Expedited Procurement Procedures for Emergency Construction Services (2012)

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5 In addition to a rigorous literature review, the synthesis is based on new data from a survey, a content analysis, three legal case studies, and 10 emergency project case studies. A general survey on expedited procurement practices provided responses from 42 U.S. state departments of transportation (DOTs). The content analysis included emergency policy documents/guidelines from 42 state DOTs and the FHWA. Finally, emergency project case studies from nine different states were conducted to furnish specific information on different approaches to dealing with emergency projects. The case study projects range from a $315,000 overpass pier replacement to the highly visible replacement of the Interstate Highway 35W Bridge over the Mississippi River that collapsed in Minneapolis. The projects were selected because each demonstrated a specific approach to an emer- gency contract that allowed an in-depth illustration of important information gleaned from the survey and the DOT policy document content analysis. Only two major high-pro- file emergencies were selected because it was obvious in the literature review that the typical DOT emergency project is something quite mundane, such as the Oklahoma DOT case where a culvert washed out under an Interstate highway. LITERATURE REVIEW Many studies on the deteriorating condition of the nation’s highway network conclude that public transportation agen- cies must find ways to deliver infrastructure projects “better, faster, cheaper” (Atzei et al. 1999; Avant 1999; Richmond et al. 2006). Once an emergency removes an essential piece of that infrastructure such as a major Interstate highway bridge, the options for optimizing the procurement process narrow to focus on only one of the three previous components: schedule. Although quality and cost are still a concern, they take a back- seat until service is restored (Houston 2011). Then, the public attention switches to an analysis of value for money from a retrospective viewpoint that often turns critical of the solution provided by the transportation agency to restore service as fast as possible. As a result of this sometimes career-ending phe- nomenon (ABC News 2005), public transportation agencies have expended much time and money to develop emergency management plans supported by a suite of expedited pro- curement procedures (Perry and Hines 2007; Blakemore and Konda 2010; Houston 2011). The requirement to expedite the delivery of an emergency project always arises unexpectedly. CHAPTER ONE INTRODUCTION BACKGROUND The following quotation eloquently describes the tenu- ous situation a public transportation agency must manage when reacting to an emergency restoration of service sev- ered by either natural or man-made circumstances: “The severe criticism directed at government agencies during their response to, and recovery after, Hurricane Katrina is a testament to the insufficient preparation for executing emergency contracting actions that occurred as a result of this unprecedented event” (Jeffery and Menches 2008). On the one hand, the public expects the agency to react to the emergency as expeditiously as possible; on the other hand, the agency will be exposed to potential criticism from vari- ous special-interest groups when it procures the necessary design and construction services in a manner different than its routine procedures. The issue is further complicated by the hypercompressed period for procurement, as shown in recent research that found “a strong linear correlation between procurement duration and schedule growth. Longer procurement duration correlates less with schedule growth” (Migliaccio et al. 2010, italics added). The first quote also provides a logical solution for the dilemma: sufficient “prep- aration for executing emergency contracting actions.” This synthesis will look at how state DOTs and other transpor- tation agencies have dealt with a variety of emergencies, and furnish information on commonly used practices for expediting the procurement of an emergency infrastructure repair, restoration, or replacement project. SYNTHESIS OBJECTIVE A report of an AASHTO domestic scan team (Blanchard et al. 2009) included a detailed analysis of eight emergency projects in four states and developed a broad set of rec- ommendations for successful emergency procurements. The objective of this report is to build on that work and to identify and synthesize current practices that comprise the state of the practice related to expedited procurement procedures and discuss expedited procurement procedures that have been used successfully on both emergency main- tenance and construction projects. This report will help DOTs develop effective procedures for delivering emer- gency projects and managing the heightened contractual risks that attend those situations.

