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Study: Low Bids Hide 'Staggering' Costs

Monday, December 3, 2012

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Low-bid contractors who compromise safety end up squandering both public money and lives, argue three new studies that challenge the longstanding government contract process.

Prequalifying public-works contractors on the basis of their safety record could save not only lives, but billions of dollars a year, contend the studies, which focus on California, Maryland and Washington State.

The Price of Inaction: A Comprehensive Look at the Costs of Injuries and Fatalities in California’s Construction Industry,” by consumer advocacy group Public Citizen, proposes that California pass a law requiring companies to demonstrate adherence to safety standards to be eligible to bid for state contracts.

Parallel reports for Maryland and Washington State make similar arguments and appeals for those states.

WI bridge death
Milwaukee Journal Sentinel / Reader submitted

Joseph R. Bidler, 35, of Green Bay, was killed July 5 when a crane lifting a 52-ton concrete girder collapsed during work on the Lake Butte des Morts Causeway in Oshkosh, WI. Bidler's employer, Spancrete, was a subcontractor for Lunda Construction, which had sustained a fatal accident in April on another job. Lunda had been hired by Wisconsin DOT for the projects. OSHA's investigations remain open.

Such a solution not only would ensure that public-sector projects are fulfilled by responsible contractors but also would provide incentives for companies to maintain clean records while working on private-sector sites, the authors contend.

‘Staggering’ Costs, ‘Tremendous Pain’

The reports examine the economic burden imposed by the disproportionate share of deaths, injuries and illnesses that afflict construction-related industries.

“The economic picture is quite staggering,” said Keith Wrightson, worker safety and health advocate for Public Citizen’s Congress Watch division. “We now know that construction accidents impose huge economic costs in addition to tremendous pain for individual victims.”

Occupational injuries and fatalities in the construction industry cost California residents $2.9 billion between 2008 and 2010, according to the report.

During those years, 168 construction workers were killed in workplace accidents in California. In addition, the state recorded 50,700 construction-industry injuries and illnesses that required days away from work or a job transfer.

And that safety record is well above average, the study notes. Forty-six states in 2010 had a higher worker fatality rate than California.

In Maryland, occupational injuries and fatalities in the construction industry cost state taxpayers $712.8 million between 2008 and 2010; in Washington State, the figure was $762 million.

Nationwide, 774 workers—including painters and blasters—died in construction-related accidents in 2010.

Tabulating the Toll

Apart from the human toll, the economic tab for those deaths and injuries—in medical care, time lost, litigation, workers’ compensation, staffing disruptions, soaring insurance premiums, and other expenses—is not only monumental, but avoidable, the authors argue.

Mississippi River bridge construction
Traylor Brothers Inc.

Andy Gammon, 35, of Park Hills, MO, was working on an extended four-wheeled aerial lift on a Mississippi River bridge construction project March 28 when the lift toppled into the water and he drowned. Gammon's employer, a joint venture of three companies, is appealing the OSHA citations.

Weighing the safety records of the firms that undertake vast, dangerous public-works projects could save taxpayers millions of dollars in the long run, the report says.

“At a time in which the economy is struggling, the last thing California needs is a largely avoidable $2.9 billion burden,” says the report, which draws on government data and published research. “One way for California to address the economic burdens caused by fatal and nonfatal injuries is to take steps to reduce construction accidents.”

Those arguments are echoed in the Maryland and Washington State reports.

The Power of the Purse

Relying on workers to improve their own conditions and enforce safe practices won't work, the study says. It is “widely understood” that “fear of job loss and employer intimidation can supersede the potential loss of life or injury in today’s construction market,” the authors report.

Meanwhile, resources for government oversight of occupational safety and health are stretched thin. (With 237 inspectors for more than 1.3 million workplaces, it would take California’s Occupational Safety and Health Administration 158 years to inspect each workplace in the state once, the authors calculate.)

On the other hand, “a significant and inexpensive step the state could take is to use its power as a chief purchaser of construction services to insist on high standards,” the study says. “Specifically, the state could adopt a policy requiring prospective construction contractors to demonstrate excellent safety records and practices to be eligible to compete for state contracts.

“To take the simplest example, only construction firms that provide both worker and site supervisor safety training and that do not have serious occupational safety and health violations should be eligible to bid on public contracts. Such a process would require contractors that derive at least some of their revenue from the state to maintain high standards in all of their work, including that performed for private customers.”

Current Screening

The report notes that California currently screens construction companies to ensure that they have met performance standards in the past and have not violated any laws. The state also incorporates some safety standards in its prequalification system.

Milton Madison Bridge Project

Walsh Construction of Chicago is appealing a $10,000 OSHA fine in the death of lift operator Roger Lee Cox, 50, who was crushed to death in May while working on the Milton Madison Bridge over the Ohio River.

Washington State already screens construction companies to ensure that they meet standards on past performance, apprenticeship utilization and legal proceedings, the report says. But safety is excluded from the state’s prequalification system.

Maryland now screens construction companies to ensure that they meet standards on past performance, bonding capacity and legal proceedings, but safety is excluded from the state’s prequalification system, Public Citizen reports.

The authors argue that all of these systems should be expanded to require construction firms to put greater emphasis on demonstrating that they provide safety training to workers and site supervisors, and that they have not had serious safety violations.

“Implementing a stricter prequalification process for public construction projects would not address all of the industry’s safety problems,” Wrightson said. “However, such a step would help further protect workers while also yielding significant gains to the economy for minimal costs.”


Tagged categories: Accidents; Bidding; Bridges; Fatalities; Government contracts; Health and safety; Locks and dams; OSHA; Roads/Highways

Comment from Valerie Amor, (12/3/2012, 9:48 AM)

Low bidders can bring other complications as well which usually results in higher than industry change orders. No way you look at it, awarding projects to the lowest bidder costs more in the long run. I advocate for the end of the hard bid process. It goes against the collaborative process which is needed to bring in sustainable projects.

Comment from M. Halliwell, (12/3/2012, 11:47 AM)

Safety should definitely be a consideration. There is something to be said for the Dutch (I hope I am recalling it right) system...knock out the high and low bids, then take the bid closest to the average of the remaining ones...perhaps prequalify (including safety) then use a Dutch style bid. Might get more jobs to realistic bidders with good safety records.

Comment from peter gibson, (12/3/2012, 1:51 PM)

The Bid process in the US is antiquated.In Europe the work on the "Best bid" principle;not the low bid one.The basic law of economics is - you cannot get the mostest for the leastest. Somehow the Americans have not cottoned on to this.

Comment from WAN MOHAMAD NOR WAN ABDUL RAHMAN, (12/4/2012, 4:40 AM)

It is very important to award the tender based on the clients estimate rather then to the lowest bidder. The recepient tends to avoid fulfilling the works specification to maximize profit. This will subject the works to substanded materials and workmanship. If the client

Comment from Raymond Fitzgerald, (12/4/2012, 3:38 PM)

The low bidder sometimes bids a system that they are not qualified nor certified to install. When they are awarded the contract they can not actually do the project, and this leads to a re-bidding process which could take another year or even longer.

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