Expedited Procurement Procedures for Emergency Construction Services (2012)

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51 CHAPTER FIVE EMERGENCY PROCUREMENT CONTRACTS AND POSTAWARD DESIGN/CONTRACT ADMINISTRATION PROCEDURES The amount of time available and the urgency of need will usually make the decision for the agency (Perry and Hines 2007). In theory, consummating a contract with a fully described scope of design and construction work is the least risky for the DOT (Alder 2007; Anderson and Damnjanovic 2008). Thus, this sec- tion discusses options 1 and 2. Option 3 is discussed later in the chapter as part of information on emergency accounting proce- dures. Option 4 is amply demonstrated in the chapter two case studies, where every emergency case study project used more than one of the possible options to restore service. FDOT defines the “critical success factors” for a consul- tant contract as follows: • “Properly define scope [of consultant contract in a manner that is] easily understood by all parties. • Use established measures [of quality of the consul- tant’s work]. • Use established procedures and policies including revi- sions throughout contract period” (SAIC 2003). The last two bullets advocate using established proce- dures for the consultant contract, which agrees with the fundamentals in chapter one with regard to using traditional procurement procedures as much as practical on emergency construction projects. Thus, the conclusion reached with respect to construction can be extended to include consultant scope definition contracts as well. Case for Outsourcing Scope Definition The survey asked whether DOTs used a preliminary con- sultant contract to define the scope of work before begin- ning the procurement to complete project itself. Half of the responses were affirmative, three indicated that they had not done so but could if needed, and only seven were negative. The survey results also yielded 29 of 30 responses that a “sufficient scope definition to allow competitors to price the project without excessive contingencies” was either impor- tant or essential to project success. Scope definition is most important when an emergency project is being delivered using lump sum payment provisions, because the contractor must include contingencies for scope risk in the lump sum. In unit price contracts, the owner shares the scope risk with the contractor (Schexnayder and Mayo 2004). INTRODUCTION “During a construction crisis, traditional contracts are inflexible, restrictive and counter-productive” (Loosemore and Hughes 1998). Selecting an appropriate contract for an emergency project is made more difficult by the emotional environment that surrounds most emergency projects. Typi- cally, contract forms are a function of the project delivery method, strategically chosen to fit the unique condition of the project. However, in an emergency, time is of the essence. “Emergency projects, because of their urgent nature, lend themselves well to time-based innovative bidding tech- niques” (PennDOT 2011). These techniques include I/D, interim completion dates, cost-plus-time bidding, and lane rental (Anderson and Damnjanovic 2008). These as well as DB and CMGC contracts were all successfully tested in the FHWA Special Experimental Project 14 (SEP-14) (FHWA 2011). This chapter discusses the options found in the study for structuring emergency design and construction con- tracts, as well as the salient procedures that are associated with each alternative, including scope definition and emer- gency accounting procedures. EMERGENCY PROJECT SCOPE DEFINITION All contracts describe the scope of the work to be accom- plished under the contract provisions (Schexnayder and Mayo 2004). A DOT essentially has four options when it comes to defining the scope of an emergency contract: 1. Define the scope using in-house design and construc- tion personnel. 2. Outsource the scope definition process to a prelimi- nary design consultant. 3. Make no effort to explicitly define scope and rely on cost reimbursable payment provisions where the work is paid for on a time and materials basis with some provision to cover the contractor’s general conditions, overhead, and profit. 4. Employ a combination of the previous three as dic- tated by the emergency.

