Companies aggressively seeking public contracts

Because of the economic downturn, more companies are competing for local government contracts and in some cases are being more aggressive when the bidding doesn't go their way.

That's leading to bid protests, project delays and in some cases the extra expense of litigation.

With commercial and residential construction and consumer demand down, the millions of dollars local governments spend each year on public works and service contracts are worth fighting for.

"Right now, every project is most likely going to be contested," said Las Vegas City Councilman Steve Ross, who works with construction unions. "Jobs are hard to find. Everybody's competing for them."

Perhaps the fiercest competition so far is between two companies scrapping over a contract to widen part of the northern Las Vegas Beltway.

Clark County commissioners have twice awarded a $116.8 million contract to Las Vegas Paving to widen the beltway between Decatur Boulevard and Tenaya Way, despite a lower bid submitted by Fisher Sand and Gravel.

Fisher sued, alleging bias toward a union-friendly contractor. The commission is scheduled to reconsider the contract again soon, although two commissioners -- Tom Collins and Steve Sisolak -- are to be barred from voting on it. It's reached the point that Collins is suing everyone involved, saying he can't be barred from voting.

Las Vegas, North Las Vegas, Clark County and Henderson all reported increased interest in public contracts, which in some ways is positive -- it tends to drive down prices as companies stretch to be the low bidder, for example.

It also means more work by local governments as bids are vetted, companies are guided through the process for the first time and contracting dates are pushed back because of bid questions.

And once bids are awarded, more challenges are being filed.

Lawsuits are not common, said county spokesman Dan Kulin.

"However, the lesser degree of challenging is called a protest, and we are seeing more of those," he said. In prior years, maybe one bid out of 10 would be challenged; these days, it's more like one in four.

Two Las Vegas projects have been challenged recently -- a $40.9 million highway interchange project and an $11.5 million contract to remodel the historic post office building downtown to accommodate the coming Las Vegas Museum of Organized Crime and Law Enforcement. The museum case ended up, briefly, in court.

In both cases, the losing bidder challenged the qualifications of the winning bidder and bored into the details of the city's bid specifications, looking for a reason for the city to change the award.

The City Council stuck with the original choices -- Capriati Construction for the interchange at U.S. Highway 95 and Horse Drive, APCO Construction for the Mob Museum -- which were also the low bidders.

The squabbles alerted city officials, though, that their bid specifications could be tightened up.

Ross was particularly vocal in telling staff members to eliminate any ambiguity in the documents so that the city doesn't find itself once again in "a pickle."

"Oftentimes there's this gray area," Ross said.

The changes are a work in progress. According to the report, city staff are working on ways to strengthen how it checks a company's background, including supplemental ways to check a bidder's lawsuit and bankruptcy history, and compliance with safety programs and rules against discrimination.

While Henderson hasn't had its bid awards challenged recently, there are definitely more bidders, and those bidders are going over the competition's proposals with fine-tooth combs.

"We've seen up to 20 or 22 bidders on a single project, where in the past we would only have a couple," said city spokesman Bud Cranor. "People are really looking for work. They're scrambling for it."

In North Las Vegas, two companies recently protested after officials ruled that they weren't eligible to bid on building a 21,900-foot sewer pipeline to the city's new wastewater treatment plant, and the City Council agreed to let them bid.

In July, Wiser Construction challenged a bid awarded to Hardy Construction to build the first phase of Craig Ranch Regional Park, alleging Hardy didn't have the right kind of contractor's license. The North Las Vegas council rejected the protest because Hardy had partnered with another firm that had the right license.

Several weeks ago, the North Las Vegas council rejected a protest by TAND Inc., which lost a bid to build a 3.3-mile bike path in the Upper Las Vegas Wash to Western States Contracting. Western States' bid was $3.58 million, about $100,000 less than TAND's bid.

Such protests and appeals are usually rare and city staff have noticed the uptick, said Brenda Fischer, spokeswoman for the city of North Las Vegas.

"I think it is a sign of the times," she said. "When business was aplenty, there were other projects they could bid on. Now, with less work available, the bidding process has become more competitive."

Economic statistics show how grim the picture is. In July, there were 493 residential permits issued in Clark County, down almost 58 percent from the same month a year ago. Commercial projects were even more scarce -- just 24 were issued, about one-third the number issued the previous July, according to the Center for Business and Economic Research at the University of Nevada, Las Vegas.

Construction employment has dropped sharply. State statistics show a decline from an average of about 102,700 jobs in 2007 to 74,000 in the first quarter of this year.

Contact reporter Alan Choate at achoate@reviewjournal.com or 702-229-6435.