Alternative Public Works Procedures Sunset Review :

1. Alternative Public Works Procedures Sunset Review: Legislature Should Continue Authority to Use Alternative Procedures Preliminary Report Mark Fleming, JLARC Staff

2. Presentation Overview 1 Background on Public Works Projects and Delivery Procedures 2 Why the Legislature Should Continue Authority for Alternative Procedures 3 Refocusing the Role of the Capital Projects Advisory Review Board (CPARB) 4 Recommendations Alternative Public Works Sunset Review

3. Background on Public Works Projects and Delivery Procedures 1

4. State Law Governs All Public Works Construction in Washington Public Bodies Largest Construction Programs: State Agencies • Dept. of Enterprise Services Higher Ed Institutions • University of Washington • Washington State University Local Governments • City of Seattle • City of Tacoma Ports Current projects total $2.4 Billion School Districts Special Purpose Districts Alternative Public Works Sunset Review Report Page No. 7 & 14

5. Public Works Projects Vary in Size and Complexity Operating Room in Everett Water Reclamation Plant in Chehalis Fence in Seattle School in Walla Walla Runway at SeaTac Alternative Public Works Sunset Review

6. Traditional Delivery Procedure: Design-Bid-Build Separates design and construction, used for projects of any size Contractor hired Awarded to responsible bidder with lowest responsive bid Construction cost established Invitation to bid Architect/ Engineer hired Phases: Predesign Design Construction Source: JLARC analysis of public works contracting procedures. Alternative Public Works Sunset Review Report Page No. 7-8

7. Perceived Risks of Traditional Delivery Perceived Risk Impact Construction bid price may exceed budget Construction delay while project is redesigned and rebid Lack of construction expertise during design Unforeseen conditions must be addressed during construction Potential adversarial relationship with contractor Disputes may arise among parties over responsibility for changes Alternative Public Works Sunset Review Report Page No. 16

8. Three Alternative Procedures Attempt to Address Design-Bid-Build Risks Chapter 39.10 RCW Alternative Method Authorized For: General Contractor Construction Manager (GCCM) Typically for projects $10M and above but may be authorized for smaller projects Design-Build (DB) Job Order Contracting (JOC) $350,000 or less Alternative Public Works Sunset Review Report Page No. 7-8

9. GCCM Contracting Integrates Design and Construction Contractor hired Based on qualifications Contractor hired Based on qualifications Maximum allowable construction cost negotiated At 90% design or above Maximum allowable construction cost negotiated At 90% design or above Architect/ Engineer hired Architect/ Engineer hired Phases: Phases: Predesign Design Construction Predesign Design Source: JLARC analysis of public works contracting procedures. Alternative Public Works Sunset Review Report Page No. 8-9

10. Design-Build: Single Entity Designs and Constructs Request for Qualifications Design-build team hired Based on qualifications and design proposal Design-build team hired Based on qualifications and design proposal Request for Qualifications followed by Request for Proposals from selected finalists Request for Qualifications followed by Request for Proposals from selected finalists Construction cost established Construction cost established Phases: Phases: Predesign Predesign Design Design Construction Source: JLARC analysis of public works contracting procedures. Alternative Public Works Sunset Review Report Page No. 9-10 Design

11. Job Order Contracting: On-Call Contractor Designs and Constructs Applies to projects up to $350,000 Alternative to Small Works Roster Contractor Hired Phases: Contractor Selection Contract Period: 1 Year • Based on: • Qualifications • Unit price book • Overhead percentage • Contractor performs work as needed: • Develops design • Estimates cost • Subcontracts at least 90% of work value Source: JLARC analysis of public works contracting procedures. Alternative Public Works Sunset Review Report Page No. 10-11

12. Legislature Has Steadily Expanded Authority for Alternative Public Works Procedures 1991 Department of Corrections authorized to use alternative procedures for prison construction 1994 Additional bodies authorized to use alternative procedures. Oversight body created. 2003 Job Order Contracting authorized for specific public bodies 2005 Oversight body made permanent as Capital Projects Advisory Review Board (CPARB) 2007 Any public body may use GCCM or DB with approval of newly created Project Review Committee 2013 Current authority expires on June 30 Alternative Public Works Sunset Review Report Page No. 12

13. Why the Legislature Should Continue Authority for Alternative Procedures 2

14. JLARC Recommends Continuing Authority for Alternative Procedures • Provide options to manage construction risk • Widespread use throughout nation • Public bodies in Washington follow statutory requirements to ensure public interest • Project managers value alternative procedures • Answers to sunset questions support continuation • Recommendation: • The Legislature should reauthorize the alternative public works procedures, Chapter 39.10 RCW Alternative Public Works Sunset Review

15. 1 Alternative Procedures Provide Options to Manage Risk Perceived Risk How Alternative Methods Attempt to Mitigate Construction bid price may exceed budget Negotiated price based on contractor familiarity with project Lack of construction expertise during design Contractor engaged early in design Potential adversarial relationship with contractor Early participation fosters collaboration Alternative Public Works Sunset Review Report Page No. 15-16

