FACT SHEET ON SCHOOL CONSTRUCTION WAIVERS
Expiration of the Empowerment Act – Ending the Empowerment Act will end single prime contractual bids and will require school districts to return to soliciting multiple prime contractual bids, thus providing a fair playing field for all contractors seeking to bid on school construction projects
Concerned Contractors Support its Expiration – Allow the school construction waiver program to sunset. Waivers do not result in greater efficiency or savings, instead the result of single prime bids is millions of dollars in costs to the taxpayers with the only benefit accruing to the general contractor and architects. Bid results prove multiple prime save approximately three to ten percent.
Waivers Add a Middle Man – Adding a middle man to the process rarely results in lower costs. After the general contractor/broker (GC) submits his bid to the school district, the GC bid shops and negotiates down the mechanical, electrical and plumbing (MEP) contractors’ quotes. With the difference they squeeze out of contractors, they keep. Neither the school district nor the taxpayers see any savings.
Waivers Increase Bid Collusion Possibility – With single prime under a waiver, all of the MEP bids are hidden from the view of the public and the MEP contractors and with fewer GCs capable of bidding the jobs, the potential for collusion, price fixing and bid rigging increases.
Waivers Limit Competition – Waivers on school projects can require GC’s capable of bonding between $40 and $80 million. There are relatively few Pennsylvania GCs that are capable of bonding even one project of this value. Because of the bonding issue, many of the local small and mid sized GCs that currently do school construction will be shut out of the market. Out of state GCs move in to fill the vacuum and enjoy a virtual monopoly at the expense of the PA taxpayers.
Waivers Benefit a Select Few – At the expense of thousands of workers and all PA taxpayers, the GC is basically a broker who makes their profits through subcontracts. In most cases, their labor costs are limited to a project superintendent and a few employees. PA’s MEP contractors employ about half the workers on a typical school project, and they employ PA residents who vote and pay taxes.
Waivers Do Not Reduce School Construction Costs – Proponents of single prime bids claim that it will save the school district administration costs. Yet, studies on both sides of the argument acknowledge that multi-prime bids save approximately 3 to 10% on average.
Waivers Result in More Non-Resident Workers – The construction industry has been losing jobs to foreign rotation workers who work here, then take their earnings and PA tax dollars out of the state. Foreign rotation workers employed on PA construction sites leave resident workers without jobs and hurt the local economy.
Waivers Deny a Fair and Open Bidding Process – With multi-prime bids, MEP contractors submit their sealed bid proposals to the school district on bid day and then at the appointed time the bids are publicly opened and all the bid amounts and alternate prices are announced. The fair and open bid process that MEP contractors and school districts have benefited from for nearly 100 years is lost with single prime bidding.