The Spokane Valley City Council took two different approaches to nearly identical contracts discussed Tuesday as the council prepares to vote this month on whether to renew the contracts or not.
Poe Asphalt currently holds the street and stormwater maintenance contract. The amount was for $1.5 million in 2011 and is proposed to remain unchanged in 2012. Similarly, the cost of the street sweeping contract held by AAA Sweeping is also proposed to remain unchanged at $490,000. Both contracts were awarded in 2007 as one-year contracts with seven one-year renewal options.
Public Works Director Neil Kersten said having multi-year contracts benefits the contractor by allowing them to plan ahead and recoup money spent on equipment over a longer period of time and benefits the city by lowering bids.
Councilman Dean Grafos led the discussion by questioning the wages included in the street maintenance contract. “Are these the prevailing wage or are they higher than we are required to pay by law?” he said.
Kersten said the wages are set by union contract and are slightly higher than the prevailing wage. “But we don’t have to pay it,” Grafos said. “It’s their cost,” Kersten said. The city has a “cost plus” contract that calls for the city to pay Poe’s costs plus a profit percentage.
The city should ask for new bids for the contract, Grafos said. “Things have changed a lot since we bid this contract,” he said. Spokane Rock Products, a local company, is interested in bidding the contract, he said.
Kersten said Spokane Rock Products did bid for the contract in 2007. “Their rates were actually higher,” he said. “I don’t think you’d save a dime. They use the same unions.”
Councilman Bill Gothmann said putting the contract out to bid too often will raise the cost to the city. “We’ve got a cheap contract,” he said. “They’re doing a fine job. I don’t see any reason to change it.”
The city would have to hire a consultant to help put the complicated contract out to bid, Kersten said. It would be “impossible” to do it for 2012 but could be done for 2013, he said. “I don’t recommend it.”
The city’s obligation is to get the lowest possible contract cost, Gothmann said, not focus on individual wage rates. “That’s precisely what we have in this seven-year contract,” he said.
Councilwoman Brenda Grassel said the city should negotiate more and not agree to pay more than the prevailing wage. “It seems they’re taking advantage of us in some ways,” she said.
That is not the type of contract the city has, Kersten said, and all of Poe’s costs are well documented. “We owe them those funds. It would be the same with any contract we have.” The asphalt prices in the contract have actually dropped and Kersten said he monitors Poe’s costs to make sure they are competitive.
Councilmembers Arne Woodard and Chuck Hafner spoke in favor of rebidding the contract for a five-year term. “I just don’t like seven,” Hafner said. “It’s just too far out.”
Kersten said there could be repercussions if the city cuts off a contract early when the contractor is doing good work. “I think that will also hurt your bids,” he said.
Despite the lengthy discussion on the street maintenance contract and the desire of the several council members to put it out to bid early, no such concerns were raised about the seven-year street sweeping contract by the council even when Kersten said it would be possible to put the contract out to bid almost immediately. “This one we could actually bid a lot quicker,” he said. “It’s just sweeping.”
AAA Sweeping and its owner, Brett Sargent, both donated money to Grafos’ re-election campaign, as did Spokane Rock Products.
Grafos said in an interview Wednesday that he didn’t raise similar concerns about the sweeping contract because the council will get the chance to look at both of them again this month when Kersten brings back more information. “That doesn’t mean that we’re not going to rebid both of those,” he said. “I don’t have a problem looking at both.”