52 Figure 33 illustrates the survey result regarding emer- gency contract payment provisions and shows that two- thirds of the respondents use lump sum contracts. The combination lump sum-unit price contract mitigates the risk for the features of work that are unit priced, but the risk for the lump sum portion remains with the contractor. Research by Mogren (1986) and Kirby et al. (1988) proved that the major causes of routine construction contract modifications are design scope deficiencies, and correcting the deficiencies accounts for 56 percent of all modifications after construc- tion contract award. Another study found that deviations resulting from design errors discovered during construction account for 79 percent of all modification costs and average 9.5 percent of the total project cost (Burati et al. 1992). A more recent study confirmed the value of a comprehensive scope of work when it found that construction cost growth was inversely proportional to preconstruction/design costs (Gransberg et al. 2007). The agreement between the two survey responses and the literature leads to a conclusion that investing in a preliminary consultant contract to quantify the scope of both the design and construction work appears to be worthwhile. The conclusion is confirmed by two of the case study projects where the DOT actually hired a consul- tant to develop a preliminary scope of work. Emergency Scope Definition Contract Content Table 17 contains the responses of the survey respondents who used a preliminary contract to scope emergency proj- ects. It shows the level of effort in those contracts. Com- pleting a preliminary design is the most frequently included task. It is also worth noting that most of the agencies that use this approach also ask the consultant to conduct geotechni- cal investigations and verification testing. These engineer- ing work items connect nicely with the previously quoted contractors’ assertion that owners can reduce costs by “doing their homework” and “hiring the best possible geo- technical and environmental firms to provide early, pre-bid data” (Christensen and Meeker 2002). The intersection of these two bits of independently derived information points to retaining a consultant to prepare a preliminary scope of work and perform limited geotechnical and environmental testing as an effective practice that could be included in a DOT’s emergency procurement plan. It also demonstrates the need for research to both recommend the optimal con- tent of this type of contract and document its effectiveness through analysis of its costs and benefits in terms of time/ user costs as well as its impact on construction cost growth. EMERGENCY CONTRACT TYPES NCHRP Synthesis 379 (Anderson and Damnjanovic 2008) evaluated routine contracting practices to accelerate the delivery of infrastructure projects. It looked at 43 differ- ent methods currently in use. Many of these methods are applicable to expediting procurement procedures for emer- gency contracts. Those that are not were discarded from the analysis. The content analysis also identified a number of contracting methods that are used specifically for emer- gency projects. The contract types found in Synthesis 379 were combined with those found in the content analysis and categorized in three groups. Finally, contract types found in the survey were added to the population. FIGURE 33 Emergency contract payment provisions.

53 TABLE 17 PRELIMINARY SCOPE DEFINITION CONSULTANT CONTRACT Content of Preliminary Scope Definition Contract No. Responses Inventory of features of work to be repaired/replaced; preliminary design 10 Inventory of features of work to be repaired/replaced; design recommendations 8 Review of records and geotechnical investigation of critical areas 8 Review of records and preliminary permit(s) development 8 Review of records and limited verification testing 7 Cost estimate 6 Inventory of features of work to be repaired/replaced; no design 5 Traffic control plan and/or implementation 5 Develop and submit permit application(s) 4 Public information planning 4 Risk analyses 2 The first category included contract types with the abil- ity to directly establish an expedited schedule. For instance, cost-plus-time bidding competes the schedule as well as cost, allowing the agency to award to the fastest schedule at a higher price. Sole source contracts eliminate the pro- curement period, and therefore directly expedite the delivery by eliminating one step in the process. The second category was reserved for methods that indirectly expedite delivery by means of financial incentives and/or disincentives. It also included approaches that took advantage of active contracts and augmenting the internal workforce or adding DOT employee support to consultant/contractor organizations. The final category contained other methods that did not fit in the first two categories but if applied properly could also reduce the reaction time to an emergency. Table 18 is the out- put from that analysis; it shows 27 different methods uncov- ered in the literature review, content analysis, and survey. The glossary defines all the methods in the table. The survey also asked respondents to indicate the types of project delivery methods and procurement procedures that were used in both routine and emergency project. Figure 34 shows the responses to that