The roofing industry is filled with hot topics that incite great passion in many people and require more than a Magic 8-Ball® to provide guidance. A topic that has infiltrated every industry segment is proprietary specifications.
Professional Roofing discussed proprietary specifications from a legal standpoint in "How to combat proprietary specifications," June 2000 issue, page 14, and "States and proprietary specifications," August 2000 issue, page 18. Background information about the topic is available in those articles. But now, the magazine will explore the issue from different viewpoints.
Professional Roofing asked Thomas W. Hutchinson, an architect with Legat Architects, Palatine, Ill.; Deryl Kratzer, president of Tremco Inc.'s Roofing and Building Maintenance Division, Beachwood, Ohio; J. Dudley Miles III, president of J.D. Miles & Sons Inc., Chesapeake, Va.; and Sherri Miles-Foley, vice president of J.D. Miles & Sons, to discuss proprietary specifications from their perspectives. Following are the authors' opinions about the subject.
An architect's view
by Thomas W. Hutchinson
Proprietary specifications that eliminate legitimate competition raise ethical, legal and fair-business concerns for roofing contractors, architects and building owners involved with public bidding. Even with considerable public documentation and information about the pitfalls of proprietary specifications, unknowing, beleaguered building owners and architects are susceptible to the often unethical sales methods of manufacturers' sales representatives purporting to be roof system designers, specification writers and inspectors.
A recent example experienced by my firm, Legat Architects, involved a fairly large school district in the Chicago area. The district's superintendent requested a base bid be a nonproprietary modified bitumen roof system and alternate bid be a proprietary material roof system. This was done by a Legat Architects designer, who made every effort to have all products specified—in the base bid and alternate bid—be of equal quality.
Legat Architects did not allow product substitutions. But numerous roofing contractors told my firm the proprietary material manufacturer pressured them to submit substitutions.
The first telephone call came from a roofing contractor who said the manufacturer required its approved applicators to submit substitution bids of substantially lower quality from the base bid proposal so the manufacturer could compete with the base bid proposals of the nonproprietary material suppliers. My firm indicated this was unacceptable. Throughout the week, my firm continued to receive numerous telephone calls from roofing contractors expressing frustration with such tactics and the circumvention of the prescribed bidding process.
At the bid opening, the apparent low bidder for the nonproprietary roof system was more than $100,000 less than the alternate bid incorporating the proprietary manufacturer's materials. The additional cost of the alternate bid was based on materials only.
Another roofing contractor submitted a substitution bid, suggested by the proprietary material manufacturer, that had been rejected during the bidding period and was a complete revision of the design and massive reduction in the roof system's quality. This bid was $30,000 more than the nonproprietary material-based bid.
Legat Architects could not, in good conscience, recommend the district pay more for a roof system of lower quality. However, the school district's superintendent appeared to have a great interest in this roofing project; he prevailed and assured the district's board members they would achieve a greater quality roof system by paying more. The district awarded the project to the contractor who submitted the substitution bid.
During the construction process, the roof system was installed in phases, which violated the designer's and proprietary material manufacturer's specifications. Moisture entrapment was evident. Attempts to enforce the specification that required removal and replacement of compromised materials were thwarted by the proprietary material representative and school district. In fact, the proprietary material representative called the vacationing superintendent and requested he remove the architects from the job site.
Although the proper time to request substitution or revision of contract documents is during the bidding process, requesting the lower-quality roof system and the unethical nature by which this project almost was prearranged raised concerns. Everyone involved in the process, including all roofing contractors who submitted bids, were left with the impression there was some type of financial realization for the individuals requesting and pushing the use of a proprietary specification.
There are several unethical sales methods used by proprietary material sales forces. First among them is the "free" inspection. Building owners and architects should realize nothing is free. Often, they become enamored with anything advertised as being free, but they eventually may pay 300 percent more than the cost of similar roofing materials.
A second questionable sales method occurs when a representative for a specific material represents himself as a roof consultant. Building owners, facility managers and architects should question a representative's ethical nature when they hear such a claim.
