Construction Contractor Prequalification Process

Without a more transparent prequalification process, city managers risk reducing the city’s pool of potential qualified bidders because contractors may choose to abstain from doing business with Denver if they believe the prequalification process is unfair or not transparent.

A reduced pool of bidders could result in the city receiving lesser-quality work or paying more for construction than necessary. It also leaves the city vulnerable to reputational damage by not being seen as a fair and equitable business partner.

FINDING 1 — The city’s process to assign and communicate contractors’ financial limits lacks transparency

• The Prequalification Board does not document how it makes decisions.
• The city’s prequalification rules allow for subjective decisions about prequalification and assigned financial levels.
• The board does not tell contractors why they were assigned a certain financial level or how they can improve their standing.
• The rules do not allow contractors to dispute their assigned financial levels.

FINDING 2 — The Prequalification Board is not receiving accurate and complete information about potential city contractors

• The Department of Transportation & Infrastructure does not collect and verify some information that could disqualify contractors from prequalification.
• Supervisory reviews of summary information given to the Prequalification Board are not effective at identifying inaccuracies and calculation errors in documents manually prepared by the prequalification coordinator.

1.1 Update the prequalification rules – The Department of Transportation & Infrastructure and Denver International Airport should update the city’s prequalification rules to require that recommendations made by the Prequalification Board are documented with detailed reasons for the financial levels assigned for contractors’ work categories.

Agency Response – Agree, Implementation Date – March 31, 2024

1.2 Improve transparency – The Department of Transportation & Infrastructure and Denver International Airport should improve transparency when determining contractors’ prequalification statuses to ensure accountability and that institutional knowledge is retained. To that end, the agencies should:

• Document justifications and rationale for assigned financial levels in both the managers’ letters to contractors as well as any meeting minutes for the Prequalification Board.
• Communicate the justification for financial level determinations to contractors.

Agency Response – Agree, Implementation Date – March 31, 2024

1.3 Establish a dispute process for prequalified contractors – The Department of Transportation & Infrastructure and Denver International Airport should develop, document, and implement a process that allows prequalified contractors to dispute prequalification decisions. Specifically, the agencies should ensure all contractors are given transparent reasoning and justification for decisions on assigned financial levels.

This process should be codified in the city’s prequalification rules as part of implementing Recommendation 1.1.

Agency Response – Agree, Implementation Date – June 1, 2024

2.1 Update applications for prequalification – To ensure the board has the information it needs to ensure its decisions comply with the prequalification rules, the Department of Transportation & Infrastructure and Denver International Airport should:

• Update the applications for prequalification to require that applicants disclose whether they are in arrears or in default on a city obligation whether by debt or contract.
• Update the prequalification policies and procedures to include processes for staff to verify and document the review of an applicant’s potential debarment status with the city and whether they are in arrears or default.

Agency Response – Agree, Implementation Date – March 31, 2024

2.2 Document supervisory reviews – The Department of Transportation & Infrastructure and Denver International Airport should formally document how supervisors review and approve application packages for contractors seeking prequalification. This should be done through formalized policies and procedures to ensure information prepared by the prequalification coordinator is consistent with city rules and that the Prequalification Board receives accurate information.

At a minimum, the procedures should detail who is to perform the review, the steps involved in the review, and the steps involved when errors are identified.

Agency Response – Agree, Implementation Date – March 31, 2024