Sunset Review Preliminary Report

1. The Legislature Should Reauthorize the UW Medical Construction Contractor Alternative Process Because Timeliness and Quality Have Improved Sunset Review Preliminary Report Mark Fleming, JLARC Staff

2. Presentation Overview 1 Background on Alternative Process for Medical Facility Construction 2 Why the Legislature Should Continue Authority for the UW Alternative Process 3 Steps That Follow Alternative Process Increase Time for Harborview Projects 4 Addressing the Sunset Questions 5 Legislative Auditor Recommendations UW Alternative Construction Process

3. Background on Critical Patient Care Facility Construction Procedure 1

4. UW May Use Alternative Process for Certain Medical Facility Construction Projects • Alternative process allows UW to pre-qualify contractors for certain projects: • Within a UW building that is used directly for critical patient care or highly specialized medical research; and • Estimated cost is $5 million or less • Alternative to traditional public works procurement where competition is open to all contractors UW Alternative Construction Process

5. Intent Was to Speed Contractor Selection • Limits solicitations to contractors who can demonstrate qualification and experience working in patient care settings • Enacted in 2010 • Authority to use process terminates June 30, 2015 • Unless reauthorized by Legislature prior to termination date UW Alternative Construction Process

6. Process Has Been Used for Projects at Two Medical Centers UW Alternative Construction Process

7. How the Alternative Process Varies from the Standard Contracting Process Standard Request bids from all interested contractors • Select contractor: • qualifications • proposal • price Obtain approval for project contract Issue notice to proceed Alternative Final two steps of UW’s process are identical to a standard construction process Create roster of pre-qualified contractors Request bids from pre-qualified contractors • Select contractor: • proposal • price Source: RCW 28B.20.744(2) and (6) and JLARC staff analysis of UW contracting procedures. UW Alternative Construction Process

8. Steps Differ for UWMC and Harborview After Contractor Selection UW Vice President approves contract UW projects Select contractor Obtain approval Issue notice to proceed UW Vice President approves contract Harborview projects Select contractor contract sent to King County for approval… …and returned to UW for final approval Issue notice to proceed UW Alternative Construction Process

9. Why the Legislature Should Continue Authority for UW Alternative Process 2

10. The Alternative Process Has Been Successful • Has reduced time required to select contractors • Contractor performance evaluations have improved • UW has followed statutory requirements to protect public interest UW Alternative Construction Process

11. Reduced Time to Select Project Contractors Select contractor Obtain approval Issue notice to proceed 39% 9% 34 31 31 Average number of days Before using alternative process 19 Since using alternative process UW Harborview Source: JLARC staff analysis of UW critical patient care facility contracts for projects $5 million or less. UW Alternative Construction Process

12. Opportunity to Improve Contractor Selection Time for Harborview Projects • UW reports that the difference is due to coordination with King County and Harborview during contractor selection • UW should review selection process to identify opportunities to further reduce time to select Harborview contractors UW Alternative Construction Process

13. Contractor Performance Ratings Have Improved Before using alternative process Since using alternative process 95% superior or good 62% superior or good 6% superior 58% superior 56% good 37% good 32% satisfactory or standard 5% satisfactory or standard 6% deficient 0% deficient 16 projects 19 projects Source: JLARC staff analysis of UW critical patient care facility contracts for projects $5 million or less. UW Alternative Construction Process

14. UW Complies with Procedural Requirements of Law Soliciting Contractor Qualifications Notices published in newspaper of general circulation Solicitation content consistent with statutory requirements Evaluation factors comply with statutory requirement Appeal process established Project Contractor Solicitation/ Request for Bids Request sent to all contractors on roster Request content complies with statutory requirements Request includes minority outreach requirements Project Award Contract awarded to lowest responsible responsive bidder UW Alternative Construction Process Source: JLARC staff analysis of selected contract files.

15. UW Can Improve Tracking of Woman- and Minority-owned Subcontractors • Statute requires UW to make outreach to certified MWBE contractors to extent permitted by Washington’s civil rights act • UW has made outreach efforts to minority contractors but none have submitted qualifications for review • Prime contractors are encouraged to use woman and minority subcontractors but UW does not track their use UW Alternative Construction Process

16. Steps That Follow Contractor Selection Increase Time for Harborview Projects 3

17. Increased Time for Harborview Approval Average number of days Select contractor Obtain approval Issue notice to proceed 20% Before July 2010 25% Since July 2010 Harborview contracts must be approved by King County before UW approval 20 16 5 Some of that time due to UW delay in sending contract to King County 4 UW Harborview Source: JLARC staff analysis of UW critical patient care facility contracts for projects $5 million or less. UW Alternative Construction Process

18. Increased Time to Begin Construction for Harborview Projects Average number of days Select contractor Obtain approval Issue notice to proceed 25% Before July 2010 88% Since July 2010 Wide variation in number of days to issue notice for these nine Harborview projects 16 15 32 12 31 27 8 14 13 UW Harborview 3 7 6 1 Source: JLARC staff analysis of UW critical patient care facility contracts for projects $5 million or less. UW Alternative Construction Process Notice to proceed allows contractor to begin work

19. Answers to Sunset Questions Support Continuation 4

20. Sunset Questions 1 • Yes. Use of the alternative process has reduced the time required to select a construction contractor. However, the UWMC projects experienced a greater reduction than did Harborview projects Has UW’s use of the alternative process complied with legislative intent? 2 Does the alternative process provide for efficient and economical public works construction, with adequate cost controls in place? • Yes. UW has used the alternative for construction projects under $5 million that involve critical patient care facilities and complied with procedural requirements established by law UW Alternative Construction Process

21. Sunset Questions (cont) 3 Have projects constructed using the alternative process achieved expected performance goals and targets? • Yes. Contractor performance, measured by post completion quality evaluations has increased from 62% good or superior to 95% good or superior 4 To what extent does the alternative process duplicate the activities of another agency or the private sector? • Not at all. Public works contracting procedures engage, rather than duplicate, the services of private sector contractors UW Alternative Construction Process

22. Legislative Auditor Recommendations 5

23. Legislative Auditor Recommendations • The Legislature should reauthorize the UW alternative public works process, RCW 28B.20.744 • UW should: • Identify opportunities to reduce the time to select contractors for Harborview projects, and • Report to Legislature and Capital Projects Advisory Review Board on results UW Alternative Construction Process

24. Recommendations (continued) • UW should develop a process to track payments made to woman and minority owned subcontractors for projects using the alternative process • UW should: • Review post-selection activities to identify opportunities to reduce time to begin constructing Harborview projects, and • Report results to Legislature and Capital Projects Advisory Review Board UW Alternative Construction Process

25. Next Steps and Contacts Proposed Final Report December 2014 Mark Fleming, Project Lead mark.fleming@leg.wa.gov 360-786-5181 Valerie Whitener, Project Supervisor valerie.whitener@leg.wa.gov 360-786-5191 www.jlarc.leg.wa.gov