Best Value Public Works Procurement September 7, 2007

Existing Alternatives  Design – Bid – Build  General Contractor / Construction Manager (GC/CM)  Design – Build  Job Order Contracting

Room for Improvement?  JLARC Recommendations (2005)  Finding 1:  Some agencies may be using GC/CM to overcome deficiencies in the Design- Bid-Build contracting method.  Recommendation 1:  The Legislature, through the CPARB, should further analyze the implications of the low-bid requirement on capital construction projects.

Similar Trends Nationally  Federal Executive Order (1994) establishing Best Value Procurement  “Place more emphasis on past contractor performance, and promote best value rather than simply low cost in selecting sources for supplies and services.”

Similar Trends Nationally  Who is using Best Value Procurement?  Federal Government  Several States  Massachusetts  California  Florida  Texas  Minnesota  And others  Universities  Private Companies

What is a “Best Value Procurement?”  Seeking Value  Seeks to choose the provider offering the best combination of performance, qualifications, and price.  Honoring the Public Trust  Construction procurement should be consistent, open, competitive, and free of political influence.

Best Value Procurement I. Price Based II. Value Based IV. Unstable Market III. Negotiated-Bid Dependent on detailed drawings, specifications and standards Requires high level of Management & Inspection Best Value (selection based on qualifications, past performance, and price) Less dependent on detailed drawings and specs Price Competition Performance Private Sector Process Owner selects vendor Negotiates with vendor Vendor performs Contractor minimizes risk Owner minimizes risk

Modifies Design–Bid–Build Model Designer Public Entity General Contractor Sub-contractors Change in Selection Process Here

The BV Selection Process  Establish a selection committee  Issue a RFQ announcement  Evaluate qualification submittals  Establish a short-list  Check references  Conduct technical reviews  Conduct interviews  Receive Bids

The BV Selection Process  Two general approaches:  Trade-Off Analysis (more subjective)  Formulaic Approach (more objective)  Non-Price factors:  The RFQ submittal  Reference checks  Third party technical review  The short-list interview

Relative Importance of Price  Three Categories  Price is LESS important than the technical criteria  Price is EQUAL in importance to the technical criteria  Price is MORE important than the technical criteria

Desired Results  Better achieve project goals  Budget  Schedule  Quality  Lower the risk of construction claims  Increase management efficiency

Engineering and Architectural Services  John Lynch