Last August and September, Memphis-Shelby County Schools hosted five pre-bid meetings to outline a whopping 84 federally funded HVAC upgrades at various schools.
Representatives of more than a dozen local engineering and construction firms opens in a new windowsigned in, including reps of the nine firms that eventually bid on the contracts.
But of the four major local suppliers of HVAC equipment, only Ewing Kessler sent a representative to all the pre-bid meetings.
The other major HVAC equipment suppliers — Carrier, Trane, and Johnson Controls (JCI) — know they can’t compete with Ewing Kessler for MSCS contracts.
Last year, for example, opens in a new windowthree companies bid on a contract to service the school system’s more than 120 HVAC chillers.
Soefker Services bid $446,000. Ewing Kessler bid $274,000. Carrier bid $99,999.
Ewing Kessler was awarded the contract. Carrier’s much lower bid “did not meet bid specification requirements,” according to MSCS.
“It beats anything I’ve ever seen,” said Lance Hornsby, a commercial sales engineer for Carrier. “We’ve complained for years about how we and other equipment suppliers have been written out of the specs. Nothing changes. The school district is wasting millions of dollars. It’s just a bad deal.”
Design guide revisions
In its urgency to spend millions of federal COVID-relief funds and address a huge backlog of deferred maintenance, MSCS officials changed the bidding process last year for HVAC jobs.
The district also revised the “Design/Planning Principles & Construction Guidelines for Shelby County Schools.”
That’s the manual contractors must follow when they are designing, purchasing, installing, and repairing everything from doors and windows to plumbing and electrical.
That includes HVAC systems.
MSCS issued its construction guidelines for the federally funded HVAC jobs in June 2021.
On July 13, 2021, a week before the first pre-bid meeting for the first batch of federally funded jobs, the district opens in a new windowissued revised guidelines for HVAC components.
The revised manual included a new list of approved/preferred HVAC manufacturers.
Most key components of commercial/institutional HVAC systems are manufactured by one of these five companies: Daikin, Carrier, Trane, York (Johnson Controls), and Lennox.
Locally, opens in a new windowCarrier and opens in a new windowTrane distribute their own products.
York and other JCI products are distributed locally by opens in a new windowEtairos HVAC.
Daikin and Lennox brands are distributed locally by opens in a new windowEwing Kessler.
The revised list of approved/preferred HVAC manufacturers benefited some and restricted or excluded others.
District doesn’t bid equipment
It’s difficult to measure the full impact of the lack of competition for HVAC equipment locally.
The school district doesn’t bid HVAC equipment. It only bids the installation, repair, or maintenance of HVAC equipment.
Mechanical contractors choose their equipment suppliers, based on the school district’s Design Guide and additional specs.
Last year, for example, the district decided to spend opens in a new window$25 million to install controversial air-cleaning devices known as bipolar ionizers in all schools and administrative offices.
Three local companies opens in a new windowbid to install the devices, and the contract was awarded to Gipson Mechanical of Memphis.
There are several manufacturers of bipolar ionizers, but the MSCS specs and bids specifically required Needlepoint Bipolar Ionization (NPBI).
That’s a product patented, trademarked and manufactured by Global Plasma Solutions.
Ewing Kessler is the only opens in a new windowlocal supplier of GPS products.
The lack of local competition proved costly.
Ewing-Kessler also supplied GPS ionizers last year for schools in Madison County, Mississippi.
But unlike MSCS, Madison County allowed contractors to submit alternative prices from other ionizer manufacturers.
MSCS paid about $2,000 per installed GPS unit. Madison County paid about $500 per installed GPS unit.
‘We cannot bid’
MSCS follows the same process with HVAC equipment.
Construction companies bid to install new HVAC equipment, but all contractors are required to purchase the equipment based on the district’s construction guidelines.
Local representatives for Carrier, Trane and JCI told the Institute that their products have not been used in years in Memphis-Shelby County Schools.
“I drove to every job that has been done over the past eight years,” said one local HVAC equipment supplier. “I guess it’s possible the same company was the low bidder on equipment for every single job, but that’s unlikely.”
The representatives say MSCS Design Guidelines have been changed in little ways that prevent all but one supplier from competing for jobs.
Earlier this year, Etairos sent MSCS officials an email about the lack of competitive bidding for equipment
“After review of the ‘REVISED’ MSCS Master Spec, we are still written out of every single item listed. As it is written, we cannot bid any of the equipment we sell,” David George, sales director for Etairos, wrote. “There are sentences buried all thru the document that will allow MSCS to toss out a bid.”
No-bid equipment costly
The high cost of the more restrictive equipment guidelines is apparent in two similar jobs.
Early in 2021, pre-ESSER, six companies bid to remove and replace the entire HVAC system at Winchester Elementary, which is about 82,000 square feet.
During the bidding process, one of the potential contractors asked the district to opens in a new windowallow Magic Aire to be added to the list of approved/preferred manufacturers. Magic Aire products are distributed locally by Etairos.
“There are currently three approved manufacturers listed,” the contractor noted. “Neither Carrier nor Trane manufacture a self-contained water-source heat pump unit ventilator, and so Daikin would be the only approved manufacturer. Would it be allowable for Magic Aire to be added to the specification as an approved manufacturer?”
The request was approved.
