Implementing Alternative Technical Concepts in All Types of Highway Project Delivery Methods (2020)

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12 Chapter 3 ATC Working Definition 3.1 Current Definitions The FHWA defines an Alternative Technical Concept (ATC) as “a request by a proposer to modify a contract requirement, specifically for that proposer’s use in gaining competitive benefit during the bidding or proposal process…[and] must provide a solution that is equal to or better than the owner’s base design requirements in the invitation for bid (IFB for DBB) or request for proposal (RFP for DB) document” (FHWA 2012). Ultimately, this definition only applies to federal-aid projects. However, it does set the standard upon which state DOTs are able to craft their own definitions. FHWA definition presumes the objective of the ATC is for the proposer to gain a competitive edge and sets two tests for determining whether a proposed alternative qualifies as an ATC: 1. It must modify a contract requirement. 2. It must be equal to or better than the baseline design. The first test essentially means that if the alternative is responsive to the contract requirements, then it is NOT an ATC. Therefore, a proposed alternative, by definition, must be nonresponsive to be considered an ATC. The second test is less specific and provides a lot of latitude for actual evaluations of proposed ATCs. Therefore, it’s not surprising that state DOTs have developed their own more specific definitions. 3.1.1 State DOT Definitions As would be expected, there were several similar but different ATC definitions found in the content analysis of state DOT procurement manuals and solicitation documents. Table 3.1 contains the definitions from nine states, which represent the spectrum of variations found in the Phase 1 research. The first difference from the federal definition is the explicit purpose for employing ATCs. In all but one, that stated purpose is oriented on the project rather than the competing bidders. Additionally, three of the definitions include explicit guidance that ATCs are not warranted if their sole purpose is to reduce the scope of work or relax project quality standards. Finally, the Florida DOT includes a qualification that ATCs must change a contract requirement, i.e. not responsive to the baseline requirements. Synthesizing the state ATC definitions with the federal one would lead one to consider adding two more tests to the federal definition: 1. The ATC must improve the baseline design in some verifiable fashion. 2. The ATC must be nonresponsive to the baseline design criteria/scope of work.

13 Table 3.1 State DOT ATC Definitions and Purpose for Employing ATCs. Agency ATC Definition Purpose California DOT “ATCs allow proposers to propose changes to the Department’s basic project configuration, design criteria, and similar project requirements for which some design flexibility exists. Allowing proposers to submit ATCs is intended to enhance innovation and increase efficiency or reduce cost. ATCs are therefore similar to cost reduction incentive proposals but are submitted as part of the proposal before contract award.” (Caltrans 2008). Enhance innovation, and increase efficiency or reduce cost Florida DOT The ATC process allows innovation, flexibility, time and cost savings on the design and construction of Design-Build Projects while providing the best value for the public. The alternative technical concept shall provide an approach that is equal to or better than what is required by the Request for Proposal (RFP), as determined by the Department. Concepts which reduce scope, quality, performance, or reliability should not be proposed. A proposed concept is not an ATC if it is contemplated by the RFP. (FDOT 2011) Allow innovation, flexibility, time and cost savings Concepts which reduce scope, quality, performance, or reliability should not be proposed. A proposed concept is not an ATC if it is contemplated by the RFP Georgia DOT The ATC process may be used by GDOT if it will allow DB Firms the ability to suggest modifications to the RFP that would improve the project technically or reduce construction costs, thus allowing a better project without increasing its cost or to gain the benefit of a cost reduction without an adverse impact on project quality. (GDOT 2010) Improve the project technically or reduce construction costs Michigan DOT “A process to allow innovation and flexibility in order to minimize conflicts and maximize speed and efficiency and ultimately obtain the best value for the motoring public while accomplishing the goals of a Project.” (Youngs 2013). Allow innovation and flexibility Minnesota DOT “ATCs are alternative concepts to the Basic Configuration.… that are equal or better in quality or effect as determined by MnDOT in its sole discretion and which have successfully been used elsewhere under comparable circumstances. A concept is not an ATC if it merely seeks to reduce quantities, performance, or reliability, or seeks a relaxation of the Contract requirements.” (MnDOT 2003). A concept is not an ATC if it … reduce quantities, performance, or reliability, or seeks a relaxation of the contract requirements Missouri DOT “An Alternative Technical Concept (ATC) is a proposed change to agency- supplied base design configurations, project scope, design criteria or construction criteria. This change provides a solution that is equal or better to the requirement in the contract. In the broadest sense, ATCs are similar to value engineering, but they are made as a part of the bid proposal before contract award. ATCs provide flexibility to the bidders in order to enhance innovation and achieve efficiency.” (MoDOT 2013). Provide flexibility to the bidders in order to enhance innovation and achieve efficiency Penn- sylvania DOT “ATCs provide design-build teams with an opportunity to propose innovative ideas within the Department's Scope of Work or can be written into the Scope of Work. The use of ATCs can promote innovation and tap into the unique expertise of each design-build team and may result in a reduction of the Project's cost. In addition, ATCs can provide the Department with new ideas, techniques or materials to use in future Projects.” (PennDOT 2011) Opportunity to propose innovative ideas Utah DOT “A deviation from the requirements of the RFP (including work and performance requirements, 30% concept drawings, etc.) which promotes innovation and is equal to or better in performance, quality or effect of the end product absent the deviation, as determined by the Department in its sole discretion, and which has successfully been used elsewhere under comparable circumstances.” (Page 2012) Promotes innovation Washington State DOT “An ATC is a confidential request by a Proposer to modify a contract requirement, specifically for that Proposer, prior to the Proposal due date.... In order to be approved, an ATC must be deemed, in WSDOT’s sole discretion, to provide a project that is “equal or better” on an overall basis than the project would be without the proposed ATC. Concepts that simply delete scope, lower performance requirements, lower standards, or reduce contract requirements are not acceptable as ATC’s.” (WSDOT 2010). Promote innovation, find the best solutions, and to maintain flexibility Concepts that simply delete scope, lower performance requirements, lower standards, or reduce contract requirements are not acceptable as ATC’s

