ESTADO DEL ARTE

Selection of an alternative contracting method depends primarily on the legal environment allowing for such arrangements, implementation objectives, maturity/expertise of the Project Sponsor staff, the Project Sponsor’s concern with cost overruns and controlling system costs, tight project schedule, and the decision as to the physical scope of the contract. A summary of the general procurement approach for certain alternative delivery approaches is listed below. Section 2.2.6 provides additional information on these methods along with benefits and constraints.

For all alternative delivery approaches, a key premise of the procurement is to assure that there is clear definition of the responsibilities for each party with a specific statement of the service, how it will be measured, and which parameters are fixed and where there is opportunity for innovation. The approach of Alternative Technical Concepts (ATCs) is often used to allow proposers to submit and receive approval for innovative concepts that vary from the procurement documents. The ATCs are normally kept confidential.

Prior to the formal selection process, the Request for Information (RFI) provides a useful tool in alternative delivery procurement. The RFI is used to seek industry input on the proposed process, provide the opportunity for informal feedback, and identify key commercial issues and solutions.

The selection process itself normally involves a Request for Qualifications (RFQ) that results in a short list of the most-qualified firms. An RFP is issued to those short-listed firms and usually includes three components: Instructions to Proposers, Technical Requirements/Performance Criteria, and the Agreement. The Technical Requirements components will vary depending on the nature of the contracting arrangement but should focus on measurable functional and performance-based elements. The framework needs to be developed through an allocation of contractual responsibility and risk ownership to the party best able to manage the risk. The short-listed proposers are often given the opportunity to provide industry review comments. After any amendments to the documents are made they are reissued and all proposers bid on the revised documents.

 Design/Build (D/B) –The procurement process is normally two-step with an initial pre-qualification of teams based on experience and capability of firm(s) and their

design documents available for analysis prepared to a 15-30-60 percent level along with bidding documents that include instruction to proposer, performance- based requirements and a D/B agreement. A typical contract has a guaranteed maximum price (GMP) and a guaranteed completion date. The contract may include warranties of various terms; normally these would be for at least one year. While D/B can be selected solely on lowest price, it is normally a best value selection to take maximum value of innovation opportunities (as further discussed below).

 Design/Build/Operate/Maintain (D/B/O/M) -- The procurement process is similar to D/B with the additional components of assessing operations and maintenance capability. In addition to the construction price, there may also be terms for the ongoing operations and maintenance payments that may be at a fixed price with inflation indices. The O&M payments are tied to achieving stated standards of performance with opportunities for bonus and significant deductions for inferior delivery.

 Concession or D/B/O/M/Finance – The concession procurement process is similar to D/B and D/B/O/M but adds the additional requirement in the qualifications phase of presenting the capability to deliver financing for all or significant parts the project. A concession procurement is a complex set of documents and selection criteria that must address financial, technical and O&M capabilities. There must also be requirements and provisions for the “hand-back” of the facility to the public sponsor. The procurement process normally includes participating in one-on-one meetings. Once the public owner has produced a final set of documents, all bidders are expected to provide bids backed up by letters of credit or other financial commitments. The investment on the part of the private parties in developing their bids and securing financing commitments is significant and it is important to conduct the procurement process with openness and care to maintain a high level of competition.

 Construction Manager at Risk (CMR) or Construction Manager/General Contractor (CM/GC) – The procurement process for the designer and the contractor are both on a qualifications basis. The Project Sponsor chooses the designer and then chooses the CM/CG contractor. The designer selection is the same as a D/B/B although the qualifications will seek those with experience in this type of arrangement. For the contractor the selection covers elements such as experience, project approach, and past performance. The contractor procurement may also include prices for general conditions and the management fee that will be applied to subcontracts.

3.6.6.1 Best-Value Procurement System

One important tool to maximize the value from alternative delivery options is use of evaluation criteria that allow selection of the private contractor that will bring the highest value to the public agency. The most effective approaches are when the agency establishes selection criteria based on the agency’s policies and goals. Almost all best- value evaluations are based on a two-step process that first establishes the qualifications of proposers and establishes a short-list. When the detailed proposals are submitted, the type of considerations being employed to evaluate include the quality and technical innovations, commitments of key personnel, community outreach programs, minimizing life cycle costs, added-value features and, of course, price.

Table 3-10 provides a comparison of results between more traditional approaches with multiple or single primes vs. two alternative delivery approaches: D/B or D/B/O/M.

Table 3-10. Comparison of Contracting Methods

Feature Multiple _Prime Single Prime Design/Build Design Build Operate and Maintain

Number of Construction Contracts

Many One One One Type of Technical

Specifications Prescriptive Prescriptive Performance Performance Acquisition

Experience of

Project Sponsors Moderate Extensive Low Low

Project Sponsor Involvement and Coordination Demands

Extensive Moderate Low* Low*

Expected Claims Change Orders, and Back Charges

High Medium Low Low Operating Risk

Exposure to

Vendor Low Low Low High

Proprietary Technology

Admissible No No Yes Yes

* While some coordination responsibility can be assigned to a contractor, the Project Sponsor must maintain overall public interface responsibility.

Lessons learned from FTA’s Turnkey Demonstration Program (TDP) are documented in:

With a wide range of project development approaches offered by turnkey, acquisition planning, including whether to proceed with turnkey implementation, and if so, what type of turnkey is very important. Turnkey requires more effort and concentration in project development, with less in engineering, construction, and contracting requirements on the part of the public sponsor. Turnkey also requires different management and professional capabilities on the part of the Project Sponsor as contrasted to conventional procurement. Turnkey can benefit agencies with less technical and engineering resources or those with projects under tight financial and schedule constraints, as it can result in cost savings due to shorter inflation periods.

In the past, constraints such as the Federal public competitive bidding policies and the Brooks Act restricted the ability of a Project Sponsor to pursue anything but a conventional procurement approach.

Additionally, many state licensing statutes prohibit design services by unlicensed architect and engineer (A&E) entities. In effect, these state statutes prohibit the Project Sponsor from contracting with any other entity than an A&E to accommodate alternative contracting, distinct from traditional legal forms of contracting. Many of the TDP and other transit projects using alternative delivery methods had to enact special legislation or receive waivers to permit various elements of the D/B process. As D/B and other contracting approaches became more common there was a significant increase in the number of states that passed legislation that to some degree identifies, supports, or encourages the combining of design and construction on public projects.

3.6.6.2 Build America Transportation Investment Center (BATIC)

The Build America Transportation Investment Center (BATIC) serves as the single point of contact and coordination for states, municipalities and Project Sponsors looking to utilize Federal transportation expertise, apply for Federal transportation credit programs and explore ways to access private capital in public private partnerships.

BATIC addresses the procedural, permitting, and financial barriers to increased infrastructure investment and development by:

 Intervening earlier in project lifecycle

 Actively helping sponsors navigate and accelerate the often complex Federal permitting and procedural requirements,

 Centralizing project coordination and  Cultivating public private partnerships

BATIC drives efficiencies and creates further financing optionality for projects in a shorter timeframe helping to accelerate the repair and development of critical US transportation infrastructure. Details are available at the DOT’s BATIC website.