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A. Construction Contracts/Preliminary Engineering 1. Commission authority to determine projects for design-build. The design-build concept involves awarding a highway improvement project to a
company which is responsible for both the design and subsequent construction
phase of the project. Design-build authority would allow the department to let
one design-build contract that includes both engineering services and
construction. Then, once sufficient design work is done, the contractor could
begin construction while the design is being finished. TxDOT would need close
oversight of all phases to ensure that public health, safety and welfare are
protected. There are currently two laws that prohibit this process from being considered on
public works projects in Texas. The Professional Services Procurement Act
requires a two-step, qualifications-based, selection and price negotiation
process. Also, TxDOT is required to accept the lowest responsible bid for
construction work. These laws were put into place to protect the public and
assure competitive bidding on construction to maximize the use of public funds.
The option to design-build in one contract requires enabling legislation for an
exception to these laws to be used at the discretion of the Texas Transportation
Commission. The evaluation of the design-build option should consider cost, as
well as quality factors, time of completion, and "best value." Because design-build can be used to shorten final stage project development
time, the Commission might use it in emergency situations, such as when a bridge
is out, and replacement in the shortest time possible is critical to the public.
Design-build allows construction to begin before project design is totally
complete. Another circumstance where design-build could be advantageous is when
the design-build team becomes the operator/lessor of the facility. If the
design-build team must also operate the facility for ten to twenty years, and
live with and correct any mistakes made during design or construction, then a
short-term profit motive would be forced to accommodate longer-term quality
issues. The Commission could also consider design-build if a special project were
authorized with special or unanticipated funding. An example of unanticipated
funding is the current interstate construction in Salt Lake City brought about
because Utah’s legislature passed a special construction package in conjunction
with the scheduled 2000 Winter
Olympics. This resulted in a very special unanticipated project with a definite
time frame that would not allow sufficient time for the conventional
design-bid-construct process. The department urges caution with design-build because this option could allow
the development of contractual relationships between a designer and builder that
might not promote the best design, proper construction processes or best
materials utilized. Since this process may cost more in order to accomplish
either design or construction in a
compressed time frame, this increase will have to be under close control by
TxDOT as the owner of the facility. TxDOT will also need to retain close control
of design-build projects in order to ensure that inferior materials are not used
in the project merely to shorten time or increase profits for design-build
contractors. The department is qualified to oversee and manage such projects
effectively because of its strengths in the design, engineering and construction
oversight facets of our business. Two federal laws inhibit use of federal funds in design-build. First, the Brooks
Act requires qualifications-based selection of professional services. Second,
construction is required to be awarded on a low-bid, competitive basis. There is
a possible exception to these laws, if approved by the Federal Highway
Administration according to criteria not yet determined. An exception is
possible if state law allows for use of design-build, and if it is an
Intelligent Transportation System project over $5 million or any other project
over $50 million. These exceptions do not take effect until calendar year 2001.
An additional exception allows for use of design-build on an emergency basis. Possible statutory change: Allow the Texas Transportation Commission to use the
design-build option at its discretion. 2. Quality and Value Issues in Professional Services Procurement. Currently the department, and all public entities, are required to follow the
qualifications-based selection procedures of the Professional Services
Procurement Act. As part of this process, price is not a factor and is
prohibited under law. Instead, a firm, or provider, is selected and then the
price is negotiated with that firm to perform whatever professional
architectural, engineering or surveying services may be required. This process
is not only lengthy, but may not always provide the most cost-effective price to
the taxpayers. Price comparisons and any references to value are prohibited by
state law. At current contracting rates, approximately $1,380,000,000 will be
spent over then next ten years without getting a second price. The department suggests that there could be a possibility of savings of both
time and money if the Professional Services Procurement Act were amended for
TxDOT. The department supports qualifications-based selection as appropriate,
but feels that value should be incorporated. Once a short-list of providers has
been determined which are each qualified to do the work, then it should be
statutorily permissible for the agency to get priced proposals from all of those
short-listed providers. Price could then be a consideration in determining which
provider would be the best value for the state.
However, it should not be a requirement to simply accept the lowest bid. The
agency should be able to consider cost as a factor along with all other factors
to deliver a high quality product in the shortest time and at the best available
price. Amending the Professional Services Procurement Act for a TxDOT exception
could accomplish that goal. It should be noted that this could only be done where state funds pay the
professional service cost. No federal funds could be used since this would
conflict with federal statute. Currently and historically most design costs are
state funded to maximize federal funds for construction and maintenance.
However, if the procedure were changed at the state level
and found to be effective, then similar changes in federal legislation might
result. Possible statutory change: Allow TxDOT to consider value in selection of
professional services once a list of qualified firms has been selected. |
