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Suggested Citation:"II. BART EXTENSION TO SAN FRANCISCO INTERNATIONAL AIRPORT." National Academies of Sciences, Engineering, and Medicine. 2012. Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies. Washington, DC: The National Academies Press. doi: 10.17226/14639.
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Page 10
Suggested Citation:"II. BART EXTENSION TO SAN FRANCISCO INTERNATIONAL AIRPORT." National Academies of Sciences, Engineering, and Medicine. 2012. Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies. Washington, DC: The National Academies Press. doi: 10.17226/14639.
×
Page 10
Page 11
Suggested Citation:"II. BART EXTENSION TO SAN FRANCISCO INTERNATIONAL AIRPORT." National Academies of Sciences, Engineering, and Medicine. 2012. Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies. Washington, DC: The National Academies Press. doi: 10.17226/14639.
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9 party (Virginia’s PPTA is a good example of this). Other states have been challenged by statutes that require 100 percent bonding for any contract involving con- struction of a public project. This proved to be a major challenge for Missouri DOT in implementing its Safe and Sound bridge rehabilitation program. This was originally conceived as a design-build-finance arrange- ment, with an expected cost of $800 million. When it was determined that Missouri statutes required a 100 percent bond on the entire contract value (including the financing component), Missouri DOT was required to obtain legislative amendments to the statute, as the industry was not able, or was unwilling, to meet this requirement. Another important legislative issue is whether the PPP statute should allow unsolicited proposals to the agency, or whether all projects must be formulated by the agency and solicited. Delaware, Texas, Virginia, and Oregon are among the states that allow unsolicited proposals to be made by the private sector for whatever ideas the private sector feels are justified. However, most states that have PPP legislation do not allow un- solicited proposals. This area is currently being looked at carefully by some state legislatures, as they evaluate whether the benefits of getting novel ideas are worth more than formulating their own specific needs and developing a competitive proposal process. Many of the- se legislatures are also evaluating the entire premise of PPPs—particularly whether there is a loss of state con- trol because of their long duration and whether they are creating what is an essentially unregulated monopoly to outsource the responsibility for raising tolls to the pri- vate sector. Regardless of how the project is delivered, there is one other major issue to consider on PPP projects—the marketplace’s view of risk. Contractual terms and con- ditions in many of the PPP projects demonstrate a re- luctance, or unwillingness, to assume unlimited liability for performance. As a result, the contracts have a look and feel very similar to those one might expect from the private sector—particularly relative to limitations of liability, limitations on latent defect and warranty cov- erage, and caps on liquidated damages. Summary The evolving regulatory and statutory environment of alternative delivery systems in the public sector mandates that practitioners maintain an understand- ing of what is happening in the states where they prac- tice. While DB and CMAR delivery approaches are rec- ognized at the federal level and in most states, the span of use and experience of the approaches varies widely among states. PPP approaches are a work in progress, and best procurement practices continue to develop. II. BART EXTENSION TO SAN FRANCISCO INTERNATIONAL AIRPORT Project Overview The San Francisco Airport Extension project in- volved an 8.7-mi, four-station extension of the existing Bay Area Rapid Transit (BART) system from the Colma Station to Millbrae, with an aerial station at the planned International Terminal at the San Francisco International Airport (SFIA). BART developed this pro- ject in conjunction with the San Mateo County Transit District (SamTrans). Before the system’s opening in June 2003, airport users had to drive to the airport. SamTrans projected that the extension would carry an estimated 68,500 passengers per weekday overall in the year 2010, including 20,000 to and from the airport. The extension was expected to reduce the number of work-related auto trips by about 35,000 vehicles per day by the year 2010, while BART ridership in San Mateo County would jump 41 percent, to 123,000 pas- sengers per day from 87,000. Additionally, the light rail access to the airport was expected to greatly reduce the 70,000 vehicles per day on the Highway 101 access road to the airport. BART developed the contract documents and award- ed a general engineering consultant (GEC) contract to Bay Area Transit Consultants, a Bechtel-led joint ven- ture that included Parsons Brinckerhoff; Quade & Douglas; John Warren & Associates; and Don Todd As- sociates, Inc. The overall project used a multicontract DB delivery process. The biggest DB contract was for the line, track, and systems portion of the SFIA exten- sion. This contract is the subject of this section. The other DB contracts included 1) above-grade stations and below-grade platforms and finishes; 2) parking and sta- tion site work; and 3) elevators, escalators, alarm, and detection systems. BART secured funding for the total project through several resources. The original budget for all of the work associated with the project was $1.167 billion, of which $750 million came from a Federal Transit Ad- ministration (FTA) grant as part of its New Starts Pro- gram (49 U.S.C. 5309), which provided funding for new fixed guideway systems and extensions of existing guideway systems. This project was also part of the FTA Turnkey Demonstration Program, which was a pilot program to assess if the DB approach would re- duce implementation time and cost. The remainder of the project funding came from the following resources: SFIA ($200 million); the State of California ($108 mil- lion); SamTrans ($99 million); and West Bay bridge funds ($10 million). Procurement Scope of Work The scope of the subject contract was only for the de- sign and construction of the line, trackwork, and sys- tems for the BART extension into SFIA. The specific

