Attachment to 6/3 Status Report

 

MEMORANDUM

 

To:                   City Council

From:               David J. Deutsch, City Manager

Subject:            Furniture Bid City Hall Project

Date:                June 3, 2010

On May 17th, the City issued a Request for Qualifications (RFQ) as a first step toward the purchase of furniture for the new City Hall.  City staff, along with the architect, G+P, and the furniture consultant for G+P, PLDA, developed this RFQ.  The total budget approved by City Council for this project in the FY 2011 budget is $1,357,300.  Once qualified contractors for this job are selected, the City would then issue a Request for Proposals (RFP) for actual bids.  Our intent was to award this contract at your September 7, 2010 City Council meeting.  Given the fact that there are different furniture manufacturers specified for this job, it is likely that more than one company would be awarded a contract.

The City had requested RFQs to be submitted by June 8th.  Given some issues as outlined below, staff has notified all companies that were sent the RFQ that we are temporarily putting the RFQ process on hold and that we would be back in touch with them shortly regarding our review of this situation.  This communication was sent on May 28th.

For the reasons outlined in this memorandum, staff plans to terminate the furniture bidding process and instead piggyback on a furniture bid obtained by Howard County working in conjunction with the Baltimore Regional Cooperative Purchasing Committee (BRCPC)for the substantial discounts offered.         

Sixty companies requested the RFQ.  One of the requirements in the RFQ was that the furniture contractor/dealership must have one location within 60 miles of the Bowie City Hall project.  Many of the companies that received the RFQ are not within 60 miles of the project site so would not be eligible to participate in the bidding process.  Other companies after reviewing the RFQ have indicated they do not intend to participate in this process.  Two companies from the City of Bowie have expressed an interest in this project, Accent Business Interiors and Foster Jones Furnishings, LLC.  Also, there may be some local Bowie salespeople representing  larger companies as well.  Five additional firms located in Prince George’s County have expressed an interest in the RFQ.  We have not received any submittals at this juncture since we have put the process on hold, so we do not know whether these firms would meet the qualifications established in the RFQ for this project.    

As the City reviewed the questions received from furniture contractors we became aware of  some issues that are unique to purchasing furniture which causes us to reexamine our approach to procurement.    

The City specified the following manufacturers for this furniture:

• Allsteel (workstations and storage)
• Gunlocke (office desks) 
• Hon, Encore and Arcadia (seating)
• Berco (office tables)

We further specified that “or equal” submittals would not be acceptable. 

City staff has had numerous meetings with the architect and the furniture consultant regarding what furniture is required and what manufacturers would be preferable.  In December 2008, City staff went on an all day excursion in Washington D.C. to sample furniture products.  Also, office chairs were brought to City Hall for several weeks for staff to sample.  This process resulted in the above manufacturers being selected as preferable for this project.

Three major issues have been raised regarding the RFQ.  First, several companies objected to the fact that “or equal” substitutes would not be considered.  The two local companies mentioned above, Accent Business Interiors and Foster Jones Furnishings, LLC, both raised this concern.  We have discussed this matter with G+P and PLDA, the City’s design consultants.  If “or equal” substitutes were allowed, this would open up the bidding process to other product lines beyond those selected during the evaluation process defined above.  We would be concerned about broadening the product line in such an expansive way.  Since such an expansion would require significantly more work by G+P and PLDA, their contract would need to be increased to cover this expanded scope of work. 

The second major issue is inherent in the current structure of the commercial furniture industry.  Most of the manufacturers who produce furniture of the appropriate caliber for our project, and who have the experience and reputation that this project warrants, sell their product through a limited number of dealers, approximately four to five per state.  If one of these dealers assist the client, architect or designer with a particular project, it is not uncommon for them to tell the manufacturer that they have a relationship there.  This assistance could be delivering samples, specifying components for accurate pricing estimates, etc.  It is something of a gentleman’s agreement that when one dealer is first on a project, the others defer claim on it; they are all part of the manufacturer’s “family” and are expected to honor other dealers’ claims.   Our concern is that if all dealers defer in such a fashion, we have lost the ability to have a competitive bid on product lines specified.

