1. Early Contractor Involvement: HPO’s Key to Success
Luis A. Ruiz, P.E.
Chief, Geotechnical Branch
Jacksonville District
SAME Post Meeting
Jacksonville, FL
28 August 2013

2. Agenda Background ECI Contracts Basics HPO Projects Solicitation
1828
Background
ECI Contracts Basics
HPO Projects
Solicitation
Design phase
Contract administration
Lessons learned
Wrap-Up

3. **75 percent of the city of New Orleans flooded (per IPET)
**Illustrated flood depths based on preliminary data and high water marks. Numbers will become more specific as data is verified.
(maximum New Orleans flood depths pending from MVN hydrology)

4. A Priority of Two Administrations
“Now, even as we continue our recovery efforts, we're also focusing on preparing for future threats so that there is never another disaster like Katrina. The largest civil works project in American history is underway to build a fortified levee system. And as I — just as I pledged as a candidate, we're going to finish this system by next year so that this city is protected against a 100-year storm.”
President Barack Obama
Xavier University, New Orleans
August 29, 2010

5. Best Practices System Program Management
Acquisition Strategy
Design Build / Cost Plus Contracts
Best Value Source Selection
Early Contractor Involvement (ECI)
Program Management Support Contract
Construction Materials
Government Furnished Borrow
Supply Contracts for Sheet Piles & Borrow
Improved Techniques
Value Engineering – systems study complete
Pile Load Tests – in advance of contract award
Press Pile, Spiral welded piles
Deep soil mixing, sand blanket and wick drains
Earned Value Management System (EVMS)
Leverage National & Regional Resources

6. ECI Contracting A Fixed Price Incentive contract IAW FAR 16.403
A project delivery method where the Corps engages the services of a general contractor to provide “preconstruction services” concurrent with design effort
The contract includes the Government’s ability to exercise an option for the construction
Provides for successive target price adjustments as the design matures, with the objective of managing the final construction cost to optimum.
Contract includes terms and conditions to allocate risk among the parties
Data and information from 13 Jun 05 ENR, page 38.

7. What it ain’t… Design Contract Non-competitive acquisition
Government retains design responsibility either through in-house or with a separate AE contract.
Preconstruction services are not “Brooks Act” services.
Non-competitive acquisition
Contract is procured IAW FAR 15 and application of FAR
Price and non-price factors are evaluated.
Design-Build Contract
Two separate entities (designer & construction manager/general contractor)
Both report to the owner (Government).
Legal anaalysis by GSA determined legal sufficiency, supported by further review by COE lawyers.

8. Acquisition Strategies Comparison
Phase
Traditional Acquisition
(D-B-B)
Early Contractor Involvement
(ECI, also I-D-B-B)
Design
Completed prior to advertisement of construction contract
Preconstruction Services – construction contractor provides input on design constructability, VE, means & methods, construction phasing, etc
Award
Complete designs are used to advertise and award construction contract
Construction option - awarded when major design decisions are complete and price negotiated (designs may be <100%)
Construction
NTP and construction begins after award of contract
Construction can begin prior to final designs being completed

9. Relative Project Delivery Timelines
P&D
Funding
Construction
Funding
Design Bid Build Project
Delivery
Design
Construction
ECI delivery advantage depends upon timing of design and construction funds.
ECI Project
Delivery
Design
Construction
CM selection and design begins with P&D funds.
Design-Build
Project
Delivery
Design
Construction
Total duration equal or less than ECI, but cannot commence design/construction until construction funding is received.
PY -1 PY
Time

10. ECI Contract
Fixed-price Incentive (successive targets) contract (FAR clauses and )
RFP will provide
SOW for preconstruction services (Base)
Concept engineering solution with typical sections for proposal preparation for construction initial target pricing (Option)
Ceiling price
Evaluation criteria, based on best value tradeoffs, including price
Negotiated Procurement
Award of preconstruction services (Base) as a Firm Fixed Price
Exercise of Construction (Option) as a Firm Price Incentive

