The 10/9/2007 edition of the Pittsburgh Post-Gazette ran an article written by William D. Clifford titled, "Private Sector: State needs to change outdated 'multiprime' approach to public building projects." Mr. Clifford wrote:

When businesses and other private-sector organizations embark on construction projects, they typically hire one primary or "prime" contractor that then can subcontract the project's more specialized pieces. This approach to the bidding process, known as the single-prime delivery system, tends to result in more efficient and cost-effective projects.

While the business community relies almost exclusively on the singleprime method, Pennsylvania's public entities, such as school districts and municipalities, are bound to a less efficient, more expensive system that breaks one contract into multiple pieces or "multiprime" contracts.

In order to better serve the state's taxpayers, who are the ultimate source of the money wasted in the multiprime process, Pennsylvania must reevaluate its continued reliance on this outdated, ineffective multiprime system. But any new method must address the valid concerns voiced by single-prime system objectors.

For almost a century, a Pennsylvania law known as the Separation Act has mandated that virtually all of the state's public entities use a multiprime system for construction projects such as schools and municipal buildings. That means that public-sector clients are required to split up one job into at least four components (plumbing, electrical, HVAC and general construction) and divide the work among four contractors.

With so many prime contractors in the mix, no single outfit is responsible — and accountable — for the entire project, so the lack of coordination can lead to delays and excessive costs. As the Post-Gazette reported in May, an investigation by Auditor General Jack Wagner found that at least a portion of the cost overruns for the University of Pittsburgh's Petersen Events Center was due to the unreasonably high number (25) of prime contractors involved.

Some multiprime proponents argue that an appointed construction manager could serve as a single point of contact, but that tactic fails to meet its objectives if the manager does not have adequate authority to terminate contracts or impose other financial sanctions — a right that owners are reluctant to give up.

The business community has demonstrated that the single-prime system works better than multiprime, and state governments elsewhere have followed suit. In fact, Pennsylvania is one of just three states using a multiprime system for awarding construction contracts.

Furthermore, a brief experiment earlier this decade allowed Pennsylvania school districts to opt out of the multiprime requirement for their construction projects. By all indications, the experiment was a successful, albeit short-lived, one. The single-prime system yielded cost savings fueled by more efficient project completion.

In the face of all this evidence, why does our state government still resist moving toward a single-prime system?

The multiprime system may be highly flawed, but the single-prime system in its current iteration is no panacea itself. Efforts to move away from the multi-prime system frequently are met with opposition from subcontractors who feel that the single-prime system gives disproportionate leverage to the prime contractor.

For example, subcontractors had little recourse in the past when general contractors were painfully slow in paying their bills, delaying payment for 90 days or even longer and turning the subcontractors into de facto project financiers.

Some general contractors also take advantage of subcontractors by bidshopping after a contract is awarded. That is, the prime contractor bases the overall project bid on bids submitted by the subcontractors, only to come back after winning the job to try to squeeze the subcontractor into lowering its original quote. Such practices leave the subcontractor in the unenviable position of either abandoning the job or doing it for the lower price.

These subcontractors' concerns about the single-prime system are valid, and any planned overhaul of the current system needs to resolve them.

So, the solution to Pennsylvania's construction contract quandary may be neither the current multiprime system nor a straightforward single-prime approach, but instead a plan that falls somewhere in the middle — in essence, a modified single-prime system.

One subcontractor complaint already was addressed in the Contractor and Subcontractor Payment Act, which imposes penalties, interest and reimbursement for attorney fees on any contractor found to have purposefully and unreasonably delayed payment to a subcontractor.

The second critical single-prime modification would require prime contract bidders to list their major subcontractors in the bid — at the very least those that would be handling the project's plumbing, HVAC and electrical components.

The prime contract recipient then would be obligated to use the named subcontractors, effectively putting an end to the practice of bid shopping. As Pennsylvania legislators reconvene this fall, they should consider repealing the outdated Separation Act. Their constituents deserve a system that is more efficient and economical.

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