What You Need to Know About Towing Contracts
Adopted by municipalities and police departments in response to the growth in the length of tow truck operator waiting lists, competition between towers and abuse of the competitive bidding process, a towing contract is a contract designed to regulate the conditions of towing services offered by participating truck operators in relation to police-initiated impairing immobilization or removal requests. Most towing contracts are specifically configured to accomplish a reduction in the costs associated with the provision of towing services by such service providers in order to benefit the agencies which contract for the police-related services furnished by towing contractors. At the same time, such contracts serve to insure that the status quo is not disrupted by the overtaking of recalcitrant or untrustworthy individuals who do not abide by the conditions of a towing contract or, otherwise, prey on those who have encountered vehicle problems or been involved in accidents.
The provision of towing services by private motor vehicle tow operators constitutes a valuable public service compatible with limited government resources. In that vein, tow providers are used extensively by municipalities and other government agencies. Billing adjustments, aggressive collection practices and predatory pricing schemes are prevalent in the towing industry, warranting some oversight by government. The towing contract serves this purpose and creates an organized allocation of towing work among a discrete group of experienced and willing towers.
Generally speaking , towing contracts are competitively bid for a limited number of slots within a municipality or county. Once awarded, each successful tower is assigned a specific category of work to be serviced by it. Examples of such categories include "non-consent emergency tows following a motor vehicle accident," "private property tows" and "non-consent emergency tows ordered by a police officer." Full and partial opt-out provisions stipulating the extent to which a municipality or jurisdiction can opt out of the application of a contract (e.g., in times of special needs, special events and unscheduled exigent circumstances, involving large numbers of vehicles or regular and recurring events) are also common. Other provisions include, but are not limited to, a list of vehicles eligible to participate in the fleet of vehicles maintained by each participating tower and a requirement that each such vehicle must display, or conform to, a municipal or agency prescribed logo.
Additional areas covered under towing contracts are reimbursement schedules for vehicles immobilized by, and/or in the custody of ordinary and emergency facilities, release of impounded vehicles on a limited basis, insurance requirements, identification of all personnel involved in a sediment towing operation, annual operational review and evaluation of all participating towers and a variety of administrative requirements (e.g., record keeping, certification and training of personnel and rules of conduct).
How to Prepare to Bid on Tow Contracts
Preparation is key when it comes to submitting a bid on a contract, whether a new vendor or a renewal for continued services. The first step in preparing to submit a bid is familiarizing your company with the contract requirements. This can be accomplished by thoroughly reading the Request for Proposal ("RFP") and all other documents that were provided, with special attention paid to instructions and requirements that are specifically related to your company’s needs. For example, a new vendor may be surprised to discover that a large number of Towing Contracts require insurance coverage that exceeds current coverage amounts. Knowing this information in advance can allow a new vendor to make arrangements to upgrade insurance coverage before the time of bid submission.
Once a company has read through the RFP and is generally familiar with the requirements, it is essential that it print off and review every single document that is attached to the RFP, as an addendum or separately stated contract documents. Not only will the attachments usually contain crucial information about how to fill out the forms correctly (which is important because bids are often rejected due to improper forms or failure to provide mandatory attachments), but the attached documents often provide additional information that will be a deciding factor in whether a company wins the contract or not. For example, attached to an RFP was a proposed budget, which revealed that although the contract was in two phases with a maximum phase rate of 800,000 cars for all of the vendors combined, Phase II had already been awarded to other bidders, meaning that your company (if awarded the contract) would only receive a small fraction of those calls. Without having reviewed the proposed budget attached to the contract, the company would not have known this information and had no way of evaluating whether the contract was worth the investment.
In addition to reviewing the specific RFP requirements, companies should familiarize themselves with all the attachments that are incorporated into the RFP by reference. One of the most common contracts to have incorporated by reference are the City of Chicago Police Department "General Orders." For Towing Contracts, this includes policies on Towing Contract Management; Towing of Parked Vehicles; Reporting and Billing; and Service Personnel. In addition to the incorporated General Orders, there are other City of Chicago amendments and General Orders that are important for a company to be familiar as well, such as "Standard Specifications for Construction," "General Specifications for Construction," and "Document Management Procedures for the City of Chicago."
The third step in preparing a bid on a contract is conducting a competitive analysis of the landscape and determining any differences between your company and your competitors. This can include calling up the other competitors and posing as a customer for a quote and knowing, with this information, how your company stacks up with the competition. For example, are the competitor’s rates higher or lower than yours? If the competitors are charging more, they may simply be charging a price that the market is willing to pay, which is something to consider when it comes to underbidding. On the other hand, a competitor who is willing to accept a much lower price will obviously be incentivized to cut corners wherever possible in order to recoup its losses, and as a customer of these competitors, you do not want that to be your company.
Towing Contracts and Legal Considerations
Before responding to a request for bids, you should familiarize yourself with the most relevant legal and regulatory issues that come into play with such contracts. Regardless of what types or numbers of contracts you are pursuing (including private property, commercial property, city or municipal contracts), be sure you have a good understanding of the following issues as they may be addressed in the contract, its attachments, or your response to the bid request: Insurance Requirements: Tow firms are often required to maintain the minimum insurance coverage amounts established by law and/or regulations in the jurisdictions where the contract work will be performed. Some insurers will not cover policyholders engaged in an occupation that is highly regulated, such as the towing business. This has caused problems for some firms that have attempted to become involved in new contract work only to find that their insurability disqualified them from being awarded the contract. Liability Exclusions: Many general liability policies exclude coverage for injuries arising out of towing, even if bodily injury occurs as a result of the operation of a vehicle owned or operated by the tow driver. Unfortunately, the need for this insurance coverage may exist before the bidding process is complete, making it difficult for towing companies to quote the necessary premiums to cost-out of the contract, or forcing a company to pursue some contract opportunities to the exclusion of others. Compliance with all Applicable Regulations: State statutes and regulations, and municipal ordinances will govern the operation of your tow business and may control how your bids are evaluated. Your firm’s compliance with state and local statutes and regulations can make or break your response to a request for bids. If your firm’s compliance record is less than stellar, you should find out what requirements need to be met, and make every effort to comply with them before submitting a bid. Provide detailed and accurate information in your bids, no matter how trivial it may seem to you.
