Competitive Bidding System
ARTBA staunchly supports the free enterprise system of open competitive bidding for highway projects.
Further, ARTBA opposes contractor ratings systems which can alter the procurement process by changing bid prices. At least one such program initiated by a state transportation agency has included ratings metrics that are subjective and may dissuade contractors from pursuing legitimate claims because it may harm their future ratings and negatively affect their bids. By contrast, the low-bid contracting system should be completely objective and transparent, without the uncertainties of such a ratings system.
“Union-Only” Labor Agreements
Federal law should prohibit the use of union-only project labor agreements on federal-aid highway projects. Such agreements are counter to the free enterprise system of open competitive bidding.
Davis-Bacon Act
ARTBA supports reform of the Davis-Bacon Act (DBA). This law requires the payment of local “prevailing wages” on federal-aid transportation projects and addresses other labor-related issues. ARTBA believes Davis-Bacon reform should include, but not be limited to:
- Full implementation of the helper regulations; changing the Act’s payroll reporting requirements from weekly to monthly; and
- Exempting from the Act’s requirements employees of off-site batch plants and suppliers, and truck drivers who spend only an incidental percentage of their time at the work site in the course of delivering materials from off-site locations.
- The threshold for application of the Act should be $500,000.
ARTBA does not support an expansion of the statutory definition of “site of the work,” or modifications of the exclusion from the Act’s coverage for fabrication plants “whose location and continuance in operation are determined wholly without regard to a particular federal or federally assisted contract or project.” Extending DBA coverage to off-site plants that do both federal and non-federal work with a permanent workforce would create administrative, logistical and practical problems for all federal contractors; disincentivize contractors whose work is regularly done off-site from bidding on DBA projects; and significantly increase the cost of all federal construction projects.
Disadvantaged Business Enterprise Program
The goals of the Disadvantaged Business Enterprise (DBE) program should be to attract certifiable DBE firms, to enable and assist them to grow and develop within the safe harbor of the DBE program, and to facilitate their transition into the broader, unsheltered market as financially viable and technically proficient construction companies and professional service firms. The DBE program should use the rate at which DBE firms successfully graduate into the unsheltered construction market as its primary metric.
The periodic re-justification for the compelling need for DBE programs does not justify the lack of a time limit on how long a DBE firm may remain certified. Longevity in the program is a function of either a failure to “narrowly tailor” the program or the lack of business development and technical assistance or both.
Long-standing programmatic issues should be fixed. These include how goals should be set, over concentration and reverse discrimination within the meaning of 49 CFR §26.7(a), the meaning of “unreasonably high price” and “commercially useful function,” making “good faith effort” less subjective, making certification databases user friendly, and measuring and reporting DBE capacity.
Hiring Preferences
ARTBA opposes mandatory hiring preferences – such as those based on residence or income level – for federal-aid highway and transit projects. These mandates from contracting agencies can compromise contractors’ efficiency and safety in building these projects, through the hiring of workers who are not integral to the project or are inadequately trained and experienced, especially in safety procedures. This can lead to displacement of existing employees and cost increases as contractors take on the risk of inexperienced or superfluous labor.
On many projects around the country, contractors have successfully collaborated with public agencies to implement voluntary or incentive-based, targeted hiring programs. This approach is greatly preferable to imposing hiring mandates on contractors unilaterally.
Funding for Cost Adjustments
The U.S. Department of Transportation (USDOT) and its agencies should allow use of federal-aid funds for retroactive cost adjustments on projects under extraordinary market conditions.
Incentive/Disincentive Clauses
ARTBA supports the inclusion of incentive/disincentive clauses in highway construction contracts provided the disincentives (penalties) are properly balanced with the incentives. This practice rewards contractors who utilize good management practices and innovative techniques and technologies to deliver contracted work prior to deadline. It also reduces inconvenience to the highway user caused by construction activity.
Qualifications-Based Selection
To assure state-of-the-art, high-quality projects, contracts for professional services such as transportation planning, design and construction management, should be procured by Qualifications Based Selection procedures. Contracts for these services should be based on uncapped salaries and overhead in accordance with Title 48 (Federal Acquisition Regulations), Sec.15.901 (c).
