TM&E: On second thought

Brian G. Papernik, David J. Farkas and Eric C. Mellor, P.E. / January 26, 2010

Public agency project owners often seek innovation from the private sector to help reduce project costs and add technical enhancements.

Many project owners have had success by allowing proposers to incorporate alternative technical concepts (ATCs) into their proposals. The Intercounty Connector (ICC) project in Maryland provides a recent example of benefits of this approach. The Maryland experience is a useful model for other states facing limited budgets and a backlog of critical projects.

A preproposal ATC process allows proposers, on a confidential basis, to suggest modifications to technical requirements that would improve a project technically or reduce development costs, thus allowing the project owner to obtain a better project or to gain the benefit of a cost reduction without an adverse effect on project quality. Proposers are motivated to propose confidential ATCs, which add value to the project owner, because the ATCs can give them a competitive advantage over other proposers.

Absent such a process, the successful proposer could still share its ideas with the owner after it is selected, although there is less incentive to do so once it has already won the job. Furthermore, even if the successful proposer shared its ideas with the owner, the owner would only benefit from one proposer’s ideas rather than from multiple proposers. Finally, any cost savings would not help drive down the initial pricing—a significant consideration given that a high initial project cost may mean that the contract is never awarded.

If a project owner approves an ATC from a proposer, it is allowing a change in the request-for-proposal (RFP) requirements exclusively for that proposer. Such a change raises questions about conducting an “apples-to-apples” comparison of the proposals, including, for example, how to compare a smaller but less expensive project to a larger but more expensive project. These questions can be resolved by establishing standards for the ATCs, usually requiring that ATCs must be “equal to or better than” the original requirements of the contract documents included in the procurement package and that an ATC cannot produce cost savings by merely reducing quantities.

FHWA’s design-build rule specifically contemplates use of ATCs, but states that ATC proposals may supplement, but not substitute for, base proposals that respond to the requirements of the RFP. Many FHWA division offices, however, have allowed the incorporation of pre-approved ATCs directly into a proposal without options, effectively waiving this requirement. Particularly if the owner sets up a process to review and approve ATCs prior to the proposal due date, requiring proposers to incur the cost of advancing a base design that would never be used, would have a chilling effect on ATCs. Allowing ATCs to be incorporated into the proposal also results in a more efficient proposal evaluation process for owners by eliminating the need to evaluate multiple alternative proposals.

No substitute

The Maryland State Highway Administration (SHA) has taken full advantage of the ATC process in its procurement of multiple design-build contracts for the $2.566 billion, nearly-19-mile ICC in the Maryland suburbs north of Washington, D.C. In order to avoid any uncertainty regarding the applicability of the requirement that ATCs may supplement, but not substitute for, base proposals, the SHA obtained a formal waiver under FHWA’s Special Experimental Program 14 (SEP-14). As part of its application, the SHA agreed to provide a summary of its experience using ATCs. The summary has been completed and is available online at www.fhwa.dot.gov/programadmin/contracts/sep14mdeval.cfm.

The SHA used a competitive sealed proposal (or “best value”) process to select its design-builders. The SHA’s process allowed proposers to ask the SHA, prior to the proposal due date, to pre-approve proposed deviations from certain design requirements and performance specifications in order to encourage proposers to incorporate innovation and design flexibility into their proposals.

ATCs were approved only if the SHA determined, in its sole discretion, that the end product with the proposed deviation was equal to or better than the end product without the deviation. The SHA also incorporated into the process the ability to meet one on one with the proposer to discuss the ATC, as well as the ability to “approve with conditions” ATC proposals. Proposers were permitted to incorporate any of their pre-approved ATCs into their final proposals.

The design and construction of the ICC involves three separate and major procurements and two separate and smaller procurements. This article addresses the first three major contracts, A, B and C, with a total as-awarded value of nearly $1.5 billion.

For these three contracts, seven proposers submitted a total of 130 ATCs, almost half of which were approved.

The approved ATCs minimized the impact on the environment, improved the overall technical quality of the final product and helped decrease the project cost. In addition, approval of ATCs during the proposal process allowed proposers to further develop their project design and construction schedules.

