Multiple proposal requests 4

[JAE]

Just came across this situation:

You are an engineer and a contractor/supplier calls and asks for a proposal to do a study of a roof supporting mechanical equipment at a remote facility.

You provide the proposal to the contractor, they sign it, and you travel to the site, perform the investigation, and meet the owners of the facility.

The investigation is completed - no problems.

The next step is that, due to the investigation showing that the units don't belong on the roof, the contractor then asks you for a second proposal to design a separate structure to support the equipment off the roof. You provide them with the proposal.

The contractor is also, in tandem with your second proposal, submitting a proposal to the owner that includes selling them new equipment as well as providing the structure for it (my proposal) marked up a bit.

Then nothing happens for a while....

The owner then calls you, the engineer, for a second proposal to design the separate structure, independent of the contractor.

Ethical issues and points:
1. Your relationship to the owner was only possible due to the contractor bringing you on board and introducing you.
2. You have an outstanding proposal to do the design of the structure pending in the contractor's hands.
3. The owner is deciding to not deal with a Design/Build approach but rather going directly to you the engineer to set up a Design-Bid-Build approach, bypassing the contractor.
4. The owner intends to let the contractor bid your design...just not as a Design/Build entity.

Optional responses (which one?)
1. Simply give the owner a new proposal since the contractor has not signed your first proposal.
2. Don't give the owner a proposal, explaining that you already are working as a team for the contractor.
3. Call the contractor and explain that you were called by the owner and asked to provide a proposal and intend to do so.



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[jayrod12]

Honestly it would depend on my relationship with the contractor. If there's a solid working relationship, I'd give him a call and discuss. It may end up working out to be a wash for them in terms of overall money made as the markup they would've put on your fees they'll probably just transfer to the construction costs of the frame. However if the overall design is going to be tendered to multiple bidders and there's a chance that the contractor may not get the job, then that may pose other issues.

Either way, I'd start with a call to the contractor if you don't want to potentially sever the relationship. If this is a one-off project from the contractor and you don't care about what bridge is burnt, I'd just send the proposal.

 

[CANPRO]

Agree with jayrod12. If you're not worried about keeping the contractor happy, I don't see anything wrong (unethical) with your option #3. If you value the relationship with the contractor, I'd modify #3 - call and have an honest conversation with them and see how they're comfortable proceeding.

 

[Ron]

Disclosure. If you work for two different entities on the same project, you have to obtain concurrence from both that they are aware. Outside of that, no issue, since you will do your work independent of who pays the bill (I know that's what you would do, JAE!)

 

[Guest262653]

I once was in a similar situation but I had a sound relationship with contractor so the response was pretty obvious for me at the time. My option was:
4. Call the contractor and explain that you were called by the owner and asked to provide a proposal and DO NOT intend to do so.

 

[JStephen]

Note that if you and the contractor get together and agree that one of you won't bid, that may be an ethical consideration in itself.

 

[MotorCity]

Does your cost depend on who you work for? In other words, did you give the same cost for the same services in both proposals?

If so, I'd say you work for the first party to sign your proposal. It sounds like both the owner and the contractor see value in hiring you directly.

You have no control over who the owner decides to work with or not work with. If the owner wants to hire you, you have no obligation to the contractor, and vice versa.

Your loyalty belongs to the party that hires you....be it the owner or the contractor.

 

[JAE]

Well I have no legal obligation to the contractor but the ethical dimension here is that the contractor introduced me to the owner, allowed me to do an initial investigation project for their facility as well.

The contractor, for his part, spent a huge amount of time working with the owner on developing a concept (schematic design) and pricing. Then the owner pulls the rug out and basically says to the contractor, "well thanks for all your free up front services but now we are going to hire the engineer directly and force you to bid against others to get this work."

In some sense, the contractor presumed (wrongly) that his up front services would be rewarded but that wasn't the case.



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[kipfoot]

If your proposal would be the same, then I'd vote for #3: This gives the contractor the opportunity to remove the markup that they should not have put on your work and re-submit their proposal to match the one that you're sending.

If your proposal would be more, because sometimes going to bid might yield a different set of drawings on your part, then I'd just go with #1, though the owner might want some explanation.

I wouldn't consider #2, being averse to exclusivity.

 

[zelgar]

You might want to look into your State's laws regarding Professional Engineering and Conflicts of Interest. From Nebraska Engineer and Architects Regulation Act Handbook:
5.2.1 The architect or professional engineer shall not accept compensation for their services from more than one party on a project unless the circumstances are fully disclosed to and agreed to (such disclosure and agreement to be in writing) by all interested parties.

 

[JAE]

zelgar - there isn't a conflict of interest as we've not contracted directly with either party yet, nor would we.
The question was more aimed at the issue of beginning work for a client when that client abandons the party that introduced you in the first place.

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[zelgar]

Were you paid for the project from the contractor? If so, it would be a conflict of interest to get paid again by the owner for the same design.

 

[JAE]

I was paid by the owner - through the contractor - for an initial investigation report.

Once the investigation revealed that another separate structure would be required, the contractor asked me for a proposal to design that new structure.
The owner then called me and asked me to give them the proposal for the new structure direct - and not through the contractor.
So there is no conflict of interest here - two separate projects - one client.



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[zelgar]

It's still one project, as the need for the new structure was based upon the original work you did for the contractor. Others seem to agree:

Disclosure. If you work for two different entities on the same project, you have to obtain concurrence from both that they are aware.

