2013 Federal D-B Downsized
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Lisa Cooley presented on job order contracting (JOC) and how it can be used for smaller construction projects. Some key points: - JOC streamlines the design and procurement process for small projects using unit pricing from a universal price book. This allows projects to be delivered faster and with less change orders than traditional methods. - Under a JOC, contractors are prequalified and a competitively bid coefficient is used to establish pricing for line items from the price book. Pricing for additional work is also determined from the price book. - Examples of agencies using JOCs or MATOC contracts for smaller projects include USACE Louisville and Savannah districts. JOCs provide stability for contractors and flexibility for
2013 Federal D-B Downsized
- 1. Lisa Cooley, LEED AP Program Director Job Order Contracting and Custom Cost Engineering
- 2. The Premise How small is too small for Design-Build? • No project is too small to benefit from Design- Build principles • The challenge lies with process definition and procurement
- 3. A personal journey through Federal Design-Build History • Federal Acquisition Streamlining Act, 1994 – Reduce unique purchasing requirements – Simplified Acquisition of small purchases – Focus on speed – Established preference for Multiple Award Contracts • Clinger-Cohen Act 1996 and FAR 1997 – Established 2 phase selection process for D-B • ARRA • Sequester
- 4. Alphabet Soup IDIQ (Indefinite Delivery/Indefinite Quantity) • MACC/MATOC (Multiple Award Construction Contract/Multiple Award Task Order Contract) – SATOC • JOC (Job Order Contract) – DOC – TOC – SABER (Simplified Acquisition of Base Engineering Requirements)
- 5. Government Perspective: Increasing Importance of O & M in a World of Shrinking Funding Savannah District USACE
- 6. Contractor Perspective: Stabilizing Influence of O & M Work Reed Construction Data, 2012
- 7. Multiple Award Task Order Contracts • Most easily understandable form of IDIQ • Mirrors Design-Bid-Build or Design-Build process, in reiterative form • Qualifications and some form of price validation are both required at the contract level • Contractor selection is pushed down to the delivery order level • In Design-Build version, it can eliminate Phase 1 process time and investment
- 8. Two Examples of Small(er) Project MATOCs USACE Louisville • Exclusively Design-Build • Minimum 3, maximum 5 contractors • Max $4m per delivery order, typical $1m • 3+2, $20m max • 8(a) setaside USACE Savannah • Design-Build or DBB • Maximum 5 contractors • $750k to $10m per delivery order • 3+2, $100m max • Total small business setaside
- 9. MATOC vs. SATOC Benefits MATOC Pros • Reduction in contracting Time & Cost • Contractors Prequalified • Evaluators develop more intimate understanding of contractor capabilities and past performance • Ability to Negotiate • Flexible Response to Emergencies Cons • Large Upfront Effort • Minimum Guarantee • One contractor can dominate, ultimately resulting is loss of competition SATOC Pros • Prepriced Work allows for single source procurement • Match Funding to Requirements • Flexibility to Add Work (Modification) Cons • Assuring competitive pricing • Hard to Adjust to Market Changes Both allow for the development of seasoned contractor base and create efficiencies in contractor and government staff
- 10. SATOC Example • USACE Little Rock SATOC for US Air Force Medical Service • Focused on SRM, providing D-B process flexibility • 2 year, $49m max • Provision for emergency services on pre-negotiated T&M basis, up to $150k • Requires 2 notional design solutions at 20-30% design for every task order – Prescriptive but streamlined project development process: Background Narrative, Technical Observation, Technical Solutions. Focus on photodocumentation and site investigation in early phase. • 65% design prior to construction start, 90% design required at 35% construction completion
- 11. Job Order Contracting Genesis: US Army, 1980’s Smaller projects were taking up to 1 year to procure 8-22% of project costs were consumed in design and procurement Change orders could increase project costs by 50% Claims and litigation Low bid procurement produced low quality results Large backlog of projects Impact to mission
- 12. Faster project delivery (-3 to -9 months) Streamlined engineering and design Assurance of cost reasonableness Better contractor performance Partnering relationship More opportunities for local small and disadvantaged business Effective use of year-end funds Cassell, Jordan W., and Linda T. Gilday. Improving the Army’s Job Order Contracting Program. Logistics Management Institute, September 1997. JOC Results 0% 25%50%75%100% Non- Partnered/Low Bid Non- partnered/Best Value Selection Partnered/Best Value Selection Owner/Contractor Satisfaction with JOC Mulcahy, Francis S. The Effectiveness of Partnering and Source Selection in Job Order Contracting. Master’s Thesis, University of Washington, 2000.
