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City may ease construction rules

Janet Urquhart

Aspen may relax some of the rules it applies to contractors in hopes of attracting more competitive prices for city projects.

Ed Sadler, assets manager for the city, has outlined a series of recommendations for City Council consideration that he said may help ease the city’s recent difficulties in attracting bidders for projects and soften the sticker shock that has become the norm with bids for city work.

His proposals include cutting the amount of money the city withholds from contractors until a job is finished, easing the bonding requirements and reducing the warranty period from two years to one year.

Sadler also suggested the city consider hiring a procurement officer to handle the buying and bidding for all city goods and services.

He hopes to see some of his suggestions applied to the $25 million Truscott Place redevelopment, scheduled to begin this fall.

“I have no doubt several of them I will propose for this contract,” he said. “It depends on how it will affect my price. It depends on how much I’m going to save, and it depends on how much risk is worth it for us.”

Sadler, along with Parks Director Jeff Woods and Jay Leavitt, director of development for the housing office, met with 13 representatives of design firms, contractors and developers last July to discuss the city’s perennial woes with its traditional bidding process.

The booming construction economy has often left the city begging for bidders on its projects, and when it manages to get a contractor or two to submit a bid, the costs are invariably well above the projected budget for the job.

By loosening the rules on performance bonds and the like, the city may attract more bidders and lower prices, said Sadler.

“Business has changed,” he said. “Now government, facing increased cost for those things, is having to make changes in the way they do business.”

Sadler has recommended the city require no bonding for contractors on projects of less than $50,000, as the risk to the city is minimal. For projects of $50,000 to $1 million, he is recommending a bond equal to the bid amount. For costlier projects, existing bond requirements would continue.

Sadler has also suggested the cost of the bonds be listed separately in construction contracts so the city can agree to require the financial security, ask for a letter of credit in lieu of the bond or opt to forego the bond.

He is seeking a similar approach in retaining final payment to the contractor.

Currently, the city withholds 10 percent of the contract price until a job is deemed complete and accepted, forcing contractors to, in effect, borrow that amount to pay for supplies and labor. “That borrowing comes at a price,” said Sadler in his memo.

He has recommended retaining 10 percent on projects of less than $50,000, keeping 7 percent on projects of $50,000 to $1 million and retaining 5 percent of the contract price on projects of more than $1 million.

On a big project like Truscott, halving the amount retained is significant, Sadler said. “That’s half as much money we keep of theirs,” he said. “I’m not sure on a twenty-five-million-dollar job, whether you have to keep two-and-a-half million.”

He is also suggesting the city require a one-year warrantee on work rather than two in an effort to reduce costs.

The city has already acted on one of Sadler’s recommendations for the Truscott project, which will include golf course improvements, a new clubhouse/restaurant and 99 additional units of employee housing.

Shaw Construction was hired to handle the design/bid phase of both the Truscott and the Iselin Park redevelopment projects in the hopes of attracting better prices.

The firm is currently obtaining quotes for the first of five phases at Truscott, and Sadler plans to take an updated budget number for Truscott to the City Council next week.

He plans to discuss all of the procurement recommendations with the council late next month.

None of them, said Sadler, will be set in stone.

“If we get an unknown contractor or something that increases the risk for us, for example, we can still ask for full retainage,” he said.

And, Sadler added, he is not recommending anything he considers too risky for a government entity.

“There were other things that I thought were too much of a risk for the city. We are dealing with public money,” he said.


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