all of that? 

    Goel, by your standards has made an egregious mistake that could, if allowed, taint the whole process for centuries, if emulated by others, but Potts and Callahan, by your explanation, has made an unavoidable teeny tiny mistake and deserved the Board’s approval and award.  Your explanation doesn’t wash–are you Potts or are you Callahan is the next question.  Does PCCP stand for–Potts– Callahan, Callahan-Potts?

    And by the way, it took all the genius in my brain to understand your GC argot.  Like lawyers and bankers–so too contractors and subcontractors– GC should stand for God Confusing–even God can’t make out what this process is all about, and I bet, it has been made on purpose this way.           

  • tom

    Another great example of an American city in decline – Detroit, Newark, Baltimore ….  The common thread always seems to be cronyism, corruption, etc. and they always want to defend their actions by hiding behind “the rules”.  I do know a LOT about bidding and this is another great example of how “the system” screws contractors and the taxpayers alike.  It shouldn’t be a game – it should be common sense and fair.  That’s all we ask.

  • westside resident

    How was this defect “material” if all the information contained within the application? Missing a small calculation cost this city’s taxpayers $170,000 at a time when there is a $53M budgetary short fall. 

    Why is the mayor not outraged? Why is an office charged with the worthwhile task of increasing contracts to minority and women owned businesses to throw a company out on a technicality without consultation? Why are they still using paper forms that cannot be posted and tracked electronically?

    This story leaves me sick to my stomach. Good job Baltimore Brew. Shame on you Board of Estimates. 

  • UpperFells

    These types of posts are the best work that the Brew does. Keep it up.  Send it to the Sun.  Lord knows they’re not doing this kind of reporting.

    Yet the sheeple of Baltimore will keep voting for Pratt, SRB and Young. 

  • RogerClegg

    It’s ridiculous that race, ethnicity, and sex have any role to play in the award of contracts anyhow.  This is unfair, divisive, wasteful of the taxpayers’ money — and unconstitutional.  Here’s hoping someone sues.

  • Corey Gaber

    Why would this bidding process be dependent on a one-time submission in the first place? Doesn’t that completely eliminate the point of competition and the market getting us the lowest price possible? Let the bidders see what other bidders are doing and submit an entry, and resubmit an entry if their willing to go lower. Anything wrong with that idea?

    • http://www.facebook.com/1NonlyKIRBS Kirby Elaine

       Everything! Then you’re tied up in a bidding war and Shit never gets done.

  • Don Twichell

    The good Ol’ Boy Network is still alive and well in Baltimore.

  • T-bird5573

    Keep up the pressure Brew!  This is the kind of journalism we need in this city and the Sun is too poor or incompetent to do it.  The Mayor should hold a meeting with the head of purchasing, head of the Minority business office and decide which head should be fired, because one of them should be.

  • PCCP

    @yahoo-CXOITMLTMCOTTFR377LMT4X4EU:disqus

    where you miss the boat is that Hispanic firms also count as a minority business. its easy to fixate on the african americans, but the reality is that Hispanic firms have very competitive pricing in certain work areas.

    the real problem is that it takes an awful lot of money to be a big time contractor. do you have any idea how much equipment costs, and how many jobs you need to win and make money on before you can get bigger? each piece of equipment costs anywhere between 35 and 125 thousand dollars. its specialized work. nobody learns how to run an excavator in school.  the only way to learn how to do this stuff is to learn it when you are young, and keep advancing.

    that was the point behind the mbe stuff in the first place: to create opportunities for a minority owned firm to compete in an environment where there are significant barriers to entry ( ie high fixed costs).

    but the system has been abused so bad that it leaves people jaded after enough contact with it. where companies refuse to take an extra job because that money would disqualify them from being disadvantaged. where people use loopholes, or otherwise try to cheat the system.

    and the city does have a hiring program where…well thats another story for another time.

     

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