Construction Contract Types
In construction contracting the selection of contract type is usually a firm-fixed price type contract. However, within the firm-fixed price contract there is the indefinite-delivery contract vehicle.
The indefinite-delivery contract vehicle would allow an agency to utilize one construction contract (i.e, Job Order Contract (JOC); Task Order Contract (TOC); etc.) to accomplish numerous construction projects of a similar nature. This vehicle is becoming increasingly common in the construction environment but varies depending on agency requirements and guidelines. The Acquisition Planning Team should consider the indefinite-delivery vehicle; however, if the current construction requirement is for an excessively large, one-time acquisition, this vehicle maybe inappropriate. The Acquisition Planning team must also consider which procedures to utilize in awarding the type of contract selected. In the past, most construction projects were awarded as firm-fixed price type contracts utilizing the sealed bidding procedures.
Under the Two-Phase Design Build concept the agency must either develop a scope of work that defines the project or contract out for those services under FAR 36.6, Architect-Engineer Services. Utilizing Two-Phase Design Build selection procedures should result in a firm-fixed price contract. In accordance with FAR 36.303, Phase One shall include a scope of work; phase-one evaluation factors; Phase Two Evaluation factors; and a statement of the maximum number of offerors that will be selected to submit phase-two proposals (NTE 5 without Contracting Officer approval). Phase Two shall be prepared in accordance with Part 15 and include phase-two evaluation factors.
FAR 36.301 states that during the acquisition planning phase, if considering the use of two-phase design-build selection procedures, the Contracting Officer shall determine that this method is appropriate, based on the following:
- Three or more offers are anticipated.
- Design work must be performed by offerors before developing price or cost proposals, which means that offerors will incur a substantial amount of proposal expense.
- The following criteria has been considered:
- The extent to which the project requirements have been defined.
- Time constraints for completion.
- Suitability of the project for use of this method.
- Capability of the agency to evaluate offers and manage the project.
Although the Two-Phase Design Build procedures are unique to construction; the procedures may not often be utilized. In accordance with FAR 36.104, other acquisition procedures are allowed under 10 U.S.C 2862 for design-build.
These procedures are currently being utilized for construction projects. Depending on agency guidelines, the design-build procedures allow the same firm to perform the design and construction or subcontract either phase of the work. Therefore the "two phases" become the design and then the construction.
Two-step sealed bidding procedures are a combination of competitive procedures designed to obtain the benefits of sealed bidding when adequate specifications are not available. This method is especially useful in acquisitions requiring technical proposals, particularly those for complex items.
It is conducted in two-steps:
- Step-one consists of an RFP requesting technical proposals, evaluation, and discussions (if necessary) without pricing.
- Step-two involves the submission of sealed bids containing the price by those who submitted proposals in step-one.
If the acquisition planning team is considering two-step sealed bid then in accordance with FAR 14.502, unless other factors require the use of sealed bidding, it may be used in preference to negotiation when all of the following conditions are present:
- Available specifications are not definitive or complete, or may be too restrictive without technical evaluation
- Definite criteria exist for evaluation of technical proposals
- More than one technical proposal is anticipated to be received
- Sufficient time is available for the process
- A firm-fixed price contract or fixed-price contract with economic price adjustment will be used.
Two-step sealed bidding may be applicable for construction projects when "state of the art" may be a factor, but the Government may not be fully aware of the latest construction technology.