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

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