question and shows that the most commonly used project delivery method is DBB and most common procurement procedure is low bid. This result fur- ther supports the idea that the use of traditional contracting techniques to the greatest extent practical is a key success factor for emergency projects. Table 19 provides examples of contracts used in nine states to expedite emergency proj- ect delivery that were found in the content analysis. Note that the name for each is a local term. The type of contract can be determined by looking at the procurement procedure column. The table confirms the preference for retaining tra- ditional contracting methods, with six of nine emergency contracts utilizing a low bid award mechanism. The table also highlights the need to plan for emergency procurements before the emergency occurs, because six of the contract types are consummated before an emergency occurs. This allows time to do the procurement at a normal pace and with- out the pressure induced by the “severe emotional distress as a result of the incident” (AEMA 2009). The Office of Fed- eral Procurement Policy identifies “the use of IDIQ contracts to have contractors available for a rapid response, and new flexibilities, including an expanded use of simplified acquisi- tion authority” (Perry and Hines 2007). TABLE 18 CONTRACTING METHODS FOR EXPEDITING DELIVERY OF EMERGENCY PROJECTS Direct Expediting Contracting Methods Indirect Expediting Con- tracting Methods Other Construction man- ager/general contrac- tor (CM-at-risk)* Alliancing* Active manage- ment payment* Cost-plus-time bidding* Augment internal mainte- nance force with contract personnel Cost plus Design sequencing* Contractor overhead costs* Letter contract Design-build* Incentives/disincentives* Lump sum bidding* Multiparameter bidding* Early contractor involvement* In-house support to out- sourced consultant contract Flexible notice to proceed* Lane rental* Indefinite delivery/ indefinite quantity Liquidated savings* Pre-event logistics contract Interim completion dates* Modification of existing contract Limited competition bidding No-excuse incentives* Qualification- based selection Sole source selection Quality factors* *Contracting method reviewed by NCHRP Synthesis 379 (Anderson and Damnjanovic 2008). The NYSDOT case study in chapter two demonstrates the value of IDIQ contracts, because they furnished the additional capacity to immediately mobilize design and construction resources in the aftermath of a major disaster. The MoDOT case study validates the importance pre-event contractual contingencies to minimizing the time that ser- vice capacity is lost in an emergency. Combining the results of the survey, the content analysis, and the case studies leads to the conclusion that having IDIQ contracts in anticipation of the need for emergency services is the surest contractual means to minimize the impact of an emergency. EMERGENCY PROJECT DESIGN AND CONSTRUCTION ADMINISTRATION No repair, restoration, or replacement work on damaged infrastructure can take place until enough of the design has

54 been completed to permit the contractor to identify the means, methods, materials, and subcontractors required to complete the emergency scope of work (Bai et al. 2006). With reac- tion time as the critical parameter, reducing the time it takes to make the technical decisions necessary to get construc- tion started is paramount. Two primary components must be established: the amount of design that must be completed before releasing construction documents, and the review and approval by the DOT of the design products as they are pro- duced by either consultants or in-house design staff. The first factor has been facilitated by selecting a project delivery method that involves the contractor in the design pro- cess, such as CMGC or DB, or emulating NYSDOT, whose design staff worked hand in hand with the IDIQ statewide emergency bridge contractor. The Utah DOT has found that design products produced in its routine CMGC contracts can released for construction much earlier because of contractor involvement (Alder 2007). Since the contractor is already on board, the engineer no longer has to produce biddable con- struction documents and can wrap up its designs on a feature- by-feature basis when the CMGC declares it has sufficient design detail to bid out the trade subcontract work packages (Alder 2007; Schierholz et al. 2012; West et al. 2012). However, the Title 23 USC (2008) “due diligence” responsibilities of the DOT are not so easily satisfied through outsourced design (Mogren 1996). The major issue is the amount of review that an agency has the time to do in the middle of a crisis such as the aftermath of a flood or earthquake. Obviously, the linear review and comment process used in routine design contracts is not well suited for expediting procurement, and given the previously established preference for accelerating the DBB process for most emergency projects, the design review pro- cess must be altered if the required pace of design is to be met. Thus, the literature and the content analysis both found that DOTs were using expedited design review procedures that were originally developed for DB projects (WSDOT 2004; Arizona DOT 2007; Koch et al. 2010). FIGURE 34 Oregon DOT emergency permitting process for emergency slope/bank failures (Apke 2002).