Tips for Crafting a Successful Bid
Just as there are some common characteristics to the most successful towing contacts, there are some common denominators among the most successful bids.
- Be very clear about the services you offer. Again, we are not just trying to make the most money here, most municipal authorities are going to go with the operator who is going to be most efficient with tax payer’s money. There’s no reason to add things that you don’t even think you will use to contracts just so you can bill more. You will be outbid by someone who has those services built in. If your municipality is looking for motorist assistance you should include it. It is much better to outbid people with services that your competition does not even offer in the first place.
- Cost effectiveness: see above for further clarification of this item.
- "Past performance" is a fancy way of referring to your history. If all your past clients were very impressed with your friendly service and efficiency, say so! Provide references. I generally recommend providing anywhere from one to five references, with at least one having no direct affiliation with the municipality you are bidding for. For example, as a lawyer I would not recommend providing my own information as a reference for a bid for a new type of case. It is a good idea, however, to provide a reference that is outside your immediate area. Clients of towing services often talk to one another and if you have a highly rated operator in the same city, you may be undermined by word of mouth. If possible, try to get a reference from at least one (preferably two) successful and reputable towing companies from various parts of the state or even out-of-state.
The Process of Bidding on Towing Contracts
The information you need to help your business and clients
Most tow contracts come up for bid at least every one to three years. What is the process for bidding on a contract? While there are many different processes, the basics are fairly similar.
The government, or its authorized agent, will prepare a request for proposal (RFP). The legislation or ordinance covering the bid process will specify how the RFP is to be advertised. Normally, the RFP is sent to every business owner who met the minimum qualifications and is listed in the county or city’s issuing of taxis, airport shuttles, and limos, or a similar type business. The document will often be available on an official website (such as www.bidsync.com) which will also host the completed bids.
Deadlines are often the first item to get tossed into a drawer and forgotten. Set a physical and virtual calendar reminder for yourself of the deadline for submission. There are usually at least two different types: a pre-submission meeting and the deadline for submission of the bid.
At the pre-submission meeting, the government or its authorized agent will explain its purpose. Read any documents provided , even if they seem redundant or obvious. If you have questions, ask them. Bad tow trucks are no excuse for bad customers! You leave the meeting knowing what is expected of you and when you need to complete each task. After the meeting, you can pretty much disregard any notices that appear on the website. And you have a much smaller stack of unread papers in your "to do" file.
Now you know the basic deal. If you’re serious, it’s time to start preparing your bid. Figure out who you’re going to hire and the crew dispatcher, billing, and tow drivers.
Most bids are scored using some sort of transparency. A pre-bid points-system will enable an easy decision on the lowest bid, which is usually the lowest bid one can legally submit. This typically consists of: 1) the low number on the bottom of the sheet, and 2) certain required attachments. Many businesses simply cut corners and do not really understand the purpose of the bid. Don’t be that business! There’s more to the bid than the numbers you wrote on the top.
If you stick around, you can win the real prize! And you’re one step closer to that win-win you’ve been working for.
Avoiding Common Towing Contract Bidding Mistakes
Some companies bid on contracts that do not meet the Department of Transportation’s (DOT) standards; other times they do not meet their own expectations. The mistakes made during the bidding process can cost more than just the work itself. Even if a company wins the bid, if it does not comply with the contract’s requirements, operations can stand to lose the contract. These contracts, after all, are very competitive and only awarded to the best of the best. It is therefore critical for companies to educate themselves on the most common mistakes in tow bidding contracts.
Risk assessment is often overlooked. When bidding for towing contracts, companies should consider risk factors such as non-payment, liens, increased liability, damage to vehicles and the like. If a company bids too low, is unable to handle the work and worse, goes out of business, it will have no money left to make good on its promise or pursue a legal remedy.
While some contracts only require a basic insurance policy, companies may not realize more comprehensive coverage like cargo, flood or worker’s compensation is needed. If an insurance company is not notified of the type of work performed, it will not provide coverage for operations if there is any type of problem associated with that work. For example, some contracts will not cover certain types of repossessions and if a company ignores those restrictions, it will not be covered.
Whether a bidding company qualifies for the contract may seem obvious, but companies often overlook it anyways. If a company does not have the financial resources to, for example, devote enough time to the work, then the work will not be done properly. On the other hand, companies can also "over qualify" for some contracts, making them too sophisticated for what the DOT or client wants. This makes the bidding price too high and can ultimately result in losing the contract to another company.
Emerging Trends in Bidding for Towing Contracts
As we look to the future of towing contracts and bidding for contracts, it is clear that technological changes will continue to play an important role. With the advent of mobile applications, both sides of the transaction will be able to more closely monitor the relationship. Customers will be able to have ready access to information about customer service as well as whether towing companies are in compliance with all of the technical requirements of a contract. This access will help towing companies to get more business from that city. For cities that have multiple contracts , it can help empower customers and they will be more likely to find the best contractor for their needs and use that contractor instead one that is less well regarded. One day, cities may expand their contracts to include ancillary services, such as impound services or increasing the capacity for storage of impounded vehicles. We also see a possibility that cities will adopt policies that encourage or require community involvement and input into the bidding process, and also community involvement and input over the life of a contract.
