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2013 Federal D-B Downsized

Lisa Cooley, LEED AP
Lisa Cooley, LEED AP

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

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Lisa Cooley, LEED AP Program Director Job Order Contracting and Custom Cost Engineering
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
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
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)
Government Perspective: Increasing Importance of O & M in a World of Shrinking Funding Savannah District USACE
Contractor Perspective: Stabilizing Influence of O & M Work Reed Construction Data, 2012
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
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
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
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
Job Order Contracting Genesis: US Army, 1980s 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
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 Armys 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. Masters Thesis, University of Washington, 2000.
2013 Federal D-B Downsized
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?
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
Delivery Order Pricing Delivery orders are firm fixed price, lump sum UPB is an estimating tool, not a billing tool. Unit price proposals represent contractors committed priceit converts to lump sum. Change orders rare, governed by same pricing structure. No surprises! 16
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
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
JOC Design and Proposal Deliverables
Streamlined Design
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
Whiteman: Economy of Scale and Reiterative Efficiencies
A Hybrid Approach GSA Region 7 Contracts GSA-specific price schedule with RSMeans Facility Construction Cost Data as backupline 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
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 4x8 opening on 10th floor for concrete pumping and structural steel access
Other Issues Potential for Regionalization USACE Little Rock Regional JOC Role of Small Business 8(a) setasidesstandalone or IDIQ Impact on A/Es Embracing LEAN Design
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.
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

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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, 1980s 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 Armys 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. Masters 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 contractors committed priceit 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 backupline 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 4x8 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) setasidesstandalone 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
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