Overview
The MBTA did not maintain an accurate database of “disinterested bidders,” which it defines as bidders that were prequalified and submitted proposals but elected not to submit bids, or investigate all prospective bidders that had not submitted bids. According to MBTA officials, the agency’s Capital Delivery Department uses information in the Disinterested Bidders Database to maximize the participation of potential vendors in the agency’s solicitation of project bids.
For the 34 construction contracts that were competitively bid during our audit period, there were 31 disinterested bidders, but 8 of them were not listed in the Disinterested Bidders Database. In addition, for the same 34 contracts, the MBTA did not investigate 883 prospective bidders identified as Other Planholders on the MBTA Planholders Lists to determine whether they were prequalified bidders and, if so, determine their reasons for not submitting a proposal. The ongoing process of market research was agreed upon by the MBTA as a result of its 2011 external audit.
If the MBTA does not identify disinterested bidders, determine their reasons for not submitting bids, and accurately record and analyze that information, it cannot develop effective strategies to encourage more potential vendors to bid on future contracts and thus increase the pool of competitive bids.
Authoritative Guidance
In an MBTA construction audit report issued August 30, 2011 by an external auditor, the MBTA formally agreed to take the following management action:
Management will strive to broaden the bid list and gain a better understanding as to why pre-qualified bidders choose not to bid, including additional market research to determine why contractors do not bid.
MBTA management has an ongoing responsibility to ensure that the information in the Disinterested Bidders Database is current and accurate in order to effectively analyze why some prequalified bidders choose not to bid. Further, to broaden its bid list, the MBTA should investigate its Other Planholders list to determine why prequalified bidders on this list do not submit proposals, when that is the case.
Reasons for Noncompliance
The MBTA had no written policies and procedures for updating information in the database or identifying and researching disinterested bidders.
Recommendation
The MBTA should develop written policies and procedures for updating information in the database and identifying and researching disinterested bidders, and it should establish monitoring controls to ensure that these policies and procedures are followed.
Auditee’s Response
We gave the MBTA the opportunity to respond to our draft report and provide missing documentation. The following response, dated June 18, 2018, was germane to this finding:
The intent of outreach to Disinterested Bidders is to increase the total number of bidders for MBTA projects. Over the three (3) year audit period the average number of bidders per project increased. The MBTA is committed to focus on efforts to expand its bidding pool. For example, recently the MBTA held Contractor Forums in advance of the advertisements of the Green Line Extension (GLX) Design Build Project and the Cabot Yard and Maintenance Facility Improvements Project for which six teams bid on this $213.8M job.
The MBTA maintains a Disinterested Bidders List on its construction contracts. This current list includes prequalified and eligible firms who were issued proposals but did not choose to bid. The planholders list includes, in addition to prequalified firms with issued proposals, subcontractors, vendors and other interested parties. The 883 “prospective bidders” identified are not in fact eligible to bid on the job as part [of] the 34 contracts reviewed. If a planholder is not eligible to submit a bid on a project, the MBTA does not consider the planholder to be a prospective bidder. Firms are deemed eligible to bid only if they are prequalified and have submitted a Request for Proposal (RFP) to the MBTA to become a prospective bidder. The MBTA’s focus has been on determining why firms that were both prequalified and were issued proposals did not bid on contracts.
As a result of discussions during the audit process, the MBTA does agree that there is value in expanding the list of disinterested bidders to include those on the planholders list that are prequalified but that do not submit a Request for Proposal. This additional investigation should prove beneficial to the MBTA in generating a more robust bidding pool.
In summary, the MBTA will continue to update its disinterested bidder’s list to include why prequalified contractors did not submit a proposal to become an eligible bidder. This research will be performed for each contract and updated accordingly in the disinterested bidder’s list. This process will be outlined in the Contract Administration [Department’s] Standard Operating Procedure (SOP).
In addition, based on the increase in average number of bidders per project over the audit period, and the MBTA’s tracking and follow up with disinterested bidders, as defined by the MBTA and consistent with [the MBTA Contract Administration Department’s] Standard Operating Procedures, the management action resulting from the August 30, 2011 [external auditor’s] audit report stating that “Management will strive to broaden the bid list and gain a better understanding as to why pre-qualified bidders choose not to bid, including additional market research to determine why contractors do not bid . . .” has been satisfied.
In a subsequent response, dated July 26, 2018, the MBTA stated,
The MBTA has already begun reaching out to prequalified contractors to gain an understanding as to why they did not choose to bid on a project that they were eligible to bid on. This outreach has been performed by MBTA staff on recent construction procurements. This process has also been incorporated into [the Contract Administration Department’s] Standard Operating Procedures.
Auditor’s Reply
We do not dispute that the average number of bidders per MBTA project increased during our audit period or that the MBTA’s actions in this matter were consistent with those recommended in the external audit report. However, OSA believes that by doing a better job of maintaining an accurate database of disinterested bidders and investigating why companies may not have submitted a bid, the MBTA could facilitate even better competition/bids with its projects.
The 883 prospective bidders we identified in our report all met the definition of “prospective bidder” in the MBTA’s own procedures entitled “Governing Classification and Rating of Prospective Bidders.” Although we acknowledge that not all of them were necessarily eligible to bid on MBTA projects, OSA believes the MBTA should have investigated them to determine which ones were prequalified, as discussed in the external audit report, to “gain a better understanding as to why pre-qualified bidders choose not to bid.” This practice could have increased the average number of bids received per project over the audit period.
Based on its response, the MBTA is taking measures to address our concerns in this area.
| Date published: | September 28, 2018 |
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