11. Contract Schedule
An example of ECI Solicitation Line Items are shown below. This is remitted with the proposal.
Additional line items may be added for long lead items if required.
ITEM NO.
SUPPLIES/SERVICES
QUANTITY
UNIT
UNIT PRICE
AMOUNT
0001
BASE
Preconstruction Services
FFP 1
Lump Sum
$____________
0002
OPTION
Construction Phase
FPI
Initial Target Cost
Initial Target Profit
NTE $____________
The contract schedule shown above is a representative example for an ECI contract. The contract is composed of two major parts – the preconstruction services base which is a service contract. The second part is the construction option. This part is the equivalent to a normal construction contract and is subject to Davis Bacon.
The preconstruction services phase is awarded as a fixed price contract. At this step of the contract, the ECI contractor will be providing the typical services: cost estimating, design review, constructability reviews, design and construction scheduling and construction phasing. This is where the ECI contract is a bit different than a normal construction contract by allowing input from the construction contract during the design phase of the project.
The construction phase is awarded at a point where major design decisions are complete but the design package is not necessarily at 100%. This allows us to get to construction sooner than a normal design bid build process.
This schedule will be remitted with the proposals. The contractor will fill in the prices for the preconstruction services and the initial target cost and profit.

12. When to Use ECI Urgency - very tight mandated schedules
Funding - funding stream is available
Complex “one of a kind” project, with no standard design
Size - large enough to attract experienced firms
Uncertainty – risk in delaying award while requirements are being developed

13. When to Use ECI - Other
Challenging site, or other unique aspects that would benefit with a Contractor’s input during design phase
It would be advisable to have a collaborative effort during design and construction between Designer, Builder, Owner, User to ensure Project success

14. New Orleans ECI Projects
Seabrook Gate
IHNC
LPV 111
27,720 FT DSM
LPV 145
30,800 FT T-Wall
LPV 146
36,600 FT T-Wall
LPV 148
43,100 FT T-Wall
West Closure Complex (PRO)

15. New Orleans East Largest Deep Soil Mixing Project in the World
LPV (CSX Railroad to Michoud Canal)
Scope: Raise existing levee via deep soil mixing and landside alignment shift; raise T-wall around Pump Station 15; add a floodwall tie-in from the levee to the IHNC Surge Barrier.
Status: Construction is 78 percent complete and will be finished in June 2011.
The deep soil mixing project along this 5.3-mile stretch of levee in New Orleans East is the largest deep soil mixing project in the country, and one of the largest in the world.
Approximately 1.7 million cubic yards of land is being treated with the deep soil mixing method to strengthen the underlying soil. The next largest deep soil mixing project in the U.S., part of Boston’s Central Artery/Tunnel Project (also known as the “Big Dig”), is a distant second, with 650,000 cubic yards of ground treated.
There are 8 deep soil mixing rigs, each with their own batch plant, on the construction site.
More than 500,000 tons of cement/slag is being incorporated into the new levee.
The deep soil mixing rigs inject a concrete slurry into the underlying soil to produce stabilized soil columns. Each stabilized soil column is about 5.25 feet in diameter and extends about 67 feet deep.
A row of columns, or a panel, is about 54 to 98 feet long, depending on the properties of the different soil layers.
The distance from panel to panel along the levee is roughly 15.5 feet.
The project is budgeted at about $295 million.

16. Bayou Sauvage National Wildlife Refuge
New Orleans East Levee
Bayou Sauvage National Wildlife Refuge
Old
Levee
New Levee
Over 1 Superdome of Clay
(4.9 mil cy) Required
~1 Football Field

17. Raise and Strengthen Levees / Floodwalls Higher Floodwalls and Levees
New T-wall
Orleans Metro
St. Bernard Parish
Old
I-wall
New 32-foot T-wall
Old
Levee Elevation
New Orleans East

18. (2 miles constructed per month)
St. Bernard Floodwall
MRGO
MRGO
50 Eiffel Towers of Steel
(2 miles constructed per month)
23 Miles Long
In St. Bernard Parish, work is under way to construct new structural features that, when complete, will reduce the risk associated with a storm surge that has a one percent chance of occurring in any given year. Risk reduction features will be operational in June 2011.
Approximately 23 miles of T-wall and 3 gates constitute the St. Bernard Parish risk reduction system.
Approximately 115,000 linear feet of sheet pile, with each ranging in length from 20 feet to 40 feet, is being used to support the floodwall’s foundation.
Approximately 42,000 H-piles, with each H-pile ranging in length from 90 feet to 160 feet, are being used to support the floodwall’s foundation. In other words, the project includes about 994 miles of H-piles, which is approximately the distance between New Orleans and Chicago.
Approximately 25,000 tons of rebar is being used to reinforce the concrete flood-walls.
Approximately 300,000 cubic yards of concrete, or roughly 6.5 million square feet, is being used in floodwall construction. That is 1.75 times the amount of concrete used in construction of the Louisiana Superdome.
Approximately 207,000 tons of steel H-pile is being used in floodwall construction. That is approximately 28 times the amount of metal used to construct the Eiffel Tower. If the total tonnage of steel is included, the St. Bernard floodwalls incorporate about 50 Eiffel Towers worth of metal.
Approximately 250 construction workers from St. Bernard Parish are employed by the various contractors.
The entire risk reduction system in St. Bernard Parish is budgeted at approximately $1.5 billion.
Central Wetlands

