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Innovative Contracting Techniques

Innovative Contracting Techniques. HISTORY OF INNOVATIVE CONTRACTING AND INNOVATIVE FINANCING Cordell M. Parvin. Innovative Contracting Techniques. Legal Issues. It is Clear that Disputes and Litigation Follow Any Type of Change or Innovation.

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Innovative Contracting Techniques

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  1. Innovative Contracting Techniques HISTORY OF INNOVATIVE CONTRACTING AND INNOVATIVE FINANCING Cordell M. Parvin

  2. Innovative Contracting Techniques Legal Issues • It is Clear that Disputes and Litigation Follow Any Type of Change or Innovation. • In the case of Innovative Contracting Disputes Will Arise Because They Affect Opportunities for Contractors • Innovative Contracting Techniques Affect Liabilities of Contractors • Contractors Generally Resist Change

  3. Innovative Contracting Techniques Legal Issues • Types • Is the Innovative Techniques Legally Permissible? • Disputes Over Award; Factors Other Than Low Bid • Disputes Over New Standards

  4. Innovative Contracting Techniques TRB Task Force Studied: • Bidding Procedures • Materials Control • Quality Considerations • Insurance and Surety Issues

  5. Innovative Contracting Techniques TRB Task Force • September 1989 Workshop • Two Days • Industry Participants

  6. Innovative Contracting Techniques TRB Task Force • Recommendations • Cost-Plus Time Bidding • Warranties • Constructibility • Performance Specifications • National Center • Value Engineering

  7. Innovative Contracting Techniques SEP-14 • Initiated February 1990 • No Longer Experimental • A+B Bidding • Lane Rental • Warranties

  8. Innovative Contracting Techniques FHWA Report Objective: Investigate Innovative Contract Practices to: • Determine Effects of Various Contract Management Methods on: • Construction Quality • Pavement and Bridge Performance • Costs • Risk to Contractual Parties

  9. Innovative Contracting Techniques FHWA Report Objective: Investigate Innovative Contract Practices to: • Recommend Contract Management Methods With Greatest Potential to Improve Quality and Performance and Can Be Promoted for Implementation in a Quality-Oriented Contracting System

  10. Innovative Contracting Techniques FHWA Report Objective: Investigate Innovative Contract Practices to: • Develop Instructional Guide or Guides to Select and Implement the Chosen Contracting Approaches and to Educate the Highway Construction Community

  11. Innovative Contracting Techniques FHWA Report Innovative Contracting Practices Studied • Quality Based • Quality Assurances (QA) Specifications • Performance-Related Specifications (PRS) • Construction Warranties

  12. Innovative Contracting Techniques FHWA Report Innovative Contracting Practices Studied • Time Based • Incentive/Disincentive (I/D) Provisions • Cost-Plus-Time or (A+B) Bidding • Lane Rental • Design-Build • Indefinite Delivery/Job Order Contracting (JOC)

  13. Innovative Contracting Techniques FHWA Report Innovative Contracting Practices Studied • Multiple Bases (Quality, Cost, Time) • Value Engineering (VE) for Design and Construction • Partnering • Alternate Bids (Design Alternatives) • Privatization/Build-Operate-Transfer (BOT)/Build-Transfer-Operate (BTO)

  14. Innovative Contracting Techniques FHWA Report Other Innovative Practices • Design-Build Warranty • A+B Bidding + Warranty • A+B+C Bidding

  15. Innovative Contracting Techniques FHWA Report Legal Points • Incentive/Disincentive • No Legal Barrier • Road User Costs May Be Included in Liquidated Damages

  16. Innovative Contracting Techniques FHWA Report Legal Points • A+B Bidding and Lane Rental • No Longer Experimental • Conforms to Lowest “Responsible” Bid • No FHWA Restriction on Lane Rental

  17. Innovative Contracting Techniques FHWA Report Legal Points • Design-Build • Legal Barriers Limit Use • Brooks Act - Type Procurement of Design • Lowest Responsible Bidder • 1996 FHWA Chief Counsel Office Opinion

  18. Innovative Contracting Techniques FHWA Report Legal Points • Quality-Based • QA - Used in Almost All States for Procurement • Performance Specifications - Not Discussed • Warranties - Have Been Restricted Because of Opposition and Bonding Issues

  19. Innovative Contracting Techniques FHWA Report Legal Points • Quality-Based - GOA Report Barriers • Difficulties in Attributing Responsibility for Failures • External Factors Beyond the Contractor’s Control • Reluctance by Sureties to Bond Long-Term Warranties Except for Larger Well-Financed Firms

  20. Innovative Contracting Techniques FHWA Report Legal Points • GAO Recommendations • Relatively Short Warranty Periods • Target or Restrict Warranties • Use End-Result or Performance Specifications • Develop Model Warranty Language and Terms for Specific Project Types

  21. Innovative Contracting Techniques Innovative Financing Pre-TEA-21 Consisted of Various Programs in Title 23, ISTEA and National Highway Designation Act

  22. Innovative Contracting Techniques TEA-21 Innovative Financing • Financing Includes • Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA)

  23. Innovative Contracting Techniques TEA-21 Design-Build • Specifically Authorizes Design-Build • Greater Than $5,000,000 for ITS • Greater Than $50,000,000 for Others • Regulations Within 3 years • Effective in 3 Years • SEP-14 Continues Until Then

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