Since TEA-21 was signed into law in 1998 and officially removed the “experimental” label on design-build contracting, state highway departments (SHAs) have successfully let and completed design-build projects. TEA-21 legislation also permitted the use of “any procurement process permitted by applicable state or local law,” and thus design-build projects may now be awarded on a basis other than low bid.
Many industry observers in the late 1990s identified the change from “low bid” to other award criteria as one of the attributes of design-build that politicians and the general public might view with great trepidation due to the belief that alternative award criteria might lead to abuse, favoritism and degradation of the “competition” mantra so well entrenched in public contracting. A recent design-build letting in Delaware illustrates the difficulty SHAs may face when making awards on innovative contracting projects.
Union representation
In March, the Delaware Department of Transportation (DelDOT) received proposals for a design-build project to replace the Indian River Bridge, a crucial link between Bethany Beach, Md., and Dewey Beach, Del. DelDOT prescribed a two-part proposal for the project—one that provides technical information on the project design and construction methods and a second that provides the contractor’s price.
The department received two bids, and a committee reviewed the technical proposals and graded them according to parameters set forth in the Request for Proposals. One bidder received a grade of 96.87 out of 100 while the other received a score of only 93.12. When the department applied the technical score adjustments to the hard bid numbers, which were not opened until after all technical scores had been tabulated, the bid that was $800,000 high was determined to constitute the “best value.” Within the highway contracting community, this result would not be considered atypical. But the project became a political “hot potato” due to an aggressive publicity campaign by local union officials, and the inability of DelDOT to effectively counter by educating the public and local politicians on the best value approach.
After DelDOT released the final bid results, local labor union officials set out on a multimedia campaign blitz that focused the public’s attention primarily on two facts: (1) Taxpayers were going to pay more to the successful contractor because DelDOT was breaking from tradition by not awarding to the lowest bidder and (2) the successful contractor planned on importing out-of-state labor whereas the low bidder was planning on using local union labor.
This all but ensured that regardless of to whom the project was awarded, a lawsuit would follow. DelDOT thus cancelled the award and local officials predict that the project will be delayed a year while legislation is redrafted and the proposal process is repeated.
In the end, the union won in Delaware, but it may turn out to be a short-lived victory, especially if the tables are turned on the next project and, for example, some public interest group seeks to reverse the department’s determination that a union contractor submitted the best value proposal. The union’s attack also may turn out to be short-sighted in light of the fact design-build and best value contracting is enjoying so much success. Nevertheless, the project should serve as a strong reminder to DelDOT and other SHAs of the need to educate state and local politicians, and the general public, on the advantages of design-build and the need for best value awards.