19. Katrina storm surge elevations were much higher elsewhere
Top of Floodwall: EL +32’
Katrina storm surge elevations
were much higher elsewhere
along the Gulf Coast.
Top of Base Slab:
EL +21’
500-YEAR STILL WATER ELEVATION*:
EL +22.5’
100-YEAR STILL WATER ELEVATION*:
EL +18’
HURRICANE KATRINA’S STILL WATER ELEVATION* AT THIS LOCATION: EL +18’
Designed for a 100-year Surge
Top of
Stabilization Slab: EL +17.5’
St. Bernard Floodwall, near the IHNC Tie-In
(not to scale)
*Still water elevation does not include waves

20. Seabrook Floodgate Complex
The Seabrook Floodgate Complex will consist of a 95-foot-wide sector gate and two 50-foot-wide vertical lift gates approximately 540 feet south of the Ted Hickey Bridge with floodwall tie-ins on the east and west sides.
Other components of the Seabrook Floodgate Complex include upgrading the Alabama Great Southern Railroad gate to 100-year heights, constructing new T-walls that will tie into the lakefront risk reduction system and raising the Hayne Boulevard ramp. When complete, the Seabrook complex will close the only remaining gap along the lakefront in Orleans Parish.
Construction is under way and will continue into 2012; however, the 100-year level of risk reduction will be achieved in June 2011 with the completion of the Seabrook Interim Closure Structure, a cofferdam inside which the floodgates will be built.

21. Seabrook Floodgate Complex
CONSTRUCTION COFFERDAM ALLOWED TO ACHIEVE HYLA BY 01 JUNE 2011

22. West Closure Complex
The WCC removed 26 miles of levees and floodwalls from the first line of defense

23. West Closure Complex
The GIWW West Closure Complex will consist of a navigable floodgate, a pumping station, floodwalls, foreshore protection, and an earthen levee. The project will also require the dredging of Algiers Canal, as well as the realignment of Bayou Road.
Project challenges are maintaining navigation traffic on the GIWW (a Federal navigation channel with heavy commercial barge traffic) and the location of the complex in relationship to the Environmental Protection Agency’s Bayou aux Carpes Clean Water Act (CWA) 404(c) area, a wetland area of national significance.
A 225-foot navigation navigable floodgate will be constructed to ensure safe navigation on the highly trafficked GIWW and tie in to a pumping station. The design of the navigation gate closure is being done in collaboration with representatives from the navigation industry and the US Coast Guard to ensure that the safest and most reliable system will be constructed.
When the gate is closed during a storm event, 19,140 cubic feet per second (cfs) pump station is required to evacuate the rainwater pumped into the Harvey and Algiers canals by 9 pump stations along the canals. The pump complex will be the largest of its type in the nation.
To minimize environmental impacts to the Bayou aux Carpes 404(c) area, the floodwall will be constructed on the eastern edge of the wetlands, within 100 feet from the western bank of the GIWW for a length not to exceed 4,200 feet. The floodwall will start in the north with a water control structure across the Old Estelle Outfall Canal, extend southward along the eastern edge of the Bayou aux Carpes 404(c) area and tie into the navigable floodgates on the GIWW. A protective berm will be constructed on the channel side of the floodwall to protect it from barge impacts, provide concrete scour protection, and serve as a maintenance access road. Foreshore protection will be constructed along the GIWW, adjacent to, but not within, the Bayou aux Carpes 404(c) area.
A new earthen levee will be constructed east of the closure complex to tie into the existing levees. Bayou Road will be realigned to provide access around the new levee on the protected side.
Dredging of the Algiers Canal will be required from the Belle Chasse Tunnel south to the confluence of the Harvey and Algiers canals, a distance of approximately 4.8 miles. Approximately 700,000 cubic yards of material will be excavated from the Algiers Canal. The dredged material will be used beneficially in a marsh restoration project in the Jean Lafitte National Historical Park and Preserve (JLNHPP) or placed in the Walker Road borrow sites.