The New Jersey Commission on Investigation's report, "Waste and Abuse: Public School Roofing Projects," indicates a number of concerns are raised when architects and consultants specify products with which they have financial ties. Specifically, a consultant or architect who specifies products he represents while acting as a roof consultant raises ethical and legal business practice concerns.
In most proprietary specification scenarios, manufacturers' representatives perform preliminary investigations, create final designs, prepare and administer contract documents, and perform field inspections. When a manufacturer's representative performs these tasks to secure a proprietary specification, a tremendous overspending of taxpayers' dollars results because the specification, which often secures a more expensive roof system, may not be the best system for a project.
Third, some proprietary specification representatives use tensile strength as a selling method stating it is the supreme determination of a roof system's quality, which is not necessarily accurate. Fourth, some manufacturers actually produce few products they sell, relabel products from other manufacturers and resell products at inflated prices. A client must realize a proprietary material representative does not have his best interests in mind. Pushing profitable products over those that may be right for a project but less costly is endemic.
What fiduciary responsibility do those who use proprietary specifications believe a representative has when he has a financial interest in a roof system? Will a representative be able to require a contractor to remove unacceptable work that may cost the contractor additional money to repair or replace? By overlooking unqualified work, will a representative have the opportunity to sell additional materials to a contractor to perform repairs that resulted from poor quality work that should not have been allowed in the first place?
It is easy to see conflicts of interest related to proprietary specifications are numerous. Any time a designer has a financial interest in a product being specified, knowledgeable, well-educated school district administrators—such as business managers, superintendents, or directors of building and ground services—in a position to specify and/or purchase roofing products should immediately disengage themselves from discussions about the means and methods of procurement.
As mentioned previously, it is not uncommon to have a manufacturer's representative prepare specifications and contract documents for architects to use in their projects. This sounds like a good idea. An architect wouldn't have to do any work, perform the needed investigation or determine whether the product is appropriate for the project. And an architect still can charge a fee to a public entity in this regard.
In such a case, not only does a public entity not receive a roof system specifically designed for its unique project with its best interests in mind, but an architect may be jeopardizing his license by approving drawings created by people not under his employ—an activity that quickly can get a license to practice reviewed and revoked.
For example, a recent high-school reroofing project in a northwest community of Chicago incorporated a proprietary specification. The proprietary material representative—rather than the architect—prepared the design and specification. The school district paid the architect a fee based on a percentage of construction cost, which was greater than typically would be anticipated. The district paid this fee for a lower quality product, which may or may not have been in its best interest. The architectural firm in question has been reported to the State of Illinois Licensing and Registration Department, and the complaint currently is being reviewed.
Ultimately, it is contingent upon purchasers to know their projects' cost-to-value ratios. Paying exorbitant amounts for materials of less or equal value that may or may not be appropriate for a roof system rather than for products of equal or better value does not appear to be a wise practice.
I have investigated a number of roof systems designed by proprietary material representatives where the buyer was not cautious. No consideration was given to the building elements impinged on the roof systems.
For example, in one case, a newly installed roof system received a 15- or 20-year roof warranty, but it was flashed into a 120-year-old roof hatch, parapet walls with excessive deterioration, and air-conditioning units and pipe penetrations with questionable detailing. Unfortunately, the building owner had no idea of the poor over-all quality of the roof system he purchased.
Architects, facility managers and building owners can protect themselves from proprietary specification pitfalls by doing the following:
Public officials who continue to use proprietary specifications eliminate fair competition and waste taxpayers' dollars; they need to realize they now are being watched by architects, consultants, the media, Better Business Bureau® and any company concerned about fair use of taxpayers' dollars.
A manufacturer's view
by Deryl Kratzer
What does the term "proprietary specification" mean? The word "proprietary" connotes ownership. To a manufacturer, it means ownership of a product that is different from similar products because of the standards and processes used to create it. The word "specification" expresses the ability to specify or identify details. Together, do the words proprietary specification mean limitation to the details of a particular product? Or should they be understood to specify details that establish standards that can be met by a range of competitive products? In a competitive market economy such as ours, the answer is the latter because buyers—not sellers—control purchasing and establish the standards for what they purchase.
