Architecture & Engineering "Design-Build" and Biased Ground Rules OCI

In Federal FAR-based design-build contracting, the design-build contractor or it’s A-E firm, if not designed in-house, doesn’t define the requirements and isn’t allowed to develop the design criteria for the design-build solicitation, consistent with FAR 36.209.

See FAR 36.104 for Design-Build statutory and regulatory citations.

See 36.3 for the Two-Phase D-B policies and procedures.

The design-builder performs the role and responsibilities of the Designer(s) of Record, in contrast to the owner in the traditional design-bid-build acquisition method. But it doesn’t define the building requirement and the design criteria.  

That’s the “short story”.

Please note, specifically, 36.302 Scope of work.

“The agency shall develop, either in-house or by contract, a scope of work that defines the project and states the Government’s requirements. The scope of work may include  criteria” [i.e., “design criteria”] “and preliminary design, budget parameters, and schedule or delivery requirements. If the agency contracts for development of the scope of work, the procedures in  subpart  36.6 shall be used.”

In re-reading your question, I note that you are referring to 

govt2310 said:

Architecture & Engineer contracts to be "design-build"

Please note that a design-build contract is a construction contract, not an A-E contract. An A-E firm could be and occasionally has been the prime contractor for D-B but it is technically a construction contract.

Per 36.302, the government provides the scope and requirements for the design-build construction contract - separately from the actual design-build construction contract.

I’m sorry if what I am saying is confusing.
I’m familiar with the D-B concept and am familiar with the 36.209  prohibition against an A-E firm preparing the scope and the functional and engineering design criteria, or partial or full design, then competing for the construction contract (which can be either straight construction or design and construct/build).

It should logically follow that the same A-E firm can’t define the requirement and design criteria, then design the project and construct it. It doesn’t matter if there is only one contract or there are two contracts to do all this.

FAR 36.104(a) states: "Unless the traditional acquisition approach of design-bid-build established under 40 USC Chapter 11 .  .  . or another acquisition procedure authorized by law is used, the CO shall use the two-phase selection procedures authorized by 10 USC 3241 or 41 USC 3309 when entering into a contract for the design and construction of a public building . . . ."  What is the definition of "design-bid-build"?  I don't see it in FAR 2.101.  To me, what an A&E firm does, as described in 40 USC Chapter 11, is only "design."  They don't build anything.

I'm sorry that my question is causing confusion.  I am being told that the Government can and does by "design-build" services to build public buildings, and I am being told this justifies applying this approach to other things, such as computer software.  I'm trying to figure, is that true?  Does the Government buy "design-build" services to build public buildings, where there is only one Contract, and that Contractor does both the design and the build?  If so, how can this be?

See 36.102 Definitions:

“Design-bid-build means the traditional delivery method where design and construction are sequential and contracted for separately with two contracts and two contractors.” **

“Design-build means combining design and construction in a single contract with one contractor.”

**This term is misleading because the government can also design the project internally without resorting to hiring a contractor. In the design and construction industry, it means that the owner furnishes the constructor the design and is legally responsible for the design.

Then read 36.3, concerning Design-Build acquisition.

As alluded to in 36.104, there are a couple of other design-build approaches authorized by law. However,  the overall concept of one contract with a single contractor providing both design and construction solutions to the government’s defined scope and design criteria are essentially the same. The design-builder furnishes the completed design and constructs the project.

If you are somewhat confused by the sparse coverage of design-build in the FAR, it’s because there is hardly any coverage or details in the FAR.

The FAR doesn’t address the unique and non-traditional roles and responsibilities of the owner and its design and construction contractor, who provides the “designer(s) of record” *** along with their responsibilities.

When the two-phase design-build process was being added to the FAR in 1996-1997, the D-B industry commented that the FAR committee needed to address the unique/revised roles and responsibilities of design-build

The Committee stated that this was beyond the scope of the FAR implementation of the authorizing Statute. My HQUSACE lawyer, who was the DoD chairperson on the Part 36 committee told me that they had thought that the FAR coverage was adequate.

The truth of the matter was that none of the Government committee members knew any of the details of how design-build works or the unique differences in the  roles and responsibilities of the parties for DB vs. D-B-B.

Other USACE DB proponents and practitioners and I taught a week long DB Construction course for over 20 years.

Ah ha!  Thank you, joel hoffman!

govt2310 said:

Ah ha!  Thank you, joel hoffman!

I edited my post while you were responding. 🤠

@govt2310 There’s nothing wrong with this going back to your original question.  It all involves defining the scope of what you are soliciting for.  This approach is quite common as you questioned originally for software development and cloud computing.

Yes, indeed. I’m not responding to anything other than questions concerning Part 36, as pertains to Architect-Engineer design, construction contracting and design build construction.

It doesn’t translate directly across to other types of acquisition.

FAR 36.104(a) cites to 40 USC Chapter 11, as well as to 10 USC 3241 and 41 USC 3309.  41 USC 3309 appears to state that an agency can use a "traditional acquisition approach of design-bid-build," but if it chooses not to use that, then "the head of an executive agency shall use the two-phase selection procedures authorized in this section for entering into a contract for the design and construction of a public building, facility . . . ."  It sets forth criteria that the CO is supposed to use in determining whether two-phase selection procedures are appropriate.  It states that "The agency develops, either in-house or by contract, a scope of work statement."  The title of 41 USC 3309 is "Design-build selection procedures."  FAR 36.102 Definitions defines Design-bid-build to mean "two contracts and two contractors."  Then it defines Design-build as "combining design and construction in a single contract with one contractor." 

