Friday, September 19, 2008
Contractors Say APS Taking Too Long To Pay Bills
By Andrea Schoellkopf
Journal Staff Writer
Albuquerque Public Schools is taking too long to pay construction-related bills, and that could limit competition for bids and cost the district more for projects, contractors warned an APS advisory group recently.
"This is a huge issue for our industry," John Horton, of the Associated General Contractors, told the APS Community Capital Advisory Commission, which advises the district on construction and cost issues. "We've got to come up with some fix."
Betty Valdez, director of the Bernalillo County Housing Authority, said she's heard from at least two companies that said they were "carrying APS" because of payment delays.
"They billed into their cash flow that the (APS) payments aren't coming for 120 days," Valdez said.
An APS analysis of more than 16,000 checks written from July 1 through Sept. 10 shows it took the district an average of 45 days to pay the 3,600 checks written for capital projects, chief financial officer Gina Hickman said. The average for all checks was nine days. In some cases, though, it reportedly took as long as 120 days for payment.
Zane Myers of Edward Jones Investments said state procurement laws have a limit of about 45 days to pay bills, after which a contractor could be entitled to a 1.5 percent penalty.
APS officials say part of the problem stems from vendors who aren't following procedures for payment. For instance, one company handed its invoice to an APS employee at a construction site rather than sending it to the proper office, facilities planner Karen Alarid said.
She said she has heard that things are getting better, and that some vendors have been paid in a 30- to 90-day window rather than 30 to 120 days. She added, though, "I think we've got a long way to go in improving paying."
Hickman said there has been no reduction in the number of bidders for school construction work, probably because of a slowdown in other parts of the city. She said costs have increased consistently over the last three years due to rising costs of materials and fuel.
"It's very complicated, but frankly, based on the very preliminary data, I'm still not concerned," Hickman said.
Lynne Andersen, president of the local chapter of the National Association of Industrial and Office Properties, warned that "very few businesses" can afford long delays in payment, "particularly small businesses which can't afford that with a payroll."
APS officials have begun a review to determine how widespread the problem is and what is causing it.
Hickman, who was hired last year, said she had not heard any complaints about late payments from contractors until recently. Part of it is the nature of construction work, which requires verification by the project architect and other layers of approval before payment, she said.
In 2003, the district installed its $7 million Lawson financial system and immediately fell behind in paying its vendors. But Hickman said that is a typical problem with new systems, and she doesn't believe Lawson is causing the recent delays.