Ethics of Rejecting a Substitution

Specification & Product Discussions Construction Contract Administration Discussions
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Here is a hypothetical situation Id like you all to consider:

Our hypothetical specifier, lets call him George, recently removed Acme, one of the major manufacturers of a certain product, from his specs. For many, many years, the A/Es in Georges town based their designs on Acme; the manufacturers rep was very responsive and helpful during the design phase, and excellent with follow up. About 3 years ago, the old product rep was let go, and a younger (and presumably lower-salaried) rep took over, not only in Georges market region, but in four others, whose product reps were also fired or retired at about the same time.

George still hasnt met the Acme product rep, even after three years. The project architects and designers in Georges office complain that the rep doesnt return their phone calls and emails on a timely basis, if at all. Now most people in the office base their designs on one of Acmes major competitors (with, not all that coincidentally, a very responsive product representative) and Acme is out of the list of manufacturers in the spec.

A large project, lets assume hypothetically, is out to bid. The spec is a closed basis of design based on one of Acmes competitors and listing four other competitors as other approved manufacturers; of course Acme was excluded from the list. Assume also that Acme and all the listed competitors are very comparable in quality; there are no issues with the product itself. During the bidding process, the Acme rep submits a request for substitution.

Our hypothetical specifier George is inclined to reject the substitution based on his firms recent history with the reps lack of responsiveness. What do you think professional ethics demand in this situation? Can your opinion of the representatives responsiveness be the sole reason for rejecting a substitution, or must you base your rejection only on the salient qualities of the product itself?

Any similarity in this hypothetical situation and any real project or real specifier is completely coincidental, of course.

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According to A201 General Conditions 3.4.2 (unaltered/modified), the Architect does not have authority to “approve/reject” a substitution.

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I think that in George’s case, guided by Shedrick’s additional comment, the A/E and the Owner need to evaluate whether the manufacturer’s participation in procurement, construction, and warranty service constitute salient characteristics. They may matter with some products, and may not matter with other products.

For example, I do not specify waterproofing systems that are not actively represented regionally by technically qualified people who routinely call on specifiers. I want the rep to provide competent review of documents, identification of qualified installers, participation in preinstallation conferences, and onsite manufacturer inspection. This can’t be properly carried out by someone whose territory is “the East Coast.”

Other products that are less mission critical may be successfully incorporated with minimal rep involvement; for those, I don’t think rep responsiveness would be reason for substitution rejection.

I have heard of certain hypothetical specifiers who express their displeasure when manufacturers fire their regions’ reps by removing the manufacturer from their specifications and forcing the manufacturer to substitute in for each project. Just a rumor.

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Shedrick:

The original post is relative to the bidding process, and not the construction process, so A201 is not applicable. There really is no approval process for substitutions except what is stated in A701 Instructions to Bidders; the architect can approve and reject substitutions unless another provision is provided in the Owner-Architect agreement that defines or limits the architect’s responsibility for approving substitutions during the bidding phase.

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The bottom line is that you are working for the owner. Phil makes a good point about involvement of qualified people, but not all products require the same support as waterproofing. For example, if the local rep for (pick a name) steel doors doesn’t call on you, that is not a reason to deprive the owner of the lower price that company may offer - whether the request is made during bidding or after award of contract.

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Ronald:

You are correct 3.3 in A701 does provide a process for substitutions, however, George did say “closed “basis of design”” documents. My understanding of “basis of design” is that any equal/comparable product is acceptable (as defined within the documents), thus, approval to bid would not be required. Perhaps my assumed definition of “basis of design” is incorrect.

Also, in A701, Article 1 DEFINITIONS, paragraph 1.1, the “proposed Contract Documents” are a part of the bid documents. Doesn’t that make the A201 applicable?

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Shedrick:

Regarding the last part of your post, yes, the A201 is a part of the procurement documents. However, the conditions of the contract establish how the contract is to be administered, as well as the roles, rights and responsibilities of the parties, after the agreement is executed.

If one were to apply the requirements of A201 to the procurement process, then a change order would be required to formalize the substitution–but how can you have a change order without a contract?

As to the first part of your post, the use of “basis-of-design” (BOD) doesn’t necessarily mean that it’s open for substitutions. It depends upon how you phrase the language. For example, if you state that XYZ product is the BOD and that comparable products from the following manufactuers are acceptable, then the bidders are limited to the BOD product or comparable products from those manufacturers listed. However, if you state that XYZ product is the BOD and those comparable products that may be incorporated into the Work include, but are not limited to, those from the following manufacturers (or some similar language), then the specification is open to any product that meets the specified salient characteristics of the product.