You seem to disagree, though

Well I have no legal obligation to the contractor but the ethical dimension here is that the contractor introduced me to the owner, allowed me to do an initial investigation project for their facility as well.

I think there is a legal issue in addition to the ethical one as the Conflict of Interest (CoI) portion of the rules would apply in this case, IMHO. If you're planning to cut out the contractor about the design of the new structure, I would contact a lawyer first to make certain that you're not in violation of the CoI regulations.

 

[IRstuff]

Seems to me the conflict can only exist if the contractor could also do the new work, even though they did sub the original work to you. It can certainly be perceived from the outside that you managed to bypass the contractor and cut them out of bidding on the new work. If the contractor cannot possibly bid on the work themselves, independent of you, then there is no conflict, per se. Nevertheless, full disclosure to the contractor would seem to be the most appropriate action.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

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[JAE]

There is no conflict of interest.

There are two completely different "projects" so I'm not being paid by two entities on the same project.

One was a study of an existing roof structure currently supporting two mechanical units.
The report outlined the existing structure and showed its limitations.
No mention or reference to a new structure completely separate from the original structure.

The "second" project is about the design of a completely separate steel tower platform to support two completely new units.

I did not "cut out the contractor". The owner did.

I was hired to do a study - I did a study.
The contractor asked me to provide a proposal, separate from the study, to design a steel frame.
I gave him a proposal - he never signed it.
The owner then asked me for the same type of proposal to design the steel frame.

Currently I do not have any contract or agreement to either party to do anything more.

The conflict here is not one where I'd have a "conflicted interest" where my engineering judgement would possibly be compromised.
Nor is there something I'm doing to "cut out" or undermine the contractor.
Even if the contractor signed my proposal, I would be concurrently aware that the owner didn't intend on paying the contractor for my design anyway.

The ethical or moral dimension here is not one of conflict of interest - but perhaps more of social or business obligation.







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[zelgar]

If you were compensated by both the Owner and the Contractor for the Design of the Steel Frame, without it being fully disclosed and agreed to by all parties in writing, you have a Conflict of Interest. I feel this situation is very Black & White.

It's starts to get grayer, if only the Owner asked for your deign of the steel frame and is trying to cut out the Contractor for the future work, after you performed the initial Study.

Since this is a potential legal situation, I would suggest you consulting a layer about this.

 

[JAE]

If you were compensated by both the Owner and the Contractor for the Design of the Steel Frame, without it being fully disclosed and agreed to by all parties in writing, you have a Conflict of Interest. I feel this situation is very Black & White.

I was NOT compensated by both. I've said that twice now. Only compensated ONCE for the REPORT/STUDY by the contractor through the owner.

It's starts to get grayer, if only the Owner asked for your deign of the steel frame and is trying to cut out the Contractor for the future work, after you performed the initial Study.

I was asked by both the contractor and then the owner for a proposal for the design. Neither has signed either proposal yet.
The owner is NOT "cutting out the Contractor" in that the contractor can still bid the job - just won't get preferential treatment by being handed the project.

Since this is a potential legal situation, I would suggest you consulting a layer about this.

This is not a legal situation.
There is nothing illegal:
a) about a contractor asking me to provide them a proposal
b) about the owner asking me to provide them a proposal.
c) about me providing said proposals when I'm not under contract with anyone.

The question is almost more of a courtesy issue - the contractor introduced me to them. The contractor had provided free, marketing-like services to the owner by involving me, providing other mechanical reviews, and proposing certain options - all with the expectation (not legal obligation) that the owner would respond by continuing to offer the contractor the sole opportunity to provide all the mechanical design and equipment.

There is a hint of ethical issue with the owner in that they may have led the contractor to believe that they would honor such up-front free services with a relationship, not revealing that they ultimately would simply put the thing out for bid.



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[zelgar]

Maybe I'm missing something, but it appears that you've provided design drawings to both the Contractor and the Owner without getting paid? Based upon the Owner's actions, I would be afraid that even if he did use your design, that he wouldn't pay you for your work, unless I'm missing something (e.g., the drawings haven't been stamped).

In all of my posts, I was trying to make certain that there may be a Conflict of Interest if you were being compensated by both parties without full disclosure. I feel like things could get problematic if the Contractor does pay you for your original design and so does the Owner, especially if the Owner decides not to go with the Contractor.

Personally, I think full disclosure to the Contractor should have occurred when the Owner contacted you for design.

 

[JAE]

Maybe I'm missing something, but it appears that you've provided design drawings to both the Contractor and the Owner without getting paid?

Sigh.
I guess I'm not being very clear here obviously.

There are no drawings, zelgar. I haven't performed any design.
I have NOT been contracted to design anything.
I've only been asked to provide proposals to do the design.

Only a report exists (the first "project").
The rest is just proposals sent out - neither of which have been accepted or signed by either the owner or the contractor.

The original question was whether to notify the contractor of the fact that the owner had asked us for a proposal similar to the one I'd already given the contractor.
It had to do with the nature of the ethics, or moral duty, of providing a second proposal to the owner and whether to communicate that fact to the contractor.

You keep talking about conflict of interest and there is none. That is not the subject of this situation at all.
There can be no conflict of interest if there is no interest (i.e. there's no standing agreement in existence)



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