Lisa Cooley, LEED AP Program Director

Job Order Contracting and Custom Cost Engineering

The Premise

How small is too small for Design-Build?

• No project is too small to benefit from Design-Build principles

• The challenge lies with process definition and procurement

A personal journey through Federal Design-Build History • Federal Acquisition Streamlining Act,

1994 – Reduce unique purchasing

requirements – Simplified Acquisition of small

purchases – Focus on speed – Established preference for Multiple

Award Contracts

• Clinger-Cohen Act 1996 and FAR 1997 – Established 2 phase selection process

for D-B

• ARRA • Sequester

Alphabet Soup

IDIQ (Indefinite Delivery/Indefinite Quantity)

• MACC/MATOC (Multiple Award Construction Contract/Multiple Award Task Order Contract)

– SATOC

• JOC (Job Order Contract)

– DOC

– TOC

– SABER (Simplified Acquisition of

Base Engineering Requirements)

Government Perspective: Increasing Importance of O & M in a World of Shrinking Funding

Savannah District USACE

Contractor Perspective: Stabilizing Influence of O & M Work

Reed Construction Data, 2012

Multiple Award Task Order Contracts

• Most easily understandable form of IDIQ • Mirrors Design-Bid-Build or Design-Build process, in

reiterative form • Qualifications and some form of price validation are both

required at the contract level • Contractor selection is pushed down to the delivery order

level • In Design-Build version, it can eliminate Phase 1 process

time and investment

Two Examples of Small(er) Project MATOCs

USACE Louisville

• Exclusively Design-Build

• Minimum 3, maximum 5 contractors

• Max $4m per delivery order, typical $1m

• 3+2, $20m max

• 8(a) setaside

USACE Savannah

• Design-Build or DBB

• Maximum 5 contractors

• $750k to $10m per delivery order

• 3+2, $100m max

• Total small business setaside

MATOC vs. SATOC Benefits

MATOC Pros • Reduction in contracting Time &

Cost • Contractors Prequalified • Evaluators develop more intimate

understanding of contractor capabilities and past performance

• Ability to Negotiate • Flexible Response to Emergencies Cons • Large Upfront Effort • Minimum Guarantee • One contractor can dominate,

ultimately resulting is loss of competition

SATOC Pros • Prepriced Work allows for single

source procurement • Match Funding to Requirements • Flexibility to Add Work

(Modification) Cons • Assuring competitive pricing • Hard to Adjust to Market Changes

Both allow for the development of seasoned contractor base and create efficiencies in contractor and government staff

SATOC Example

• USACE Little Rock SATOC for US Air Force Medical Service • Focused on SRM, providing D-B process flexibility • 2 year, $49m max • Provision for emergency services on pre-negotiated T&M

basis, up to $150k • Requires 2 notional design solutions at 20-30% design for

every task order – Prescriptive but streamlined project development process:

Background Narrative, Technical Observation, Technical Solutions. Focus on photodocumentation and site investigation in early phase.

• 65% design prior to construction start, 90% design required at 35% construction completion

Job Order Contracting

Genesis: US Army, 1980’s

Smaller projects were taking up to 1 year to procure

8-22% of project costs were consumed in design and procurement

Change orders could increase project costs by 50%

Claims and litigation Low bid procurement produced low quality results Large backlog of projects Impact to mission

Faster project delivery (-3 to -9 months)

Streamlined engineering and design

Assurance of cost reasonableness

Better contractor performance

Partnering relationship

More opportunities for local small and disadvantaged business

Effective use of year-end funds

Cassell, Jordan W., and Linda T. Gilday. Improving the Army’s Job Order Contracting Program. Logistics Management Institute, September 1997.

JOC Results

0% 25% 50% 75%100%

Non-Partnered/LowBid

Non-partnered/BestValue Selection

Partnered/BestValue Selection

Owner/Contractor Satisfaction with JOC

Mulcahy, Francis S. The Effectiveness of Partnering and Source Selection in Job Order Contracting. Master’s Thesis, University of Washington, 2000.

