Questionnaire Regarding State DOT Approaches for Dealing with Unsatisfactory Contractor Performance

1. Questionnaire Regarding State DOT Approaches for Dealing with Unsatisfactory Contractor Performance AASHTO Subcommittee on Construction / Contract Administration Task Force Jerry Yakowenko Task Force Secretary FHWA, Headquarters 202.366.1562 gerald.yakowenko@fhwa.dot.gov

2. Agenda • Results of survey • Example States • Other experience • Conclusion

3. State Transportation Agency Responses WFLHD CFLHD EFLHD PR

4. 1) How does your state define unsatisfactory contract prosecution and progress?

5. Definition of “unsatisfactory progress” • % time - % completion • 25% - AL, • 20% - MS, OK, • 15% (HI, NM, TN, • 10% - EFLHD • Expiration of time / work not complete (FL, HI, • Case-by-case – NV, VT, • Other – IA, UT, GA, LA*

6. Louisiana - “unsatisfactory progress” Non-CPM projects CPM projects

7. 2) List the methods currently available in your agency for dealing with unsatisfactory contract prosecution and progress.

8. 3) Which method in Question #2 is used the most in your state to deal with unsatisfactory contract prosecution?

9. 4) Does your state generally inform the contractor's bonding company when it is determined that the contractor's prosecution and progress is unsatisfactory?

10. 5) If the answer to question No. 4 is yes, does the involvement of the bonding company generally result in improved contract prosecution and progress?

11. 6) How does your State define unacceptable quality in the performance of the work?

12. 7) How does the State use contract performance evaluation data? • Performance evaluations directly lead to an adjustment of prequalification capacity rating with the completion of every contract (7) • Performance evaluations indirectly lead to an adjustment of prequalification capacity rating only when consistent or below average performance is noted over several contracts (18) • Removal from the prequalification list (15) • Increase retainage on future contracts (3) • Initiate termination procedures (13) • Other (23)

13. 8) Does your state have a process for rewarding above average performance (other than QA specs)? • No – 32, Yes – 14, Other – 3 • Examples: • early completion incentives (8) • congratulation letters from the contract engineer to the top 15 performers – no $ (IA) • increase prequalification rating (IL, KS, MA, WA) • Reduction in retainage (MD) • Financial incentive (up to 5%) being developed (NJ) • Yearly recognition awards for quality, prosecution and contract compliance (MO, PA, )

14. 9) Does your state have a contractor prequalification process? • No – 12, Yes – 34, May be used on individual projects –2, Other (1) • Qualifications: • some states rely on licensing and bonding requirements in-lieu-of prequalification • Others make responsibility determinations • some may require specific qualifications (SSPC)

15. 10) If your state has a contractor prequalification process, is contractor performance a criterion that is used in the adjustment of ratings or in a non-responsibility determination? • No – 7, Yes – 20, Other explanation–3 • Unique qualifications: • NC – utilize bonding capacity and safety rating

16. Example States

17. Project manager completes an evaluation for each project • Contractor may appeal the evaluation rating to the ODOT Area Manager • ODOT evaluates a 12-month rolling average of scores for corrective actions (potential removal from prequalification list) • Two page evaluation form available • References: http://landru.leg.state.or.us/ors/home.html (279.041); administrative rules http://arcweb.sos.state.or.us/rules/alpha_index.html (734 division 10)

18. Pilot program started in 2001 • Resident Engineer completes project check lists / evaluations (up to 46 pages) • Low ratings may affect prequalification rating; high ratings may result in an incentive payment up to 5%

19. Since 1991, project questionnaire to evaluate quality, contract compliance, prosecution • Statistical analysis of all summaries • Excellent = mean + 2 std. dev. • Average = mean +/- 1 std. dev. • Below average = mean – 1 std. dev. • Unacceptable = mean- 2 std. dev. • Implementation • Unacceptable rating in 1st year – probation; 2nd – suspension for one year; 3rd - debarment • Awards (certificates and plaques) by category: Heavy/medium/light volume, specialty contractors, etc. • Evaluation forms available (10 pages)

20. Missouri Results • For 2001: • notices of suspension - 2 contractors • probationary notices - 4 contractors • continue on probation from previous years - 10 contractors • achieved significant improvement and are reinstated to good standing - 7 contractors • Upon review, the Chief Engineer waived disciplinary action against seven (7) contractors. • Reference – MO Code of State Regulations: http://www.sos.state.mo.us/adrules/csr/current/7csr/7c10-10.pdf • Jerry Hirtz, MODOT, 573.751.7600

21. Federal Contracting • Emphasis on “Best Value” since 1994 • BV used for over 50% of projects (applied to over 66% of Federal construction $)* • Projects range from $50,000 to over $1 billion * Gerard Waites, “Overview of Best Value Contracting Process”

22. AGC Position • Neutral appeals process for a contractor to question an adverse evaluation. (due process) • Evaluations should not rely on the opinion of one individual • One negative project should not negate an otherwise positive performance record. Should be a process to eliminate or at least mitigate a single poor performance evaluation.

23. Additional references • Office of Federal Procurement Policy – “Best Practices for Collecting and Using Current and Past Performance Information” http://www.arnet.gov/Library/OFPP/BestPractices/pastpefguide.doc • “Quality-Based Performance Rating of Contractors for Prequalification and Bidding Purposes” – NCHRP D10-54

24. Additional references • “Guide to Collection and Use of Past Performance Information”, The Deputy Under Secretary of Defense (Acquisition Reform); Includes: “Past Performance Top Ten Tips”;http://www.acq.osd.mil/ar/doc/ppiguide.doc