THE POWER LINE POLES
If you were in the position of Gordon Yarrow how would you deal with the bid exceptions requested?
If I was Mr. Yarrow, I would request Henry Nelson Co. that several pre-award meetings are held to discuss the exceptions made with the goal of setting final agreements on these exceptions prior contracting the services. I would also make sure that these discussions are recorded as minutes of the meetings so that the document(s) can become an integral part of Henry Nelson’s quote and eventually included in the contract agreement. With regards to each of the exceptions requested (Exhibit 2), my comments are:
• Exception 1:
To handle this exception, Moren should request Henry Nelson and for that matter all bidders, to include in their quote a Jobsite delivery. Although most of the companies in the US are more familiar with the UCC transportation terms, Moren should request that the latest version of Incoterms (developed by the ICC) should be used as the applicable transportation terms of the contract. By enforcing the use of Incoterms, Moren may even specify that the quoted terms should be DDP-Jobsite which would indicate Henry Nelson and all other bidders that the supplier “must” carry the responsibility and risk of delivering the equipment to the jobsite by the requested date. With this in mind, Henry Nelson and other bidders should include as part of their cost estimate the costs for using DDP-Jobsite delivery terms. This way, the sales price to Moren is inclusive of this cost.
• Exception 2:
From experience, depending on the application and service, materials that are subject to low temperatures may require being compliant and certified according to the standards of the NACE International Institute. In such cases where a NACE certification is deemed necessary, charpy testing is then a requirement. So, to best handle this exception I would request the engineering department to re-review the specifications and determine based on the application and service of this particular project whether or not charpy testing is required.
• Exception 3:
The concern for the excessive bolt projection should be brought to the attention of all pole suppliers as they may pose a serious trip hazard to workers on the construction site. Again, both engineering departments at Moren and at Henry Nelson should seek for alternatives or for solutions on how to deal with such hazard. If Henry Nelson is ultimately selected as the preferred pole supplier, Moren will have to make sure they provide a workplace that is free of recognized hazards according to OSHA’s general duty clause.
• Exception 4 and 5:
Again, Moren’s engineering department should re-review the specifications requirements and confirm whether or not RT examinations are mandatory for this project. If RT examinations are mandatory, then I would suggest Henry Nelson and other pole suppliers to revise their quote and include any impact in price and delivery in their quote in order to accommodate this requirement. If Moren’s engineering department is OK with opting out from RT examinations, then Moren may negotiate with Henry Nelson for the inclusion of other NDE tests in lieu of the RT examination with no additional impact to the price or delivery. Also, Moren should negotiate with Henry Nelson that weld procedures need to be submitted to them for approval and that in the event of any major weld repairs, a dedicated weld repair procedure and weld map is submitted for review prior commencing the repair work.
• Exception 6:
To handle this exception, I would request assistance from Moren’s legal department. With large projects, it is assumed that deliveries of this kind of equipment are staggered in time. Also, once the equipment is received, Moren must undergo an installation and start-up phase which makes Henry Nelson’s 5-day claim requirement very unrealistic. Moren and Henry Nelson should re-negotiate the warranty clause while avoiding a Battle of the Forms.
• Escalation Clause:
Moren should not be made responsible for any 3rd party or consequential liabilities. Moren should negotiate and require Henry Nelson to remove should clause from their quote as it brings a tremendous unknown liability to Moren.
In conclusion, as with our last previous case submission, the early disqualification of bidders without carrying a proper pre-qualification review that is equal among all bidders is not a recommended practice. In this project, Mr. Yarrow counted with the technical support from a consulting engineering services firm and his own engineering department so it would have been more adequate if he permitted the technical review and un-priced bid comparison of all eight quotes received. By doing so, the team would have had a chance to select the most appropriate vendor that met Moren’s design and technical specifications.
By electing Henry Nelson Co. as the preferred pole supplier, Moren would inadvertently opt out from Moren’s design and specifications and instead would accept to proceed with a vendor that chooses to use unapproved manufacturing processes. For Moren, this may be a risky move as the complications that may come up during manufacturing, testing and inspection are yet unknown. If complications arise, the delivery of the poles may be affected which in turn affects the overall completion of the 1st phase of the project. Should Henry Nelson get selected, Moren may request them to provide an experience list of similar projects where a similar product was manufactured. This may give Moren an extra push of confidence for closing a deal with Henry Nelson.