55 Emergency Design Reviews The Washington State DOT (WSDOT) approach to DB over-the-shoulder design reviews is one tool that has been used to expedite the review of design while satisfying the FHWA requirements for due diligence (WSDOT 2004). The Arizona DOT also advocates this process to expedite con- struction start (Arizona DOT 2007). A typical WSDOT RFP over-the-shoulder design review clause is as follows: WSDOT is expecting a proposed project that meets the design criteria and can be further developed for construction….WSDOT is expecting to be available in a matter of hours or days, not days or weeks, to answer questions and provide feedback during the process. We would like to operate under a partnering environment with over-the-shoulder reviews, if possible (WSDOT 2004). A second tool that was used by the Mississippi DOT to expedite the design approval process on the emergency replacement of a major highway bridge was to develop an integrated work breakdown structure where direct coordi- nation was created between design and construction work TABLE 19 EMERGENCY CONTRACTING METHODS FOUND IN THE CONTENT ANALYSIS AND SURVEY Name of Contract Agency Procurement Procedures Description Emergency Force Account Contracts Caltrans (2004) Sole source Begins immediately after documentation procedure Estimated total cost Location limits of work Informal Bid Contracts Caltrans (2004) Low bid—As many bids as practical Begin once the initial disaster response is accomplished “Cut And Toss” Contract Florida DOT (2010) Low bid—Procure before hurricane season Selection based on resources, capabilities, and cost Begins immediately after governor declared emergency Repair traffic signs/devices Clear debris “H” Contract Florida DOT (2010) Modification to an existing contract for emergency ser- vices or materials Must fall within the original scope or intent of the contract Used for services that will be reimbursed by federal funds FHWA approval before starting work “Push Button” Contract Florida DOT (2010) Pre-event low bid IDIQ contract Unit price contract Awarded to low bidder Emergency DB Project Florida DOT (2010) Best value Compressed schedule Minimal public involvement Emergency Repair Contract Without Bidding Indiana (2010) Contract awarded to low bidder without advertising for bids Invitation to prequalified contractors only Price below the engineer’s estimate Must invite at least one Disadvantaged Busi- ness Enterprise if practical “Nested” DB Contract Missouri DOT (McLain 2008) Low bid DBB contract with an on-call DB contract embedded in the project in the event of a landslide All bidders included a directed allowance for DB landslide repair DB contractor mobilized immediately after event “If and Where Directed” Contract New Jersey DOT (Perry and Hines 2007) Pre-event low bid IDIQ contract Unit price contract Awarded to low bidder Statewide Emer- gency Bridge Contract New York State DOT (2007) Pre-event low bid IDIQ contract for emergency bridge work Payment by force account. Includes cost to install temporary bridging Contractor responds within 24 hours Debris Site Man- agement and Dis- posal Contract North Carolina (2011) Pre-event low bid IDIQ contract for debris disposal (logistical support) Unit price contract Awarded to low bidder Secondary contract to second low bidder 12 month duration Limited Competi- tion Contracts Utah DOT (2011) Low bid—3 or more bids; however, document the rea- sons if time constraints, limited interest, or lack of qualification make it impractical to solicit 3 bids Verbal approval needed Commence work prior to a signed contract Designate authority “Master” Contract Wisconsin DOT (Perry and Hines 2007) Pre-event low bid IDIQ contract Unit price contract Awarded to low bidder

56 packages (Blakemore and Konda 2010). This allows the review of those designs to be conducted in a highly priori- tized manner and can be incorporated into an emergency project plan. The details are as follows: To achieve the first [construction] milestone, the design effort was focused to match the planned order of construction with select groups of pile bents, waterline footings, and beams being designed first to provide adequate lead time for the precast suppliers (Blakemore and Konda 2010). The operating requirement for emergency response is to have a plan for handling the review of necessary design deliverables in a manner that does not delay construction (Kirk 2011). The Title 23 USC requirements for agency over- sight are not waived in an emergency (FHWA 2011). There- fore, DOT personnel must understand what the change from routine to emergency project delivery means with regard to design review and how they can facilitate design progress rather than act as a barrier to construction start. The sur- vey respondent from the North Carolina DOT recognized the need to expedite reviews and stated, “time constraints limit review periods.” The same thing is true for the review and approval of construction submittals on projects using expedited procurement procedures. Emergency Construction Submittal Review “It is evident that through a partnering atmosphere and contracting methods such as design build plus incentive disincentives clauses, encourages a contractor to expend the planning and effort and resources necessary to reduce construction time” (Schexnayder and Anderson 2010). To maintain the environment of trust and to allow the con- tractor to accelerate the pace of construction as desired in I/D contracts, construction submittals need to be