No. 42616 (Amendment): Rule R916-4. Construction Manager/General Contractor Contracts

(Amendment)

DAR File No.: 42616
Filed: 02/20/2018 02:28:31 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Department of Transportation (Department) is amending this rule to recognize its authority to contract the constructing of transportation infrastructure projects using a variation of Contract Manager/General Contractor (CM/GC) contracting arrangement known as Progressive CM/GC, which is also referred to in the transportation industry as the Progressive Design-Build contracting method.

Summary of the rule or change:

This amendment adds text to the existing rule that describes the conditions under which it is appropriate for the Department to employ Progressive CM/GC contracting. The additional text describes Progressive CM/GC contracting and the procedures the Department must follow when soliciting for vendors interested in entering into a Progressive CM/GC contract relationship.

Statutory or constitutional authorization for this rule:

Section 63G-6a-702
Section 63G-6a-106
Section 63G-3-201
Section 63G-6a-1302
Subsection 72-1-201(1)(h)

Anticipated cost or savings to:

the state budget:

The Department's goal in amending Rule R916-4 is to enable it to utilize a new and innovative contracting method that is known in the industry to reduce design and construction costs. State Departments of Transportation and public utilities in other parts of the U.S., particularly water utilities have been using Progressive CM/GC contracting for several years. They use Progressive CM/GC contracting because it reduces the time needed to design and construct large infrastructure projects, which saves money. Design and construction contractors do not face the same degree of risk with Progressive CM/GC contracting, which allows them to reduce their fees. The Department's motivation for making this amendment is to allow it to employ a contracting method that will result in savings for the state budget. However, such savings are speculative now, and cannot be quantified.

local governments:

This amendment to Rule R916-4 will not affect local governments in any way. It does not require anything of local governments nor provide them with any direct benefits. This amendment only applies to and will only affect the Department.

small businesses:

This amendment to Rule R916-4 will not have a direct affect on small businesses. It does not require anything of small business nor provide them with any direct benefits. This amendment only applies to and will only affect the Department.

persons other than small businesses, businesses, or local governmental entities:

This amendment to Rule R916-4 will not affect persons other than small businesses, businesses, or local government entities in any way. It does not require anything of them nor provide them with any direct benefits. This amendment only applies to and will only affect the Department.

Compliance costs for affected persons:

No person, legal or natural, will be affected directly by this amendment. There are no compliance costs included in or arising from this amendment. This amendment only applies to the Department and will only affect how the Department contracts for transportation infrastructure projects.

Comments by the department head on the fiscal impact the rule may have on businesses:

This amendment to Rule R916-4 will have no direct fiscal impact on businesses.

Carlos Braceras, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Transportation
Operations, Construction
CALVIN L RAMPTON COMPLEX
4501 S 2700 W
SALT LAKE CITY, UT 84119-5998

Direct questions regarding this rule to:

Christine Newman at the above address, by phone at 801-965-4026, by FAX at 801-965-4338, or by Internet E-mail at cwnewman@utah.gov
James Palmer at the above address, by phone at 801-965-4000, by FAX at 801-965-4338, or by Internet E-mail at jimpalmer@utah.gov
Linda Hull at the above address, by phone at 801-965-4253, by FAX at , or by Internet E-mail at lhull@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

04/16/2018

This rule may become effective on:

04/23/2018

Authorized by:

Carlos Braceras, Executive Director

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2018

FY 2019

FY 2020

State Government

Local Government

Small Businesses

Non-Small Businesses

Other Person

Total Fiscal Costs:

Fiscal Benefits

State Government

Local Government

Small Businesses

Non-Small Businesses

Other Persons

Total Fiscal Benefits:

Net Fiscal Benefits:

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described above. Inestimable impacts for Non-Small Businesses are described below.

Appendix 2: Regulatory Impact to Non-Small Businesses

This amendment to rule R916-4 authorizes and provides a procedure for the Department to follow when employing a variation of CM/GC contracting known as Progressive CM/GC (also referred to in the transportation industry as Progressive Design-Build). This contracting method will be used on large transportation infrastructure construction projects. Design and construction firms will form teams to prepare and submit proposals in response to RFPs published by the department. The Department will contract with the successful team to design the project and possibly, but not necessarily, perform and or manage the construction phase. Considering the magnitude and complexity of projects for which this contracting method will be employed, only a small number of firms in the Utah market have the experience and ability to complete a Progressive CM/GC project successfully.