10 construction work included cut-and-cover subway, ae- rial structures, U-wall and at-grade trackway, track- work, contact rail, site work, drainage, utilities, street work, ancillary structures, conduits and cable tranches, and subway mechanical and electrical systems and structures. The line facilities included below-grade structures for each station, including retaining walls, trackway, platform structure, and station structure. The contract also required systems design, procure- ment, and installation. In addition, because of the anticipated funding from the FTA, the proposers were to comply with federal re- quirements as stipulated in Supplementary Conditions, Article SC 10, of the contract. The requirements in- cluded certification by bidders, suppliers, and subcon- tractors that they have not been debarred, suspended, or ineligible to participate in U.S. government contract- ing activity and the requirement that bidders conform with U.S. prevailing wage laws as set by the Depart- ment of Labor. Process Overview BART released an RFP in December 1996. Prequali- fied proposers submitted bids in accordance with the contract book, contract drawings, bid book, standard and directive drawings, and specifications standards. BART evaluated the bid documents and maintained the sole discretion to reject any bids and waive any infor- malities and minor irregularities in the bids received. Furthermore, the Invitation to Bid did not commit BART to award any contract or pay any costs incurred in the preparation or submission of a bid. The project depended on the availability of funding, and in the event that the funding did not materialize, BART did not have to accept any bids. Selection and Award Criteria The basis for award on this DB project was low bid. As part of the bid process, proposers submitted unit, lump sum, and other prices for various elements of the work. BART reviewed the Total Contract Bids to ensure the correct sum of bid item totals. In the event of a dis- crepancy, the sum of bid item totals prevailed. The “in- structions to bidders” indicated that “the award of con- tract will go to the lowest responsible bidder who complies with the prescribed project requirements and whose qualifications are satisfactory to [BART].” The successful design-builder for this project was the joint venture of Tutor-Saliba/Slattery, which was awarded an approximately $530 million contract.19 The engineering firm HNTB was the lead engineer for the joint venture. 19 Tutor-Saliba/Slattery was also awarded two separate DB contracts totaling $95 million for stations (San Bruno and S. San Francisco) along the extension route. Key Contract Provisions Ownership of Documents The contract provided for ownership of the work product whereby the owner maintained ownership of all pertinent documentation for the design and construc- tion of the project. Those documents included drawings, specifications, and data regardless of whether they were used in the project. Upon the project’s conclusion, the design-builder was to provide the owner with a list of the information not previously received by the owner, and the owner had 30 days to requisition that documen- tation. The contract also provided for the use of escrowed bid documents (EBD). The use of EBD was conven- tional, in that the EBD were to be used in the course of the project to assist in price adjustments, change or- ders, and dispute settlements. The EBD are the prop- erty of the design-builder, but remain in the owner’s possession for the life of the project. The owner entrusts the EBD to an escrow agent and returns the documents to the design-builder after final payment and final claims resolution. Suspension and Termination The owner reserved the right to terminate all or part of the contract if it deemed the design-builder to be in default. Default included 1) violation of contract terms; 2) abandonment, assignment, or subletting of the con- tract without BART approval; 3) filing for bankruptcy; 4) failure to maintain work schedule; 5) refusal to prop- erly execute the work; 6) use of improper materials or supplies; 7) inadequate skilled labor supply; 8) inade- quate design services; 9) failure to provide proper work- manship; 10) failure to take steps in a prolonged labor dispute; or 11) performance of the contract in bad faith. If the owner chose to suspend the design-builder’s re- sponsibilities for all or part of the contract, the design- builder would incur the cost of the BART-chosen re- placement contractors. Design-Builder Proposed Changes in Standards or Requirements The contract stipulated a value engineering incen- tive for the contract. The incentive included several criteria for value engineering change proposals (VECP): • Design-builder must identify changes at the time of submittal to BART’s representative. • Items must require a change in the contract. • Items must decrease the contract price. • Items must not alter the light rail system’s character- istics: service life, reliability, economy of operation, ease of maintenance, and necessary features and appear- ance. • Items cannot require unacceptable extensions of con- tract time (contract does not define what is “unaccept- able”).