both minimized and expeditiously reviewed. Construction sub- mittals extend the routine project’s design by furnishing additional detail on materials, fabrications, and other ele- ments that the designer has left open to contractor prefer- ence as a means of encouraging competition (Schexnayder and Mayo 2004). The U.S. Army Corps of Engineers (USACE) (2007) utilizes a concept that centers design responsibility on the designer of record regardless of proj- ect delivery method. “[The] philosophy is that once the designer of record approves construction and extension of design submittals, the builder can proceed—don’t wait on us, unless there is a specific government approval required” (USACE 2007). This agency hands-off approach removes the linear construction approval process in which the con- tractor submits to the agency, which passes the submittal to its design consultant and then returns it to the contractor with comments and either an approval or disapproval. A DOT that chose to use the USACE approach for construc- tion submittal review on an emergency project would allow the contractor to furnish necessary construction submit- tals directly to the design consultant. The consultant would have the authority to review and approve them without passing them through the DOT unless the submittal was of a specific nature that required agency approval. One possible added value of this approach is the clarifica- tion of design liability between the agency and its consul- tant for the construction submittals. With the agency outside of the submittal approval loop, the consultant becomes the direct line of design responsibility and clearly liable for its actions or inaction (Mogren 1996). Based on the discussion in this section, it becomes clear that the design review and construction submittal review process could be combined in the emergency procurement management plan, and expe- dited procedures can be developed that see the process as single task for each work package in the work breakdown structure, as done by the Mississippi DOT (Blakemore and Konda 2010). EMERGENCY CONTRACT SPECIAL CLAUSES AND ACCOUNTING PROCEDURES Routine design and construction contracts must be modi- fied to be successfully applied in an emergency situation. The MnDOT replacement of the I-35W Bridge (see chapter six for details) in 339 days (Hietpas 2008) demonstrates expedited procurement procedures in the most favorable light. The survey asked a series of questions concerning the procedures and clauses that are used to deliver emer- gency projects. Table 20 contains the responses to those questions. The remainder of this section discusses how the other research instruments relate to the survey responses shown in the table. Emergency Permitting Procedures Only four survey respondents—California, Kansas, Minne- sota, and New York—stated that their emergency contracts were constrained by a pre-event abbreviated permitting pro- cedure. Minnesota stated that its constraints revolved around water quality and soil contamination issues. The other three did not elaborate on their constraints. The survey asked about available forms of expedited permit procedures. The first was the use of an abbreviated permit application (Perry and Hines 2007), and the second was the ability to use a progressive permitting procedure. Progressive permits allow construction to begin based on a limited permit for specific items. As long as the construction activity does not exceed the limits of the permit, it is allowed to continue. As the design becomes more developed and specific environmental protection/mitigation measures are included to address more issues, the authority of the permit gets larger until a complete permit is issued at design completion (Koch et al. 2008). The DOTs in 17 states have some form of expedited permit pro- cedures, as shown in Table 21.

57 TABLE 21 EXPEDITED PERMITTING PROCEDURES DOT Abbreviated Permit Applications Authorized Progressive Permitting Authorized Alaska Y N California Y Y Colorado Y Y Florida Y Y Maine Y Y Massachusetts Y N Minnesota Y Y Mississippi N Y Montana Y Y North Carolina Y N Nebraska Y N New York Y Y Ohio Y N South Carolina Y N Virginia N Y Washington Y N Wisconsin Y N Y = yes; N = no. The issue of emergency permits basically revolves around the trade-off between the urgent need to protect life and property and the laws protecting the environment. This is a gray area. However, the Council on Environmental Quality has issued the following guidance on the subject: 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 (40 C.F.R. § 1506.11). The Vermont Agency of Transportation (VTrans) emer- gency management manual differentiates between actions necessary during the crisis and the work necessary after the crisis has passed: Prior to any work being performed under the recovery phase, the [engineer] must make contact with the VTrans Program Development Regional Environmental Specialist and applicable regulatory agencies to advise them of the emergency status of the activities planned and/or underway and to discuss the need for permits or clearances for this work (VTrans 2011). TABLE 20 EMERGENCY PERMITTING PROCEDURES, RISK MANAGEMENT, AND CONTRACT CONTENT Survey Question Permitting Procedures Yes No NA Are your emergency contracts constrained by expedited, abbreviated, or progressive permitting require- ments that were negotiated in advance or as a result of the emergency? 4 13 13 Are abbreviated permit applications authorized to deliver emergency projects? 