lean & green schools

A new school is being designed. You are told it must go out to bid. The bidding contractors all get quotes from various trades and subcontractors and then mark up the cost. The contractor adds little additional value other than coordinating meetings and schedules, serving as referee, etc. The contractor is hired to do those things, but should the contractor be paid by marking up all the work actually performed by other trades, increasing the cost of the school?

Oh, and don’t forget the contractor will be paying a sales or use tax to the vendors.

Oh, and don’t forget the mentality of the low-bid process encourages contractors to push for acceptance of products – frequently when it is too late to do anything about it without messing up the construction schedule – that are low in price but do not meet the specified quality expectations. (But it helped the contractor be low on bid day)!  In addition, the bid-day-low-cost alternate the contractor pushes you to accept often not only doesn’t meet the needs of the school, it frequently doesn’t last as long as the originally specified product.

Lower quality product at too high prices; what can you do?

Cost saving solution: Most schools have the opportunity to take many of the project fit-out items out of the bid document and purchase them directly through the use of a contract.

Eliminate mark-ups: Contracts allow schools to take advantage of the negotiating power of a larger association to purchase products at lower, set pricing, circumventing the mark-ups of contractors. (Don’t get me wrong; contractors provide value, but make certain their payment is based on the work they do, not the mark up on products and installation provided by others.)

Eliminate sales/use tax cost: By purchasing directly from the vendor the school can provide the vendor with their sales tax exemption number and lower their cost without affecting quality. Contractors don’t get to do this.

Maintain quality: Typically the school knows what they really want anyway. By buying direct they can make certain they get what they want, not what the contractor wants to provide.

Various types of contracts exist.

• In the counties mainly in southern New York, BOCES (Board of Cooperative Educational Services) contracts are common.
• Some states have contracts, including New York, Florida, Pennsylvania and Texas as well as others. Some state contracts allow any public institution to purchase off of the contract, even in surrounding states!
• In other states, such as Minnesota and Wisconsin, a “state” contract is actually available through a major public university.
• There are also national contracts available. Some of the best known are:

1. EFETC (www.efetc.com) is the Educational Furniture, Equipment and Technology Contract. ANY educational institution can buy from this contract (public, private, charter, etc.), and it is popular in both K-12 and Higher Education.
2. E&I (www.eandi.org) is the Educational and Institutional Cooperative Service. E&I is a co-op owned by over 1600 colleges, universities, K-12, hospitals, medical research institutions and hospital purchasing organizations throughout the United States. ALL tax-exempt institutions of learning (public and private) can join the co-op. While membership only costs $5, membership in the National Association of Educational Procurement (www.naepnet.org) is also required.
3. PEPPM (www.peppm.org) is the Pennsylvania Education Purchasing Program for Microcomputers. Any public institution/department can purchase from this contract. It is popular in K-12 but not higher education. It may not be easy to use in small states because of limited distribution by some of the vendors. While it has many types of products, as you would expect from the name its’ strength lies in technology.

If as a school administrator you are trying to figure out how to build/renovate despite the economy, you need to ask more about contracts if you are not familiar with them.

If as an architect you want to get that school built or renovated, also despite the economy, you should bring the contract concept up to the schools you are working with.

A little bit of additional coordination can often provide more than enough savings to get that project moving!

- Dave