Over the past decade, both the public and the private sector have come to recognize that that the traditional methods used to select contractors to design, build, and maintain the national infrastructure are in need of reform. These methods were developed to ensure that the public is protected by building structures that are safe and that perform as expected; to encourage contractors to provide services at a reasonable cost to taxpayers; and to avoid preferential treatment of select contractors for government jobs. However, the administration of typical government procurement methods - in particular, the emphasis placed on "low-bid" or lowest initial construction price as the most important factor in choosing a contractor -- has, quite unintentionally, created a system that does not encourage and in fact often discourages or prohibits contractors to use construction products and processes that are innovative - i.e., those that perform better, faster, or more cost-effectively than traditional approaches. Because innovations often lack lengthy performance histories, infrastructure owners are understandably concerned about how safe and reliable they are, and in some cases, are reluctant to pay a higher capital cost for them even though their overall life-cycle costs may be significantly lower. Yet using new technologies and methods for designing, building, and maintaining public facilities is critical for advancing the state of the practice and the quality of constructed facilities in the U.S.
Historically, the replacement cost of an infrastructure asset has played an extraordinarily important role in determining whether an innovative technology will be successfully commercialized. Despite some movements towards adopting a more life-cycle cost analysis approach, many, if not most purchasing decisions are still based on lowest cost. This has the effect of retarding the introduction of innovative products or practices, since in most cases, the initial cost of these innovative technologies is often higher than for traditional practices, even if cost efficiencies in installation costs or life cost costs are more competitive. While innovative procurement approaches (build-own-operate, best-value purchasing, first cost versus life cycle cost, design-build, "no excuse" completion bonuses, bid averaging, warranties, best price/contractor qualifications, etc.) are slowly working their way into the world experience of key decision makers, most of them have limited practical experience with innovative contracting options. Exploring the implications of these options and convincing infrastructure owners to adopt more innovative purchasing options is essential if we are to make maximum use of the most cutting edge technologies and the most effective construction materials.
The September 1999 procurement reform workshop resulted from an April 1999 PAIR-T workshop that identified procurement as a major obstacle to deploying new technologies, products, and construction methods, and it built on recent projects that have explored innovative procurement strategies.
In addition to the April 1999 PAIR-T workshop, the procurement reform workshop built on some recent projects that have explored innovative procurement strategies. A recent Transportation Research Board (TRB) workshop on alternative contracting approaches focused attention on innovative techniques used in Virginia and Florida for comprehensive highway maintenance and construction. Such innovative approaches might have a dramatic effect on mitigating problems with cost, time, liability, risk, and other factors that typically impede the introduction of new technologies.
In a project for the U.S. Army Corps of Engineers (USACE), the Civil Engineering Research Foundation (CERF) examined acquisition strategies by such owners as the Utah Department of Transportation and facilities such as the Northumberland Strait Crossing, and the Fort McHenry Tunnel. Preliminary findings suggest that pre-qualification of potential vendors can help to identify those firms who have the capability and experience to use innovative technologies. Such approaches as build-operate-transfer and design-build-operate provide the owners with confidence that the builder will assume responsibility for operation and maintenance functions, thus possibly lowering the overall costs over the life of the facility.
One of the most ambitious studies to date is National Cooperative Highway Research Program (NCHRP) Project SP20-33 that focused on facilitating the implementation of research that explored barriers and boosters to innovation and a follow-on study that examined a variety of procurement and contracting practices in terms of the financial incentives that they provide to support innovation. The practices included such options as design-build, design-bid-build, privatization, bid alternates, constructability review, and construction warranties. The study demonstrated that these practices cannot be analyzed in a vacuum, because their acceptance is tied to a range of other conditions. Such considerations include suitability of the specific project, industry acceptance of the technique, previous experience with a given technique, willingness of the owners to share risk, cost of allocating differing responsibility in the competitive bidding process, insurance industry concerns, among others.
While these projects provided interesting data and suggested alternative theoretical approaches, at this time no consensus has been developed on the relative advantages of one procurement strategy over another. The studies cited during the workshop suggest that new strategies must be tied to the specific needs and obligations of the owner, and will vary with the type of infrastructure built. PAIR-T will continue to build on this work to investigate procurement reform techniques, since they are of high priority to all involved.
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