Article Date: 06/07/2013

Are Federal Contracting Laws Harming the Livelihood of Small Architecture Firms?

By Steve Rizer


Does the federal design-build contracting process need an overhaul? The American Institute of Architects (AIA) believes so, alleging that current laws addressing this process are “harming the livelihood" of small architecture firms through increasingly risky bidding competitions. So what exactly does the organization want Congress to do about it?


“The institute is looking for a bill [to be introduced in Congress] that will narrow the exception for contracting officers to have more than five finalists in a two-step design-build competition,” Jessica Salmoiraghi, AIA’s director of federal relations, told ConstructionPro Week (CPW). Such a change in law would reduce the potential number of architecture firms that could lose the substantial amounts of time and money they invest in preparing for federal contracts they ultimately fail to win.


Under current law, federal agencies are required to “short-list” 3-5 teams -- typically consisting of architects, engineers, contractors, and subcontractors -- that have cleared the initial stage of qualification in competing for a federal design-build contract. However, some federal agencies reportedly are short-listing 8-10 teams, using an exception that permits contracting officers to increase the pool of finalists if it is “in the federal government’s interest and is consistent with the purposes and objectives of the two-phase selection process.” AIA believes this exception is so broad that agencies avail themselves of it “without giving it a second thought.”


Narrowing the exception is important for small architecture firms because they spend a median of $260,000 to compete for a federal design-build contract through the plans, models, and other materials they prepare, AIA First Vice President Helene Combs Dreiling told the House Small Business Committee's Contracting and Workforce Subcommittee late last month, noting that about 76 percent of architecture firms earn less than $1 million per year. She also pointed out that in approximately 87 percent of all federal design-build projects, architecture firms receive no stipends to help defray expenses. Developing an accurate cost expectation requires teams to complete roughly 80 percent of design work in advance for federal design-build projects, she said.


Short-listing 8-10 teams makes for “an especially difficult situation for small firms, which are less able to absorb the costs of competitions than larger firms,” according to Dreiling. “Due to the current economic climate, small and medium firms face the Hobson’s choice of ‘betting it all’ on a contract they may not get or self-selecting out of the federal design-build market.”


In a separate interview with CPW, Design-Build Institute of America (DBIA) Vice President of Advocacy and Outreach Louis Jenny reported that his organization "is generally in agreement" with AIA's concerns and recommendations as outlined in Dreiling's testimony. He noted that DBIA "is bringing these concerns to the attention of key members of Congress and hopes to have solid legislation progress [on this front] this session." Furthermore, DBIA is "closely following" the reauthorization of the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141) as there are some design-build provisions in that measure, he said.


A transcript of CPW’s interview with Salmoiraghi -- including her prediction about the prospects of passage for such reform -- and Dreiling’s complete written testimony are available ConstructionPro Net members. To sign up for a membership, click here.



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