Based upon its review of the firms listed in the Department of Workforce Services' Firm Find database, the Department believes there is one small business and as many as 17 non-small businesses categorized as Highway, Street, and Bridge Construction firms, and 10 small businesses and as many as 20 non-small businesses categorized as Engineering Services firms located in Utah that have the ability and are likely to compete for Progressive CM/GC contracts. Therefore, there are 48 businesses in Utah that might be impacted by this amendment. Those businesses still must form teams, assemble successful proposals, and be awarded contracts by the Department before the amendment will have any direct impact on them. And for those firms that are impacted by the amendment, the impact will be positive in that the firms will gain additional opportunities to profit from contracts obtained as an indirect result of the Department making this change to rule R916-4.

The Department of Workforce Services' Firm Find database lists 176 firms under NCAIS #237310, Highway, Street, and Bridge Construction category. Of these, 155 reported having 0 to 49 employees and are considered small businesses, which leaves 21 firms that report employing 50 to 499 employees and are, by definition, large businesses.

The Department of Workforce Services' Firm Find database lists 965 firms under NCAIS #541330, Engineering Services category. Of these, 937 reported having 0 to 49 employees and are considered small businesses, which leaves 28 firms that report employing 50 to 999 employees and are, by definition, large businesses.

The executive director of the Department of Transportation, Carlos E. Braceras, has reviewed and approved this fiscal analysis.

R916. Transportation, Operations, Construction.

R916-4. Construction Manager/General Contractor [~~Contracts~~]and Progressive Construction Manager/General Contractor Contracts.

R916-4-1. Purpose.

(1) Pursuant to Utah Code Section 63G-6a-106(3)(a), this rule establishes the Department's procedures to procure transportation construction under the Construction Manager/General Contractor (CM/GC) approach authorized in Utah Code Section 63G-6a-1302. CM/GC contracting seeks to provide a collaborative project delivery method which may result in: A savings of time and cost; improved quality expectations as to the end product, schedule, and budget; and risk management savings through lack of duplication of expenses, and through early, continuous and coordinated efforts.

R916-4-2. Authority.

(1) This rule is authorized by sections 63G-6a-106, 63G-6a-702, and 63G-6a-1302 of the Utah Procurement Code; section 63G-3-201 of the Utah Administrative Rulemaking Act; and subsection 72-1-201(1)(h) of the Utah Transportation Code.[This rule is authorized by grants of rulemaking authority in Sections 63G-6a-106(3)(a) and 63G-6a-1302 of the Utah Procurement Code; Title 63G, Chapter 3, Utah Administrative Rulemaking Act; and Sections 72-1-201(h), 72-2-206, and 72-6-105 of the Utah Transportation Code.]

R916-4-3. Policy.

(1) When the Executive Director or designee determines it appropriate, Department may use CM/GC method of project delivery. CM/GC is not recommended for every project, therefore, the decision to use the method must [~~take into account~~]consider the factors listed in Utah Code Subsection 63G-6a-1302(3). When the Executive Director or designee makes such a determination, the procurement officer responsible for the project shall execute and include in the contract file a written statement describing the facts leading to the selection of the method of construction contracting management used for the project.

(2) This rule also applies when the Department uses a variation of CM/GC contracting known as Progressive CM/GC (also referred to in the transportation industry as Progressive Design-Build).

(3) When a Progressive CM/GC contracting approach is used, the Department shall enter into one or multiple contracts to provide both engineering/design services, construction services, maintenance services, or a combination thereof pursuant to a scope of work statement provided by the Department.

R916-4-4. Request for Proposals (RFP).

(1) The Department will issue a request for proposals (RFP) from interested contractors.

(2) The RFP may require separate technical and price proposals, meeting requirements as stated in the RFP.

(3) The RFP may require a minimum mandatory technical level.

R916-4-5. Evaluation Team.

(1) The Department shall establish a team for evaluating [~~the technical~~ ]proposals[~~consisting of no fewer than 5 members~~].

(2) One member of the team may be an employee of a consulting engineering firm, selected based on recommendation from the American Council of Engineering Companies of Utah (ACEC); and

(3) One member may be an employee of a licensed contractor, selected based on recommendation from the Utah Chapter of the Association of General Contractors (AGC).

