McGill’s reputation makes it tough on the little guys
McGill Associates, a large engineering firm in Asheville, gets the lion’s share of government water and sewer contracts in the region, while smaller, local engineering firms are blocked from competing, according to several local engineers in the region.
McGill’s status as the de facto engineering firm for county and town work, however, took a blow this week when Haywood County commissioners turned down McGill’s bid and chose a smaller, local company.
Both McGill and Bradshaw Engineering, a Waynesville firm, submitted bids to design and oversee construction of the water and sewer line and roads for a new housing development being built in Clyde. The development is for flood victims rendered homeless when the Pigeon River swamped the town in September 2004.
Clyde officials said both firms had “excellent qualifications,” but recommended McGill based on the firm’s history of doing work for the town.
But the Haywood County commissioners — which held final approval over the contract — disagreed with giving an Asheville firm preference over a local firm if both were equally qualified.
“I feel like whenever we can try to use local firms that are qualified, we should give them every consideration,” Commissioner Kevin Ensley, who owns a surveying company, said at a county board meeting Monday (Dec. 19).
Ensley said if local firms never get selected, they never get the chance to prove themselves and never grow to be a big company that would create jobs locally.
Commissioner Mary Ann Enloe said she understands that Clyde officials have a “comfort level” with McGill from working closely with them in the past.
“But if we don’t give our local people the opportunity, who is going to give them that opportunity?” Enloe asked.
The commissioners unanimously awarded the contract to Bradshaw instead. Such an outcome is rare, however.
“The big jobs all go to McGill,” said Kevin Alford, owner of Alford Engineering based in Maggie Valley. “We get the table scraps.”
Who gets the call?
McGill is the largest and most experienced engineering firm in Western North Carolina, with the most diverse set of skills. As a result, county and town officials have come to rely on McGill as kind of quasi-permanent government contractor. McGill designs their water and sewer master plans, writes grants for the work, engineers the project and oversees construction.
Often, counties and towns do not solicit bids from other firms before awarding contracts to McGill. Smaller, local engineering firms say they deserve a shot at some of the work.
“At least give us a chance,” said Larry Lackey, president of CE Tech in Franklin. “Smaller firms are going to put their heart and soul into it so they can be recognized for doing a good job in the place where they live. I think smaller local firms would do at least as good if not a better job.”
Jeff Herron, an engineer in Bryson City, said he has experienced the same roadblocks.
“I would like to do the town’s work but I can’t get my foot in the door,” Herron said of Bryson City. When a firm closer to home is awarded work, the money stays in the community and is recirculated, having a positive impact on the local economy, Herron said.
Joel Storrow, president of McGill, said his company’s reputation is hard-earned.
“We’ve been in business 20 years. That’s the main reason why we are seen as the premier company. We have a lot of expertise we have developed over the course of that time,” Storrow said. “Our experience stacks up pretty good against all of our competitors.”
Alford said other firms rarely go head to head with McGill because it is a lost cause.
“Ask any of the small engineering firms in Western North Carolina. We will not compete because we do not get the job,” Alford said.
The issue is similar to complaints from local firms in the Gulf Coast who complained loudly about no-bid reconstruction contracts awarded to large companies from outside the area like Halliburton.
One of the challenges facing local engineering firms is simply finding out about projects.
“I can’t even find out where they need water and sewer at,” Herron said of local governments.
McGill plays a large role in helping towns and counties develop master plans for new water and sewer lines. McGill also writes grants on behalf of the towns and counties. After doing the master plan and writing the grants, McGill is usually a shoe-in to carry out the work.
“They have a cozy relationship,” Herron said.
For example, when Haywood County commissioners hold their annual planning workshop each January to set goals for the year, an engineer with McGill is allotted time to make a presentation. No other private firms are invited to participate in the county’s long-range planning. This gives McGill an advantage when it comes time to award contracts, according to other engineers.
Frequently, local governments do not put engineering projects out to bid at all, but simply award the work to McGill.
In Swain County, the engineering work for a new sewer line to the Franklin Grove community — which is plagued by failing septic systems — was awarded to McGill without going out to bid. In Highlands, the town hired McGill to engineer a new water line to the Highlands-Cashiers Hospital without a bidding process. Lackey said he wanted to bid on the water line to the hospital, but was told the town wasn’t accepting bids.
In Franklin, McGill was hired to design a new sewer line to Macon Middle School without going through a bidding process.
