County stirs hornets nest; exterminator critical of bid practices

Friday, June 12, 2009

Some Marshall County commissioners stirred up a hornets nest when they voted to award a contract for insect extermination services to a company based elsewhere instead of a Lewisburg man who was required to have insurance he can't use, thereby increasing his bid.

"I think the Marshall County taxpayers got shortchanged," Marshall County Pest Control owner and operator David Philpot of Nix Road said after his "one man army" was out-bid by the Terminex Commercial service based in Columbia. "It's about saving money for the people of Marshall County."

Commissioner Mickey King defended the Building Committee's decision on Tuesday night and said the issues will be presented for a full discussion when the Marshall County Commission meets at 6 p.m. on Monday, June 22 in the Courthouse Annex on Lewisburg's public square where pest control and other contracts were awarded.

The dispute is over contracts for less than $6,000 a year, and while nobody has described that as a small amount of money, it's clear that there's a difference of opinions over what could easily be called the principle of the matter.

Philpot, King, Commissioner Scottie Poarch and others who've watched the County Building Committee call, receive and award pest control bids -- all of them -- agree that the original specifications for the contract did not require a workers compensation insurance policy.

Then, during a pre-bid conference, revised specifications were issued, King has confirmed. King is chairman of the Building Committee and he says the so-called workers-comp policy was added when a performance bond requirement was dropped from the specifications.

Several officials have explained that there's an exemption in state law. It does not require workers-comp -- to insure employees when they're injured on the job -- if the business has only a few employees. That means a sole proprietor like Philpot wouldn't normally have to buy such an insurance policy. And even if Philpot had one, it wouldn't cover him because he's not an employee. He's the boss. The policy covers employees.

Philpot's bid for extermination services was $5,700 a month with a three-year contract with the insurance. Without it, the price would be $4,950 per month for three years.

The Terminex bid was $4,776 per month, regardless of how many years are in the contract.

"I'd have been more competitive," he said, acknowledging that the difference is $174, or $14.50 a month -- still more than the Terminex bid.

"It's not the money that's not going into to my pocket," Philpot said. "It's money going out of the county."

Shop at home is a common cause for chambers of commerce and the practice has been endorsed in other parts of South Central Tennessee by congressmen and other leaders.

"I don't think the county commissioners should have done what they did," Philpot said. "Most of Marshall County is hurting for income. The difference would have been paid back in taxes. Go out of the county, and it wouldn't have received anything, no business tax, no sales tax and no property taxes."
Philpot runs his business from his home.
"Terminex has an office in Columbia and I know Maury County is hurting, too, but I get my vehicles fixed here by local people," he said. "I eat [local] and buy my gas locally. The lowest bid isn't always the best thing."

King acknowledges Philpot's point, adding, "I checked into it myself... [A workers-comp] policy doesn't cover the owner-operator, unless you get a special written policy. All workers-comp does is cover the employee."

However, King asks about equity between bidders.

"Is it fair for me to say you don't have to have the insurance when it's required of others?"

King's question appears to indicate that a county requirement for workers-comp policies held by all bidders would level the playing field. That, however, does not address the exemption allowed by state lawmakers for small businessmen.

"I've been in the same boat," continued King, who runs a grave-digging service. "I've had several graveyards where they won't let you dig unless you have workers-comp. It didn't make no difference when I was working alone at the time."

He cited a cemetery in Alabama that required insurance for employees regardless of whether the service was provided by a sole proprietorship.

The addition of a requirement for the insurance policy was "on a recommendation from CTAS," King said of the University of Tennessee's County Technical Assistance Service. CTAS will "help us when we have questions."
Reference books on business requirements were consulted during the meeting, King said.

"The only thing that changed is when the bid went out -- it said bonded," King said.

That requirement was removed and replaced by the requirement for insurance, he said.

Philpot said the revised specifications were described on papers distributed at the pre-bid meeting. Some people at the committee meeting have reported they heard that a county official received advice from the county's insurance agent.

"I don't know where exactly" County Budget and Accounts Director Freda Terry got the information that raised questions about the insurance policy, King said when asked if the initial information was from an insurance agent.

Terry has been at a training seminar and was therefore unavailable. She's also been unavailable as preparations for the annual budget are time consuming now.

As for Philpot's point about buying buying local, King said, "I agree with him to buy local, but when we agreed to bid it, there were commissioners who said we needed to get it cheaper."

Philpot is the county's exterminator now.
"Are we going to set a standard?" King asked about accepting low bids.
King was also asked if the committee's decision was final, and if the vote was for the award of a contract.

"That committee has the power to do contracts," King replied. "If it's over $10,000, we'd have had to go to the whole commission."

The Terminex bid is for $4,776 annually. Philpot's bid is $6,840 annually, if it's only for one year. His annual price of $5,700 assumes a three-year contract.

Other bidders included: Kirkland's Pest Control at $5,160 annually without an indication on the county's bid comparison sheet that he had a three-year price; A-1 Exterminating at $8,220 annually and $7,320 annually in a three-year contract, and; Orkin at $7,512 annually and $6,385 for a three-year contract.

"I wanted to go local, but we were voted in by the people to save money," King said. "Are we going to save nearly $1,000 or go all local bids?

"I think we could have justified it for a difference of $30-40 because Philpot is doing a good job and is well-trained," King said.

"But, where do you draw the line? Is it at $400, $500, or $1,000?"

While King has those questions, one of his fellow commissioners suggests Philpot ask a question during the June 22 meeting of the commission.

"I told him that he should ask them to show him where the committee voted to include that" requirement for workers-comp insurance, Poarch said.