- 14. Framing JOC as a Design-Build Tool JOC brings the advantages of the most progressive delivery methods to smaller projects – Design-Build Lite – CM At-Risk Lite – Integrated Project Delivery Lite – Performance-based Contracting Lite Integrated Team Early Collaboration Best Value or Qualifications Based Selection Performance Incentives Pricing Transparency “Great service, less change orders?” “Everything you ever wanted in a construction project?”
- 15. The Competitive Pricing Component of JOC Pricing structure relies on a Unit Price Book (RSMeans) Competitively-bid coefficient (multiplier, factor) establishes pricing at the outset of the contract. Coefficient includes all costs including materials, labor, overhead, profit, and sometimes bond and tax. Effectively bidding every component of typical construction on bid day Example: 1 sf drywall $1.00 Coefficient .92 - .08 Contractual Price $ .92
- 16. Delivery Order Pricing Delivery orders are firm fixed price, lump sum UPB is an estimating tool, not a billing tool. Unit price proposals represent contractor’s committed price—it converts to lump sum. Change orders rare, governed by same pricing structure. No surprises! 16
- 17. What if an item is not in the Unit Price Book? • Items not appearing in the Unit Price Book are considered Non Pre-priced Items (NPP) • Typical NPP options: 1. NPP coefficient serves as a markup on three transparent subcontractor bids 2. NPP markup can be set per contract provisions Warning: can skew pricing/coefficients 3. Once a new unit price is negotiated it can be incorporated into the contract 4. Some contracts will prohibit or limit NPP items as a percentage of delivery orders. Sample Contractor Bid: UPB Coefficient .92 applied to line items NPP Coefficient 1.18 applied to actual sub costs
- 18. Advantages of Unit Pricing • Allows for Market-researched Price Escalation • Change Orders are rare in JOC – Owner-initiated – Truly unforeseen conditions Single-source responsibility = complete scope of work • UPB governs original scope of work and scope added after – Puts owners at an advantage when directing changes in the work • Non-prepriced Provisions for unusual items of work
- 19. JOC Design and Proposal Deliverables
- 21. Whiteman AFB SABER • HVAC Upgrades for Mold Remediation • Scheduled to go through MATOC but time was too short at FYE • Provided drawings from a similar building as design direction
- 22. Whiteman: Economy of Scale and Reiterative Efficiencies
- 23. A Hybrid Approach • GSA Region 7 Contracts • GSA-specific price schedule with RSMeans Facility Construction Cost Data as backup—line item pricing for projects under about $100,000 • Projects over $100,00 are competed as DBB or D-B • D-B capabilities are an option at contract award
- 24. Dennis Chavez Federal Building • Albuquerque, NM • Converting 30’ high courtroom on 11th floor to two floors of office space • Fast-track Design-Build, integrated structural inspection with demo • Utilized 4’x8’ opening on 10th floor for concrete pumping and structural steel access
- 25. Other Issues • Potential for Regionalization – USACE Little Rock Regional JOC • Role of Small Business – 8(a) setasides—standalone or IDIQ • Impact on A/Es – Embracing LEAN Design
- 26. Pricing Transparency and Electronic Support Systems • Industry standard data updated regularly are key to pricing fairness in a long-term contract • True transparency required owner and contractor understanding and a robust collaborative software program • 4Clicks Project Estimator (DOD) and RSMeans JOCWorks (other federal agencies) • Integrated cost estimating, project management, contract management, document management, and visual estimating in a single program. • Automated Technical Evaluations, enabling Owners to quickly compare Contractor and Owner estimates. • Complete Post Negotiations Memorandums for Contractors to identify the changes that happened during the Owner/Contractor negotiation process. • Embedded project delivery and contract processes –Ability to directly populate government forms.
- 27. Lisa Cooley, LEED AP Program Director for JOC and Custom Cost Engineering lisa.cooley@reedbusiness.com 505-239-3446 Presentation will be posted at: http://www.reedconstructiondata.com/market-intelligence/job-order- contracting/ Discussion