Competition Requirements of the Design/Build, Construction Manager at Risk, and Public-Private Partnership Contracts—Seven Case Studies (2012)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

42 Dispute Resolution While the norm in all of the cases, alternative dis- pute resolution methods varied. The following summa- rizes the methods employed in the cases: • BART Extension: Partnering arrangement coupled with an optional DRB. • DART Green Line: DRB. • Dulles Metrorail: Escalating dispute resolution process—negotiations (field level with DTP and MWAA representatives); elevated negotiations (DTP and MWAA Senior Representatives); independent expert; submission of certified claim (recommendation by MWAA representative, DTP has 30 days to agree or seek further action); mediation; legal proceedings. • Largo Extension: Initially DRB; subsequently, par- ties could propose and agree to any form of alternative dispute resolution. • Portland Mall Segment: Tiered dispute resolution followed by mediation. • River Line: Partnering arrangement; consent to ju- risdiction of Courts of New Jersey and waiver of trial by jury. X. CONCLUSION AND KEY FINDINGS This digest explores the nature of alternative deliv- ery methods for U.S. transit projects. The use of alter- native delivery methods such as DB, CMAR, and PPP techniques (like DBOM) has been steadily increasing over the past 20 years. Although use of alternative methods has grown, the specific characteristics and implications of the various methods remain largely pro- ject-specific. There has yet to emerge a universally- accepted or institutionalized framework for implement- ing alternative procurement methods. Based on the statutes and projects studied, several key findings are noted: Substantial flexibility exists with respect to project delivery methods nationally. The review of the statutory authority for using delivery methods other than DBB for transportation projects indicates clearly that many public agencies across the nation may use methods ranging from DB to CMAR to unsolicited proposals that include private investment. The cases reviewed are a reflection of this flexibility, which has grown substan- tially over roughly the last decade. Procurement methods are evolving from fixed price awards to best-value approaches. Chronologically, the BART extension to SFIA was the earliest case studied. Its award was based significantly on the price proposed. The DART Green Line and the Portland Mall Segment cases were the most recent awards. These procurements had multiple phases where qualifications and qualita- tive, technical, and price criteria were assessed for the award of the contract. In both of these cases, rather complex point-scoring systems were used to select the preferred contractor. While best-value procurements are growing in popularity, a word of caution is war- ranted. Scoring systems can prove difficult to imple- ment, as indicated by recent research into best-value procurement.33 Best-value procurement methods employed in the cas- es still showed a preference for “fixed” pricing. Pricing strategies for design, preconstruction services, and con- struction work remained oriented toward fixed pricing. This is not necessarily unusual in DB or DBOM solici- tations, but the two CMAR cases studied went to sub- stantial lengths to establish unit prices for preconstruc- tion or construction items of work. The unit prices proposed served as both a means to award the contract and as the basis of pricing or negotiating the price for task orders or work items. This strategy, while poten- tially advantageous to the owner, creates a significant burden to properly identify and characterize these items. While this initiative did not uncover evidence of issues related to this strategy, the proper interpretation of these items by proposers/contractors is clearly corre- lated with the merit of the corresponding prices. Indeterminate pricing prior to award poses a sub- stantial risk to the contracting community if the owner seeks to obtain a fixed/lump-sum price through competi- tion. Owners in the case studies that provided prelimi- nary design and geotechnical information in the RFP documents, and then attempted to distance themselves from the accuracy of such information, had mixed suc- cess. This approach clearly created conflict between the contractor and the owner when problems surfaced, and the contractor was able to recover some monies in the cases reported. The use of allowances appears to be an effective way of addressing the challenges of pricing long-duration projects. There are times when the extended duration, or other characteristics, of a project will lead to ineffi- ciencies in using a pure fixed-price contracting ap- proach with the contractor. The Dulles Metrorail pro- ject (and the AirTrain JFK project to some extent) provides an excellent example of how to creatively use allowances to avoid excessive contingencies and have a direct role in the procurement of major subcontractors. Plans for the inclusion of DBEs in proposals were ei- ther a condition of responsiveness or an evaluated crite- rion. Proposers in the cases studied had to demonstrate compliance with the project’s DBE requirements during procurement. Typically, proposals were not considered responsive unless an appropriate DBE plan was pre- sented. In one case, the DBE plan was an evaluation criterion. During project execution, one case used a liq- uidated damages provision in the event that the se- lected contractor fell out of compliance with the pro- ject’s DBE participation goals. Little to no evidence was uncovered to suggest that the projects were unable to achieve their DBE participation goals. Alternative dispute resolution mechanisms were var- ied among the cases, but they were the norm. The cases demonstrated a variety of alternative dispute resolution 33 S. SCOTT ET AL., BEST-VALUE PROCUREMENT METHODS FOR HIGHWAY CONSTRUCTION PROJECTS 24 (National Coopera- tive Highway Research Program Report 561, 2006).

43 approaches from hierarchical interpretation/negotiation with owner representatives followed by mediation to ex ante establishment of DRBs. All cases, however, in- cluded an alternative dispute resolution mechanism.