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PDE-417 (7/00) 751 Solanco School District

SECTION 1 – Law/Regulation/Standard to be waived. Please provide the appropriate legal citation and specify the provision(s) from which relief is sought.

In connection with two simultaneous construction projects, Solanco School District requests a waiver of School Code (to the extent applicable) and the department’s PlanCon rules that prohibit the district from bidding and awarding a combined bid for both projects where the combined bid is not lower than the sum total of the lowest individual bids for both projects.

The district seeks this waiver in the event the combined bids for both projects provide a lower overall cost to the district than the sum total of the lowest individual bids, considering both initial bid costs and long-term savings and efficiencies realized through the combined bid.

SECTION 2 – Specify need for waiver.

The district is at the PlanCon F stage in the planning process for renovations and additions to two separate elementary schools. The design, bidding and construction schedules are running on simultaneous tracks with tentative bid award dates in mid June 2001.

The district wishes to invite both individual and combined bids for these projects, and to award bids based on the lowest overall cost to the district, considering both initial bids and long-term savings associated with a combined bid.

With two simultaneous projects, there are numerous ways in which the district could realize substantial cost savings by utilizing the same contractor on both projects.

One cost savings would be through the economies of scale of having a single contractor order the same product materials for two projects, instead of having two contractors order different (or even the same materials) for two projects. This type of savings would presumably be reflected in a contractor’s bid for both projects, as compared to the sum of the contractor’s bid for each individual project.

In addition to savings reflected immediately through a contractor’s combined bid, there are additional long-term savings to the district inherent in a combined bid. Such additional savings would accrue to taxpayers through the following:

1. More efficient communications by the district and its architect with one contractor instead of with two contractors.
2. Where a contractor on a combined bid installs the same product materials in both projects, the district would realize very substantial long-term savings in the following ways:
   1. Less time involved in the product submittal and substitution process before and during construction.
   2. Much lower costs and greater efficiency to stock and order replacement parts for one product instead of two products. (This factor alone could save tens of thousands of dollars over time.)
   3. Lower costs to train employees to operate one product instead of two products.
   4. Lower costs to train employees to maintain, repair, and replace one product instead of two products.
   5. PlanCon rules preclude bidding and awarding a combined bid that would exceed (even by a single dollar) the sum of the lowest bids for the individual projects. (Precluded in the very real sense that state reimbursement for the project is placed in jeopardy.) This prohibition is based solely on initial bid costs, and ignores the very real and very substantial long-term savings that can be realized through a combined bid.

If a combined bid for two projects exceeds the sum of the lowest bids for both projects based on initial costs, but taking into account the factors outlined above would provide lower overall cost to the district, we wish to take advantage of such superior value for the benefit of our taxpayers.

Accordingly, we request a waiver of School Code 751 (to the extent applicable) and the Department’s PlanCon rules that prohibit the district from awarding a combined bid for two construction projects where the combined bid is not lower than the sum total of the lowest individual bids for the two projects. This will permit the district to award a combined bid providing a lower overall cost to the district’s taxpayers, considering both bid costs and long-term savings through the combined bid.

SECTION 3 - Explain how the waiver will enable the school district to 1) improve its instructional program and/or 2) operate in a more effective, efficient or economical manner.

With regard to instructional program improvement, waiver approval will only have an indirect impact resulting from the economies of operations. The ability to economically allocate resources will always benefit the instructional program from the viewpoint that support costs in general, and plant operations in particular, are always competing for instructional dollars. Once a district "locks" itself into long-term commitments with regard to physical plant equipment and operating costs, resource allocation opportunities become constrained.

With regard to operating in a more effective, efficient and economical manner, we believe this waiver is critical to ensure that the district retains the right and the options necessary to award contracts that provide the best economic value to the district. Waiver approval will allow the district to view both projects from the proper perspective of total district impact. While these may be two different school sites with different "reimbursable calculations," they are inherently the responsibility of the total district.

In the near term, district operations will be enhanced as bidders are afforded and encouraged to pass along any economies they may find in costs associated with doing both projects as opposed to each site bid "standing alone". It should be noted that current PlanCon combined bid rules negate any incentive for contractors to pass along any economies because bid award rules are so narrowly defined. Further economies are to be gained when dealing with fewer actual awarded vendors during the administration of the construction project. Coordination of contract documents, payment schedules, contractor communications, site meetings, architect and engineering services, as well as all required paper work is reduced significantly.

In the long term, the district would have the opportunity to take advantage of reduced operating costs resulting from servicing similar equipment, economies of inventory and parts control, maintenance and service needs, and overall better service and care delivered in support of the classroom environment.

SECTION 4 - Explain benefits to be obtained by the waiver, and supply supporting data and information.

First and foremost, a waiver approval will serve to allow the district to retain the option for selecting bid awards that represent the district’s best value. Waiver approval will allow the district to gain PlanCon form approvals, solicit bids that use appropriate common standards for competition, and make awards based on total district value with regard to both individual projects and bidders. It must be recognized that without such a waiver we believe it severely restricts the district’s options. Under the current rules and process the board of education may find itself forced to decide between state reimbursement and the fiduciary responsibility to reject known higher costs.

SECTION 5 - If the purpose of the waiver is to improve the instructional program, please explain how the program will operate under the waiver.

As noted in Section 3 above, the purpose and any implementation of such an approved waiver request will have limited instructional impact.

SECTION 6 - Describe the evaluation process the district will use to determine: 1) the effectiveness of an innovative program; 2) the effectiveness of a revised instructional program, which shall include measures of student performance; and 3) the effectiveness of changes in the operations of the school district.

While described more as common sense than as innovative, the true measure of effectiveness for the district to retain bid award options, is that any economic value or efficiencies to be gained would remain lost and unknown under the current process. The initial evaluation will necessarily include investigating all relevant facts and provide a reasoned analysis for the bid selections. This is not unlike, nor should it be, any other bid evaluation process.

With waiver approval the district intends to exercise sound discretion and consider all relevant facts including operating costs, incidental related costs, quality and operating efficiencies. Should actual awards be made that take full advantage of waiver approval the district will record and track economies and efficiencies resulting from such decisions. It is expected that such opportunities presented will reveal cost reductions and increased efficiencies in a variety of ways relevant, but not limited to, the issues noted below.

1. Reduction in the number of Prime contractors that the district and professional service staff (architects and engineers) must work and interact with over the course of 18 to 20 months. For these two projects there could be a minimum of 6 or a maximum of 12 prime contractors.
2. Reduction in the amount of paper work and labor for contract administration for district staff, the district’s solicitor, the architect, and staff at the Pennsylvania Department of Education.
3. Reduction in the amount and type of inventories needed for operations and maintenance. Similar product selections on both sites present economies in parts, repair needs and upkeep.
4. Similar product selection and installation provide efficiencies and economic advantages in labor time, labor training and skills, and preventative maintenance scheduling.
5. Efficiencies gained in physical plant operations allow for more effective use of the district’s limited resources and results in a better and more stable instructional environment over the long term.