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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[CWB1]

Per both college ethics and the legal dept, we are legally and ethically obligated to clients from the moment we submit a quote to the time the quote is either rejected or the project completed, so I would concur that this is a conflict of interest.

 

[EZBuilding]

I don't see the ethical or legal issues raised by other posters.

I think your response should be based upon your relationship with the Contractor, and what is best for your business moving forward. There may be other factors to which you are not aware that led the owner to modify the previously understood course of action. A discreet phone call to the contractor may help bring more light to the situation at hand.

 

[zelgar]

Maybe I mistaken when I said drawings, but you've repeatedly indicated that you have provided proposals to both the Contractor and the Owner about the design of the new structure. I thought the proposals was the engineering design of the structure, not a contract to perform the design. I think part of the confusion was my misunderstanding your original post where you indicated that the Contractor presented your proposal (marked up by the Contractor) to the Owner.

I still feel that you should make a full disclosure with the Contractor that you were contacted with the Owner to submit a proposal for the new structure, since they requested a proposal from you first. As you indicated, you were concerned with ethics about the situation, but you also need to evaluate if there are any legal ramifications. Since your profile indicated you're from Nebraska, I checked their website to see the rules, but only was able to find Nebraska Engineer and Architects Regulation Act Handbook. The section concerning Conflict of Interest seemed to possibly apply to this case, as I have been trying to convey.

Finally, since it appeared that after the study was complete it was determined that the design of a new structure is needed. One could make the argument that the design of the new structure is a continuation of the original study, which is why I thought you might want to get legal advice. If the Owner ends up getting you to do toe design of the new structure and the if the Contractor doesn't get the project, the disgruntled Contractor may file a complaint against you to the State Board. Diffusing the possibility of a complaint by having full disclosure now may prevent any complaints later, or talk with a lawyer and see what they think.

 

[JAE]

I thought the proposals was the engineering design of the structure, not a contract to perform the design.

A proposal is simply me saying to someone - I will do x, y, and z for this many dollars assuming you agree to the terms and conditions of our agreement.

I still feel that you should make a full disclosure with the Contractor that you were contacted with the Owner to submit a proposal for the new structure, since they requested a proposal from you first.

I agree 100%

One could make the argument that the design of the new structure is a continuation of the original study

I disagree 100%.
The study was simply a scope/fee/agreement to study.
The study resulted in the owner being informed that a separate steel frame was a good idea and highly recommended.
But my study does NOT guarantee me getting a "continuation of the project".
I hope you see the subtlety here: If I write my report suggesting that the owner MUST continue to hire me to do the design, that is a true conflict of interest.
My report/study should always be treated as a totally independent effort on my part - not contingent upon me getting more work from the owner.

....the disgruntled Contractor may file a complaint against you to the State Board.

If I do contact the contractor (which I actually did do) and notify them that...cough cough...the owner asked me for a proposal - essentially informing the contractor that it looks like the owner wasn't going to use them exclusively for the work - then I've been fair, open, communicative, and honest in all my dealings. There's nothing that I did that would bother our state board.

we are legally and ethically obligated to clients from the moment we submit a quote to the time the quote is either rejected or the project completed, so I would concur that this is a conflict of interest.

"ethically obligated"
OK I'd agree that I"m always ethically obligated - but you must define what exactly we are obligated to do.
I submitted a quote to the contractor to provide engineering services.
Does that man I'm obligated for all eternity to never do work for the original owner? I think not.

I am obligated to communicate to the contractor that my proposal to them was now null and void.
Anyone, at any time, can rescind a proposal.
A proposal is NOT an agreement. It is NOT a contract. I can write a proposal, the other party can sign it - but I can decide then NOT to sign.
No agreement - no relationship - and no conflict of interest.

I might push your argument 180 degrees here.
If I get a signed agreement back from the contractor, knowing full well that the owner wasn't going to hire the contractor or use my work through the contractor, and I then proceed to do the design work and charge the contractor - THAT would be unethical.

What my final thoughts are is that:
1. I notify the contractor that the owner has chosen to hire the design directly.
2. I notify the contractor that the owner will put the work out for competitive bidding.
3. I respond to the contractor's questions and offer full disclosure that I intend to give the owner a proposal.
4. Even though it will probably hurt my relationship with the contractor - I have to take that "hurt".
5. I can and will commend and speak highly of the contractor to the owner.





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[bones206]

JAE, sounds like the owner put you in a tough spot and I would hope the contractor would recognize that this situation is really on the owner and not hold it against you. I think your approach is about as ethical as you can be while still trying to run a business and bring in work. I think as long as you are respectful and transparent with all parties, that's what's most important. The contractor might feel somewhat betrayed initially, but in the long run they will remember that you treated them with respect.

 

[JAE]

bones206 - very good summary - agree with all of what you posted.

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[CWB1]

OK I'd agree that I"m always ethically obligated - but you must define what exactly we are obligated to do.

We are ethically obligated not to compete against clients. In your case, the contractor is your client. Submitting a quote to the end-customer directly, even if its for a customer-proposed separation of design & build could be considered competing as the contractor has potential to lose business while you gain.

I submitted a quote to the contractor to provide engineering services.
Does that man I'm obligated for all eternity to never do work for the original owner? I think not.

No, that's why quotes have end dates.

Anyone, at any time, can rescind a proposal.

You'd better consult the attorneys on that one. I have always been told that unless the client agrees to release you, you are tied to them legally until the quote expires or they choose a competitor as a legal expectation of having responded to a RFQ with a quote.

 

[JAE]

No, until I receive a signed agreement there is no agreement or obligation.

An outstanding proposal is not a contractual obligation.

I am free to rescind a proposal anytime.

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