Solar project report finds U. has fair contract awards process
Editor’s note: This is part two of a two-part series on the Livingston solar projects. Part one of the story ran in the Dec. 9 print edition.
In addition to the success of the project as described in Part 1 of this series, the Livingston Campus Solar Energy Projects can also be described as having involved a relatively fair contract awards process.
Although a January 2011 audit report by the state Comptroller’s office suggested that Rutgers allegedly restricts competition on many of its construction contracts, it did not seem to happen in this case.
For example, despite the fact that SunDurance, the company that was awarded the contract for both projects, came from a pre-approved vendor list, which was a key source of the audit report’s concerns, this practice allegedly allows Rutgers to restrict the pool of potential bidders to a select few companies to bid.
Rutgers had a relatively open and competitive bidding process for the solar projects, according to the bid lists that came with the contracts.
In the solar farm project, over 100 companies were invited to be potential bidders for the project, according to the bid lists. However, only 20 of them responded to the invitation overall, and 13 of them were selected to participate in the pre-bid proposal meeting, according to the bid lists.
Eight of those companies said they would propose a final bid in principle, but only SunDurance and three other companies actually did, according to the bid list. Of those four companies, SunDurance’s proposal won the final bid, according to the contract.
As for the solar canopy project, of the 69 companies invited to bid, 10 responded, and some withdrew from the process, according to the bid list, which was acquired through the Open Public Records Act.
At the end, 10 companies were solicited to submit final bids, and of those bids, SunDurance was chosen, according to the contracts.
SunDurance was not the lowest price per watt of projected output for the solar canopy —Skanska offered to install an 8.02 MW solar canopy for $40.68 million, in contrast to SunDurance’s 8 MW canopy for $40.8 million, according to documents obtained through the OPRA process.
But, unlike SunDurance, Skanska is not a local company.
During the contract award process for the solar canopy, SunDurance’s three competitors proposed either smaller projects or higher prices, according to the documents. Some, such as Austin-Hale, Torion and Hessert, submitted either incomplete proposals or did not submit any price offers.
Concerning the solar farm’s contract award process, SunDurance’s competitors were Faigon Electric and Pepco Energy Solutions, according to documents obtained through OPRA.
Pepco charged $9.74 million, or almost $600,000 more for the same size project as SunDurance, whereas Faigon Electric only proposed $5.95 million for the project, but gave no further details in the proposal as to how it proposed to carry out the project or how it would operate, according to the documents.
As for SunDurance’s third competitor, American Energy Co., the company submitted a proposal but later withdrew because it did not have enough bonding capacity, according to an email statement in response to an OPRA request for a copy of its proposal.
State law requires all potential contractors that do business for any public entity to be able to post a bond of up to 10 percent of the contract value before that public entity can even consider awarding it to the contractor, according to a document required to go with every contract awarded.
SunDurance paid a $400,000 project guarantee bond for each project once they got the contracts of them, according to each contract’s documentation.
The Board of Public Utilities website has a list of every licensed commercial solar power installer in the state, said Rutgers Utilities Director Joe Witkowski. Rutgers sent letters to every company on that list to submit an initial draft bid proposal.
A comparison of the names of companies on the initial bid list and the official BPU licensed vendor list on its website showed that the names on both lists are the same, confirming this account.
“We wouldn’t want to slight anyone,” Witkowski said.
Rutgers uses two main methods to deliver construction projects for the University, said Alexander Andrews, contracts administrator for Rutgers.
The first is Design-Build, which applies to specialty projects like the Livingston solar farm and solar canopy. The second is Design-Bid-Build, which applies to most general construction projects like the Business School and Dining Hall on Livingston Campus, Andrews said.
Under design-build, Rutgers sends a request for proposals, which states the parameters on what Rutgers wants in the construction project to a select group of the companies on the pre-qualified bidders list. Under the design-bid-build project delivery method, Rutgers provides a completed set of plans and specifications to invited bidders.
Rutgers then publicly announces the invited bidders names and the location and time of the public bid. The bid opening session is open to anyone from the general public, Andrews said. Both delivery methods provide completion in the contracting process, he said.
Under design-bid-build, the project design has already been completed by an architect or engineer hired by Rutgers before the bid documents are put out to bid, Andrews said. In the design-build delivery method, the design is made by an architect or engineer hired by the design-build contractor after the design-build contract is awarded.
This sometimes makes design-build more convenient because the proposal process allows a firm to propose to Rutgers how it wants a project built provided Rutgers approves the suggested designs, Andrews said. In a design-bid-build, a project’s plans and specifications are pre-determined.
A firm using the design-build process can renegotiate the project price with Rutgers if the scope of the project changes materially from what was first proposed and published in the proposal, a practice not allowed under design-bid-build because the project scope and its price is fixed at bid time, he said.
In both processes, any contractor who wants to bid or propose on a project must first be on the pre-qualified bidders list, Andrews said.
“The pre-qualified [bidders] process applies to all [design-bid-build and design-build construction] projects at Rutgers,” he said.
The pre-qualified vendor system used at Rutgers puts taxpayers at a potential disadvantage by interfering with open competition, said Peter McAleer, communications director for the Office of the State Comptroller. It is the most effective way to reduce construction costs, since companies are then encouraged to offer lower prices to get a contract they are seeking.
“We believe that whenever you open up to competition, you do the right thing for taxpayers and ultimately save money,” McAleer said. “The more competition [there is], the more you can drive down overall costs.”
Rutgers is exempt from public contract bidding laws that apply to other state colleges and universities because it was once a private college, McAleer said. He is concerned this may hurt taxpayers because projects at Rutgers would likely be more expensive than equivalent projects at other state colleges.
These concerns about the Rutgers contract-awarding system are reflected in the two audit reports the comptroller’s office has completed on the Rutgers contracting system, McAleer said.
“We thought they should open it up to competition the same as all the other colleges,” he said.
McAleer said he is unaware of the comptroller’s office doing any specific investigation, audit, or review of the Livingston solar projects so far or of any specific plans to do so later.
Matthew Boxer, New Jersey’s state comptroller, was unavailable for an interview on the Livingston projects or the Rutgers contracting system due to a busy schedule, according to an email communication by McAleer.
Andrews said he was unaware of the specific content of either audit report on the Rutgers contracting system from the state comptroller’s office. But Rutgers’ pre-qualified vendor system the ability to scrutinize potential bidders and vendors for construction projects more carefully.
“We want to see the experience and financial strength of companies before they submit a proposal or bid,” he said. “Their ability to guarantee a job will be taken care of if the contractor has financial difficulties, although I’ve never seen a case here at Rutgers where that had to happen.”