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Bidding Challenges Focus of New Bills

Thursday, July 25, 2013

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Two new bills target the barriers that small businesses face in bidding for government contracts.

The bills—The Design Build Efficiency and Jobs Act of 2013 and the Commonsense Construction Contracting Act of 2013—were introduced Friday (July 19), according to an announcement made by the bills’ sponsors.

The bills aim to streamline the construction contracting process for federal projects, according to sponsors.

The Design Build Efficiency and Jobs Act of 2013, sponsored by House Small Business Committee Chairman Rep. Sam Graves (R-MO), is bipartisan legislation that would require the government to solicit proposals for design-build contracts through a two-phase process.

The Commonsense Construction Contracting Act of 2013, sponsored by Subcommittee on Contracting and Workforce Chairman Rep. Richard Hanna (R-NY), is bipartisan legislation that would ban the use of “reverse auctions” for construction services.

Last year, Construction and Architectural & Engineering contracting accounted for more than $41 billion in federal spending, according to the bills’ sponsors.

Moving to a Two-Step Process

Currently, the federal government often solicits proposals for design-build contracts through a cost-intensive, single-phase procurement process.

A May 23 hearing conducted by the Small Business Subcommittee on Contracting and Workforce showed that the cost of bidding on these jobs can exceed three percent of the value of the contract, which poses a real barrier to entry for small firms and excludes many qualified firms from the market.

House Representatives
United States Congress

House Small Business Committee Chairman Rep. Sam Graves (R-MO) (left) sponsored the Design Build Efficiency and Jobs Act of 2013; Commonsense Construction Contracting Act of 2013, was sponsored by Subcommittee on Contracting and Workforce Chairman Rep. Richard Hanna (R-NY).

Consequently, some agencies have adopted a policy of using a two-phase process—the preliminary phase to narrow the field before a significant investment is made in completing a proposal.

The new bill would require a two-phase process that allows the government to assess technical qualification in the first round, but doesn’t ask small businesses to expend significant funds unless they make the list of the top five most qualified, competitive companies in the second phase. 

“This saves the government time and money, since they do not have to evaluate proposals that have no chance of success, and allows businesses to reserve their bid and proposal funds for contracts where they will be highly competitive,” according to the sponsors.

“Two-step design-build contracts have proven incredibly effective,” Rep. Gerry Connolly (D-VA) said in a statement. The Army Corps of Engineers already identifies two-step design-build contracts as a “best practice,” he said.

The American Institute of Architects has applauded the bill, calling it a “major step in reforming the outdated, lengthy and wasteful process the government uses to choose the services of design and construction firms for federal contracts.”

Design-build reform has been a major legislative priority for the AIA.

Cutting out ‘Reverse Auction’ in Construction

Currently, some federal agencies use a “reverse auction” process to award some contracts for construction services.

Under this method, the government advertises its service needs, and bidders are allowed to offer multiple, consecutively lower bids on a rapid basis, until the lowest price wins. Often conducted electronically, the method is best suited to buying well-defined commodities, but not skilled services with a high degree of variability like construction and design services, the bills’ backers say.

The Small Business Subcommittee on Contracting and Workforce hearing in May showed that the reverse auction process for construction contracting resulted in “imprudent bidding, a poor evaluation of businesses, and unfair competition for many small construction contractors,” the sponsors reported.

Thus, the new bill would ban the use of reverse auctions for construction services, so that agencies would be required to use one of the other statutorily approved contracting processes, such as a sealed bid procurement or a negotiated procurement.

The bill prohibits the use of reverse auctions when a construction services contract is suitable for award to a small business, or when the procurement is made using a small-business program.


Tagged categories: Architecture; Contractors; Contracts; Design; Designers; Government contracts; Laws and litigation; Regulations; Subcontractors

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