16. 2 Most States Use Alternative Procedures Procedure States GCCM 49 Design-Build 42 Job Order Cont. 48 WA WA WA NH NH NH VT VT VT MT MT MT ME ME ME ND ND ND MN MN MN OR OR OR MA MA MA ID ID ID SD SD SD WI WI WI NY NY NY WY WY WY MI MI MI RI RI RI CT CT CT IA IA IA PA PA PA NV NV NV NE NE NE NJ NJ NJ OH OH OH IN IN IN IL IL IL UT UT UT DE DE DE CA CA CA CO CO CO WV WV WV VA VA VA MD MD MD KS KS KS MO MO MO KY KY KY NC NC NC TN TN TN AZ AZ AZ OK OK OK NM NM NM AR AR AR SC SC SC GA GA GA MS MS MS AL AL AL LA LA LA TX TX TX AK AK AK FL FL FL HI HI HI Alternative Public Works Sunset Review Report Page No. 17

17. 3 Public Bodies in Washington Follow Statutory Requirements • In authorizing use of alternative procedures, Legislature sought method for meeting public interest in absence of price competition • Recognized that price is not sole measure of public interest • Established statutory requirements governing: Project Selection 1 Public Notice 2 Contract Limits 3 Alternative Public Works Sunset Review Report Page No. 17-21

18. 3 JLARC Review Found Substantial Compliance with Requirements Requirement GCCM DB JOC 1 Project Selection Project review committee approval Yes Yes NA Used for appropriate projects Yes Yes NA 2 Public Notice Yes Yes Yes Required notices published Contract Limits 3 JOC contracts & subcontracts NA NA Yes GCCM subcontracts Yes* NA NA *Documentation of full compliance was lacking for some projects Alternative Public Works Sunset Review Report Page No. 18

19. 3 Compliance with GCCM Subcontracting Requirement Not Always Evident • GCCM subcontracts must be competitively bid • GCCM contractor limited to 30 percent of total • Detail to verify compliance not always available in project owner’s records • Recommendation: • Public bodies using GCCM should maintain information on project subcontract awards and payments and provide a final project report on their subcontract awards to CPARB Alternative Public Works Sunset Review Report Page No. 20-21

20. 3 Job Order Contract Reporting Format Does Not Accurately Reflect Compliance • Statutes limit number and dollar value of JOC contracts • All public bodies complied with limits in 2011 • Reporting format creates impression that some public bodies exceeded limits • Recommendation: • CPARB should revise job order contract reporting to clearly identify separate contracts with and payments to the same contractor during the July 1-June 30 reporting period Alternative Public Works Sunset Review Report Page No. 20

21. 4 Project Managers Value Alternative Procedures for Some Projects • During review of selected projects, managers strongly supported having alternative procedures available • Especially important for projects involving significant risk: • Hospital that must remain open during construction • Historic building where actual scope is not fully known • Complex science and research buildings Alternative Public Works Sunset Review Report Page No. 22-23

22. 5 Sunset Questions 1 Has use of alternative public works procedures complied with legislative intent? Yes 2 Do alternative procedures provide for efficient and economical public works construction, with adequate cost controls in place? Yes 3 Have projects constructed using alternative procedures achieved expected performance goals and targets? Qualified Yes 4 Do alternative procedures duplicate activities of another agency or the private sector? No Alternative Public Works Sunset Review Report Page No. 23-24

23. Refocusing the Role of the Capital Projects Advisory Review Board (CPARB) 3

24. CPARB Membership Represents Wide Range of Public Works Experience and Interests • One Member from: • Two Members from: Architects General Contractors Engineers Specialty Contractors OMWBE(Office of Minority & Women’s Business Enterprises) Construction Trades Labor Private Industry Cities House of Representatives (One from each caucus) Counties Senate (One from each caucus) Higher Education Dept. of Enterprise Services Insurance/Surety Industry School Districts Ports Hospital Districts Alternative Public Works Sunset Review Report Page No. 13

25. CPARB Role is to Advise and Recommend Performs role in several ways: • Makes recommendations to Legislature on public works and contracting issues • Organizes task forces and subcommittees to address contracting and public works issues • Seeks stakeholder input on alternative procedures • Collects quantitative and qualitative data for analysis • Initiated effort in 2008 to collect data on all public works projects over $5 million across the state Alternative Public Works Sunset Review Report Page No. 25-26

26. CPARB Needs to Rethink Approach to Collecting Project Information • Project data is not likely to lend itself to meaningful comparisons • CPARB contributes most value as forum for discussion and developing consensus on policy and legislation • CPARB experience with task forces and subcommittees offers opportunity for timely policy input on issues related to public works construction Alternative Public Works Sunset Review Report Page No. 26-27

27. Rethinking Project Information • Recommendation: • CPARB should refocus its efforts and limited resources on collecting information that will more readily assist the Board in developing recommendations to improve public works delivery methods • Example: Alternative Public Works Sunset Review End of project report for alternative projects that summarizes project performance and lessons learned Report Page No. 30

28. Recommendations 4

29. Recommendation Recap • The Legislature should reauthorize the alternative public works procedures, Chapter 39.10 RCW • CPARB should revise job order contract reporting to clearly identify separate contracts with and payments to the same contractor during the July 1-June 30 reporting period • Public bodies using GCCM should obtain information on project subcontract awards and payments and provide a final project report on their GCCM subcontracting to CPARB • CPARB should refocus its efforts and limited resources on collecting information that will more readily assist the Board in developing recommendations to improve public works delivery methods Alternative Public Works Sunset Review Report Page No. 29-30

30. Next Steps and Contacts Proposed Final Report: December 2012 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