Manufacturers know they compete with every other manufacturer. To compete effectively, manufacturers have to make better products that meet tougher specifications to ensure their products are the best. Is competition restricted because one manufacturer's products clearly are better than rival products and customers choose to adopt that manufacturer's standards as expressed by its specifications? Competition is not restricted by evolving higher standards; it is elevated. When buyers identify and specify the qualities of better products, they are not shutting off the market but raising the bar of competition to purchase better quality products.
This is why in the roofing industry, competition takes place not only in the sales and customer service arenas but also in the laboratory and factory where better products are invented and produced. In addition, competition takes place in the field as manufacturers seek roofing contractors who are willing and able to understand the nature of better products and adopt and conform to higher workmanship standards.
In the roofing industry, an important element of competition is the ability to bid for contracts in the public sector under terms and conditions set by public bidding rules and requirements. When governments issue bids, they must determine how to specify goods or services, including the quality standards they seek to purchase. Bid specifications, therefore, become critical to the ability of the public sector to purchase what it needs and for roofing contractors to understand and respond to the standards established by a public bid.
The primary purposes of bid specifications in the public procurement field are basic and fundamentally simple to understand. Governments want to make purchases on behalf of the public under rules that eliminate favoritism, fraud or corruption. And governments want to buy the goods or services they need at the lowest responsive price possible while obtaining the best quality. Does this or should this mean the public sector has to purchase whatever is offered at the lowest price? The answer, emphatically, is "no." Public agencies have the right to insist on quality, as well as price. This is a concept that defines the notion of lowest responsive price.
Whether public agencies are buying computers, playground equipment, vehicles, carpet, plumbing fixtures or roof systems, they have the right and obligation to insist on quality. Competitive bidding does not require public agencies to accept inferior products or materials or eliminate standards. This is why public agencies are permitted to identify a particular product, product characteristic or standard to describe what they seek to meet the needs of a given purchase. Once public agencies make such distinctions in the interest of quality and lowest responsive price, they have reasonably defined the boundaries of competition, but they have not excluded competition.
Public agencies have the right to limit competition to those who can achieve standards of quality that meet their needs. They have the right to strike a balance between quality, performance and price. Setting responsible contract specifications is a way to ensure quality and performance and achieve a beneficial price—quality and performance are the key factors in the cost component.
In the case of roofing project bids, public agencies have the right—and taxpayers expect—that the roof systems agencies buy are long-lasting and of a quality that significantly keeps repair and replacement costs low.
One way to do this is to write bids with specifications that call for products that reliably meet high standards when those can be quantified and qualified. This may mean a public bid document specifies minimum quality performance characteristics, standards or performance criteria. Or it may mean a bid will call for a particular product or its equivalent. This preserves the ability to compete while protecting public purchasing.
Manufacturers should be willing to compete in an environment that defines products and product standards. It is manufacturers' jobs and competitive obligations to develop and bring to market better products and services and prove they are better by offering greater value that delivers a price benefit that always should be part of the cost equation.
Therefore, a "proprietary specification" is:
Public purchasing can run the gamut from no standards and no specifications to a clearly limited sole-source specification. Rarely, if ever, do either occur because in the space between those two extremes lies competition to provide the best quality at the lowest responsive price.
A good manufacturer with quality products—the best products crafted to its proprietary specifications—never will shy away from such competition and will compete to make its products' standards the standards others have to meet in public and private purchasing.
Roofing contractors' views
by J. Dudley Miles III and Sherri Miles-Foley
From a contractor's perspective, a proprietary specification means only one manufacturer's products are to be bid and used for a given project. Although contractors who are approved applicators of a specified roof system gain certain benefits from proprietary specifications, there also are several negatives. Obviously, when a proprietary specification is limited to a roof system that a roofing contractor is unfamiliar with or not approved to apply, that specification represents a lost opportunity for that contractor.
However, there are several advantages of having a roof consultant or, more likely, a manufacturer's representative provide a proprietary specification. A contractor occasionally may even find it to his advantage or in his client's best interest to recommend a proprietary roof system.
