Alternative Public Works Contracting Methods

Overview

Most local governments in Washington State use the traditional “design-bid-build” contracting method for public works projects, in which a project is broken into two distinct contracts. First, the agency solicits for and contracts with an architect or engineer or does the work in-house to design the project. Once the design is complete, the agency then solicits bids from contractors to build the project according to the plans and specifications.

However, chapter 39.10 RCW provides agencies three “alternative” forms of public works contracting that can be useful in certain situations:

• Design-build contracting
• General contractor/construction manager (GC/CM) contracting, and
• Job order contracting (JOC).

Design-Build Contracting

Design-build contracting brings a designer and contractor team together under one competitive process. An agency contracts with a single firm to both design and construct a public works project instead of separating it into two separate contracts (RCW 39.10.300-.330).

Eligible Agencies

All “public bodies” in Washington – defined in RCW 39.10.210 as “any general or special purpose government in the state of Washington, including but not limited to state agencies, institutions of higher education, counties, cities, towns, ports, school districts, and special purpose districts” – may use design-build contracting method.

Agencies that intend to use design-build contracting for eligible projects must first obtain approval from the state Project Review Committee (PRC), which is appointed by the Capital Projects Advisory Review Board (CPARB; see RCW 39.10.240-.290). The PRC will evaluate if the project meets at least one of the criteria outlined in state law and whether the agency has the necessary expertise to manage the project.

An agency may also apply for blanket certification to use design-build contracting for a three-year period.

Eligible Projects

Agencies may use design-build for any public works project with a total project cost over $2 million that meets at least one of the following criteria (RCW 39.10.300):

• The construction activities are highly specialized, and a design-build approach is critical in developing the construction methodology;
• The projects selected provide opportunity for greater innovation or efficiencies between the designer and the builder; and/or
• Significant savings in project delivery time would be realized.

In addition, public agencies may use design-build for the following project types regardless of cost (RCW 39.10.300(2) and (3)):

• Parking garages and pre-engineered metal buildings (with PRC approval), and
• Construction of portable facilities (as defined in WAC 392-343-018), or not more than 10 prefabricated modular buildings per installation site (PRC approval not required).

Competitive Process

Agencies must award any contract for design-build services through a competitive process as outlined in RCW 39.10.330, using a multi-phased, qualifications-based, cumulative selection process with a request for qualifications (RFQ), a request for proposals (RFP) and a “cost related factor.” Agencies typically request contractors propose an overhead and profit fee as the “cost related factor."

Agencies may schedule proprietary meetings and interviews with potential design-build project teams to interact ahead of award.

Awarding the Contract

The agency may initiate negotiations with the finalist who submitted the highest scored response to the RFQ and RFP. If the agency is unable to execute a contract, negotiations may be suspended or terminated and the agency may negotiate with the next-highest scored finalist, and so forth until a contract agreement is successfully negotiated, as outlined in RCW 39.10.330.

After contract award, an agency must pay “honorarium payments” to each finalist that submitted a responsive proposal but was not awarded the contract.

Benefits

Using design-build contracting for larger, hard to define projects can provide:

• Reduced owner risk, with design and construction being performed under one contract. Designers and contractors creatively solve problems before construction begins.
• Potentially shorter project delivery timelines between design and building the project.
• Budget predictability with a target value and a guaranteed maximum price.

Challenges

• Design-build is not beneficial for projects with prescriptive design requirements or limited innovation options.
• Agencies could see potential for higher costs because they are paying the contractor professional rates for preconstruction/design services.

Examples of Design-Build Documents

Below are selected examples of design-build solicitations.

• Bothell RFQ for Replacing Fire Stations (2019) – Progressive design-build project to rebuild two fire stations on existing sites, including construction of nearby temporary facilities to maintain continuous fire service operations during project.
• Pasco:
  • RFQ for New Reservoir Storage Tank (2021) – Progressive design-build project
  • RFQ for Owner’s Representative (2021) – Seeking firm to provide owner’s representative and construction management services to oversee the water storage project
• Tacoma RFQ for Rebuilding Hydroelectric Powerhouse (2021) – Highly specialized work requiring simultaneous design, material sourcing, and manufacturing, as well as coordination to meet outage schedules and reduce outage durations

General Contractor/Construction Manager (GC/CM)

Under the general contractor/construction manager (GC/CM) method, a public agency selects the contractor early on in the design process so they can participate in project development given complex scheduling, phasing, or coordination (RCW 39.10.340-.410). For example, a hospital renovation might have such complexities as the hospital must continue to operate during construction.

