In June of 2015 the 114th Congress of the United States introduced a bill called Construction Consensus Procurement Improvement Act of 2015.
The intention of this bill was to allow for the use of Design-Build contracts in gov’t construction.
Recently the Committee on Homeland Security and Governmental Affairs issued a report on the bill making certain recommendations for amendment.
For some of you who are not familiar with public sector work you may not know that Design-Build contracts are not allowed under Federal procurement guidelines.
Some municipalities and states have allowed Design-Build contracts under what is known as a two part solicitation. The Federal government is now considering allowing two parts solicitations so that Design-Build contracts may be used in Federal projects.
This new legislation would allow the use of Design-Build contracts as long as the procurement is done in a two part method.
Today I want to address best practices for conducting a two part solicitation for a Design-Build contract. These best practices apply not only to public sector work but are also best practices in the private sector as well. There are some subtle nuances between private-sector and public sector which I will address later, but the concept will be the same.
First let me address why it is important to separate quotations from qualifications in a Design-Build contract.
Design-Build agreements carry a significant number of unknowns. When a contractor quotes a Design-Build contract their experience and knowledge of the specific work is absolutely critical to ensuring a fair contract value is quoted.
When unqualified or under-qualified contractors are allowed to submit quotations on Design-Build contracts the propensity for “low-ball” quotes is extremely high. This creates on unfair condition for more qualified and experienced contractors.
Having the right experience means you are likely to generate a price that represents a fair market value. When under-qualified or inexperienced contractors quote the same work, you are likely to receive quotations that are below market. In the public-sector this is extremely problematic since they are required to award the lowest bid.
Part one of the solicitation
The first part of the solicitation is the qualifications solicitation.
In this part of the solicitation you are narrowing the field of potential bidders based on qualifications. This can be done in a number of ways but generally speaking the most efficient way of soliciting qualifications is through a qualifications questionnaire.
The questionnaire should be tailored to the individual project but generally there will be some consistency in what information you solicit.
Basic information such as qualifications of the staff that will be assigned to the project, prior history of performing similar work, bonding and insurance compliance, and solicitation of references will generally be common questions that can be applied to every project.
Best practice for ensuring you are identifying the most qualified bidders should also include a section that specifically addresses the project and or processes your project will require. For example if the project includes installation of specialized equipment, you should include at least 1 to 2 questions that specifically addresses that requirement. Similarly if the project has some kind of special building systems such as acoustical treatments, clean rooms, or renewable energy systems, your questionnaire should include a section on these items.
Relying solely on the generic question about previous experience may not satisfy the specific need, therefore it is important to include specific questions that identify the contractor’s expertise in these areas. Make sure your project specific questions also solicit references to previous projects that demonstrate their experience.
Part two of the solicitation
The second part of the solicitation is the request for quotation.
Bidders who are selected from the qualifications questionnaire are then invited to quote the work. This part of the solicitation should follow the best-practices of what ever pricing model you have selected for your project.
As always you should ensure that you’re using a proper bid form and that you have identified the form of agreement that will be used.
Private-sector vs. public sector
As I alluded to earlier, a Design-Build solicitation can be somewhat nuanced between the private-sector and public sector.
Public sector procurement is not permitted to solicit qualifications at the same time as a you solicit the quotation.
The qualifications must be solicited first without the benefit of any pricing information.
This is intentional so that low bidders or high bidders cannot be excluded or included on the basis of their price.
The qualifications questionnaire and the resulting list of bidders should be based strictly on the scores from their qualification questionnaire.
In the private-sector there are no such restrictions, however best practice is to separate the qualifications from the quotation.
Effectively you’re trying to do the same thing as a public sector bid. Withholding the quotations from the reviewers of the qualifications prevents pricing to be a factor in the qualifications evaluation.
In private-sector you may solicit the qualifications and the quotations at the same time but it is best to score the qualifications first and then open the quotations from the most qualified bidders.
Design-Build is an effective delivery model which saves time and in some instances may be the most desirable option. Segregating qualifications from price is absolutely critical to ensuring your clients make the right award decision.
Ensuring that all the quotations you consider are based on the same or similar levels of qualification and experience also ensures that your bidders are being treated fairly.
So what is your experience with Design-Build? Have you solicited Design-Build agreements before? If so did you keep your qualifications separate from your quotations? How did that work?
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