safetea-lu section 1503: overview of fhwa's notice of
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SAFETEA-LU Section 1503
Overview of FHWA’s
Notice of Proposed Rule MakingFHWA Environmental Conference
June 28, 2006
Agenda
• Background
• S. 1503 Provisions
• NPRM issues– Implementation of S.1503– Other design-build provisions
• Potential future use
Design-Build Experience in USas of 12/31/2002
AK- 4
1
6
6**6 DC- 5
66
6
HI- 2
9MD- 8
2
21
NJ- 8
7
59
1
49
7
1
75
1
DE-1
MA-1
VI- 1
States with 5 or more projects
States with 4 or fewer projects
1
2
2
1
3
1
1
1
** toll agencies
AK- 4
1
6
6**6 DC- 5
66
6
HI- 2
9MD- 8
2
21
NJ- 8
7
59
1
49
7
1
75
1
DE-1
MA-1
VI- 1
States with 5 or more projects
States with 4 or fewer projects
1
2
2
1
3
1
1
1
** toll agencies
Agenda
Historical Dates
• February 1990 - FHWA establishes SEP-14
• June 1998 - TEA-21, Section 1307, requires:– FHWA to issue design-build regulations
– Report to Congress on DB effectiveness
• Final Rule Published 12/10/2002;
• August 10, 2005 – SAFETEA-LU enacted
NEPA / Project Development
NEPADEIS EIS ROD / FONSI
Design-Bid-Build
ConstructionPrelim Design Final Design.
PS&E ApprovalConstr Auth.Oblg $
Bid Opening
NEPA / Project Development
NEPADEIS EIS ROD FONSI
Design-Build 2002
Design-Bid-Build
Construction
Construction
Prelim Design
Prelim Design
Final Design.
Final Design.
PS&E ApprovalConstr Auth.Oblg $
Bid Opening
Draft RFP ReleaseRFP Release
RFP Approval Design & Construction Auth.Obligate $
Three years ago . . . FHWA’s December 10, 2002 Final Rule . . .
• 23 CFR 636.109(b) - “The RFP must not be release prior to the conclusion of the NEPA process”
• Why? – – NEPA related issues
1. Maintain independent, unbiased NEPA decision making process (no-build option must be fully considered!)
2. Public perception
3. Ensure environmental impact information is available for decision making and before actions are taken.
– Cost-effective issues
1. Responsibility to provide an adequate Scope of Work in RFP
2. Reduce risk to proposers (reduce contingencies in price proposals)
Three years ago . . . FHWA’s December 10, 2002 Final Rule . . .
• §636.109 provided for flexibility– RFQ may be released prior to NEPA
conclusion– Draft RFP may be released prior to NEPA
conclusion as long as the RFP provides for:• Status of NEPA process
• List all alternatives under consideration (including no-build)
Enactment of SAFETEA-LU 8/10/2005
An excerpt from SAFETEA-LU Section 1503*
‘‘ . . . Not later than 90 days after the date of enactment of the SAFETEA–LU, the Secretary shall issue revised regulations . . . that—
(i) do not preclude a State transportation department or local transportation agency, prior to compliance with section 102 of the National Environmental Policy Act of 1969 (42 U.S.C. 4332), from—
(I) issuing requests for proposals;(II) proceeding with awards of design-build contracts; or(III) issuing notices to proceed with preliminary design work under design-
build contracts;
(ii) require that the State transportation department or local transportation agency receive
concurrence from the Secretary before carrying out an activity under clause (i); and(iii) preclude the design-build contractor from proceeding with final design or construction
of any permanent improvement prior to completion of the process under such section 102.’’.
*bold and underlining added for emphasis
“DBIA worked hard to include in the bill language to expand the use of design-build on federal highway projects. This language was supported by The American Association of State Highway and Transportation Officials (AASHTO), Design-Build Institute of America (DBIA), Texas Department of Transportation(DOT), Louisiana DOT, Georgia DOT, Colorado DOT, Delaware DOT, and Virginia DOT. Without this language, states have been hindered in their use of innovative contracting by the Federal Highway Administration’s (FHWA) rule promulgated in 2002 to implement design-build, which imposes procurement restrictions affecting states wishing to use such contracts for Title 23 projects. “*
From the Design-Build Institute of America’s July-August 2005 Dateline newsletter . . .
*underlining added for emphasis
Final Design.
NEPA / Project Development
NEPADEIS EIS ROD / FONSI
Design-Build 2002
Design-Bid-Build
Construction
Construction
Prelim Design
Prelim Design
Construction
Prelim Design
Final Design.
Final Design.
PS&E ApprovalConstr Auth.Oblg $
Bid Opening
Draft RFP Release RFP Release
RFP Approval Design & Constr Auth.Oblg $
Award, NTP RFP Release
FHWA
ConcurrenceFHWA Final Design and Construction Authorization
Obligate $SAFETEA-LU S. 1503
5/25/ 2006 NPRM – New Definitions (Rev. 23 CFR 636.103)
• Qualified project means any design-build project (including intermodal projects) funded under Title 23 USC which meets the requirements of this part and for which the contracting agency deems to be appropriate on the basis of project delivery time, cost, construction schedule and/or quality.