The selected GC/CM then partners with the agency and the designer on various preconstruction services such as life-cycle cost design considerations, value engineering, scheduling, cost estimating, constructability, alternative construction options for cost savings, and sequencing of work (RCW 39.10.360(6)). Because the contractor is brought in early, the contractor has additional time to understand the project and help shape it.

The GC/CM is the general contractor and construction manager during the construction phase.

Eligible Agencies

All “public bodies” in Washington – defined in RCW 39.10.210 as “any general or special purpose government in the state of Washington, including but not limited to state agencies, institutions of higher education, counties, cities, towns, ports, school districts, and special purpose districts” – may use GC/CM contracting method.

In most cases, agencies wanting to use GC/CM must obtain approval from the state Project Review Committee, which is appointed by the Capital Projects Advisory Review Board (CPARB; see RCW 39.10.240-.290). The PRC will evaluate whether the project meets at least one of the criteria outlined in state law for use of the process and whether the agency has the needed expertise.

An agency may also apply for blanket certification to use GC/CM for a three-year period.

Eligible Projects

GC/CM may be used for public works projects meeting at least one of the following criteria (RCW 39.10.340):

• Implementation of the project involves complex scheduling, phasing, or coordination;
• The project involves construction at an occupied facility which must continue to operate during construction;
• The involvement of the general contractor/construction manager during the design stage is critical to the success of the project;
• The project encompasses a complex or technical work environment;
• The project requires specialized work on a building that has historic significance; or
• The project is, and the public body elects to procure the project as, a heavy civil construction project.

Competitive Process

Early in the design process, the agency selects the GC/CM through a competitive qualifications-based process through a request for proposals (RFP) and sealed bids for general conditions and fee, according to the requirements of RCW 39.10.350-.370.

Awarding the Contract

The agency must select the firm submitting the highest scored final proposal using the evaluation factors and relative weighting published in the RFP. The agency then negotiates the scope of work and enters into a preconstruction services contract with the GC/CM.

Once the design is 90% completed, the agency and GC/CM negotiate to establish the maximum allowable construction cost and the total contract cost, as outlined in RCW 39.10.370.

Benefits

• GC/CM may work well on large projects where there is complex scheduling, phasing, and coordination; or renovation/remodeling of facilities that the government will continue to operate or use during construction.
• The GC/CM can help the agency avoid costly changes during construction due to their increased familiarity with the project and early involvement.
• Major scopes of work such as mechanical, electrical, and plumbing will likely be done by specialty subcontractors who can also participate in the design/preconstruction services process.

Challenges

• It can be hard for the agency and contractor to manage the multiple, prescriptive cost categories and tracking requirements with the GC/CM method.
• 70% of all subcontract work needs to be competitively bid, with current Washington State statutes prescribing several nuances to bidding subcontract work.

Examples of GC/CM Documents

Below are selected examples of GC/CM solicitations.

• Everett RFP for General Contractor/Construction Manager (2022) – Seeking GC/CM to provide preconstruction services and potential construction for municipal building modernization/improvements
• White Salmon Valley Pool District RFP for General Contractor/Construction Manager (2021) – Seeking GC/CM for preconstruction and construction services for swimming pool facility project

Job Order Contracting (JOC)

Using job order contracting (JOC), agencies enter into one contract that can be used for multiple, small, time-sensitive projects requiring little or no design (RCW 39.10.420-.460). As projects arise, agencies price the work based on an established price book.

Under JOC, agencies can access contractors after a basic scope of work is developed on a small project. This eliminates time-consuming, costly aspects seen in the traditional “design-bid-build” public works process, which requires separate contracting actions for each small project.

Eligible Agencies

All “public bodies” in Washington – defined in RCW 39.10.210 as “any general or special purpose government in the state of Washington, including but not limited to state agencies, institutions of higher education, counties, cities, towns, ports, school districts, and special purpose districts” – are authorized to use JOC.

