Gillis Gilkerson recently bid on a project for the State of Maryland to erect a bathhouse in the Pocomoke River State park. The project was listed as a small business preference, which is defined in MD by annual sales volume less than $7 million dollars. I would like taxpayers to know that the small business preference program may give a 5% price advantage; which is in addition to a rule that 10% of all State construction procurement is “Small Business Set aside” which will only allow small business contractors. Gillis Gilkerson was the qualified low bidder on the New Bathhouse at the Pocomoke River State Park. The State of Maryland has chosen another bidder that is a qualified small business at the expense of the taxpayers. This is an additional cost of $22,365 (which is just the tip of the iceberg, I will explain later). We have protested this selection with the State, which was denied by Maryland. We have in writing from the State “Seven (7) bids were received. Your bid was determined to be the lowest responsive bid. However, in accordance with COMAR 21.11.01.06B(4) Beauchamp Construction (BBCS) was given a 5% preference as a small business.” It needs to be understood that this is a clear choice by the State (DGS) and not actual legislation. I have email correspondence from Senator’s Colburn’s office to confirm that.
So we as taxpayers now have to pay an additional $22,365 to satisfy a choice that the State wants to make. I would like citizens to know we have contacted our legislator’s with regard to this issue: Senator Colburn, Delegate Otto, Delegate Conway, Delegate McDermott, and Delegate Haddaway-Riccio. All offices have responded to my complaint stating that they would look in to this situation and Delegate Conway attended a meeting with us. I have received no further response from legislators at this time. I have had the most response from the office of Senator Colburn and thank him and his office for that.
Now to the taxpayer iceberg I was talking about earlier. We as taxpayers face an extraordinary amount of costs to build a public building it would make your head spin. Let’s use this example above and the low bid for the State was $1 million dollars. With the small business 5% preference, the State chooses a small business contractor. The price to the taxpayers is now $1,050,000 (the tip) and included in this price are several other compliance programs which include minority business enterprise program, Davis Bacon Act (wage scale rates), and administrative costs (compliance paperwork to be processed on a weekly basis). All of these compliance costs are paid by tax payers; which adds about 15 to 20% to a total project cost. So 15% of a million dollars is $150,000 compliance, plus our $50,000 for the small business preference, which is a total of $200,000 in added unnecessary tax payer money. This same exact building all items being equal besides State and Federal compliance, could be built by a private owner and would cost roughly $800,000 (competitively bid). Please keep in mind that this private owner will be paying a fair market wage for all employees working on the project. This example shows money wasted on one (1) construction project in Maryland. How much money is spent to comply with these programs on an annual basis? The amounts are monstrous (the entire iceberg I was referring to earlier), keeping in mind that locally we have spent a couple hundred million dollars in State construction projects in the past 24 months (Perdue School of Business, Bennett High School, Washington High School). My example showed $200k wasted on $1 million dollars; so let’s be conservative and say it’s only $100k per $1 million dollars. So if logic is correct, MD has spent $200 million dollars in construction projects in the Tri County area in the past 24 months. That is $20,000,000 spent on compliance costs! That is one huge iceberg! It is sad that our politicians do not have the political courage to address this huge iceberg of wasted taxpayer money. Marylanders need to start caring about this iceberg melting!
Are these programs really looking out for us, as the politicians claim?
Christopher D. Eccleston, LEED AP
Project Manager
GGI Builders Inc. T/A Gillis Gilkerson
212 West Main Street Suite #305
Salisbury, MD 21801
(O) 410 749 4821
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This is why the cost of Bennett Middle is so high, because of all the state regulations. Contracts have to be given to certain qualifying contractors and the building must meet certain "green" environmental standards as well in order to receive state funding. So, blame the Wicomico BOE if you want, but the real blame lays with the state of Maryland.
ReplyDeleteI'm also a Project Manager for a local contractor who bids on work advertised by the Maryland Department of General Service. I completely agree with Mr. Eccleston's statements. At a time when Companies are only bidding with single digit markups it makes it completely impossible to bid low enough to make up for the 5% preference.
