Sticker shock: Contractor nearly triples bid

“His profit margin was just way too high…”

Dilley councilors unanimously rejected the lone contractor bid received for a major municipal water infrastructure project after the proposal came in at more than double the city’s entire state-funded grant budget.

Last year, the city received a $500,000 grant from the Texas Department of Agriculture, specifically earmarked to improve local water infrastructure and secure emergency power capabilities for public facilities.

However, councilors learned last week, procurement hit a roadblock when the bidding process yielded only a single contractor, whose proposal soared to nearly three times the city’s available funds at $1.1 million.

“The city did everything correct,” Carl Esser, independent consultant for the city said during the Tuesday, June 9 meeting. “We advertised, reached out to contractors individually. Unfortunately we only got one bid.”

Esser successfully negotiated an emergency timeline extension with state regulators to extend the procurement process after the city was faced with the massive budgetary shortfall.

“We need to make adjustments and do it again,” Esser said. “I reached out to the state agency and pleaded the case; fortunately, they have offered sympathy and extended the award to September 30, for us to go through procurement. So we have about ninety days to reconstruct the bid.”

According to Esser, the grant monies include the replacement of a critical aerator at the water treatment plant, replacing a variable frequency drive to an existing water pump, and installing a generator with automatic transfer switch at the Civic Center.

Armando Guerra, an independent engineer for the city, requested councilors look at the current procurement proposal and make adjustments that are ‘more specific.’

Furthermore, Guerra noted the upgrades at the water plant cannot be abandoned.

“They need to be changed,” the engineer said of the proposed equipment upgrades. “The [life] expectancy has already run out; we did improvements last year.”

Guerra offered alternative vendor relationships that include a recent contract with a vendor who could potentially provide the required treatment plant aerator at a significantly better rate.

“The contractor, in my opinion, his profit margin was just way too high,” Guerra said.

To protect the city from future budget overruns during the upcoming procurement cycle, Esser recommended restricting how the construction contract is presented to prospective contractors.

“Another idea is to prioritize those elements for the city and if there is an element that is not a priority, it could be an alternative item,” the consultant said. “But construct the bid in such a way that the base bid is the highest priority for the city.”