Framing JOC as a Design-Build Tool

JOC brings the advantages of the most progressive delivery methods to smaller projects

– Design-Build Lite

– CM At-Risk Lite

– Integrated Project Delivery Lite

– Performance-based Contracting Lite

Integrated Team

Early Collaboration

Best Value or Qualifications Based Selection

Performance Incentives

Pricing Transparency

“Great service, less change orders?”

“Everything you ever wanted in

a construction project?”

The Competitive Pricing Component of JOC

Pricing structure relies on a Unit Price Book (RSMeans)

Competitively-bid coefficient (multiplier, factor) establishes pricing at the outset of the contract.

Coefficient includes all costs including materials, labor, overhead, profit, and sometimes bond and tax.

Effectively bidding every component of typical construction on bid day

Example:

1 sf drywall $1.00

Coefficient .92 - .08

Contractual Price $ .92

Delivery Order Pricing Delivery orders are firm fixed price, lump

sum UPB is an estimating tool, not a billing tool. Unit price proposals represent contractor’s

committed price—it converts to lump sum.

Change orders rare, governed by same pricing structure.

No surprises!

16

What if an item is not in the Unit Price Book?

• Items not appearing in the Unit Price Book are considered Non Pre-priced Items (NPP) • Typical NPP options:

1. NPP coefficient serves as a markup on three transparent subcontractor bids

2. NPP markup can be set per contract provisions Warning: can skew pricing/coefficients

3. Once a new unit price is negotiated it can be incorporated into the contract

4. Some contracts will prohibit or limit NPP items as a percentage of delivery orders.

Sample Contractor Bid:

UPB Coefficient .92

applied to line items

NPP Coefficient 1.18

applied to actual sub costs

Advantages of Unit Pricing

• Allows for Market-researched Price Escalation

• Change Orders are rare in JOC – Owner-initiated

– Truly unforeseen conditions

Single-source responsibility

=

complete scope of work

• UPB governs original scope of work and scope added after – Puts owners at an advantage when directing changes in the work

• Non-prepriced Provisions for unusual items of work

JOC Design and Proposal Deliverables

Streamlined Design

Whiteman AFB SABER

• HVAC Upgrades for Mold Remediation

• Scheduled to go through MATOC but time was too short at FYE

• Provided drawings from a similar building as design direction

Whiteman: Economy of Scale and Reiterative Efficiencies

A Hybrid Approach

• GSA Region 7 Contracts

• GSA-specific price schedule with RSMeans Facility Construction Cost Data as backup—line item pricing for projects under about $100,000

• Projects over $100,00 are competed as DBB or D-B

• D-B capabilities are an option at contract award

Dennis Chavez Federal Building

• Albuquerque, NM • Converting 30’ high

courtroom on 11th floor to two floors of office space

• Fast-track Design-Build, integrated structural inspection with demo

• Utilized 4’x8’ opening on 10th floor for concrete pumping and structural steel access

Other Issues

• Potential for Regionalization

– USACE Little Rock Regional JOC

• Role of Small Business

– 8(a) setasides—standalone or IDIQ

• Impact on A/Es

– Embracing LEAN Design

Pricing Transparency and Electronic Support Systems

• Industry standard data updated regularly are key to pricing fairness in a long-term contract

• True transparency required owner and contractor understanding and a robust collaborative software program

• 4Clicks Project Estimator (DOD) and RSMeans JOCWorks (other federal agencies)

• Integrated cost estimating, project management, contract management, document management, and visual estimating in a single program.

• Automated Technical Evaluations, enabling Owners to quickly compare Contractor and Owner estimates.

• Complete Post Negotiations Memorandums for Contractors to identify the changes that happened during the Owner/Contractor negotiation process.

• Embedded project delivery and contract processes –Ability to directly populate government forms.

Lisa Cooley, LEED AP

Program Director for JOC and Custom Cost Engineering

lisa.cooley@reedbusiness.com

505-239-3446

Presentation will be posted at: http://www.reedconstructiondata.com/market-intelligence/job-order-

contracting/

Discussion