“The town has used McGill for as long as I have been associated with the town and many, many years before that,” said Mike Decker, Franklin town manager. “We have a long history with McGill. Over time they have practically become the town’s engineer.”
The no-bid contracts are not unique to water and sewer lines. When the town of Bryson City embarked on a streetscaping project downtown, McGill made a presentation to the town board and got the job.
“We never even got to make a presentation to the town,” Herron said. Herron said he had specifically inquired about it.
Patrick Bradshaw of Bradshaw Engineering had the same experience in Clyde. While McGill was likely alerted to the project, Bradshaw only found out about it by reading legal notices in the newspaper. Paperwork for the project stated that firms submitting bids would be invited to make a presentation to town officials. But that never happened. The next thing Bradshaw knew, the town had drawn up a contract with McGill.
Every job, every time
Counties and towns are required to solicit bids when it comes to work like construction or paving, and they are required to go with the lowest bidder. But professional services, such as architecture or engineering, are exempt from that law. The government is not required to pick the lowest bidder or even solicit bids. Professional services can be selected on the merits, experience and expertise of the firm.
Therein lies the issue confronting Haywood County commissioners this week.
“If we base these decisions on McGill’s qualifications, they would get every job, every place, every time with all probability, and that makes it doubly hard for a local company to break into the business,” said Mark Swanger, chairman of the Haywood County commissioners.
Storrow said the need for quality, reliability, accuracy and delivery is one reason contracts for professional services aren’t automatically awarded to the lowest bidder.
“That is something you can’t put a price on, whether it is architectural or geotechnical services or engineering services that follow this same type of selection criteria,” Storrow said.
Storrow said McGill’s experience goes beyond engineering. Its staff has expertise navigating environmental permits, acquiring easements from property owners and fulfilling the host of regulations that accompany state and federal grant money. The infrastructure for the Clyde housing development, for example, is being funded by a federal Community Development Block Grant with very specific procedures and requirements.
A winning formula
On many occasions when McGill is awarded a no-bid contract it’s because the firm has already invested significant time and energy in tracking down a grant to pay for a portion of the work. McGill’s staff often hunts down and writes grants at no charge to the town or county. Local governments rarely turn around and bid that project out to another firm after McGill wrote the grant on speculation.
“What sets us apart is our ability to help these local governments secure funding for these projects,” Storrow said. “We are willing to do that pro bono. It’s an investment in the relationship. It is the cost of doing business.”
Bradshaw said McGill has earned its reputation after years of hard work.
“For so many years, McGill was it,” Bradshaw said. “They were the only ones here. They did not become entrenched by accident. It just takes time.”
Sealing the loyality of local governments is McGill’s track record in bringing home grant dollars, Bradshaw said.
“Does it prohibit anyone else from making the same stab at it? I don’t think so,” Bradshaw said.
But it is a gamble.
“It’s tougher for small firms of our size to absorb that kind of overhead at the onset,” Bradshaw said. “A group of 70 can support six or eight people out here just writing grants.”
As the engineer, McGill is often in charge of bidding out work to subcontractors. But local laborers say McGill does not go out of its way to solicit bids from local companies for its projects.
In one case, when a local firm was the only bidder on a paving project in Swain County, McGill solicited a second round of bids and the local firm was undercut.
Mark Fortner, president of HMC Paving outside Bryson City, was the only paver that turned in a bid to pave Park Avenue. When McGill put the job back out to bid, they called some of the bigger companies in Asheville and alerted them to the work. In the second round of bids, a company from outside the area came in $1,000 below Fortner.
Fortner said if the tables were turned and one of the big Asheville companies submitted the only bid, McGill would not have called him and let him know about the project, even though it was happening in his community.
“That would have never happened,” Fortner said. “They have never called us to bid on anything. If they request bids, they call the big companies.”
Patrick Bradshaw said in an era when county and town leaders are struggling to recruit jobs, supporting local firms is an easy form of economic development.
“While our business is not large, we’ve moved three professionals to Haywood County,” Bradshaw said. “We’re a company that has full health benefits and these aren’t $10 an hour jobs. If you had 20 business like us, that’s a lot of jobs.”
Bradshaw said he hopes the commissioners’ decision this week signals a new way of doing business when it comes to local government contracts
“We just want fair consideration on projects we are qualified for,” Bradshaw said. “If we can’t get one in our home county, could we reasonably have a shot at getting one in another county?”