Borough shifting to ‘best-value' contracts

February 3, 2006

DARRELL L. BREESE\Frontiersman reporter

PALMER - Collins Construction's $3.3-million bid to build a ferry terminal at Port MacKenzie was not the lowest bid the Mat-Su Borough received, but that didn't keep the borough assembly from granting the contract to the company.

Its bid was the middle of three bids for the project and thanks to the use of a new procedure, best-value contracting, put in place by purchasing director Russ Krafft, the borough awards the contract to the party with the greatest ability to complete the task.

The use of the process was a trial run for the borough, which will also use it when awarding the construction contract for the vocational-technical school, which should go out to bid sometime this month.

The process is not new, even though it was the first time the borough had used it. According to Krafft, best-value contracting has been recognized across the nation, especially with federal and state governments, as the best method for awarding contracts.

Krafft compared the process to a grocery shopper not always buying the brand with the lowest cost, but instead looking for the best value.

&#8220For years, spending wisely meant spending as little as possible, when it comes to public dollars,” Krafft said. &#8220But we're finding that the lowest bidder often ends up costing more through change-orders or work that doesn't last.”

By contrast, best-value contracting awards projects to the contractor who offers the best combination of cost and skill, not just the lowest price. It permits project managers to base contracting decisions on price and performance factors, such as past performance and firm resources, when selecting contractors for capital facilities projects.

The process is not new to Valley government. The city of Wasilla has been using it since 2002 and the city of Palmer uses a similar system for some of its contracts. The Municipality of Anchorage uses the system for road construction and the state of Alaska also procures contracts this way. Ten states have passed best value laws, and federal agencies use best-value contracting for nearly 70 percent of federal construction.

Borough Mayor Tim Anderson sees the logic of best-value contracting.

&#8220What we're trying to do is provide the residents of the borough and taxpayers with the best product possible,” Anderson said.

Borough project manager Bob Bechtold says the new procurement tool means less oversight.

&#8220Working with a quality firm could save up to a couple hundred hours of my time on a single project that otherwise would be spent on reviewing and inspection,” Bechtold said.

According to Krafft, the process takes a little longer than the low-bid contracts to put together, but the time and money saved during construction more than make up for all the preparation needed to assembly request for proposals.

&#8220Low-bid contracts don't protect the borough from having to rehire a contractor who performed unsatisfactorily over and over again,” Kraft said. &#8220Best-value contracting goes further then just looking at cost. Price is still a factor, but it also looks at such things as their work history, their safety record, their history of change-orders and delays.”

Having successfully used the procedure for contracting to build the ferry terminal, Krafft hopes to use it for the majority of future borough contracts.

&#8220The assembly approved the use of best-value contracting as a test run for these two projects,” Krafft said. &#8220If everything goes smoothly, I will work with the manager on a possible change to borough code, making it the approved process for all future contracts.”

Contact Darrell L. Breese at 352-2267 or darrell.breese@

frontiersman.com.