Major Changes to Public Contracting and the CM/GC Delivery Method
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1 Major Changes to Public Contracting and the CM/GC Delivery Method Jeremy Vermilyea Schwabe Williamson & Wyatt
2 Oregon Public Contracting Code & Model Public Contract Rules Section The CM/GC form of contracting.... is a technically complex project delivery system. Contracting Agencies shall use this contracting method only with the assistance of knowledgeable staff or consultants who have a demonstrated capability of managing the CM/GC process in the necessary disciplines of engineering, construction schedule and cost control, accounting, legal, Public Contracting and project management. CM/GC Best Practices
3 Successful CM/GC Projects The Most Important Tasks for CM/GC Success Are: 1. Select the Right Project Larger, more complex, tighter schedule, more critical Case studies: KOIN, Tram, Zoo, NOAA, fire stations 2. Select the Right People Knowledgeable selection committee Skilled owner s team and staff Qualified architect/engineer and contractor 3. Build Teamwork Focus on partnering Seek common goals Achieve project success 4. Obtain the Highest Level of Pre-Construction Service Emphasize pre-construction phase in RFP Retain most qualified CM/GC CM/GC Best Practices
4 Oregon Public Contracting Code 1. Key policies: least cost to taxpayers and competitive bidding 2. Use of findings and exemptions process for flexibility and adjustment to market conditions 3. Issues: exemptions, selection, and execution 4. Exempting inappropriate projects or not following statute 5. Selection on personality or cost instead of formal evaluation 6. Bid shopping, transparency, bid packaging for favored subs 7. Mech/electrical subs sometimes part of the CM/GC team 8. Ancillary costs (e.g. time and delays) not being considered 9. Possible use of a CM (professional service) without CM/GC 10.Need for lessons learned and Best Practices ORS 279C does not apply to: Oregon Legislature Judiciary Oregon Universties CM/GC Best Practices
5 Public Contracting Task Force Legislative Interim Committee 30+ Stakeholders Public owners (State, City, County, Special Dist.) General Contractors (Hwy, Building & Heavy) Subcontractors Labor Design Professionals Legislators Lawyers!!!
6 Public Contracting Task Force Purpose: Address perceived deficiencies in competitive bid exemption process Address perceived deficiencies and inconsistencies in use of CM/GC Address ways to force better (Best?) practices on all users of alternative delivery methods in general and CM/GC in particular
7 Exempting from Competitive Bidding on Public Works Projects Competitive bidding is required unless specifically exempted. ORS 279C.300. Public owner may exempt a public improvement contract and use an alternative delivery method if it makes certain findings that support a method other than competitive bidding. Findings are the justifications & conclusions the agency reaches, using the considerations in ORS 279C.335(2). CM/GC Best Practices
8 Exempting from Competitive Bidding on Public Works Projects What s New? 279C.335(2) has substantial changes. Agency must show that using an alternative method will result in substantial cost savings (old) AND other substantial benefits (new). Examples: Life Cycle, time for delivery, safety, etc. Rules are still to be written.
9 Exempting from Competitive Bidding on Public Works Projects What s New? Agency must also consider: Number of potential bidders/proposers; Construction Budget + projected operating costs; Potential public benefits resulting from exemption; Potential use of value engineering in alternative method vs. competitive bidding
10 Exempting from Competitive Bidding on Public Works Projects What s New? Availability of specialized expertise (Owner s CM, engineering, etc.); Public safety considerations; Risk mitigation/reduction; How the alternative method may affect project funding; Impact of exemption on market factors (cost/time);
11 Exempting from Competitive Bidding on Public Works Projects What s New? Whether exemption allows agency to better address size/complexity of project; Whether the project is new construction or remodel/rehab of existing project; Whether project will be occupied; Project conditions and whether phasing will be used to mitigate; Availability of necessary legal, project management and other expertise with experience in alternative contracting methods.
12 What does it all mean? Exempting projects from competitive bidding will require more: Planning Research Resources Technical understanding Commitment to the process (not just belief that the alternative is cheaper). Boilerplate Findings will no longer be sufficient. When using CM/GC, agencies MUST now use AG Model Rules (can no longer write own rules)
13 Using the CM/GC Process Oregon Statutes amended to prescribe the proper use of CM/GC Designed to ensure opportunity, transparency and true competition at every level Significant statutory modifications
14 Definitions CM/GC Services: Participating as member of project team w/ agency & design professional; Design review for value, constructibility, delay and error mitigation/minimization; QA/QC in design process; Establishing price for work (fixed, GMP, etc.); Other services associated with construction: Scheduling, estimating, subcontracting, project management, self-performing work, etc.
15 Definitions, cont d CM/GC Services does NOT include: Constructing per competitive bid or nonexempted process Design-Build Energy Savings Contract Certain ODOT projects
16 Definitions, cont d Guaranteed Maximum Price Total price for all work, including contingencies Excluding changes to scope of work
17 Other CM/GC Requirements Agencies must use AG s rules (no more using own rules) Agency must tell proposers, in the RFP: Evaluation criteria and weight for each factor Whether & How agency will use interviews and information gained therein Any other criteria the agency will use to evaluate proposals How written and interview scoring will be combined
18 Other CM/GC Requirements All savings accrue to agency, unless agency specifically calls out sharing in contract In RFP, Agency must specify how pricing will be determined, including what components will be fixed vs. unit pricing Agency must set clear timelines for submission of proposals, interviews and evaluation of proposals. Agency must give unsuccessful proposers Rzbl opportunity for post-selection interview.
19 Selection of Subcontractors Contract b/t agency and CM/GC must provide: Methods by which subs will be selected Must be competitive, but does not require selection of lowest bidder by CM/GC. Must provide reasonable opportunity Still allows for teaming between CM/GC and key subs CM/GC can opt out of competitive process if it provides another selection alternative that the agency accepts. CM/GC can self-perform work, but must identify the work and how it will ensure fair opportunities for subs to compete. CM/GC must have method to notify subs of selection/non-selection CM/GC must give non-selected subs rzbl opportunity to discuss reasons for non-selection
20 What s Next? aka: Rulemaking Operative date of SB 254: July 1, Temporary Rules Issued July 2, 2014 Final Rules????
21 Questions? Jeremy Vermilyea SW 5 th Ave. Suite 1900 Portland, OR Follow
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