The $54.9 million in Measure G projects moving forward at five Manteca Unified campuses will cost no more than that — $54.9 million.
That’s because the district employed the lease/lease back process that might aptly best be described as the guaranteed maximum price process.
Critics of lease/lease back that have questioned the process at recent board meetings believe the use of the best qualified low bidder process is more equitable and “fairer” to all bidders.
However, the low bid process is subject to costly change orders when the contractor runs into issues that they did not foresee. Besides increasing the cost due to a specific change, it slows down the overall project and can add cost onto the back end.
Jason Messer noted that with previous Manteca Unified boards he had observed when he wasn’t serving as district superintendent they would spend large chunks of time questioning and voicing frustration with change orders.
In some cases where a change order exceeded a dollar amount the board had authorized the staff to deal with, it would have to wait until the next board bringing the project in question to a halt.
“It (lease/lease back) doesn’t make sense in all situations,” Messer said. “If it is a smaller project and you have a good (grasp) of the variables and there is little likelihood that something unforeseen will come up, the low bid process makes more sense.”
A recent letter from the International Brotherhood of Electrical Workers that took the district to task for using the lease/lease back process doesn’t slam the process per se. Instead their squabble is over when three of the initial five contracts were signed.
The IBEW contends the board signed contracts with contractors before the Department of State Architecture signed off on the school modernization projects as required by law. In doing so, they claim the school district was trying to skirt a new state law that went into effect Jan. 1 requiring an increase in the number of apprentices on construction jobs.
Deputy Superintendent Clark Burke noted the district requires contractors to pay prevailing wages. As for the apprenticeship issue, that is the responsibility of the general contactor to address.
“They could pass the cost on to us,” Burke noted of the additional apprenticeship positions. “It really isn’t that big of a deal to the district.”
What the board did in December was authorize staff to move forward with signing contracts once they got state approval. That happened on Dec. 22. Six days later three of the five contracts were signed. The other two will be signed this month and the general contractor must adhere to the new law.
Had the other two contracts been ready before Jan. 1, they could have been executed then.
Messer stressed the purpose of having the board grant approval to sign contracts contingent on the DSA signing off was to keep the projects moving forward in a timely manner instead of having to return to approve the contacts at a January meeting.
The lease/lease buyback process establishes a guaranteed maximum price that will be paid for a project. It requires the general contractor to perform due diligence before establishing that guaranteed price. That means they must thoroughly examine existing conditions and study the plans and specifications to allow them to make a firm commitment.
It requires the contractor being involved in the design process. That is beneficial since they see projects a different way than design specialists do. It allows them input and insight to reduce costs and streamline construction sequences to save scheduling time.
As an example a contractor might steer away from tilt-up construction to framed construction due to site constraints.
“If the contactor is involved early they become very familiar with the project so they are ready to go full steam ahead once approvals are obtained and contracts signed,” Messer noted. “That results in tight construction schedules which ultimately save money.”
The process doesn’t require the public opening of bids. It is one aspect that critics do not like.
In using the lease/leaseback process, the general contractor isn’t bound to accept the lowest bid subcontractor to compete in the bidding process Instead they may select a subcontractor on other criteria such as performance, reputation, locale, past experience and such. The end result, though, is ultimately less cost to district taxpayers.
Messer noted that sometimes the lowest bidder is not the best bidder especially in times when work is scarce. He noted the lease/lease buyback also sponsors a collaborative relationship between the contractor and designers as well as the district.