By carefully maintaining the full confidentiality of the ATCs submitted during the proposal process, the SHA encouraged proposers to differentiate their proposals by developing creative and innovative ATCs. Proposers received innovation credit for approved ATCs, which improved their technical ratings in the best-value evaluation. ATCs also allowed proposers to decrease their costs, thus allowing them to sharpen their pencils in submitting price proposals.

Specific ATCs for each ICC procurement are summarized as follows:

ICC Contract A

Contract A is the first awarded contract of the ICC, consisting of approximately 7.2 miles of new, controlled-access, six-lane, tolled roadway with three interchanges on the western portion of the corridor. Also included are adjustments to five local roadways crossing the ICC, a 625-ft-long deck-over structure, 22 bridge structures including a signature concrete arch structure, approximately 25 cross culverts and 5 miles of noise barriers.

A significant ATC that was approved by the SHA involved the reconfiguration of an important interchange on the western end of the project. Although this revision required additional environmental approvals and the purchase of additional right-of-way, it helped to reduce the successful proposer’s price proposal, improved the proposal’s technical rating and provided several project benefits, including:

  • Reducing the interchange from a three-level interchange to a two-level interchange, thus minimizing visibility to neighboring communities (including one historic community);
  • Reducing the number of bridges in the interchange, thereby decreasing future maintenance costs; and
  • Improving lane continuity on the ICC.

Additional approved ATCs included use of fan-wall-style noise walls, which reduced construction costs and improved aesthetics by increasing associated planting areas, and use of box beams for a deck-over structure, which simplified construction and reduced overall impacts on a nearby neighborhood.

ICC Contract B

Contract B covers the third-awarded “middle” segment of the ICC consisting of approximately 7 miles of new, controlled-access, six-lane, tolled roadway, two interchanges and 10 bridges. Contract B also includes five dual mainline bridges and five side-road bridges over the ICC and is the most environmentally sensitive contract on the environmentally sensitive ICC.

Several ATCs on Contract B related to structures, including additional piers at two bridges with drilled-shaft foundations. These ATCs reduced construction time within sensitive environmental areas, reduced impacts to the environment, simplified constructability and resulted in cost savings.

One ATC involved a sizeable reduction of the mainline median width within the ICC’s most environmentally sensitive area. This revision was conditionally approved, pending design verification that the RFP requirements and commitments could be met and permitting agency approvals could be obtained. If the successful proposer is able to demonstrate that the reduced median meets these commitments, the reduction in median width will lead to a reduction in costs associated with earthwork and constructability, as well as several environmental benefits, including reduced forest, stream and wetland impacts and movement of the highway farther from adjacent homes.

ICC Contract C

Contract C covers the second-awarded “eastern” segment of the ICC, consisting of approximately 3.7 miles of new, controlled-access, six-lane tolled roadway, approximately 4.5 miles of auxiliary lanes, collector-distributor roads and ramps, and several new major interchanges involving 10 new bridges. Contract C includes the major interchanges at I-95 and U.S. 29.

Several approved ATCs addressed one such interchange and a wash pond crossing in an almost entirely undeveloped area. The ATCs included replacing long bridges over wash ponds with at-grade roads on improved soils, thereby removing over 300,000 sq ft of bridge deck from the RFP plans.

Other ATCs included:

  • Eliminating the need to relocate an existing electric transmission main crossed by the ICC;
  • Simplifying the interchange’s horizontal alignment;
  • Shifting southbound I-95 partially into the existing median of I-95 to avoid impacts to a permitted wash-pond dam and downstream bog;
  • Relocating interim or staged I-95 work using auxiliary lanes versus collector-distributor lanes; and
  • Relocating many of the planned storm-water ponds to eliminate impacts to existing streams, tributaries and wetlands in the area.

The Contract C ATCs reduced the estimated cost of the contract by approximately $20 million, or nearly 5%.

As the country’s infrastructure continues to age and construction costs outpace shrinking budgets, project owners are seeking solutions that will accelerate critical project delivery while controlling costs.

The ICC experience demonstrates that permitting proposers to include ATCs in their proposals can be an effective tool to help project owners meet these challenges and deliver cost-efficient and high-quality transportation projects.

About the Author

Papernik is a partner in Nossaman’s Los Angeles office focusing on infrastructure development. Farkas is an associate in Nossaman’s Washington, D.C., office. Mellor is the design manager for ICC Contracts A and D, on behalf of the GEC.

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