24. Solicitation
Award Preconstruction Services early in design phase (15 – 30%)
Pricing schedule includes:
Preconstruction services
Initial Target Cost: option
Initial Target Profit: option
Selection of Contractor – ECI Specific Evaluation Factors
Experience with preconstruction services
Local market knowledge
Plan to involve major subcontractors
Oral interviews
Sufficient design information for contractors to adequately provide an Initial Target Cost
SOW section defining preconstruction services and expectations
ECI specific clauses
7 Factors:
1. Corporate Experience (experience w/ Complex buildings/IT infrastructure/preconstruction services
2. Past Performance
3. Oral Interviews
4. Preconstruction services major subcontractor involvement
Local Market Knowledge
Small Business participation
Price
Escape Clause: Construction (Option)
Competitive pricing of subcontracted work
Minimum three sources
Govt participates in bid opening and price/quality trade-offs
Self-preformed work permitted if competitively priced & in the best interest of the Govt
Subcontractors submit drawing and spec reviews
Award of Construction Option
Negotiate within ceiling price
Satisfactory participation during preconstruction
Otherwise, issue for competitive bidding

25. Solicitation – Scope of Work
Preconstruction services and expectations
Cost estimating (live market conditions)
Design consultation
Constructability reviews
Subcontractor input
Value engineering – cost control
Bid package development
Design and construction scheduling
Construction phasing
Risk management
Project orientation and partnering
Construction/design integration – design liaison

26. Solicitation – Scope of Work
Escape clause – Govt. not obligated to exercise option:
Poor preconstruction participation
Excessive team turnover and lack of commitment
Lack of Congressional authorization/appropriation
Can’t negotiate within funds available
Competitive subcontractor pricing – Govt. attends subcontractor bid openings
Defines production point for use in FAR (100% design)
Addresses payment processes

27. Solicitation - Clauses
Successive Target Pricing
Midway Target Price scheduled when all major design decisions have been made
Midway Target Price includes:
+ Midway Target Cost (MTC, Based on 35-90% Design)
+ Midway Target Profit (MTP, 1.5% - 3% of MTC)
Midway Target Price < Ceiling Price
Midway Target Price recognizes significant scope changes
If Midway Target Price is under ceiling, the contracting officer may elect to exercise the construction option
Addresses similar details for final Firm Target Cost and Profit at 100% design

28. Solicitation - Clauses
Adequate Accounting System: Self certification that accounting system is in compliance with FAR (c)(1)
Earned Value Management System (EVMS) Certification
Offeror’s accounting capable of supporting EVMS
EVMS - Size dependent:
Under $20M: not applicable
$20M to $50M: offeror self-certifies compliance
Over $50M: offeror self-certifies and is audited

29. Solicitation - Clauses
FAR , Incentive Price Revision – Successive Targets
Defines ceiling price (ECC)
Outlines alternative if firm fixed price agreement is not reached:
Profit adjustment formula (% negotiated)
Profit increases if final price is lower than Initial Target Cost
Profit decreases if final price is higher than Initial Target Cost
Final price determined after completion of work, using profit from profit formula
Failure to agree is not subject to Disputes clause
Incentive
Profit can go up as CM controls/cuts costs between the Midway and Firm Target Prices.

30. Example: Profit Adjustment Formula
Scenario:
Example
Paragraph (d)(3) blanks are negotiated at the Midway Target Pricing with the following values: Increase/Decrease Profit by 5%, Range of FTP is 2% - 6%
Initial Trgt Cost (ITC):
$17,000,000
Firm Trgt Cost (FTC) :
$16,000,000
Initial Trgt Profit (ITP):
$800,000
Firm Trgt Profit (FTP): *
$850,000
Initial Trgt Price:
$18,140,000
Firm Trgt Price:
$17,170,000
Ceiling Price: +
$18,300,000
Ceiling Price:
** $18,300,000
+ The ceiling price was inserted in the solicitation [paragraph (a), blank no. 2] as $18,300,000.
* The Firm Target Profit is calculated based on the following:
FTP = ITP – (5%) [FTC-ITC] - or –
FTP = 800,000 – (5%) [$16M-$17M] = $850,000.
** Under this scenario, the project scope did not change between the initial target pricing and the Midway Target Pricing. Therefore, no change to the ceiling price was warranted and the FTC is lower than the ITC and the Contractor’s profit increased. You should notice that the Construction Reserve amount (2% of the FTC) has been lowered to $320,000.

