Public Works Contracting Marsha Reilly Office of Program Research House of Representatives recommended

Public works projects are work, construction, alteration, repair, or improvements, other than regular maintenance, done for state agencies or local governments. Depending on a number of factors, public works projects may be performed by public employees, through self-performance, or contracted out to be performed.

Contracting Methods Most public works construction in Washington is performed by private firms. There are several different public works contracting methods used: Small Works Roster Design-Bid Build Lease Options Design-Build General Contractor/Construction Manager (GCCM) Job Order Contracting

Small Works Roster Public entities may use the small works roster for construction, building, renovation, remodeling, alteration, repair, or improvement of real property for projects valued at less than $200,000.

Process Single roster may be established or rosters may be established for different specialties. Rosters may make distinctions between contractors based upon different geographic areas. Names of responsible contractors are solicited on a yearly basis. When projects arise, quotations are invited from contractors on the appropriate roster.

Quotations must be obtained from at least five contractors in order to assure that a competitive price is established. Contracts are awarded to the lowest responsible bidder.

Design-Bid-Build Design-Bid-Build is the traditional contracting method used for most projects and is undertaken in distinct phases. Under this process, an agency contracts with an architectural and engineering firm to design a facility. Once the plans and specifications for the facility are complete, the project is bid and the construction contract is awarded in lump sum to the lowest responsive bidder.

Lease Development Public works projects may be constructed through lease development agreements. Under these agreements, General Administration may:  Lease  Lease with an option to purchase  Lease/purchase

Process Request for proposals Evaluation committee is established to evaluate the criteria; Evaluation criteria includes  Programmatic needs  Location  Price Contract awarded to the firm with the highest score based on the evaluation criteria.

Alternative Procedures Design-Build:  Multi-step competitive process to award a contract to a single firm for both design and construction. GC/CM  Contract is awarded to an architectural and engineering firm for design.  Contract awarded to construction management firm early in design process to assist in the design and manage overall construction. GC/CM firm assumes significant responsibility and risk.  GC/CM subcontracts work for majority of construction.

Specifications for Using Alternative Procedures Used if there is substantial fiscal benefit or if lump sum competitive method is not practical for purposes of quality standards or delivery schedule. Opportunity for public review and comment through a public hearing or through a written comment procedure. Final determination to proceed must come from legislative or governing body of the agency. At completion of project, a report reviewing utilization and performance of the alternative procedure must be submitted to agency’s governing body.

Design-Build Design-Build is an alternative method that combines design and construction activities into a single contract. The public body is required to form an evaluation committee that will select three to five finalists based upon predetermined evaluation factors.

Evaluation factors:  Price;  Ability of professional personnel;  Past performance;  Ability to meet time and budget requirements;  Ability to provide performance and payment bond;  Recent, current, and project work loads of the firm  Location; and  Concept of the proposal.

Best and final offer:  The finalists are invited to submit best and final proposals, which are scored based on the factors and weighting identified under the original RFP, plus quality and technical merits.  Agency initiates negotiations with the firm with the highest scored proposal. If the agency determines that all finalists are capable, award may be made to the firm that submits the responsive best and final offer with the lowest price.

Honorariums The public body is required to provide appropriate honorarium payments to those firms submitting a best and final proposal and not awarded a contract.

Design-Build Authorized Projects: Projects valued over $10 million where construction activities are highly specialized, the project design is repetitive in nature, or the project involves complex functional interrelationships; Construction or erection of pre-engineered metal buildings or prefabricated metal buildings; Construction of new student housing projects over $5 million.

Who may use design-build? General Administration; State ferry system; UW and WSU; Cities with population of >70,000; Counties with a population of > 450,000; PUDs with energy sales revenues > $23 million per year; Public hospital districts with total revenues > $15 million per year; and Port districts.

GC/CM Agency enters into two contracts – one with an architectural firm for design of the facility, and one with a GC/CM firm to assist in developing and evaluating the facility design and to manage the construction project. GC/CM firm guarantees the construction cost. Public agency establishes an evaluation committee to review proposals.

Evaluation Factors Ability of professional personnel; Past performance in negotiated and complex projects Ability to meet time and budget requirements; Scope of self-performance and firms ability to perform; Location; Recent, current, and projected work loads; Concept of proposal.

Best and Final Offer Most qualified finalists submit final proposals including:  Cost of the detailed specified general conditions work; and  Overhead and profit on estimated maximum allowable construction cost. Contract awarded to firm submitting the highest scored final proposal using evaluation factors published in the RFP.

Negotiations Maximum allowable construction cost may be negotiated after guaranteed construct cost is established.  Fixed amount for the detailed specified general conditions work;  Negotiated maximum allowable construction cost;  Percent fee on the negotiated maximum allowable construction cost; and  Sales tax

Allowable Projects Project involves complex scheduling requirements; or Project involves construction at an existing facility which must continue to operate during construction; or A GC/CM involvement during the design stage is critical to the success of the project.

Who may use GC/CM? General Administration; WSU and UW; Cities with a population greater than 70,000; Counties with a population >450,000; Port districts with total revenues >$15 million per year; PUDs with revenues from energy sales > $23 million per year;

Hospital districts, with approval by the PHDPRB, for 10 demonstration projects valued between $5 and $10 million, and an unspecified number of projects valued over $10 million. School districts, with approval by the SDPRB, for 16 projects valued over $10 million, and two projects valued between $5 and $10 million.

2005 Authorization to use Design- Build and GC/CM Certain cities are authorized to use either method on one demonstration project of over $10 million:  located in a county authorized to use alternative public works or located in a county that is a member of the Puget Sound regional council;  reports revenues that exceed sixty million dollars; and  has a population > 25,000 but less then 45,000

Job Order Contracting Recent legislation authorized another form of alternative public works contract – job order contracting. Under this method, a contractor agrees to perform an indefinite quantity of public works jobs, defined under individual work orders, over a fixed period of time.

Restrictions Agencies may not award more than two work orders > $150,000 in a twelve-month contract period. Agencies may not have more than two job order contracts in effect at any one time. The maximum total dollar amount that is awarded under a job order contract may not exceed $3 million in the first year, $5 million over the first two years, or $8 million over a three-year period if the contract is renewed or extended.

Use of job order contracting will reduce the total lead time and cost for public works projects or repair through unit price books and work orders; Work order does not exceed $200,000; Less than 20% of the work order consists of items of work not contained in the unit price book; and At least 80% of the job order contract must be subcontracted to entities other than the job order contractor.

Process for award Job order contracts issued through competitive process; Committee established to evaluate proposals; Most qualified finalists submit final proposals, including sealed bids based upon the identified unit price book; Contract awarded to the highest scored final proposal using evaluation factors identified in original RFP, including price and ability of the firm to perform.

Who may use job order contracting? General Administration; WSU and UW; Cities with a population greater than 70,000; Counties with a population >450,000; Port districts with total revenues >$15 million per year; PUDs with revenues from energy sales > $23 million per year; and School districts.

Expiration The authority to use alternative public works contracting methods (design-build, GC/CM, and job order contracting) expires July 1, 2007.

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