To assure equitable compensation and fair competition, federal surface transportation law should require:
- the use of Federal Acquisition Regulations (FAR) cost principles in audits conducted on engineering and design service contracts or subcontracts “funded in whole or in part” with federal-aid highway or transit program funds;
- that recipients of federal funds accept the results of pre-award audits were established in accordance with FAR cost principles; were conducted within one year of the current contract negotiations; and were not under dispute.
Further, compensation for these contracts should be determined on the basis of FAR cost principles without modification or limitation.
Alternative Procurement
The transportation construction industry is continuously looking for new and better ways to build projects safely, efficiently and cost-effectively. A key to this process is the desire to provide value without sacrificing service or quality. The low bid system of procurement has historically succeeded in achieving these objectives in a competitive, open, cost-effective, efficient and fair manner. In seeking to expedite project delivery, while still achieving the highest quality of transportation projects, a number of transportation agencies have implemented alternate delivery methods encompassing various combinations of procurement, financing and construction practices.
ARTBA continues to support and promote the low bid procurement process as the most favored project delivery system for most projects, which includes awarding professional services contracts through the qualification-based selection process, and construction contracts to the lowest responsible bidder. At the same time, there may be well-defined projects that are suited for alternative procurement methods, offering the industry the opportunity to implement flexibility in project delivery methods.
The use of alternate procurement methods by public owners should not be mandated by the federal government. Rather, state and local agencies should be allowed maximum flexibility in determining their own procurement methods. If public owners opt to use alternate procurement methods, they should consider the following elements as part of the process:
- A two-step procurement system where bidders on a project are qualified through a preliminary screening process, whether it be a pre-qualification process, a surety bond-based system, or an arrangement whereby a bidder demonstrates understanding of the technical requirements of the project, or any combination thereof. Such a system should be based solely on well-defined, objective, measurable criteria relevant to the project’s size, value, duration, technical features and The owner should clearly communicate key information to the proposer/bidder in advance of bid preparation, including pre-qualification criteria, how various requirements will be evaluated and what weight they will have in the final determination of the qualification. This information should be tailored to encourage participation by all qualified contractors and designers.
- Because the use of the alternate procurement method requires more resources in the preparation of the proposal/bid than the traditional low bid system, public owners should pay a fee to each unsuccessful but responsive and competitive proposer/bidder for their preparation work. This fee should be based on the size of the project and the complexity of the proposal/bid process. This payment should not necessarily imply that the owner will then “own” any ideas, concepts or innovations that the team has developed.
- The bid selection process should be open and objective, well defined, on the public record and as isolated from political influence as possible. The bid price should be the most significant factor in determining the final bid selection. There also should be a process whereby, upon request of any unsuccessful bidder, the project owner will provide detailed information as to that bidder’s scoring against the criteria.
When considering or implementing the design-build method, ARTBA recommends that all parties review the association’s policy paper, “Risk Factors in Design-Build,” as an early step in working collaboratively to identify and allocate areas of risk on the project.
Digital Construction
Digital construction technologies provide mechanisms and processes to decrease and more properly allocate project risk, reduce schedule uncertainty, increase productivity and efficiency, lower cost, and deliver safer, higher quality, and environmentally sustainable infrastructure projects. In order to accelerate innovation in the U.S. transportation design and construction industry, ARTBA supports the adoption of open data standards, the model as the legal document (MALD), and modern, commercially-proven, and competitively acquired digital construction technologies and processes for infrastructure projects.
Support of Unit Pricing
To help avoid contractual misunderstandings, to the extent possible, bid proposals for federal-aid surface transportation contracts should be required to use unit pricing. This would give the contractor a much better understanding of the actual work and project-related activities (i.e., lead health and safety programs) that he or she is being asked to perform and would not require them to include contingency pricing. Unit pricing would also serve to enhance work zone safety activities and increase taxpayer value.
Partnering
ARTBA believes the partnering process, whether formal or informal, should be implemented on all highway projects from conception through construction. It is essential that partnering includes the project’s design engineers, contractor, subcontractors, and public owner.