31. Design Phase
Jointly develop bid packages & design schedule: design team, CM, Corps & User
Design estimates shared until negotiation point reached (IGE still close hold)
Exercise construction option at optimum stage of design (project dependent)
Establish Final Target 100% design - settle as FFP w/incentives
Tie payment during design to design milestones
Control designer bright ideas after construction option is exercised

32. Validation Phase (HPO Only)
Construction of access roads
Necessary for Project Access & Pile Load tests
Construction of Working Platforms
Set-up of Contractor’s staging areas
Perform Pile Load Tests
Support completion of Final Designs
Establishment of No-Work Zones
Allowed Pre-Ordering Steel H-Piles
Test Sections
Complete DSM Mix Designs

33. Managing Cost & Pricing Data After Construction Award
Cost and Pricing data were required for the firm target proposal only.
Otherwise, consent packages and Vouchers gave the Government a good look at the Contractor’s actual pricing without a further requirement for cost and pricing data.

34. ECI Contracting Benefits
Model allowed to arrive at well documented fair and reasonable costs
ECI contract vehicle allowed the Government to make common sense changes to the contracts prior to fixing the price
Facilitated both price increases/decreases
Encompassed the Non-Federal sponsor concerns
Eliminated the need for modifications
Streamlined the administrative process for both the Government and the Contractor and saved costs for both parties
Allowed for additional resources as necessary to maintain the contract completion dates

35. Lessons Learned
Approach ECI with different mindset – more open way of doing business on all sides
Better education of entire team of what ECI means (particularly customer)
Staff big and staff early (Voucher Validators, Scheduler, Cost Estimators)
Coordination - SOW for A-E and ECI contractor
Collocation of Team Members
Facilitate interaction between designers and contractor
Review risk analysis at each major milestone

36. Lessons Learned (cont.)
Establish control of late sponsor comments by emphasizing schedule and bid packages
Clearly define process for notifying PDT of design changes, amendments and modifications
Allocate resources according to design schedule (more Civils early, more Mechanicals later)
Allow more time for joint estimates or different approach to joint estimates
Improve sub-contractors involvement in pre-construction phase
Good risk decisions made w/ contractor input

37. HQUSACE Policy Legal Sufficiency Requirements
Why FFP contract not suitable
Use FAR , Incentive Price Revision – Successive Target clause
Ensure the contractor has an adequate accounting system
Ensuring adequate price competition and fair and reasonable pricing (include cost realism)
Negotiating the ceiling price – Recommend offerors to propose
Level of design at award of preconstruction services
Scope of preconstruction services
Structure of the contract and predominance
Funding the construction management contract (P&D vs Constr.)

38. Final Negotiated Price
ECI Results
HPO Contract
Initial Target Price
Initial Ceiling Price
Final Negotiated Price
Difference
LPV
Archer, Western, Alberici
$294,894,736
$411,600,000
$342,275,251
$69,324,749
LPV 145
Chalmette Levee Constructors
$357,245,988
$488,000,000
$237,128,127
$250,871,873
LPV 146
St. Bernard Levee Partners
$280,484,886
$452,000,000
$272,294,417
$179,705,583
LPV
Cajun Construction
$300,000,000
$380,000,000
$349,999,235
$41,582,109
 IHNC-01 Seabrook
Alberici Constructors
$154,000,000
$181,450,000
$164,511,456
$16,938,544
Sub-Totals >>>
$1,462,857,130
$1,924,850,000
$1,366,427,142
$558,422,858
Savings to the Government:
29%

39. The Delivery Team
TEAM NEW ORLEANS: COLLABORATION AND SHARED REPONSIBILITY
Team New Orleans has made significant progress on the HSDRRS in the last six years. The accomplishments of this team of federal, state, local governments, levee authorities, levee boards, academia, industry and many more is historic and unparalleled.
Committed to ensuring that New Orleans could handle a 100-year storm surge by 1 June 2011.

40. **75 percent of the city of New Orleans flooded (per IPET)
**Illustrated flood depths based on preliminary data and high water marks. Numbers will become more specific as data is verified.
(maximum New Orleans flood depths pending from MVN hydrology)

42. THANKS!