The first advantage of proprietary specifications for a roofing contractor is fewer competitors will be able to provide bids. Most manufacturers do a reasonably credible job when selecting roofing contractors to install their roof systems. Because a manufacturer's reputation and potentially significant warranty claims are at risk for each of its installed roof systems, a manufacturer has every reason to be selective when choosing its approved or certified applicators.
By limiting the field of competitors to only a given manufacturer's approved contractors, a designer will have provided a valuable service to a building owner in prequalifying prospective contractors. The manufacturer diligently should have checked each contractor's experience level, credit worthiness, reputation, safety program, extent of personnel training, available equipment and track record before approval. Once a proprietary specification has been written, all competitors offering bids should be on reasonably equal footing if the manufacturer did a thorough job when pre-qualifying its approved applicators.
Usually, a building owner who chooses a proprietary specification is much more focused on quality and thinks in terms of life-cycle costs instead of trying to save every nickel he can on a project's initial cost. That in itself is a major advantage for a roofing contractor. Yes, the successful contractor will make more money because the proprietary roof system will cost more initially, but the real advantage is the contractor's future liability is far lower (the roof system will be less likely to develop problems later or involve the contractor in future disputes).
For example, in most applications, roof insulation will be provided in two or more layers and there will be a protective cover board over polyisocyanurate roof insulation. The result is a roof membrane that will have a much better chance of performing its intended purpose during the course of many years.
Another benefit for a roofing contractor is not having to be concerned about another competitor substituting a cheaper product, fewer plies or a single layer of insulation during the bid process. With proprietary specifications, each bidder should provide pricing for the same list of materials, and those materials should be priced the same for each bidder.
Usually, a design professional, roofing contractor and manufacturer view themselves as a team or partners when involved with a proprietary specification. Ideally, this should translate to a smoother job with daily communication about various aspects of a project. The team's focus is on determining the best way to install a roof system, which means each party's self-interests become subordinate to the finished system. Unforeseen conditions or latent defects have the potential to pit building owners and design professionals as adversaries of their roofing contractors on open-bid jobs, particularly when change orders are required. The partnership concept with proprietary specifications reduces the likelihood of parties becoming adversarial.
In most cases, a proprietary specification involves either periodic or daily inspections by a manufacturer's technical representative. Every roofing contractor welcomes knowledgeable, objective observation of a roof system installation. Contractors simply cannot be on every job site every day with each crew to observe every detail. Therefore, roofing contractors appreciate an extra set of eyes confirming a roof system is being installed accord-ing to specifications and good roofing practice.
As a general rule, roofing contractors find design documents associated with proprietary specifications complete and unambiguous. Plans and specifications almost always complement each other. Seldom, if ever, do we find details that simply cannot be constructed or bid documents that seem to be the result of a first-year designer cutting and pasting from a multitude of sources with a list of products or manufacturers that no longer are used. Because manufacturers' representatives almost always write proprietary specifications, they naturally are intimately familiar with their specifications and details.
Finally, money seems to flow better when a manufacturer's representative provides immediate positive reinforcement for a roofing contractor's request for prompt payment of invoices. Our company, J.D. Miles & Sons, has seen instances where a manufacturer's representative has convinced a building owner to pay for a roof system warranty before a project began.
Let's also consider the several negatives involved with proprietary specifications. The basic negative is that, because of their nature, proprietary specifications fly in the face of most public procurement acts. These acts generally provide that the public's interest is best served by completely free and open competition so no roof system, product or applicator should be excluded. Open and free competition absolutely results in the lowest initial cost for building owners. Obviously, proprietary specifications limit the contractor base and kinds of roof systems that may be employed on a project. And proprietary specifications almost always result in higher initial costs.
When a manufacturer brings a contractor on a job with a proprietary specification, the contractor is limited in offering his best advice about which roof system or product he personally would have selected for the project, particularly if the manufacturer doesn't provide that product or system.
In addition, the same manufacturer's inspector, who could be viewed as beneficial to a roofing contractor, could be a contractor's worst nightmare. Because manufacturers sometimes are understaffed, a contractor could be stuck with an inspector who knows practically nothing about roofing.