ReplyDeleteNot only is the Small Business Preference a complete waste of “Tax Payers” money but so is the 25% Minority Business Enterprise "Goal" that DGS requires on their projects. On a project that your Company is capable of completing all the work with your own work force, DGS expects you to find a MBE subcontractor to do the work instead, which adds more cost to the bid. Now you either have to find more work for your employees or lay them off. Also, only two contractors in the state of Maryland received a waiver last year who were not able to meet this goal. Those who did not meet the goal were not awarded the bid and the project was awarded to contractors who had higher bids. Who wants to guess how much money was wasted because of the MBE goal? I will guarantee it will far exceed what was wasted on the Small Business Preference.
And we wonder why the State has no money for construction projects and why local businesses are folding up left and right.
I share your concern. While not a construction project, the Board of Public works just approved an expenditure of over 500 thousand dollars to buy Steinway pianos for Bowie State to make it an all Steinway school. The reason - to attract a higher level of students. Meanwhile another State department had it's budget cut and can not buy computers to replace failing ones. Should we provide the tools our workers need to do their jobs or buy top end pianos to attract students to a State University?
ReplyDeleteMost citizens don’t have any idea what goes on in government. While we all see what is done by the legislature during its 4 month session, most people don’t see what the Board of Public Works does the rest of the year.
The Board runs the state during that period and spends a lot of money that was never budgeted during the session. If the elected legislature doesn’t give you what you want during the session, just go to the Board later and get it. They can give it to you and take it away from something that was approved by the people’s representatives.
This is what happens when government screws around with the free market. Beauchamp Construction can not be faulted just because they followed the law and it worked to their advantage. Remember, government knows what's best for you. NOT!
ReplyDeleteDue to the Federal and State compliance costs and mandates the Bennett Middle School could cost at least 8 to 12 million dollars LESS if competitive bidding were allowed in this State.
ReplyDeleteBut we all know that the State of Maryland so much extra money to throw around. NOT!
I disagree with the MBE goal bashing because if it were not for it,all the out of state contractors they get to do local work here would have no chance of getting work.
ReplyDeleteThe MBE requirements actually have the reverse effect. They push the prime contractor to hire OUT OF STATE SUB CONTRACTORS. SO much for helping the local econmy. No ones bashing the MBE requirements, its the implementation and unrealisic requirements that are the problem
ReplyDeleteI can't believe we need to hire out of state workers for construction. Do we not have enough folks here to do the work?
ReplyDeleteFrom Mr. Eccleston's post:
ReplyDeleteI would like taxpayers to know that the small business preference program may give a 5% price advantage; which is in addition to a rule that 10% of all State construction procurement is “Small Business Set aside” which will only allow small business contractors. Gillis Gilkerson was the qualified low bidder on the New Bathhouse at the Pocomoke River State Park.
Then how much did it cost the taxpayers extra for the 10% set aside program under which Gillis/Gilkerson was able to compete with small business peers vs. not even a prayer against a bigger contractor?
Also, Bennett High was a huge cost. They build similar schools in Montgomery County for much less and they have to comply with these same programs. Then why did it cost so much here? Sniff sniff smell something?
Local contractors cannot build projects like Bennett, the last time GGI attempted to build something of this scale was that building on Wor-Wic that was a complete disaster and went over schedule by months, and even that project had non-local contractors.
ReplyDeleteLocals GC's are understanding about things like, "taking off for hunting season" or "someone passed away so we're not going to be there for a couple of weeks". I wish more companies were like that, but the Whiting-Turners and Holders of the world are not going to take any crap, schedules will be met, budgets will be met, or you'll be replaced.
GGI also has alot of "Dead Wood" employees that stand around and waste alot of time especially after getting rid of the higher paid highly skilled man power opting to keep the lower paid, less skilled, lazy people that care nothing about deadlines or schedules, and eat large holes into the jobsite budget. This is not tolerated at Whiting Turner or Holder.
ReplyDeleteSounds like a lot of whining from Mr. Eccleston. Local contractors like GGI do not provide the quality of work the larger contractors provide, nor are they deserving of my tax money given the over run on schedules and their continuous use of low quality less than desireable sub-contractors. Not to mention their own low quality employees who are constantly taking off for "Hunting Season, Fishing, etc. It is a good thing the State has the power to not always choose the lowest bidder. It was surely a good choice this time. I don't mind paying a little more for good quality work done on time.
ReplyDelete