The bill, which was a prime focus of a House subcommittee hearing on Dec. 3, is short (only three pages) and simple. (See text.)
The measure, which Rep.Sam Graves (R-Mo.) introduced in July, has two main provisions: First it would require federal design-build contracts valued at $750,000 or more to be conducted as two-step procurements. Industry prefers two-step to one-step contract competitions, which can lead to many firms' filing expensive, detailed submittals to the agency.
Second, the measure seeks to keep the number of firms an agency short-lists to no more than five, generally. It states that if an agency contracting officer calls for a short list of more than five firms on a design-build project, that decision would have to be approved by the head of the agency.
The American Institute of Architects, Associated General Contractors of America, Design-Build Institute of America, American Council of Engineering Companies and other groups support the bill.
Charles D. Dalluge, Leo A Daly executive vice president—who testified for AIA—said federal law now does require agencies to short list no more than three to five firms on D/B jobs. But Dalluge said there’s a big exception: It allows agencies to expand the list beyond five firms if that expansion is deemed to be in the federal interest “and is consistent with the purposes and objectives of the two-phase selection process.”
Dalluge also testified that there are reports of federal short lists that include eight or 10 firms. Obviously, the more firms on the list, the longer the odds that any one firm will win the job. That lengthy list of unsuccessfully contenders are out the substantial sums they spent to prepare a proposal.
He said a 2012 survey of AIA's Large Firm Roundtable determined that for architects that vied for public- and private-sector design-build contracts between 2007 and 2011, the median cost of their plans, models and other preparatory work was $260,000.
Randy Gibson, president of Whitesell-Green Inc., a Pensacola, Fla., contractor— who testified on behalf of AGC—noted that firms competing in step-one of a two-step procurement, generally are only required to submit to the agency their qualifications, including such things as past experience on similar projects.
He said that most contractors generally keep that data on file "so gathering it for a response is relatively easy and inexpensive."
Step two does require extensive and costly submissions, Gibson said, but the handful of firms "can generally justify this expense as an acceptable risk when compared to the reward of possibly winning the contract in competition with that reasonable number of similarly qualified design-build teams."
In a one-step design-build competition, all teams submit costly proposals. And Gibson said each team has "no way to judge their prospects for success as no team can be sure how many other teams are pursuing the project."
Even with strong industry backing, the House bill has a long path ahead. There have been no votes yet on the measure, even in committee. No companion bill has been introduced in the Senate.
As of Dec. 5, the House measure had picked up just 11 co-sponsors. It’s a plus that one of the 11 is Rep. Blake Farenthold (R-Texas), who chairs the federal workforce, U.S. Postal Service and the Census subcommittee. Farenthold’s panel, which is part of the Oversight and Government Reform Committee, held the Dec. 3 hearing.
Another promising sign is that the proposal's co-sponsors include Republicans and Democrats.
A third positive note is that no opposition to the bill was voiced at the hearing. For example, the subcommittee’s top Democrat, Stephen Lynch (Mass.), said, “I agree with the spirit of the bill.”
Lynch did add that he isn’t happy with the bill’s $750,000 contract threshold for requiring two-step design-build procurements. That figure is “a very, very low bar,” he added.
Gibson said AGC generally supports the Graves bill but added that the association is suggesting the $750,000 two-step threshold "may need to be adjusted to provide the contracting officer the necessary flexibility for the demands of unusual or special projects."
After the hearing, Farenthold talked with ENR for a few minutes about the legislation. He said, “The idea is we want to encourage small businesses to compete in the marketplace and we want to encourage new applicants but we still want to keep quality high and costs low.”
“If you’ve got 10 people going to phase two you only got a one in 10 chance of getting the job—which means that you have to include that lost cost on the nine jobs you didn’t get on the one that you do get. And that runs up costs to the government.”
Farenthold did note the “consternation” about the $750,000 contract level and outlined some possible changes. “It may end up as a bigger number,” he said. “It may end up with some discretion based on the type of [construction] work it is….It could be a sliding scale. It could be a number with some exceptions that require agencies to jump through some hoops before they go there.”
After the hearing, Leo A Daly’s Dalluge said it was “very promising that [Farenthold] was a co-sponsor of the bill and everybody seemed in support.” He also noted that there are other industry groups that back the bill, but which didn’t testify at the hearing.
Dalluge added that the lawmakers seemed to be “working out the finer points [of the legislation] but no one was against the big idea.”
The House is scheduled to begin its Christmas-New Year's break on Dec. 13. Farenthold said of the bill, "There's a reasonable chance that we could see some action on it next year."
