TAMPA — On Thursday, the Tampa City Council will consider awarding a contract for striping city streets to Oglesby Construction of Sanford. It will be the sixth time this year the city has asked one company to step in and finish what another started.
Contractor defaults — companies failing to perform the work they’re hired to do — are becoming a problem for the city of Tampa, Hillsborough County and the Department of Transportation. All three have seen contracts go bust this year because a low bidder failed to perform.
The broken deals have left grass unmowed in parks and highway medians. They’ve delayed the completion of roads and left abandoned homes standing.
The delays hinder governments’ ability to do what citizens expect, said Tampa Mayor Bob Buckhorn.
Tampa, like the county and state governments, hires private contractors for everything from computer programming to sewer projects. When those contracts go bust, the city takes a more lenient approach to the contractors than the county or state — an approach, critics say, that may be leaving room for more defaults in the future.
So far this year, Tampa has awarded more than 80 contracts and has dozens more pending, according to DemandStar, the online marketplace where the Tampa and other governments solicit bids.
Three of those contracts have gone belly-up this year, one of them repeatedly. While they account for a small portion of the city’s overall number of contracts, this year’s failures are about triple the usual rate, according to information provided by the city.
What’s causing the defaults?
The biggest reason is inexperienced bidders biting off more than they can chew, said Gregory Spearman, Tampa’s purchasing director.
“You’re looking at vendors who are anxious for work, to keep their employees working,” Spearman said.
When the city put out a call for companies to mow parks, cemeteries and retention ponds in June, 47 companies expressed interest. They ranged from large companies to small, from landscapers to excavating and janitorial companies.
That’s become an issue across the state, said Lewis Harper, who oversees bidding on construction projects for the Florida Department of Transportation.
“They’re trying to do anything to stay in business, and that’s when the problems start,” Harper said.
Many quickly discover there’s a big difference between winning a contract and fulfilling it.
That was the case this summer when Seffner-based Complete Landcare defaulted on a mowing contract with both the city of Tampa and Hillsborough County.
Company officials told the county at the time that warm, rainy weather meant they had to mow retention ponds more frequently than the 30-day time frame the county wanted. Debris hidden in the tall grass along roadsides caused thousands of dollars in damage to the company’s equipment.
Between the extra mowing and the mangled equipment, the company was losing money on the contract, Edward Evans, Complete Landcare’s operations director, told the Tampa Tribune at the time.
Plant City-based Johnson Excavation and Services also discovered this spring that its low bid on demolitions quickly put it over a barrel when the cost of removing asbestos from abandoned homes in Sulphur Springs eroded its profits. The company withdrew from the contract.
Companies that default on government contracts risk damaging their bottom lines along with their reputations.
“They’re jeopardizing their business, period,” Harper said.
Local governments vary in their efforts to prevent defaults.
In Pasco County, a default takes a company out of future consideration for three years, said purchasing director Scott Stromer.
“Generally, we have had relatively few defaults during the recent economic downturn and we continue to have a very reliable pool of vendors that work very hard for us,” Stromer said.
The DOT and Hillsborough County also send defaulting contractors to the doghouse for as long as two years to deter repeated failures. Hillsborough County has blocked five companies from bidding on work, four of them until 2015, according to procurement director John Hollingshead.
The city of Tampa lets defaulted contractors return to bid again. That doesn’t mean all is forgotten, however.
“The vendor needs to demonstrate the next time they come around that they can do the work,” Spearman said. “One of the things we can take into consideration is previous performance.”
Martinez said the city’s efforts to encourage small and minority-owned businesses to compete for contracts is putting some of those companies at risk of failure.
“There are certain jobs that a small business can do, and there are certain jobs that a small business can’t do,” said Nelson Martinez, owner of Greenturf Services Inc. in Tampa.
Mowing contracts attract a lot of companies looking for easy work, Martinez said.
“People think that it’s an easy thing to do,” he said. “They don’t realize when you mow roadways, you’re mowing miles and miles and miles.”
That means bumping up workers’ pay and maybe adding staff. It adds up quickly, Martinez said.
Martinez’s company took over a city mowing contract last month after the previous two contractors defaulted. Greenturf had held the contract for five years before losing it when the city put it up for bid.
Martinez would like the city to return to its policy of demanding businesses post a bond — essentially, an insurance policy — to guarantee the work gets done. Bonds are routine on large construction projects, but they’re rare for services.
Spearman said the city dropped that requirement because it was a burden on small companies. They’re also not needed when the city can simply move to the next-lowest bidder in case of a default, he said.
That may change.
The mayor said this week the broken contracts are a problem that needs to be addressed.
“It really disrupts our flow,” Buckhorn said. “We are going to put in place much more rigorous requirements for bonds and the ability to do the job.”