6 FIGURE 2 Average annual emergency project experiences. EMERGENCY POWERS Subject to state law, the powers granted to agencies in an emergency allow whatever action is determined necessary to insure health, safety, and welfare of the community. For example, the Florida State Senate (2010) states the follow- ing related to procurement of emergency highway contracts delivered by the Florida DOT: The political subdivision has the power and authority to waive the procedures and formalities otherwise required of the political subdivision by law pertaining to: a. Performance of public work and taking whatever prudent action is necessary to ensure the health, safety, and welfare of the community. b. Entering into contracts. c. Incurring obligations. d. Employment of permanent and temporary workers. e. Utilization of volunteer workers. f. Rental of equipment. g. Acquisition and distribution, with or without compensation, of supplies, materials, and facilities. h. Appropriation and expenditure of public funds. (Title XVII, 252.38(3)(a)). This language applies to procurement of emergency high- way contracts delivered by the Florida DOT. Most, if not all, state codes contain similar authority to override routine contrac- tual requirements for competition in the event of an emergency where the delay imposed by the routine procurement process could exacerbate the negative impact on the community. Federal-aid primary, secondary, and special roadway designations are eligible for federal funds administered by FHWA. Title 23 United States Code (USC) §125 (2000) provides for emergency relief (ER) funding for the “repair or reconstruction of highways, roads, and trails, … that the Secretary finds have suffered serious damage as a result of—(1) natural disaster over a wide area, such as by a flood, hurricane, tidal wave, earthquake, severe storm, or land- slide; or (2) catastrophic failure from any external cause.” Figure 1 shows the spectrum of emergency response and how emergencies can range from small-scale, high-fre- quency events to complex low-frequency events. The small localized emergency is typically handled by DOT main- tenance forces, whereas the complex emergency requires involvement of agencies at all levels of government. FIGURE 1 Emergency response spectrum (Wallace 2012). Recent examples are the losses of major Interstate high- way bridges in the following states: • California: SR-60 Freeway overpass damaged by fire from tanker truck accident and explosion (KTLA 2012). • Florida: I-10 bridge over Escambia Bay destroyed in Hurricane Ivan (Flatiron 2007). • Minnesota: I-35W Bridge over the Mississippi River lost to catastrophic structural failure (Hietpas 2008). • Oklahoma: I-40 Bridge over the Arkansas River knocked down by a barge collision (Bai et al. 2006). In every case, the DOT was able to replace these large structures under heavy traffic in periods that were orders of magnitude less than the routine procurement process would have allowed. The I-35W project was the spark that initiated the FHWA’s Every Day Counts program (Mendez 2010), which is an initiative to encourage expedited delivery of critical infrastructure projects on a routine rather than an emergency basis. To achieve the compressed timeline, each of the four cases required a specific authorization to expedite many of the procurement constraints, permitting hurdles, and risk-averse contracting procedures in order to restore the integrity of the national highway network. Additionally, the survey of DOTs found that 41 of 42 respondents delivered at least one emergency project per year, with most indicat- ing that they deal with three to five projects each year (see Figure 2). Thus, it is important for public highway agencies to understand how procurement for emergency projects was successfully expedited.

7 Emergency construction work on all other roads is generally reimbursed through the Federal Emergency Management Agency (FEMA) (FDOT 2010). Under nonemergency conditions, FHWA requires fund- ing recipient consultant contracts to conform to Brooks Act (40 USC 1101-1104) qualifications-based selection (QBS) and contracts for construction to be awarded on the lowest responsive bid meeting the established criteria of responsi- bility (23 USC 112). However, federal regulations permit temporary suspension of competitive requirements for con- tracts consummated in emergency conditions. Noncompeti- tive procurement of engineering and design consultants in an emergency is addressed in title 23 Code of Federal Regula- tions (CFR) § 172.5(a)(3). The waiver of competitive bidding requirements for construction contracting in an emergency is addressed in 23 CFR 635.204. Furthermore, an emergency event does not eliminate the need for approval and coordination with other state and federal agencies to meet the requirements of the National Environmental Policy Act (NEPA) (1978). The Council on Environmental Quality (CEQ), which issues the implemen- tation guidance for federal NEPA actions, states, Where emergency circumstances make it necessary to take an action with significant environmental impact without observing the provisions of these regulations, the Federal agency taking the action should consult with the Council [on Environmental Quality] about alternative arrangements. Agencies and the Council will limit such arrangements to actions necessary to control the immediate impacts of the emergency. Other actions remain subject to NEPA review” (Perry and Hines 2007, p. 9). Once the emergency conditions have ceased to be an immediate threat and emergency repairs have been accom- plished, conventional contracting procedures must be used for the remaining work (UDOT 2011a). Procurement Regulations and