Our company worked with an inspector with limited roofing knowledge and background on a state university reroofing project. While our crew tore off about 40 squares (360 m²) of roofing material and busily installed plies of felt in asphalt over a tapered insulation system, the inspector discovered the temperature of the asphalt in the kettle was about 500 F (260 C). He also read on the asphalt carton that the equiviscous temperature (EVT) was 440 F (227 C). The inspector did not notice the flash point was listed as 538 F (281 C). Because the temperature difference was more than the 50-degree Fahrenheit (10-degree Celsius) window for EVT variability, the inspector shut down the job.
When our superintendent insisted the crew was following good roofing practice and argued it had to get plies installed to make the building watertight, the inspector threatened to have the police lock up the crew if it kept installing the roof system. Fortunately, it did not rain that night and we resolved the problem the next day.
The inspector obviously had learned only a little about asphalt EVT. He did not understand the concept of flash point or finished blowing temperature. He only knew asphalt had an EVT and the acceptable window of variation was plus or minus 25 degrees Fahrenheit (10 degrees Celsius). The inspector simply didn't realize EVT had to be measured at the point of application rather than in the kettle. This example vividly demonstrates how important it is from a roofing contractor's perspective that roofing inspectors be thoroughly versed in good roofing practice.
Typically, products in proprietary specifications are not stocked at several distributors' warehouses but must be purchased from a sole-source manufacturer. A roofing contractor, therefore, is limited to paying whatever a manufacturer chooses. In addition to price, availability is an issue; the slightest miscalculation by a contractor or any unforeseen condition that requires additional materials means a special order must be placed. This could shut down a job for days or weeks depending on the availability of the needed product. In this all-too-familiar scenario, a roofing contractor could lose credibility with a building owner; have a production crew unable to work; and probably pay exorbitant freight costs for materials.
We want to point out proprietary specifications could be based on any manufacturer's products or systems. But in reality, so few proprietary specifications are based on products and systems available from major or dominant manufacturers that the term has come to signify "exotic" or so-called "high-performance roof systems." From a roofing contractor's perspective, we question the concept of "high-performance roof systems" when it simply involves much more expensive products. As roofing contractors, we see little reason to pay a great deal more money for a roof system that offers little additional long-term benefits.
It seems some manufacturers often emphasize a particular product's physical property or dimension to claim there is no equal to the product. Although such a statement may be technically accurate, the physical property or dimension may have no bearing on the long-term performance of a roof system.
We believe many benefits of proprietary specifications may be available to astute building owners without requiring such specifications. We also believe a building owner's first step should be selecting an ethical, highly competent design professional who has years of experience with a variety of roof systems. With such a design professional, specifications and drawings will complement each other and be complete and unambiguous. If a building owner wants several bids, a design professional should be able to prequalify several reputable contractors to bid on installing the designer's selected roof system. As long as a building owner remains focused on getting the best roof system instead of the cheapest roof system, a competent design professional and qualified contractor easily can deliver a finished product that will serve the owner's needs.
We have seen some building owners develop true partnerships with a single design firm and single roofing contractor. This model could become more prevalent as building owners become more aware of the long-term benefits of such relationships and experienced with the multitude of problems associated with a low-cost, low-bid mentality.
The final word
Obviously, the effect and meaning of proprietary specifications have different connotations for different people. Professional Roofing hopes this article highlighted some of the views to give you additional insight into the issue.
We encourage you to tell us what you think about proprietary specifications or the authors' opinions by writing to Professional Roofing, 10255 W. Higgins Road, Suite 600, Rosemont, IL 60018-5607, or visiting the discussion forum section of NRCA's Web site, www.nrca.net.
Thomas W. Hutchinson is an architect with Legat Architects, Palatine, Ill.; Deryl Kratzer is president of Tremco Inc.'s Roofing and Building Maintenance Division, Beachwood, Ohio; J. Dudley Miles III is president of J.D. Miles & Sons Inc., Chesapeake, Va.; and Sherri Miles-Foley is vice president of J.D. Miles & Sons.
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