14 The survey issued by NCHRP Synthesis 455 asked the respondents to provide the elements of their ATC definitions. (Gransberg et al. 2014). The most frequently stated elements were: • The concept must generate a cost, time, or life cycle benefit to the agency. • The concept does not comply with the existing criteria, specifications, etc. • The concept requires a design variation from standard agency documented practice. • The concept requires a simple variation from a contract requirement unrelated to design. The synthesis survey results support combining the two state DOT ATC definition tests with the two FHWA tests to develop the more current working definition of ATCs sought in the research. However, before proposing a working definition it is logical to evaluate ATC definitions that come from the research literature to determine if additional input is necessary. 3.1.2 Non-Agency Definitions: There were also ATC definitions found in the literature that must be considered when attempting to develop a more current working definition for the ATC process. Papernik and Farkas (2009) and Smith (2012) proffer the following definitions: “A pre-proposal ATC process allows proposers, on a confidential basis, to suggest modifications to technical requirements that would improve the project technically or reduce development costs, thus allowing the project owner to obtain a better project without increasing its cost or to gain the benefit of a cost reduction without an adverse impact on project quality.” (Papernik and Farkas 2009). “Alternate Technical Concepts are any proposed alternative concept or innovative idea that are sound engineering concepts but deviate from the base technical concept in the RFP project definition. ATCs should: (a) result in cost savings without reducing the functionality or durability of the Project, or (b) add value to the Project” (Smith 2012). Some authors have described the ATC process as a “pre-award value engineering” (Hitt 2012) Both of the above definitions suggest the same notion. Thus, it is logical to compare all the definitions to ones used for value engineering (VE). The California DOT has a mature VE program and its manual describes the process as follows: “Value Analysis (VA) or Value Engineering (VE) is a function-oriented, structured, multi- disciplinary team approach to solving problems or identifying improvements. The goal of any VA Study is to: • Improve value by sustaining or improving performance attributes (of the project, product, and/or service being studied) • While at the same time reducing overall cost (including life cycle operations and maintenance expenses).” (Caltrans 2007). Title 23 Code of Federal Regulation (CFR) part 627 (2014) as revised requires VE studies be completed on all federal-aid highway projects over $50 million and bridge projects over $40 million. It does not require a separate pre-award VE analysis be done on projects delivered using DB contracting, and it allows projects using CMGC delivery to conduct the VE analysis after

15 award of the preconstruction contract. Thus, the allusion to ATCs being a form of pre-award VE analysis is in sync with 23CFR627. This leads one to link the working definition for ATCs with the notion that an acceptable ATC is one that demonstrates enhanced value as defined by the agency. 3.2 ATC Working Definition Synthesizing the various definitions discussed above leads to a working definition for ATCs that satisfies the following tests: 1. The alternative must modify a specific contract requirement in a manner that is not contemplated by the project’s solicitation. 2. It must be equal to or better than the baseline design as determined by the agency advertising the project in a verifiable manner. Incorporating the above tests into a single definition results in the following: An ATC is a proposed modification to a contract requirement in a manner that is equal to or better than the baseline articulated in the project’s solicitation.