Constraints Emergency procurement procedures are strictly regulated by state and federal legislation. Nearly all DOTs are subject to a law that requires free and open competition among responsi- ble and responsive bidders in their routine construction pro- curement process (Perry and Hines 2007). Deviating from that practice is the primary issue that triggers unproductive objections to delivering an expeditious return to service (Bai et al. 2008). The objections can range from merely a pub- lic relations problem to litigation and protest of award. The Minnesota DOT (Mn/DOT) has been lauded for its highly successful restoration of the I-35W Bridge after its collapse. Mn/DOT used a best value selection process to procure a design–build (DB) contractor. When it did not select the low bidder, Mn/DOT had to defend itself against an award protest (Hietpas 2008). It did so successfully because the agency had experience with disputed DB awards (Shane et al. 2006). It also had prepared for expediting procurements when necessary. A paper reporting a case study of the I-40 bridge at Web- ber’s Falls in Oklahoma in 2005 (Bai et al. 2006), which was knocked down when it was hit by a barge on the Arkansas River, provides a set of lessons learned that helps frame the following discussion of emergency procurement procedures. It found six lessons: 1. A quick response to the incident was the key to mitigate the losses and ease the inconvenience to the traveling public. 2. Using established contracting methods and procedures sped up the contract negotiation process and avoided future contract disputes. 3. Huge incentive and disincentive clauses in the contracts played a very critical role in motivating design firms, contractors, and material suppliers to finish their work on or ahead of time. 4. The duration of design for the new structure was shortened because the original design drawings and specifications were provided quickly to the design firms and ODOT [Oklahoma Department of Transportation] engineers were on call 24 hours per day. 5. Commitment of the necessary resources such as manpower from all parties, which included ODOT, design firms, contractors, and material suppliers, accelerated the replacement project. 6. Changing the normal DOT operational procedures expedited the reconstruction. For example, ODOT approved the shop drawings the day they were submitted (Bai et al. 2006, p. 342). Fundamentals of Expedited Procurement Although every agency will have its own set of emergency procurement laws, rules, regulations, and policies, the lit- erature reveals six fundamental tenets for expediting the procurement of an emergency project. They loosely mirror Bai et al.’s (2006) six lessons learned. The concepts are cat- egorized as follows: 1. Respond rapidly: Compressing the design and con- struction of an emergency project to its shortest state is the primary objective of the procurement process (Hietpas 2008). To do so, an agency must be pre- pared with an emergency project delivery plan that describes in detail the steps to obtain the necessary waivers from various regulations in place for routine contracts (Brick 2005; Kirk 2011). 2. Experience counts: The use of procurement proce- dures with which DOT personnel are not familiar increases the perception of risk and tempts emer- gency project personnel to violate standard regula- tions in the name of expedience (Migliaccio et al.

8 2008; Perry and Hines 2007). Conducting as much of the procurement as possible using the routine system within routine regulatory constraints reduces con- tract administration risk and the probability of poste- vent criticism of agency procedures (Christenson and Meeker 2002; Kirk 2011). 3. Incentivize key elements of project success: Strate- gic Highway Research Program 2 (SHRP2) project number R-10, “Project Management Strategies for Complex Projects,” lists this principle as one of the essential elements of complex project management (Shane et al. 2011). Emergency projects can involve a level of complexity not often encountered that springs from the context in which the project must be delivered. Incentives are one way to make the con- tractor’s objectives align with project success criteria (Schexnayder and Anderson, 2010; Kirk 2011; Shane et al. 2011). 4. Minimize design review: An agency cannot afford to spend the typical amount of time reviewing and haggling over the details of design in an emergency. Research has shown that most project delays occur during the design phase as designers and owners trade design deliverables back and forth for review and approval (Diekmann and Nelson 1985; West et al. 2012). Hence, the agency must define exactly what must be designed in detail and what can be built with- out a full set of construction documents (Gonderinger 2001; McMinimee 2010). 5. Control the internal technocracy: Procurement con- straints are often immutable, but the agency can mitigate that issue by changing its routine process by implementing a 24-hour operation with senior agency experts and decision makers on call to deal with ques- tions, clarifications, or approvals as they occur (Chris- tenson and Meeker 2002; Migliaccio et al. 2008). 