The contractor asked another question about a work manual guideline that prohibits the use of a variable frequency drive (VFD) to operate a compressor.
“Daikin is the only manufacturer that uses two-stage compressors in self-contained water-source heat pump unit ventilators,” the contractor noted. “Magic Aire uses variable-speed compressors, which are more energy-efficient than two-stage compressors. Variable-speed compressors also have a lower operating sound level than two-stage compressors and are more effective at controlling humidity in the space, which are both very important in a learning environment for children.”
The request to delete the restriction and allow Magic Aire equipment was approved.
Morgan & Thornburg was awarded the low-bid contract for $2,557,456.00.
In contrast, last fall, only opens in a new windowone company bid on the equipment-restricted, ESSER-funded contract to replace the entire HVAC system at Peabody Elementary, which is about 54,000 square feet.
Damon Marcus was awarded the contract for $3,513,370.00 — $1 million (40%) more than the Winchester job in 2019.
Vendors ‘written out’ of specs
Representatives of Carrier, JCI, and Trane provided several examples of how their products have been written out of MSCS’s Design Guide.
Outside air units:
This is relatively new technology developed in the 1990s.
The units deliver dehumidified and filtered outdoor air to indoor spaces to meet Building Codes. They are especially useful in humid environments like Memphis, where standard A/C equipment struggles to wring humidity out of the air.
Last June, the list of preferred manufacturers for dedicated outside air units contained Addison, Valent and Aaon, the industry leaders.
Addison doesn’t have a local distributor. Valent is a Trane brand. Aaon, which pioneered the technology, is a brand sold by Etairos.
The revised list published in July removed all three of those brands and replaced them with Daikin, Carrier and Trane.
Daikin is distributed by Ewing Kessler. Carrier and Trane don’t make outside air units that comply with MSCS specs.
Chillers and cooling towers:
Both are part of a building’s air conditioning system.
The chiller produces very cold water that is moved through pipes and coils to cool air in a space. It’s connected to a cooling tower that removes heat from the system.
In June, the approved/preferred manufacturers list for cooling towers contained Marley and BAC, the industry leaders.
Marley is distributed by a Texas firm. BAC is sold locally by Etairos.
The revised list removed BAC and added Evapco, sold by an Alabama firm. It also added Reymsa, distributed locally by Ewing Kessler.
MSCS bidding rules favor local companies.
The list of preferred manufacturers stayed the same for chillers.
But other revisions in the guidelines favored some equipment suppliers and excluded or disadvantaged others.
The list of approved/preferred manufacturers of chillers included Daikin, Trane and Carrier, all industry leaders.
But the revised construction guidelines added this requirement:
“All centrifugal chillers shall have R134a refrigerant. SCS prefers hinged water boxes for centrifugal chillers. Provide oil centrifugal refrigerant cooled hermetic compressors with R-134a refrigerant only.”
Daikin uses R-134 refrigerant. Trane uses R-123.
The manual excluded potential alternate manufacturers in other ways.
“Open drive compressors are not acceptable due to additional required service and maintenance cost,” noted the guidelines for chillers.
Chillers made by JCI, another industry leader, use only open drive compressors.
“Water cooled VFD is not acceptable due to additional required maintenance,” the guidelines noted.
JCI’s chillers are water-cooled. Daikin’s chillers are air-cooled.
The guidelines for cooling towers also were revised.
In April 2020, before ESSER, five companies bid to replace the cooling towers at Riverview K-8 School
AHA Mechanical won the job for $259,000, but the district’s bid invitation said the towers must have a 15-year warranty.
The revised guidelines also added this caveat: “SCS recommends that the basis of design be for a reinforced fiberglass cooling tower with a seamless basin.”
That stipulation excluded the three largest cooling tower manufacturers: BAC, Marley, and Evapco, all of whom offer a complete five-year warranty.
The only manufacturer that offers a 15-year warranty is Reysma, which is sold locally by Ewing Kessler. But the 15-year warranty covers only the fiberglass casing, not the motor and drive.
These are big metal boxes that sit atop many schools. They distribute both heated and cooled air through a ductwork system. Each unit contains an evaporator, compressor, and condenser.
Both the original and revised guidelines listed three “approved/preferred manufacturers” of rooftop units — Lennox, Trane, and Carrier, three of the industry leaders.
But the revised guidelines included this caveat: “All roof top units to have minimum 2 stages of primary heat. … Condenser fans to be variable speed direct drive ECM without VFD.”
A two-stage system has a compressor that works at two different speeds — high or low.
A variable speed system (variable frequency drive, or VFD) can operate at any speed, automatically making minute adjustments to maximize energy efficiency. VFD units are generally more costly but require fewer repairs and last longer than two-stage units.
Trane and Carrier no longer manufacture two-stage rooftop units that comply with MSCS specs. Contractors had to use Lennox units, which are sold locally by Ewing Kessler.
“I don’t talk to news reporters,” said Cyrus Booker, the sales rep for Ewing Kessler who attended all pre-bid meetings last summer. “I’m not going to answer any questions.”
Phillips at MSCS denied that the Design Guide was written or revised to favor certain manufacturers or distributors.
“We’re always looking to make sure we get the best equipment technology for the district,” he said. “We revise the guidelines from time to time based on new information.”
This story first appeared at dailymemphian.com under an exclusive use agreement with The Institute.