By: Cordell Parvin
In last month's column, I began a two-part article on the
design-build method of contracting. I pointed out that the
approach is arguably in conflict with "low bid" statutes, state
statutes governing design contracts and licensing statutes.
Some states have enacted legislation enabling state agencies
to award contracts on a design-build basis. As explained below,
such statutes range from very detailed with little discretion by
the agencies, to very general leaving broad discretion to the
agencies.
A detailed state statute might include the
following elements:
-- Public policy statement
--
Criteria for use of design-build
-- Qualifications of
design-builders
-- Authorization to compensate proposers
for a portion of preparation of design proposal costs
--
A two-step process under which qualifications are considered in
the first step
-- A minimum number of firms to be
solicited in the first step
-- A maximum number of firms
that will be considered in the second step
-- Criteria
for award based on price and other factors stipulated in the
request for proposals after discussions and Best and Final
Offers (BAFO) and
-- Authorization to obtain federal
funding and/or other modes of financing.
Several states
that have enacted more general design-build statutes have taken
a variety of approaches. The Virginia statute is one that is
short in length but requires a two-step, competitive negotiation
process. After offerors submit their qualifications, the
Commonwealth decides which are most suitable for the project and
allows no more than five offerors to submit their proposals.
The New Hampshire statute is an example of broad authority
stated concisely. In simplistic terms, it provides that highway,
bridge and turnpike projects may be built under the design-build
concept, provided that the selection and award is based on
objective standards, that there are measurable criteria for
evaluation, and that such projects are expressly designated as
design-build and authorized as such in the capital budget.
State agencies considering design-build legislation can find
some useful background information. The Systems Committee of the
American College of Construction Lawyers (ACCL) has prepared
guidelines for a Model Design-Build Procurement Act for State
and Local Contracting.
The major sections include the
scope of the statute, definition of the design-build builder,
and the proposal and selection process. Under the commentary for
the scope of the statute, the guidelines reflect that it could
cover all types of construction, including roads and highways.
Under the definition of design-builder, the commentary suggests
that the statute identify those persons or firms who are
qualified to enter into design-build contracts. The guidelines
further reflect that the qualifications, which design-builders
are required to possess, be more complicated in states with
highly restrictive licensing laws.
The model statute was
drafted with such strict licensing laws in mind in that it
requires the prime contractor on the design-build project need
have only one of several different licenses, including
engineering or general contracting. The model statute also
acknowledges and authorizes that the prime design-build
contractor may delegate other services to properly licensed
firms or persons. With regard to the proposal and selection
process, the commentary states they have the most difficult
issues because most public procurement statutes require some
form of Brooks Act competition for design professionals and
fixed-price low bid for construction contracts. The guidelines
reflect that the procedures set forth in the statute are meant
to be a minimum and it is anticipated that specific agencies or
awarding authorities will implement regulations embellishing the
procedures.
The ACCL Systems Committee also has provided
guidelines for a Short Form Model
In those guidelines, the
drafters indicate that in some instances a short statement of
policy may be sufficient to authorize design-build project
delivery on state or local construction projects and may be
preferable to a more detailed design-build statute. Whether a
brief statement of policy will suffice, will largely depend on
whether the policy is harmonious with other policies or may even
override other conflicting policies.
I have been asked
whether the design-build approach reduces contract claims and
litigation. It likely shifts the timing of litigation from the
end of the project (where it addresses claims for defective
plans) to the pre-award phase of the project (where it addresses
protests from disappointed offerors who spent substantial sums
preparing detailed proposals). Given that one purpose of the
design-build approach is to speed up the process, protests of
awards can be frustrating and costly to the agency. In a later
column I will offer some ideas on avoiding such contract award
disputes.
Parvin is a shareholder in the law firm of
Leonard, Hurt & Parvin, P.C., which has offices in Austin,
Texas; Dallas; Houston; Richmond, Va.; and Washington, D.C. You
may write to him in care of the editor.