11 In the event that the owner accepted the VECP, re- sulting in a contract price adjustment, the net savings resulting from the change would be evenly shared (50/50) between the design-builder and the owner. The contract defined net savings as the gross savings less the following: design-builder’s costs for developing and implementing the VECP and estimated amounts of in- creases to the owner (review, inspection, implementa- tion, and BART-furnished property). Inclusion of Disadvantaged Business Enterprises The supplementary conditions of the contract docu- ments included goals for disadvantaged business enter- prise (DBE) participation and a structure for measuring DBE involvement in the project. The final contract doc- uments included percent total bid for category of work for DBE involvement in the following portions of the project: Engineering and Architectural Design, Material Procurement, Facilities Construction, Systems, and Trucking. The contract documents stated that DBE joint venture partners be responsible for a clearly de- fined portion of the project and that any DBE partici- pants perform a commercially useful function. The con- tract provided the following measurements to quantify DBE participation: 1. Total dollar amount of contracts with DBE bidders. If a joint venture, then only the proportionate interest of the DBE is counted unless the DBE ownership is 51 percent or greater, whereby the measurement is 100 percent of the contract value. 2. The dollar value of all first- and second-tier DBE subcontracts, except those executed under a DBE sub- contractor. 3. Dollar value of supplies or materials purchased from a DBE manufacturer. 4. Sixty percent of dollar value of material or supplies purchased from a DBE regular dealer. 5. Fees or commissions charged for providing legitimate service and assistance in any procurement (personnel, supplies, materials, etc.); bonding; or insurance re- quired for the project. The RFP required a list of eligible DBE participants as identified by the design-builder and proof that the design-builder had solicited proposals from DBE enti- ties to perform portions of the project. Should the bid- ders fail to provide proof of good faith efforts to solicit DBE participation, BART notified the bidder of its rec- ommendation to reject the proposal. Should the design- builder, after award of contract, fail to provide adequate proof that it is meeting the DBE goals as agreed upon in the final contract, the design-builder is subject to liquidated damages of an amount equal to $50,000 for every 0.1 percentage point that the design-builder falls below the DBE goals set forth in the contract. The con- tract specifies that BART will appoint an ombudsperson to ensure that any and all DBE suppliers and subcon- tractors receive adequate and timely compensation for their services. The contract requires the design-builder to compile a DBE-loaded schedule so that BART can monitor DBE participation and payment. Dispute Resolution The Supplementary Conditions of the contract in- clude recommendations that the design-builder enter a “partnering” agreement with the owner. Within such an agreement, the design-builder and the owner are to work together to develop goals and establish a coopera- tive and collaborative atmosphere for the project. The goals for the partnering arrangement are as follows: 1. For the design-builder, GEC, general contracting consultant (GCC), State, municipal governments, Bur- lingame, Airport, and District to work as partners. 2. To avoid confrontation and litigation among the par- ties. 3. To reach a mutual understanding for the proper exe- cution of the project. 4. To establish an atmosphere of trust and communica- tion. The contract stipulates an allowance provided by BART to pay for meetings and professional facilitators. The contract invites subcontractor participation in the partnering meetings. In the event of a dispute or claim arising from the work of the project, the contract offers a dispute review board (DRB) provision, unless the design-builder elects not to participate in a DRB within 45 days of the con- tract’s execution. The DRB, if established, consists of one owner representative, one design-builder represen- tative, and a chairperson identified by the two repre- sentatives, each with no prior direct involvement or financial interest within 6 months of the contract. BART, the design-builder, and three DRB members execute a DRB agreement within 14 days of the selec- tion of the chairperson. If the design-builder objects to a decision by BART in the course of the project, the mat- ter can be brought to the DRB. The parties offer evi- dence, and the DRB issues a report of its findings per the procedures outlined in the DRB agreement. The DRB’s recommendations are not binding on the two parties. Should one of the parties reject the DRB rec- ommendations, that rejection can be considered grounds for awarding costs and attorney’s fees to the prevailing party in arbitration. Other Provisions The contract required the design-builder to guaran- tee its work. In the event of discrepancies or defects with respect to facilities (it does not stipulate a clear definition of facilities) within 12 months after the date of acceptance, the design-builder must perform correc- tive work. Additionally, the design-builder is to guaran- tee the corrective work for the shorter of 12 months after the system is operational or 18 months after total completion of the corrective work. The contract documents required the design-builder to be responsible for all work and approvals necessary

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TRB’s Transit Cooperative Research Program (TCRP) Legal Research Digest 39: Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies explores the use of various project delivery methods, including design-build, construction management at risk, and a number of options considered public-private partnerships, through the examination of seven separate construction projects in various parts of the United States.

The examinations of the seven selected projects are designed to show how particular, and often unique, problems were addressed in each project by utilizing a wide variety of procurement and delivery methods.

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