(4) No evaluation team member may be an employee of any firm that participates in preparing a proposal to be submitted in response to an RFP or RLOI issued by the Department.

(5) Every member of an evaluation team must disclose conflicts of interest pursuant to the requirements of state and federal ethics and procurement law and the Department's Standard Specifications and policies.

R916-4-6. Evaluation of Proposals and Discussions with Proposers.

(1) The Department shall evaluate proposals, in accordance with the evaluation criteria set forth in the RFP.

(2) As part of the qualifications specified in the RFP, the Department may require that potential contractors, at a minimum, demonstrate their:

(a) Construction experience with similar projects;

(b) financial, manpower and equipment resources available for the project;

(d) preconstruction or design support experience.

(3) The Department may require potential contractors to participate in formal interviews as part of the selection process.

R916-4-7. Acceptable Bid Security; Performance and Payment Bonds.

(1) The Executive Director or designee shall have the authority to waive the requirement to provide bid security, or may reduce the amount of such security, if he or she determines that the bid security otherwise required by Part 11 of the Utah Procurement Code to be unnecessary to protect the State.

(2) The Executive Director or designee may reduce the amount of the payment and performance bonds below the 100% level required by Part 11 of the Utah Procurement Code, if he or she determines that a 100% bond is unnecessary to protect the State.

(3) Bid security, payment bonds and performance bonds must be provided on the forms included in the RFP.

R916-4-8. Required Contract Clauses.

(1) The Department shall comply with Section 63G-6a-1202 regarding clauses for contracts. The Department shall establish standard contract clauses to assist the Department and to help contractors and potential contractors to understand applicable requirements. These standard contract clauses may be modified as needed to meet the requirements of individual projects.[The CM/GC contract documents shall include the contract clauses set forth in Utah Administrative Code Rule R23-1-60, subject to such modifications as the Executive Director or designee believes appropriate. Any modifications shall be supported by a written determination of the Executive Director or designee that describes the circumstances justifying the variations, and notice of any material variation shall be included in the RFP.]

(2) All definitions in the Utah Procurement Code apply to this Rule unless otherwise specified in this Rule. This administrative rule provides additional requirements and procedures and must be used in conjunction with the Procurement Code.

(3) All contracts shall include text that allows the Department to terminate the contract for cause at any time, or without cause after providing the contractor with reasonable notice. The Department will pay the contractor the amount owing as of the termination date.

R916-4-9. Selection.

The basis for selection shall be stated in the RFP. Selection may be based on any of the following approaches.

(1) By the responsible proposer offering the lowest priced responsive proposal. If the RFP includes a mandatory technical level, no proposal shall be considered responsive unless it meets that level;

(2) By the responsible proposer whose proposal is evaluated as providing the best value to Department;

(3) By the responsible proposer whose proposal is evaluated as representing the most qualified proposer; or

(4) Other approaches as determined by the Executive Director or designee, which satisfy the requirements of the Utah Procurement Code.

R916-4-10. Award of Contracts.

(1) The CM/GC approach consists of the following two contract phases:

(a) Preconstruction or design services, which may include value engineering, cost estimating, conceptual estimating, constructability reviews, scheduling, and Maintenance of Traffic plans.

(b) Construction services, which will be awarded after the plans have been sufficiently developed and a price for construction services has been successfully validated and accepted. In the event that a price is not validated and accepted, the Department shall not award the construction phase of the contract. Incremental construction contracts may be awarded after prices are validated and accepted for each contract. The Department may choose to retain any of the parties if the construction/design services phase of the contract is not awarded.

(2) The Department shall not be required to award a contract during either of the contract phases. However, following an award, the Department shall provide notice of the award to the successful CM/GC proposer followed by a notice to proceed with the work.

(3) Contractors or contractor teams must not begin work before receiving the notice to proceed with work described in rule R916-8-12(2).

KEY: transportation, highways, contracts, construction

Date of Enactment or Last Substantive Amendment: [~~March 27, 2015~~]2018

Notice of Continuation: July 9, 2015

Authorizing, and Implemented or Interpreted Law: 63G-6a-1302; 63G-6a-106(3)(a); 72-1-201