13 4 13 Are progressive permits authorized for use to deliver emergency projects? 8 2 20 Risk Management Yes No Unsure Is a formal risk analysis conducted on an emergency procurement prior to? 5 18 7 Do your emergency project cost estimates involve an analysis of uncertainty (i.e., was a range cost estimate developed; rational development of contingency)? 10 20 0 Do you employ any formalized risk allocation techniques to draft the contract provisions? 3 27 0 Contract Content Yes No Unsure Does your agency currently have a contract document that was specifically developed for emergency projects? 5 25 NA Are abbreviated contract forms are authorized for emergency projects? 19 11 NA Do you use different contract forms based on the size/value of the emergency projects? 7 20 3 Do you use emergency contract clauses such Davis-Bacon prevailing wage rates that comply with require- ments for federal-aid highway funding? 18 4 8 Do you use emergency contract clauses, such as the FEMA schedule of allowable equipment rental rates that comply with requirements for FEMA funding? 13 8 9 Do the project cost and schedule control procedures differ on an emergency contract from those used in a typical contract? 7 19 4 Do the accounting procedures differ on an emergency contract from those used in a typical contract? 9 21 NA Do your emergency contracts contain liquidated damages? 22 8 0 Do you use warranties in emergency projects? 4 22 4 NA = not available.

58 The Oregon DOT Emergency-Urgency Users Guide (Apke 2002) furnishes a typical example of how one agency deals with emergency permitting requirements. In this case, the flow chart is shown in Figure 34. The figure shows how the Oregon DOT differentiates between an emergency, which must be dealt with immediately, and an “urgency,” which can wait until the high water has dropped. This agrees with the concept discussed earlier by VTrans and the Council on Environmental Quality guidance to the effect that an abbre- viated permitting process is authorized only for those situ- ations where an immediate solution is required. This leads to the conclusion that emergency permits must be carefully reviewed and the agency must be able to clearly document its rationale for shortcutting or bypassing the routine process based on a clear urgency of need to protect life and property. Emergency Project Risk Management Mitigating risk to the community is the essence of emer- gency contracting. So the survey sought to identify what, if any, formal risk management techniques were appropriate for these types of projects. The results in Table 20 show that cost risk is the one most often addressed, but by only one- third of the respondents. All the respondents that elaborated on that question indicated that they develop contingencies as a risk management tool. Of the three responses to the ques- tion about translating risk allocation to contract clauses, one respondent said the DOT does this on a “case by case - things such as day for day weather, allow higher percentage of sub- contracting, and DOT direct purchase of certain materials.” The survey results show that risk management is not an area where DOTs invest a lot of effort on emergency contracts. Roughly 75 percent of the respondents rated development of a formal risk mitigation plan as “not important” for the success of an emergency project. It would seem logical that the reason is that they do not have the time to engage in such an esoteric pursuit during an emergency. Thus, the survey has uncovered a gap in the body of knowledge, and a recom- mendation can be made to do research in the area of optimiz- ing risk management with the time available to conduct the analyses for emergency projects. Emergency Contract Content Table 21 shows that the content of emergency contracts does not differ much from routine contracts. Most of the respon- dents do not use different contract forms, different project control measures, or special accounting procedures. Most apply liquidated damages to their construction contracts, and the use of warranties does not appear to be higher or lower than normally expected from a national cross section of DOTs (Scott et al. 2011). Taken together, the conclusion reached in an earlier chapter that the use of contracting methods with which the agency is familiar is reinforced. Put another way: Familiarity equals confidence, and confidence permits DOT procurement, design, and construction personnel to acceler- ate the delivery of an emergency project and make the hard, time-sensitive decisions with less fear that they may be in vio- lation of procurement laws and regulations. Emergency accounting procedures and project control measures are related, since the accounting output becomes input to the cost and time variables for the project control measures. The DOTs that responded that they had different accounting procedures in an emergency contract typically cited the need to track and document costs to gain reimburse- ment from FHWA ER funding or FEMA funding. Minnesota indicated that it needed to track time for DOT staff and the use of materials on hand as its major change in accounting during an emergency. South Carolina stated that the need to account for expenditures in a cost-reimbursable contract required a different accounting system from the routine. Anderson and Russell (2001) describe the motivation that underlies the use of warranties on routine contracts: Warranty contracting has been implemented in an attempt to reduce the amount of [agency] resources