Comments:
– Effectively removes the TEA-21 threshold for SEP-14 for design-build.– SEP-14 is only necessary for projects that do not comply with Part 636.– Contracting agencies may use design-build for any project.
New Definitions (continued) . . .
• Preliminary design means all design activities necessary to complete the NEPA alternatives analysis and review process.
• Final design means any design activities following preliminary design. Final design activities are not necessary to complete the NEPA process as outlined in 23 CFR 771.
• Comments: the NPRM specifically asks for comments on the “preliminary design” definition; however, the definitions are consistent with FHWA traditional interpretation of issues under 23 CFR 771.113(a) - (“ . . . However, final design activities, property acquisition . . . or project construction shall not proceed until the following have been completed . . .”)
New definitions (continued)
• Developer means each entity with whom the contracting agency has executed a public-private agreement for the development, design, construction, financing, operation, and maintenance of one or more projects under a public-private partnership. Depending on the context of the public-private agreement, the term “developer” may include affiliated entities of the developer.
• Public-private agreement means an agreement between a public agency and a private party under which the private party shares in the responsibilities, risks and benefits of constructing a project. Such agreement may involve an at-risk equity investment by the private party in the project.
Revised Section: 23 CFR 636.107 “May contracting agencies use geographic preference in
Federal-aid design-build or public-private partnership projects?”
No
• Must not use geographic preferences (including contractual provisions, preferences or incentives for hiring, contracting, proposing or bidding)
• Consistent with long-standing FHWA policy prohibiting state / local preferences for contracting, subcontracting, hiring, employment, materials, etc.
Revised Section: 23 CFR 636.109 – “How does the NEPA process relate to the design-build procurement process?”
• §109(a) - allows S. 1503 steps• §109(b) – provides conditions for use of (a)
1. Contract hold points or multi-step approvals to prevent final design from proceeding;
2. Ensure that no commitment is made to any NEPA alternative being evaluated; 3. Ensure that all environmental mitigation measures will be implemented;4. The design-builder (or developer) must not prepare the NEPA document or
have any decisionmaking responsibility with respect to the NEPA process;5. Any consultant who prepares the NEPA decision document must be selected
by and subject to the exclusive direction and control of the contracting agency;6. Preliminary design work performed by the design-builder (or developer) may
be used in the NEPA analysis; and 7. Include termination provisions in the event that the no-build alternative is
selected.
Revised Organizational Conflict of Interest Provisions (Rev. 23 CFR 636.116)
• The design-builder (or developer) must not prepare the NEPA document or have any decisionmaking responsibility with respect to the NEPA process; (as noted on previous slide – see: revised 23 CFR 636.109(b)(4))
• However, if the final RFP is released after NEPA, then NEPA consultants may propose on a design-build team
• Note: CEQ policies:– Conflict of interest disclosure required by 40 CFR 1506.5(c) - “Contractors
shall execute a disclosure statement prepared by the lead agency, or where appropriate the cooperating agency, specifying that they have no financial or other interest in the outcome of the project.”
– CEQ Guidance “NEPA’s Forty Most Asked Questions” (http://www.nepa.gov/nepa/regs/40/11-19.HTM#17)
“17b. If the firm in fact has no promise of future work or other interest in the outcome of the proposal, may the firm later bid in competition with others for future work on the project if the proposed action is approved?
A. Yes.”
Rev. 23 CFR 636.119 – “How does this part apply to a project developed under a public-private partnership?”
• Allows contracting agencies to use State-approved procedures to procure the services of the “developer” for public-private partnerships
• Why?– SEP-15 experience and approvals
– Policy should be consistent with practice
Revised Sec. 636.119 How does this Part apply to public-private agreements?
Conditions for using state-procedures for PPPs
1) Procurement procedures must be approved by the FHWA;2) Procedures must be fair and transparent to all proposers;3) If an unsolicited proposal is received, the contracting agency must
offer adequate public notice and advertisement for competing proposals before considering an individual proposal for award;
4) Transparent procedures for sharing any proposer’s ideas 5) Selection of the developer may be based on a best value
determination;6) Request FHWA approval of:
A. the public-private agreement, B. timetable showing the major steps in the procurement process, C. a summary of the rationale for the selection, D. a description of any major changes made during any negotiations, andE. price reasonableness
Revised Sec. 636.302
• For projects where the design-builder is selected before the conclusion of NEPA:
• Selection of the design-builder may be based on a best value determination; (ie. it is not necessary to evaluate total contract price)
• Price reasonableness must be shown for any Federal-aid project developed under that contract.
S. 1503 Implementation
• More flexibility for States in using design-build
• Fewer barriers for PPPs
• Fewer SEP-15 applications
• New “challenges” for:– State DOTs in developing appropriate project development and
contracting procedures
– FHWA in protecting the “Federal interest”
Questions?