The third major issue is the existence of a competitive furniture bid solicited by Howard County working in conjunction with the Baltimore Regional Cooperative Purchasing Committee (BRCPC).  The City is a participant under BRCPC through our cooperative purchasing for electricity and natural gas.  Staff contacted the Howard County purchasing department to confirm whether the City could piggyback on this proposal and the answer was yes.  Howard County indicated that the purpose of the solicitation was to provide the opportunity for local governments in Maryland to piggyback on these bid prices.  The Howard County RFP states, “The purpose of this multi-step solicitation is to achieve cost savings for Contractors and BRCPC through a single competitive solicitation that (1) eliminates the need for multiple solicitations by participating entities and multiple responses by vendors, and (2) combines the volumes of multiple participating entities.”  The City Attorney has also advised that the City could proceed in this fashion. 

Staff also inquired about the MBE/WBE aspects of the Howard County/BRCPC solicitation.  The solicitation requires a 10% subcontracting goal for minority, women or disabled business enterprises.  However, there is a provision that applies to Baltimore City that establishes a goal of 17% MBE participation and 9% WBE participation which is comparable to the 25% participation goal that the City established for MBE/WBE.      

While the City was aware of the Howard County/BRCPC bids before we issued the RFQ, we started the bidding process with the expectation that because of the size of our project that we may have been able to obtain better prices then the Howard County/BRCPC bid.  We now question whether we can obtain better competitive bid prices given the information we have obtained during the RFQ solicitation. 

The Howard County/BRCPC bid has obtained the following discounts on list price for the manufacturers the City has selected.  This is the method by which furniture is bid.

• Allsteel (workstations and storage) – 61.5% discount off list from the furniture dealership Douron
• Gunlocke (office desks) – 53% discount off list from the furniture dealership Douron
• Hon (seating) – 57.5% discount off list from the furniture dealership Douron
• Encore (seating) – 44.3% discount off list from the furniture dealership Duron
• Arcadia (seating) – 40% discount off list from the furniture dealership Interior Connections LLC
• Berco (conference tables) – 50% discount off list from ten dealers

There are a few odd items like a drafting table or specialty storage unit for police evidence that are not on the Howard County/BRCPC.  This would not exceed 2% of the total project.  The Howard County/BRCPC pricing covers purchase, delivery and project management, but not installation for systems furniture and items that require more complicated tool set-up.  However, the installation charges would not exceed 2% of the total project and all dealers for all furniture products routinely charge that as an “add” to the furniture cost.   

Since these are substantial discounts off list, we are now questioning whether we would be able to obtain better prices.  The City could always reserve the option of rejecting all bids should we receive prices that are higher than the above amounts.  However, we would be concerned about the fairness to the furniture dealerships of taking this approach.  It takes considerable time, effort and money to respond to a bid of this magnitude.  If the City were to put these dealerships through this effort only to reject bids at the end of the process, we do not feel this would be fair to the dealerships involved.

Section 62 Cooperative Bidding of the Bowie City Charter states the following regarding piggybacking on bids of other agencies.

“In the event the State of Maryland, Price George’s County, the Metropolitan Washington Council of Governments, or one of its member governments, or the U.S. Communities Government Purchasing Alliance, or any other local government of the State of Maryland or Association of Maryland Local Governments, provided that such local government or association has adopted procurement regulations that are comparable to those enacted by the City, has conducted a bid and awarded a contract authorizing local governments to purchase a bid item at the bid price, the City Manager may, without soliciting bids, purchase the item in question at the bid price from the successful bidder, if the City Manager determines that the bid price is competitive.  The City Manager shall, at least seven days prior to purchasing a service or goods pursuant to this subsection, inform the Council of the intention to make such a purchase.  No such single purchase shall exceed $100,000 without a waiver by the Council of the bidding process for good cause shown.”

Since several of the contracts associated with this purchase are expected to exceed $100,000, the City Council will need to approve bid waivers at a public meeting for awarding of these contracts.   

Staff Conclusion  

Given the above, staff has concluded that there are substantial discounts available by piggybacking on the Howard County/BRCPC contract.  This competitively solicited bid conforms to the City Charter provisions.  Furthermore, staff does not feel it is in the best interest of the City to change the “or equal” provision of our RFQ to expand the number of manufacturers who can participate in this project.  We are also concerned about how competitive this process can be if furniture dealerships offering the product line requested by the City are deferring to other dealerships.  Finally, we are concerned about the fairness to furniture dealers to continue forward with this bid, if at the end of the process we chose to reject all bids if the prices from the bid process were not better than the Howard County/BRCPC discounts.

 

            Therefore, staff plans to terminate the furniture bidding process and instead piggyback on the Howard County/BRCPC bid for the discounts offered.  We would make every effort to obtain the MBE/WBE participation requirements as specified in the Baltimore City component of the Howard County/BRCPC solicitation as a condition of the City contract.

DJD/JLF/adf