Contractor Selection Due Diligence Checklist for Credit Unions

    By Terence Murphy

    We are often asked by credit unions to draft contracts with contractors, architects and design-build entities. The contractor, architect or design-builder often are chosen by the credit union based on recommendations from other credit unions or after marketing visits by these service providers. We recommend our credit union clients perform certain due diligence on the contractors, architects and design-builders before a final selection is made. The following are actions that can be taken to perform this due diligence:[1]

    1. Contractor License
      Virginia –
      Maryland –
      District of Columbia –
    2. Bonding
      a. Request capability and capacity for bonding based on current value of work to determine if a sufficient performance and payment bond can be obtained for your project.
      b. Request a letter dated within the last thirty (30) days from the contractor’s surety company licensed to do business in your jurisdiction. Surety companies should be listed on the US Department of the Treasury’s Listing of Approved Sureties (Department Circular 570).
      c. Have funds been expended by a surety company on the contractor’s behalf?
      d. List of all surety companies that provided bonds for the company in the past five (5) years
    3. Insurance
      a. Name and contact information of contractor’s insurance broker. “
      b. Contractor should indicate whether it can provide adequate coverage for Worker’s Compensation, General Liability and Builder’s Risk insurance.
    4. Experience
      a. Number of years in business under current company name
      b. Names of principals of the entity
    5. Size and Capacity
      a. How many full-time permanent employees for the company?
      b. If company has more than one office location, how many full-time permanent employees work for the company at the location which will serve the project?
    6. Office Locations
    7. Workload
      a. How many projects does the company currently have under contract or in progress and what is their total dollar value?
      b. List the three biggest contracts currently under contract or in progress including name of project, owner and architect names and telephone numbers, contract dollar values, percent complete and currently anticipated completion dates.
    8. Quality Control and Administration
      a. Describe quality control procedures including contractor inspection and approval process.
    9. Financials
      a. Attach latest balance sheet and income statement if available (audited statements preferred).
    10. Litigation and Claims
      a. List project dollar value, contract information for owner and architect, date of completion, explain nature of claim and/or delay and attach relevant documentation.
      b. Has company ever failed to complete work awarded to it?
      c. Has company ever failed to substantially complete a project in a timely manner?
      d. Has company been involved in any suits, mediation or arbitration proceedings in the last five (5) years and, if so, list.
      e. Are there currently any judgments, claims, arbitration proceedings or suits pending or outstanding against company, its officers, owners or agents?
      f. Has present company, its officers, owners or agents been convicted of charges related to conflicts of interest, bribery or bid-rigging?
      g. Has present company or its officers, owners or agents been debarred from bidding on any public work?
    11. Safety Record
      a. List company’s Experience Modification Rate (EMR), Incidence Recordable Rate (IRR) and Lost Day Case Rate (LDCR).
    12. Project-Specific Requirements
      a. Project-Specific References – Identify at least three (3) projects most closely reflecting the size and complexity of the type of work being requested for the currently proposed project. The similar projects should be completed within the last ten (10) years and at least one of which within the last five (5) years. Include:
      (1) Name of project
      (2) Dollar value for original and final contract
      (3) Scheduled and actual completion dates
      (4) A narrative describing the project and its similarity to the proposed project
      (5) Performance on this project
      (6) Any performance rating or letter of commendation from the owner (7) Contact information for owner and architect
    13. Staffing and Organizational Structure
      a. Staff Qualifications – Describe how the firm would staff the project. Provide organizational structure reflecting authority, responsibility and proportion of time dedicated to this project for all key personnel and job descriptions. As attachments, include qualifications (resumes) of the project team key personnel to be assigned to this project. For each resume, include name, length of time employed with the company, proposed position, education and training, professional registrations/licenses, and affiliations, company and project-specific employment history.
      b. Project-Specific Staff Experience – Request project-specific employment history for key personnel for similar projects performed within the last five (5) years. Information should include project size and description, time and budget performance, position held, authority and responsibilities, contributions made to project success, and include owner/architect contacts with telephone numbers. Provide evidence that the key personnel have worked together successfully as a team.
      c. Staff Availability – Are key personnel also proposed on any other projects for which bidding and contracting is pending? If yes, describe general availability and qualifications of potential substitutes.
    14. Contract Form
      Credit unions should always use their own contract forms and not the forms from the contractor, architect or design-builder. Credit unions who issue a Request for Proposal should include their form contract with the Request for Proposal. The contractor, architect or design-builder then is aware of the terms of the contract prior to submitting its proposal which should eliminate negotiation of the contract terms.

    [1] Similar questions can be asked of architects and design-builders. Architects do not provide surety bonds, but architects have professional liability (errors and omissions) insurance and questions about their claims history should be asked.

    The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2023.