ConstructionPro Week, Volume: 4 - Issue: 5 - 02/06/2015

New Procurement Methods Meet Old Bidding Culture

By Bruce Jervis

 

It is understandable, and laudable, that public entities at all levels of government are experimenting with alternative methods of procuring construction services. Some of the methods may offer greater value and speed than the traditional design, bid and construct technique. Frequently, however, these methods clash with longstanding public procurement practices and procedures.

 

The new VA medical center in suburban Denver is a glaring example. The Department of Veterans Affairs used, for the first time, an “integrated design and construct” contract, which is similar to a “construction manager at risk” contract in the private sector. Internal agency communication warned this was risky because it ran counter to VA procurement culture.

 

The VA did not get it right. Funding was fixed and the design was 50% complete when the contract was awarded, depriving the contractor of a meaningful opportunity to construct the project at the target price. The VA breached the contract and work stopped. It has now resumed on a cost reimbursement basis.

 

Procurement laws and regulations have been modified to accommodate new procurement methods. It is more difficult to change attitudes and culture. What do you think? Are alternative methods of public construction contracting doomed to failure by entrenched bureaucratic bidding practices?

 

COMMENTS

Alternative methods of public construction contracting is not doomed. The key to success is to include your procurement and contracting experts in the discussions at soon as possible. As soon as the idea becomes a gleam in the project staff's collective eye, discussions and meetings should begin with its procurement staff. These meetings should center around selection of the best contract type or method to fit the scope of work. I can also understand the project staff's frustration. They don't want to be told that it runs counter to the procurement culture or that it's never been done at that agency before. Contracting professionals need to keep an open mind while staying within the procurement laws and regulations.
Posted by: Olga Perez - Friday, February 06, 2015 11:44 AM


I agree with Ms. Perez. I worked for a federal agency which had two "Design Build" projects at the same time. One project fit all the published criteria for being a good candidate for the Design Build procurement method then current in the Federal Acquisition Regulation. The other project fit few if any of the criteria. Which project was successful? The one that didn't fit. The reason? The project/procurement/contractor team made it work.
Posted by: Vince Ryan - Friday, February 06, 2015 11:53 AM


Its all about communication & coordination combined with the right people. I have been involved in procurement and operations for more than 30 years and innovation and creativity can work. Everyone has to work together or you will have a disaster. The other key is to have staff that have the skills and knowledge to make it happen. Innovation & creativity are great but if you don't have the right people involved throughout the process you will have a disaster on your hands.
Posted by: Gary Fabrikant - Friday, February 06, 2015 12:32 PM


" Funding was fixed and the design was 50% complete when the contract was awarded" This is the definition of alternate methods involvement of the GC during design. If you have a complete design it is Design-Bid-Build. No method can overcome lack of communication, but it sounds like no one had ownership, when all are required to in alternate methods. I agree with Vince Ryan above, the team makes it work.
Posted by: David Cox Senior Project Manager AZ - Friday, February 06, 2015 12:48 PM


No public entity should design & build unless they have experienced capital improvement procurment staff. (Much different than a procurement specialist for commodities.) The AE & CM selection process must identify vendors with ample experience in that building type. Then a Guaranteed Maximum Price contract be let at 50% CD phase but only with ample GMP Contingnency (about 5%)within the contract. From that point long lead items can be ordered to accelerate the delivery schedule.
Posted by: Jere Lahey, Senior CIP Project Manager FL - Monday, February 09, 2015 9:45 AM


 









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