required on a highway project, to reallocate performance risk, to increase contractor innovation, to increase the quality of constructed products, and ultimately to reduce the [life cycle costs] of highway projects. Warranty contracting places a greater emphasis on the quality of the constructed product than the traditional design-bid- build contracting method… (Anderson and Russell 2001; italics added). The motivation does not change in an emergency, and the increased project delivery pace demands a “greater empha- sis on the quality of the constructed product.” Thus, the use of warranties on emergency projects is not only logical but also justifiable as a risk mitigation measure. However, the use of warranties is controversial in many states because a “warranty is an absolute liability on the part of the War- rantor, and the contract is void unless it is strictly and liter- ally performed” (Hancher 1994). A recent study (Scott et al. 2011) found that “[s]everal DOTs reported quality improve- ments … including Mississippi DOT, INDOT, and WisDOT. However, these DOTs admit that accurate, quantitative com- parisons to support the effectiveness of warranties are dif- ficult to achieve because of the many variables affecting project performance.” Nevertheless, four survey respondents reported using warranties on emergency contracts. Delaware and Florida indicated that they simply promulgate their standard con- struction warranty as a part of the emergency contract. Min- nesota and Mississippi stated that they use warranties only on emergency DB projects. DB project delivery demands that the DOT turn control over the design details to its design- builder (Koch et al. 2010). Therefore, requiring the entity that both designed and constructed the project to furnish a warranty makes sense. Coupling a warranty with the over- the-shoulder design review process previously discussed

59 enabled MnDOT to satisfy its Title 23 USC (2008) due dili- gence responsibilities while facilitating the replacement of the I-35W at a record speed (Hietpas 2008). This discussion leads to the need to understand the factors that affect quality of both design and construction in the emergency project. Factors That Influence the Success of Emergency Projects Figure 35 shows how the survey respondents rated the impor- tance of various procurement factors. The top four factors are a clear definition of an emergency, sufficient scope definition, highly qualified designers and contractors, and streamlined permitting process. These results validate the conclusions reached previously in each of those subject areas. The least important factors all deal with the traditional plan- ning process for both risk and quality management. This result implies that if highly qualified consultants and contractors are retained, expending the time to develop formal risk and quality management plans becomes less critical. The inference agrees with a paper on design and construction quality management in FIGURE 35 Importance of different factors on success of emergency projects.

60 DB projects, which found that the most frequently used quality management technique was to select highly qualified design and construction personnel who worked for highly experienced firms (Gransberg and Molenaar 2004). The Missouri DOT case study project demonstrates one way to achieve specific emergency qualifications without limiting competition. Its “nested” DB contract ensured that a highly qualified geotech- nical DB firm would be immediately available in the event of a landslide. The Utah DOT chose to use CMGC on its Cedar Canyon case study project in order to bring highly qualified designers and contractors to the emergency project. The inter- section of the survey, the literature, and the case studies leads to the conclusion that the quality of the personnel and firms that will design and build an emergency project is more important than the administrative planning processes, because time is of the essence in an emergency. Consultant and Contractor Perspectives on Impact of Expedited Procurement Procedure Structured interviews were held with four consulting engi- neers and five contractors, all of whom had experience with expedited procurement procedures for emergency contracts. The primary goal of the interviews was to gauge perceptions of the efficacy and impact of expediting procurement. In public policy, perceptions are often just as important as facts. Legislative action is heavily influenced by perceptions, and while changing procurement procedures in an emergency is easy to justify, the design and construction industries rep- resent a politically potent group. Hence, emergency public infrastructure projects have to overcome the perceptions that expedited project delivery would result in an inherently poor-quality and possibly unsafe final product. One report on DB implementation classifies perceptions as “barriers to broad acceptance” (Byrd and Grant 1993). Therefore, it is important to see the industry’s perspective and compare it with the agency perspective. The 10 representatives were asked to rate the importance of a list of project aspects to the success of an emergency proj- ect. Figure 36 shows the results of the interviews. Because the consultants were asked about the success of the design and the contractors were asked to focus on the constructed facility, the most notable difference because of the differing FIGURE 36 Consultant and contractor perceptions of the importance of emergency procurement.