My bet is that George’s BOD statement is closest to the former, indicating that only the BOD product and those of the manufacturers listed are the only ones permitted.

Getting back to the scenario, if you look at section 7.8.3.3 of the PRM, you’ll find that the product representative is listed as a consideration in evaluation of substitution requests. You can have a perfectly acceptable product, but get little to no support from the rep, which could impact the project negatively; especially if the product is a critical element of the construction.

I can’t provide a definitive decision on George’s scenario, because I don’t have all the information; but what I can say is that if the product rep is essential to the proper application or installation of the product in the field, then there would be grounds for denying the approval of the substitution based on past performance of the product rep.

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OK, my assumed definition of “basis of design” was incorrect as used here.

I just gotta ask, substitutions during bidding are ALWAYS ALLOWED even when bidding with closed Proposed Contract Documents?

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Is it not that “substitutions are allowed to be submitted” during bidding, but that the bids need to be based on the BOD documents [as an equal base line or level playing field for assessing the bids] and any substituions need to be be accompanied by suitable cost adjustments?

Seems to me that a bid based on an unapproved substitution is “irregular” and improper.

Further, I think lack of service by the manufacturer’s rep is a valid basis to present to your client for rejection [“not in the best interest of the project”]AND I think is valid input directly to the manufacturer. Why should we, our client and the project be saddled with a situation where service is meager or not available. IF the mnaufacturer wants to sell their products, then would think they should be fully prepared-- and willing-- to service them as necessary.

There is absolutely no rationale to impose even the possibility of added costs on those who are not responsible for the problems, lack of service, etc.

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It depends on the owner’s policies, but even when you are required to accept prior approval requests, you need not approve them unless they comply with specifications. If an owner is crazy enough to say that all prior approval requests or requests for substitution must be approved, there isn’t much point in writing the specifications.

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At a minimum, the rep should be called to the carpet, explaining why the architect does not appreciate that behavior. And, it should go to individuals higher in the company–like the national sales manager–if that is achievable without extraordinary effort.

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I personally believe that “customer service” is a very valid and salient characteristic to consider when evaluating products.

There are many reasons for lack of responsivenes: Rep is overworked, has to much territory to cover, company may have underestimated the value to the design community, corporate arrogance (“we can cut back, they’ll spec us anyway”), or the rep may just not be a very good one. Regardless, it speaks volumes of how the company in general views the value of customer service.

With so many other options and manufacturers, what incentive is there to tolerate the history of less than good service? Frankly, I see no obligation whatsoever to entertain the substitution request in “George’s” scenario.

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Forgive me; I was the “unregistered” above [lost all web connections over the week end] Sorry.

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“Closed Basis of Design”, as defined in our hypothetical specifier’s Division 01, allows either the BOD or any of the four approved manufacturers to be bid, and would therefore not require a bid period substitution for any of the five named manufacturers. ACME, or any other non-listed manufacturer, would be required to go through the substitution process and be approved before they could be included in a bid.

I think the Owner’s review of substitutions is essential after the contract is signed; at that time, the substitution will lead to a change in the contract. During bid, however, I don’t think the Owner needs to review. It is up to the A/E to determine if the proposed substitution is in fact comparable to the BOD, just like presumably he or she did with the four approved manufacturers.

The A201 is included in the procurement documents for the same reason the proposed agreement between Owner and Contractor is: it gives the bidders an understanding of the “rules of the game” that will be in effect once the contract takes effect. The A201, during bidding, is a procurement docutment, just like the drawings and specs. Knowing what general conditions will be used in the project influences the amount of the bid.

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OK, but Acme was not listed.

OK, but substitutions during bidding are permitred, but need to be processed in accordance with A701 [IF hopefully,that was part of the documentation].
This calls for architect analysis, approval/disapproval, and inclusion in an Addendum. Still nothing that mandates approval of Acme, and would think analysis includes every aspect of the product-- including service

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To control subsitution requests during bidding phase, read articles by Maynard Blumer about his Prior Approval Process. I adopted Maynard’s system 15 years ago and it is a good, nay a great system. Contact me off line at wyancey@weberthompson.com for further information.

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Wayne sent me the Blumer articles a few months ago. I agree…it’s a great resource. The articles are 20 or 25 years old, but still very relevant.