Getting money out the door faster: Design-build as an alternative procurement tool
By Grace Edinger
In the last couple of years, there has been a huge increase in allocated funding for ecological restoration. Between ARPA, IIJA, IRA and others, we’re seeing an unprecedented amount of money specifically designated for restoration. While this is fantastic, there are still hurdles to overcome in seeing positive results.
One major hurdle is procurement, or how our government structures the execution of these projects. Traditionally speaking, our government uses design-bid-build procurement which breaks a project up into smaller pieces, issuing separate Requests for Proposals (RFPs) for the design and the construction components of a project.
Design-bid-build can create lengthy delays that stem from the linearity and breaks in the process, issues between different contractors, and significant government oversight, as staff essentially act as project managers.
An alternative that is often used in large state Department of Transportation projects is the design-build method. Using this contracting process, one RFP is put out for the entire project, from design through execution. One contractor receives the award, hiring subcontractors as they see fit. This way, the primary project oversight gets shifted from government staff to the prime contractor. Additionally, with only using one contract, many delays in between phases are mitigated. It also often results in projects costing less. The one-RFP process promotes competition among bidders, allowing government restoration dollars to go farther.
Authority to issue design-build contracts is clear for federal agencies but varies from state to state. Since the 1996 passage of the Clinger-Cohen Act, federal procurement policy has followed a two-step design-build procurement process. Most states allow their Departments of Transportation to enter into these contracts, and some allow other agencies to do so. Categorized as ‘Alternative Procurement’ in state code, the use of design-build contracts often need to be approved by other entities of state government before an agency can use it (Treasury Departments, Procurement Offices, Capital Improvement Committees, etc.).
Restoration practitioners generally prefer to work under design-build structures. This gives them the ability to design projects that they know they can implement and work with teams they want to work with, resulting in faster projects.
To exemplify the wide range of state authority to issue design-build contracts, below are two brief case studies, one on each end of the spectrum.
Illinois
Illinois has one of the strictest rulings on state design-build procurement anywhere in the country. Currently, only one entity can issue design-build contracts, the Capital Development Board. This board is a 7-member committee who oversees capital improvement projects throughout the state.
However, a bill is currently on the table to slightly widen this restriction. Senator Antonio Munoz has introduced SB3826 to the Illinois State Senate. This bill proposes to amend the Illinois Procurement Code to allow institutions of higher education to enter into design-build contracts under the umbrella of a “State construction agency”. It is likely that this bill has been proposed to allow a specific project to proceed, although this isn’t publicly available information. Currently in the Assignments Committee, this bill has the opportunity to do immense good for the environment with minor tweaks.
If the bill were enacted as is, Illinois would remain one of the strictest states regarding design-build procurement; ecologically beneficial projects would still be excluded from design-build contracting. But there is still time for the Illinois legislature to expand the scope of the bill to authorize design-build contracting for ecological restoration projects as well before going to a full vote.
Arizona
Arizona essentially gives all state and local government entities the authority to issue design-build contracts as they see fit. The use of alternative procurement provides flexibility, allowing each project procurement to be tailored to specific needs.
“Design-Build is authorized for all State agencies and for all counties, cities, towns, irrigation, power, electric, drainage, flood protection and flood control districts, tax levying public improvement districts, and county or city improvement districts (collectively, “local agencies”). (Ariz. Rev. Stat. §§ 34-101 and 34-602; Ariz. Rev. Stat. § 41-2582)”
This blanket authority allows the overseeing agency or jurisdiction to use design-build as a tool in their procurement tool belt.
There are other ways to expedite environmental restoration projects even further using innovative procurement. We consider design-build as a stepping stone to efficient methods like Pay for Success contracting. If interested, please visit other EPIC publications on the subject, or contact Grace at grace@policyinnovation.org.