61 focus is the consultants’ rating of sole source and QBS pro- curement as essential, in contrast to the contractors’ some- what lower rating. However, DOT maintenance of a standing list of prequalified consultants and contractors willing to do emergency work was rated highly by both groups. Each inter- viewee was asked to name an expedited procurement practice that was particularly effective in his or her opinion, and the prequalified standing list of sources was the most frequently cited practice by both groups. The agreement between the owners regarding the importance of contracting with highly qualified and experienced designers and contractors and the perceptions of industry regarding a standing list leads to the conclusion that developing and maintaining a list of prequali- fied sources of emergency services is an effective practice. Both the literature review (McLain and Shane 2009; Blake- more and Konda 2010) and the content analysis (ODOT 2010; UDOT 2011) found examples of prequalification procedures and procurement mechanisms for consultants and contractors to register their willingness to make their firms available for emergency work and serves as validation for the conclusion. Figure 37 shows the industry perceptions of the impact of expedited procurement procedures on the various aspects of the project. Both groups are roughly in agree- ment, rating all aspects except “achievement of DBE goals” and “probability of protest” in the same range. None of the consultants had an opinion about respon- siveness to warranty callbacks, which makes sense since they are often discharged from a project after construc- tion is complete. The results of the industry structured interviews strongly suggest that the methods in use to expedite the procure- ment of emergency projects are viewed as both effective and equitable. Figure 37 shows that only two aspects out of 21 are perceived as getting worse when expedited pro- curement procedures are implemented. Hence, the industry can be eliminated as a barrier to implementation and can be counted on to support the agency when it waives routine competition requirements to swiftly relieve an infrastruc- ture crisis. FIGURE 37 Consultant and contractor perceptions of emergency procurement impact.

62 CONCLUSIONS, EFFECTIVE PRACTICES, AND FUTURE RESEARCH RECOMMENDATIONS A number of conclusions were reached in this chapter. Addi- tionally, several effective practices and one recommendation for future research are presented here. Conclusions Based on the analysis of the information discussed in this chapter, the following conclusions were reached: • Chapter two concluded that using traditional procure- ment procedures as much as practical on emergency construction projects was a key to success. That conclu- sion can be extended to include consultant scope defini- tion contracts as well, based on findings in the literature. • The survey responses intersected with the literature, supporting a conclusion that investing in a preliminary consultant contract to quantify the scope of both the design and construction work adds value to the expe- dited procurement process. • The output from the survey, the content analysis, and the case studies conclude that having IDIQ contracts in antici- pation of the need for emergency services is the surest con- tractual means to minimize the impact of an emergency. • Careful review of emergency permits helps ensure that the agency has clearly documented its rationale for shortcutting or bypassing the routine process based on a clear urgency of need to protect life and property. The statutes (40 C.F.R. § 1506.11) authorize an abbreviated permitting process only for those situations where an immediate solution is required. • The survey, the literature, and the case studies all sup- port the notion that the quality of the personnel and firms that will design and build an emergency project is more important than the administrative planning pro- cesses, because time is of the essence in an emergency. Effective Practices This chapter’s analysis of DOT emergency management documents, the literature, and the survey results identified a number of effective practices that other agencies could immediately implement: • NYSDOT’s IDIQ contract for statewide emergency bridge work enables the agency to immediately react to a variety of bridge-related emergencies while main- taining full and open competition. • MoDOT’s use of a nested DB contract for specialty services inside a DBB demonstrates another approach to furnishing pre-event capacity to quickly react to a specific emergency such as a landslide without limiting competition on the larger contract. • By letting seasonal contracts for debris removal and disposal, FDOT provides standby capacity to address high-frequency emergency events such as hurricanes and obtain competitive pricing. • Developing and maintaining a list of prequalified sources of emergency services is an effective practice based on the agreement found between DOT survey respondents and the consultant/contractor interview- ees citing the importance of contracting with highly qualified service providers. These findings support the use of a standing list of prequalified consultants and contractors. Future Research Recommendations The recommendation is for research that explores the costs and benefits of implementing formal risk management procedures on emergency projects. The research would weigh the possibility of optimizing risk management with the time available to conduct the analyses for emergency projects.