The barriers to procurement reform are both technical and institutional in nature, and include both administrative and legal issues. The Deputy Secretary of Transportation, Mort Downey, describes the current procurement system as "rigid, stifling, cumbersome, inflexible, overly prescriptive." The rules in use today were established and prescripted during the latter half of the 20th century; their primary concerns were to protect public welfare and to prevent favoritism toward particular contractors or suppliers. Ironically, these laws sometimes have the opposite effect today. Since the system is often inflexible, slow, and administratively burdensome, contractors who have previously worked with the federal government have a distinct advantage when bidding on projects over those who have not. Moreover, new technologies and materials not recognized as effective or acceptable by old procurement laws have sometimes proven to be safer and cheaper than traditional products, but there is no simple way to move them into widespread use.
Moreover, although government officials or contractors may have the "best of intentions" and want to carry out projects in an innovative manner, they may not have the training, knowledge, or tools in hand to make decisions that allow for such innovations. This knowledge gap is a significant technical barrier to procurement reform. Here, technical barriers are defined as those which might be mitigated by additional technical research, information gathering, training, education, and outreach.
As an example, a composites company developed a method to repair structurally damaged bridge columns by wrapping them with bands of composite fiber. However, state bridge engineers were perplexed when asked to assess the performance of this new repair method, because they were accustomed to assessing repairs done by patching or fitting a composite sleeve over the damaged sections. Though they wanted to assess the new method, they simply did not know how, and they would have to learn or develop a new way to assess this technique's performance before developing inspection and approval criteria for its use.
This knowledge gap exists within all sectors of the transportation community, in both the public and the private sectors. As a low-profit-margin industry dominated by small companies, design and construction firms have difficulty providing their employees with the time or the funds for continuing education and training.
Value engineering has been touted as an important solution to procurement reform. Historically, value engineering - the practice of independently reviewing a design to find ways to lower construction costs - has paid off at ratios as high as 20 to 1 (one dollar of investment in value engineering yielding twenty dollars in cost savings). However, value engineering is inconsistently applied because the government can be slow and reluctant to approve post-bid changes to design, and these delays negate the financial incentives to contractors for finding cost-savings opportunities in a completed design. For that reason, some feel that value engineering does not promote innovation because it is not well applied.
Specific barriers to procurement reforms identified at the workshop included the following:
Local field offices of FHWA do not always support innovative procurement methods even though federal policy supports these efforts. Even though much of the impetus of TEA-21 was the devolution of authority to individual states, at the working level, local field offices have not always used this increased flexibility to encourage the use of innovative products and practices.
While there are numerous studies documenting and championing different procurement approaches, they are not explicitly linked with using innovative products and practices.
Procurement laws and practices among states and jurisdictions vary significantly. For example, the Indiana DOT has used design/build contracts, minimized its review time on design documents, and used other methods to streamline their procurement system (See Appendix H for examples provided by Indiana DOT.). Other states and regions have reforms planned as well. To date, there is no well-recognized national policy guidance for procurement reform in transportation that explicitly targets and encourages innovation.
No parties want to assume risks that arise when projects are contracted using alternate methods, and these risks - both legal and financial - are difficult to share equitably among all project participants.
By definition, non-standard procurement methods are just that - non-standard - and therefore they take time to develop and administer. This observation, while obvious, is nevertheless important. In many cases, it is just easier to use the "tried and tested" methods.
While value engineering has been used successfully in many transportation procurements as well as in other industries, many officials and contractors are not familiar with this approach.
Because innovative technologies lack long performance histories, it is challenging to define and measure their performance compared to traditional technologies. For example, a company marketing a highway sign made from a new composite material was met with resistance in the highway community because, among other reasons, according to specifications, the sign in question was supposed to be constructed of aluminum covered with retroreflective sheeting. Even after an independent evaluation that showed that the sign met or exceeded all applicable performance standards, many states are simply unwilling to use the new product because "it doesn't meet standards." Other barriers are at work here, too: for instance, many highway departments buy multiple types of signs from a single supplier, and they have found it is not cost-effective for them to buy only one type of sign from one manufacturer. This example is illustrative because it is a case where a prescriptive standard by definition discourages innovation.
Procurements are often administratively burdensome and overly bureaucratic.
There are no incentives for risk-taking when bidding on or executing a project.
Government project managers micromanage projects, often stifling innovation.
It is difficult to convince the public sector to assume risk of any kind when public safety is felt to be at stake, and new contracting methods which allow for the use of new materials or processes are inherently risky.
State legislatures often mandate lowest initial cost procurements, and hence there is no incentive to develop improved procurement procedures. Since transportation infrastructure is an expensive, long-lived asset, it is difficult to get agreement from all parties on how long the life cycle of a project is, or what types of costs should be included for life-cycle analysis. Moreover, there are few real-world examples of new materials from which to draw information about long-term performance. This in turn makes it difficult to justify using new construction materials with a higher initial cost but lower life-cycle costs. As research and development yields new ways to better predict and monitor performance of new materials, life-cycle analysis should become easier to complete.
Government entities, both internal and external to the procuring agency, tend to micromanage projects, hence stifling innovation.
Contractors cannot get approval on innovative materials and techniques prior to bidding on a project.
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