Spokane Valley street maintenance contract revisited

Spokane Valley’s street maintenance contract was discussed at length again at Tuesday’s city council meeting. It was enough to make Councilman Chuck Hafner wonder if they were “beating the horse to death right now.”

The contract was put out to bid in 2007 and awarded to Poe Asphalt. It was a one-year contract with seven annual renewals. Recently Councilman Dean Grafos has pushed to rebid the contract early after a representative of one of his campaign contributors, Spokane Rock Products, said publicly that he wanted the contract to go out to bid again. The company submitted a bid in 2007, but lost to Poe.

Public Works Director Neil Kersten has said repeatedly that Poe has done a good job, has competitive prices and that putting the contract out to bid early could negatively affect the city in its relationship with local contractors and result in higher bids. He repeated that message again Tuesday, where he presented numbers directly comparing Poe and Spokane Rock Products.

Under its $1.5 million maintenance contract, Poe completed several street preservation projects in 2011 with an average cost per yard of $12.83, Kersten said. Poe also won a separate contract for the Broadway Avenue Safety Project in 2011 with the low bid of $11.70 per yard or $175,223. Spokane Rock Products bid $19.10 per yard ($260,092) for the same project, he said. “It was a real good bid project to compare costs,” he said.

Hafner asked why individual line items varied so much between contractors on the Broadway project. As an example, Poe’s cost for temporary traffic control was listed as $20,000 while Spokane Rock’s was listed at $65,000.

Kersten said he looks at the total bid, not individual line items. “I can’t tell you why they bid that high,” he said. “Contractors do a lot of different things.”

The overall cost of Poe’s contract is scheduled to go down 6.8 percent in 2012, Kersten said. That includes an increase of 0.7 percent for labor and a decrease of 11.8 percent for materials. “Poe is very competitive,” he said. “If we have any problems with their work, they’re very good about coming in and correcting that at no cost.”

Grafos questioned the wages Poe was paying and said the city should only pay the Washington State prevailing wage for operators. Poe pays some employees, such as the foreman and superintendents, $1.50 more than the prevailing wage. “There is not a prevailing wage for the foreman,” Kersten said. “He gets a little more than the guys he is supervising.”

If Poe wants to pay the extra $1.50, it should be paid out of their profit percentage, Grafos said. Kersten said doing that would only make the profit percentage go up. “That’s not how the contract was bid,” he said. “We have to pay his costs. That’s a standard contract. It would be very unusual to do it in the form you are suggesting.”

Councilman Arne Woodard made several suggestions, including removing the contract requirement that all equipment must be five years old or newer and making a new contract only five years long. Councilman Bill Gothmann said there is also quality to consider. Spokane Rock Products built two streets in the Ponderosa neighborhood and one in another neighborhood that have chronic drainage problems, he said, though there is debate about whether Spokane County engineers improperly staked out the Ponderosa streets. “As a consumer, that’s a crappy job,” he said. “There is a difference in quality. You can talk about money, but I’m also concerned about quality.”

“If we put it out to rebid now, I don’t know that it’s fair to Poe,” Hafner said.

Kersten said the council talked about the street maintenance contract at its June council retreat and seemed to be happy with it. That would have been the time to decide to rebid the contract for 2012, he said. “If you want to rebid it for 2012, you’ll just have a big gap where there is no service,” he said.

Mayor Tom Towey said he believes the city should keep the terms of the contract. “We are in a seven-year contract,” he said. “There is a benefit for a company to have that stability as long as they perform.”

The council agreed to bring back the proposed contract renewal for a vote at the Jan. 10 council meeting.