Unlike the other alternative public works contracting methods, agencies seeking to use JOC do not need to obtain the approval of the state Project Review Committee. However, agencies should have appropriate staff expertise or consultants to assist them in establishing the unit price book and administering a job order contract.

Eligible Projects

Public agencies may use JOC for the construction of public works projects, but at least 90% of the work must be subcontracted.

After entering into a contract, agencies issue a work order for each project. Work orders must comply with the requirements of RCW 39.10.450. In particular:

• No individual work order may exceed $500,000 excluding sales and use tax. All work orders issued for the same project shall be treated as a single work order for the purposes of this dollar limit.
• No more than 20% of the dollar value of any work order may consist of items not contained in the unit price book.
• Any stand-alone permanent structure constructed under a work order may not exceed 3,000 gross square feet.
• The agency may not issue any work orders until it has approved the contractor’s plan to equitably spread certified minority and women’s business enterprise subcontracting opportunities among the various subcontract disciplines, in consultation with the Office of Minority and Women’s Business Enterprises (OMWBE) or the equivalent local agency and to the extent permitted by law.
• Each work order issued shall be treated as a separate contract for the purposes of chapter 39.08 RCW (contractor’s bonds), chapter 39.12 RCW (prevailing wages), chapter 39.76 RCW (interest on unpaid public contracts), and chapter 60.28 RCW (liens for public works).
• Any work order over $350,000, excluding sales and use tax, and including over 600 single trade hours must use a state registered apprentice program except as noted in the statute.

The initial JOC term may not exceed two years, with the option of extending or renewing the contract for one additional year. For all local governments except the very largest cities and counties, the total contract amount may not exceed $4 million per year for a maximum of three years (RCW 39.10.440). Agencies can carry over unused capacity to the following year, but there are limitations.

No local government may have more than three job order contracts in effect at any one time (RCW 39.10.440(3)).

Competitive Process

A JOC is awarded through a using a qualifications-based selection process with a bid co-efficient (a multiplier that may increase or decrease costs listed in the unit price book).

The request for proposals must, at a minimum, include a detailed description of the scope of the contract, minimum and maximum work order amounts, contract duration with extension options, the reason for using JOC, the identity of the specific unit price book to be used, and a description of which elements must be included in the bid coefficient.

Additional information on the solicitation process is set out in RCW 39.10.430.

Awarding the Contract

The agency must award the contract to the firm submitting the highest scored final proposal using the evaluation criteria published in the RFP and sealed bid. Additional information on the contract process is set out in RCW 39.10.430.

Benefits

• Local governments can complete smaller projects more quickly using JOC, because it helps agencies sequence, coordinate, and manage small projects without bidding them individually.
• Plans and/or specifications are only required to the level required to secure appropriate permits.
• The use of a unit price book provides fair, locally adjusted average costs for work.

Challenges

• Local government staff must be familiar with how a price book works and comfortable negotiating quantities and scopes with the contractor without seeing traditional bids.
• JOC does not work well for projects that require heavy design with multiple technical disciplines, primarily because of the dollar limits per work order.

Examples of JOC Documents

Below are selected examples of JOC solicitations.

• Bellingham Job Order Contracting RFP (2021)
• Everett:
  • Job Order Contracting RFP (2021)
  • Interlocal Agreement with Northshore Parks and Recreation Service Area (2021) – Allows park service area to piggyback off Everett’s JOC
• Kirkland Job Order Contracting RFP (2022)
• Shoreline JOC Consulting Services RFP (2020) – Seeking qualified consultant to develop, implement, and support JOC program
• Vancouver Job Order Contracting RFP (2019)

Public Records Considerations

All public records related to alternative public works contracts are subject to the Public Records Act, with the following exceptions listed in RCW 39.10.470:

• Trade secrets, as defined in RCW 19.108.010, or other proprietary information submitted by a bidder, offeror, or contractor in connection with an alternative public works transaction under chapter 39.10 RCW are not subject to the Public Records Act if the bidder, offeror, or contractor specifically states in writing the reasons why protection is necessary, and identifies the data or materials to be protected.
• All documents related to a design-build procurement are exempt from disclosure until the notification of the highest scoring finalist is made or the selection process is terminated, except as expressly required under RCW 39.10.330(3).