6. Commit to extraordinary effort: A serious emergency requires commitment to project completion regardless of the obstacles (Thorn 2006; Warne 2008). Waiv- ing or reducing competition requirements allows the agency to mitigate the risk of awarding to an incompe- tent contractor by selecting designers and builders on the basis of qualifications and past performance. This enhances the environment of trust in the procurement as each stakeholder changes its typical procedures to accommodate the needs of the project (Anderson and Damnjanovic 2008; Jeffery and Menches 2008; Blanchard et al. 2009). The remainder of the report will explore these fundamen- tals in detail, providing examples of the state of the practice in expedited procurement procedures in state DOTs and col- lecting examples of how public transportation agencies have successfully delivered emergency construction projects. KEY DEFINITIONS The report uses a number of procurement terms in a precise sense. It is important for the reader to understand the spe- cific definitions of these terms to gain a full understanding of this study. Procurement Terms The definitions for the primary procurement terms are drawn from two sources. With one exception, federal termi- nology is defined in Glossary of Federal Acquisition Terms (Shields 1998), and nonfederal terms are defined in the state of Minnesota’s Glossary of Common Procurement Terms (2011), which seemed to be the most complete listing of this type. It must be recognized that each state will have its own definitions for technical terms describing procurement and contract actions. • Advertise: “To make a public announcement of the inten- tion to purchase goods, services or construction with the intention of increasing the response and enlarging the competition. The announcement must conform to the legal requirements imposed by established laws, rules, policies and procedures to inform the public” (Shields 1998). This term is used in the same sense as the federal definition of full and open competition. • Emergency: “A threat to public health, welfare, or safety that threatens the functioning of government, the protection of property or the health or safety of people” (State of Minnesota 2011). • Full and Open Competition: “All responsible sources are permitted to compete for a contract action” (Federal Acquisition Regulation (FAR) 6.003). • Procurement: “The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, store keeping, and salvage and disposal operations” (State of Minnesota 2011). “All stages involved in the process of acquiring supplies or ser- vices, beginning with the determination of a need for supplies of services and ending with contract comple- tion or closeout” (Shields 1998). • Solicitation: “The process used to communicate pro- curement requirements and to request responses from interested vendors. A solicitation may be, but is not limited to a request for bid and request for proposal” (State of Minnesota 2011). “(1) A document sent to pro- spective contractors by a Government agency request- ing submission of an offer, quote, or information. (2) The process of issuing a document requesting submis- sion of an offer, quote, or information and obtaining responses” (Shields 1998).

9 In addition to these terms, the DOT survey used the fol- lowing terms to describe commonly practiced procedures and to differentiate between a routine project and an emer- gency project: • Emergency project: A project initiated as the result of some unexpected circumstance that affected the capac- ity/level of service of a given transportation facil- ity (road, bridge, tunnel, etc.) to the point where the respondent believed it to be great enough to warrant special treatment in the procurement phase. • Qualifications Based Selection (QBS): A procurement method where the consultant or contractor is selected on a basis of qualification alone with no price factors. Price is negotiated with the best qualified competitor. This method was codified at the federal level by the Brooks Act, Public Law 92-582 (1972) (40 USC 1101- 1104) and regulated by Title 23 USC 112(b)(2)(A) and 23 CFR 172.5(a)(1). • Sole source: A procurement method where the agency is authorized to award directly to the consultant/con- tractor of its choice without competition. • Typical project: A project delivered using procedures considered by the respondent to be normal. Other Relevant Terms Since the application of expedited procurement in the con- text of an emergency contract is the subject of this report, it is also important to have standard terms that relate to project delivery methods: • Alternative technical concepts (ATC): “A procedure where the designers and/or contractors are asked to furnish alternative design solutions for features of work designated by the agency in its DB Request for Proposals (RFP)” (Carpenter 2010). • Construction manager/general contractor (CMGC): “A project delivery method where the contractor is selected during design and furnishes preconstruction services. Also called CM-at-Risk” (DBIA 2009). • Design-build (DB): “The system of contracting under which one entity performs both architecture/engineer- ing and construction under a single contract with the owner” (DBIA 2009). • Design-bid-build (DBB): “The ‘traditional’ project delivery approach where the owner commissions a designer to prepare drawings and specifications under a design services contract, and separately contracts for construction, by engaging a contractor through com- petitive bidding or negotiation” (DBIA 2009). • Indefinite delivery/indefinite quantity (IDIQ): “A contract that may be used to acquire supplies and/or services when the exact times and/or exact quanti- ties of future deliveries are not known at the time of contract award…within stated limits (minimum and maximum), of supplies or services to be furnished during a fixed period, with deliveries or performance to be scheduled by placing orders with the contractor” (FAR 16.501-2(a)). These are also called job order con- tracts, task order contracts, on-call contracts, standby contracts, pushbutton contracts, master contracts, and several other terms. STUDY APPROACH The approach used to complete the synthesis relied on five independent sources of information: • Literature review; • Survey of DOTs and federal agencies; • Structured interviews with design consultants and construction contractors; • Content analysis of DOT emergency management doc- uments; and • Case studies of emergency projects. The first source of information was a comprehensive review of the literature. An effort was made to seek not only the most current information but also historical information so that the change, if any, over time in emergency procure- ment practices could be mapped and related to the current state-of-the-practice. The second was the general survey responses of 42 state DOTs (80 percent response rate), including three Federal Lands Highway Divisions. The sur- vey questionnaire was based on the output of the literature review. Of the survey respondents, five DOTs indicated that they did not have formal procedures to expedite the procure- ment of emergency projects and seven responses were not complete, leaving 30 complete responses upon which to base the bulk of the synthesis. The third source was structured interviews conducted with design consultants and construc- tion contractors to gain the industry perspective on expe- dited procurement procedures. The emergency procedure document content analysis using a protocol proposed by Neuendorf (2002) from 42 states plus the FHWA was the fourth source of information. Figure 3 shows the survey response and emergency procedure document content analy- sis populations as a map. Subjects where two or more of the five sources intersected were considered notable and used to develop the conclu- sions and candidates for the list of effective practices. Points where only one source furnishes substantive information on emergency project success were used to identify gaps in the body of knowledge that showed potential for future research. Since expedited procurement procedures directly affect both the consulting engineering and construction contract- ing industries, short structured interviews were scheduled with representatives of both stakeholder groups. An effort

10 was made to sample a population from across the country. The questionnaire was developed from the literature review and assembled in accordance with the protocol established by Oppenheim (1992). The interviews were conducted either face-to-face at a national conference or over the phone accord- ing to the General Accounting Office (1991) (now Govern- ment Accountability Office) methodology and recorded for analysis. This research instrument was viewed as a valida- tion technique to confirm that the information that seemed to agree from the literature, the survey, and the content analysis was in actuality viewed by industry in the same light. Table 1 contains a description of the industry interviewees, who were promised anonymity in return for their candid input. FIGURE 3 Survey response and emergency document content analysis map. TABLE 1 STRUCTURED INTERVIEW POPULATION: CONSULTANTS AND CONTRACTORS Location Type Location Type Arizona Regional general contractor Florida National design consultant California National general contractor Massachusetts International design consultant Oklahoma Local paving contractor Oklahoma Regional design consultant Oregon Regional general contractor Texas National construction management consultant Texas National gen- eral contractor Washington Regional design consultant Protocol to Develop Conclusions, Effective Practices, and Recommendations for Future Research The major factor in developing a conclusion was the intersec- tion of trends found in two or more research instruments. The intersection of more than two sources of converging infor- mation adds authority to the given conclusion. Additionally, greater authority was ascribed to information developed from the general survey of highway agencies. The literature review and emergency document content analysis were considered to be supporting sources of information. Finally, the case studies were used to validate the conclusion as appropriate because they were examples of how U.S. highway agencies have actu- ally implemented expedited procurement procedures to sup- port the delivery of emergency projects. Effective practices were also identified by multiple instances of the same practice in several different sources of information. Greatest authority was ascribed to practices that were found in the case studies because of the immediate evidence of successful results. Recommendations for future research were developed based on the common practices described in the literature and confirmed as effective by one of the research instruments but not widely used. Gaps in the body of knowledge found in this study were also used to define the areas where more research would be valuable. Organization of the Report The next chapter sets the stage for the more thorough analy- sis contained in subsequent chapters by presenting 10 case studies. The major legal issue in emergency projects is deal- ing with limiting free and open competition before contract award. Therefore, chapter two demonstrates the methods that agencies used to deal with uncertainty in their emer- gency projects. The information in this study will be pre- sented as follows: • Chapter two—Emergency Procurement Project Case Studies • Chapter three—Department of Transportation Emergency Procurement Policies, Procedures, and Programs • Chapter four—Emergency Procurement Designer/ Contractor Selection Methods • Chapter five—Emergency Procurement Contracts and Postaward Design/Contract Administration Procedures • Chapter six—Emergency Procurement Law, Legal Case Studies, and Relevant Case Law • Chapter seven—Conclusions, Effective Practices, and Recommendations for Future Research