It appears to me that there is statutory authority to do "design-build" by one single contractor, for the sole purpose of making a public building/facility.  In order to apply this thinking to something else, like software design, development, and delivery, wouldn't an agency need Congress to pass a statute giving it this kind of authority?

govt2310 said:

It appears to me that there is statutory authority to do "design-build" by one single contractor, for the sole purpose of making a public building/facility.  In order to apply this thinking to something else, like software design, development, and delivery, wouldn't an agency need Congress to pass a statute giving it this kind of authority?

To my knowledge, no special authority is necessary for a contract for software design, development, and delivery.

Similar to design-build contracting, the government would prepare a solicitation, defining the scope of the IT effort, define the functional and performance requirements, and any other requirements of the software. Kinda like a new aircraft acquisition, right?

The reason that special authority was required for design-build was that the laws and all processes and regs, etc. were written around the traditional, Legacy approach of design-bid-build, either by contract or by in-house government designers.

Under the Legacy approach, to hire an A/E contractor to design a public facility requires following the Brooks Act, qualifications-based selection procedures. The designer of record works for the owner, not the constructor.

Design-build is a fundamentally different approach,  and combines design and construction in one, construction contract. The design-builder provides the designer of record and assumes that responsibility, authority and liability rather than the owner’s designer.

Every state has also had to pass legislation in order authorize the Design-Build process for public projects in their state.

The “Legacy Approach” actually evolved in the latter part of the 19th Century and in the 20th Century.

————————————————-
P.S., the design-build concept actually dates back thousands of years. It was  used in Egypt on the pyramids and in Europe since the Middle Ages.

The designer was the master builder or was associated with the master builder. The combined entity was legally responsible and liable for the safety and adequacy of the design.

They often faced imprisonment or execution for failures and loss of lives.

Even as of the 1980’s in Germany, the construction contractor assumed some legal responsibility/liability for the adequacy of the design for seven years (I think) after completion.

Under German trade laws, our Contractors would make changes to designs to correct what they deemed were design deficiencies. They were responsible to notify the owner as soon as they became aware of a problem but didn’t always do that.

Since the German re-unification in 1990 and the advent of the European Economic Community, I don’t know if those trade laws are still in effect in Germany.

As of last week, Turkish and Syrian officials were investigating holding contractors and/or designers liable for damage and loss of life in the recent, massive Earthquake. Under Shiria Law, those penalties can be severe…

Having worked in the Middle East in the 1980’s, I can attest to the widely prevalent unskilled, shoddy construction practices there.

Thanks, joel hoffman!  Well, situation that prompted this question has to with research on "agile software development" and "agile acquisition."  In "agile," the agency doesn't define the requirements up front.  While it defines the scope by making a "Product Vision" (just 1-2 sentences), it doesn't do any more than that.  Even in a SOO situation, where the offeror writes up the PWS, all of the requirements are written only in terms of cost and schedule.  In "agile," the "definition of done" (the acceptance criteria/requirement) is defined during contract administration/performance, not in the solicitation.  At least in A&E and builiding design/construction, the Scope of Work defined by the Government actually gives you a concrete idea of what functions/constraints the final "product" must meet ("Contractor must construct and deliver a building at X location, it must accommodate at least 5,000 federal employees in office spaces, it must meet security requirements, it must have X parking spaces, etc").

"  In order to apply this thinking to something else, like software design, development, and delivery, wouldn't an agency need Congress to pass a statute giving it this kind of authority?"

@govt2310 Is not the authority to do so wrapped in FAR Part 12?  It would seem market research would show it is commercial practice for IT.

Agile is a commercial practice for IT.  I think I see what you mean, C Culham.  Agencies are treating agile as only a "commercial service," not a "commercial product."  But in the end, doesn't the agency want a working software, a commercial product, delivered to them?  I think this is being forgotten by many agencies.  In any case, thanks!

“ In order to apply this thinking to something else, like software design, development, and delivery, wouldn't an agency need Congress to pass a statute giving it this kind of authority?“

Nope.  Agencies have been using this approach over decades with “waterfall” development.  While many will argue having a single contractor do it all as opposed to competition among vendors at various stages, it often is done with one contractor doing it all.  The acquisition is broken up in the various stages -requirements analysis, design, development, testing, implementation, training, deployment, etc.  A common argument is braking the work into pieces that can be competed among a limited pool of multiple awardees so you aren’t at the mercy of the company that started.  No special authority is needed other than sometimes having to justify your acquisition process with OMB to get funding.

Sorry.  Double post

To formerfed: I'm seeing on SAM.gov that many agencies are combining into a single contract the "design, development, deployment, and maintenance," such as the Treasury IRS EDOS Solicitation posted in July 2022.

On 2/16/2023 at 7:52 AM, govt2310 said:

What if an agency just did one contract where the SOW was to both figure out the agency's requirements, write it up, then provide the requirement.  This sounds ludicrous to me...

Why?

We have been doing that for more than a century to buy all kinds of things.

On 2/17/2023 at 4:53 PM, govt2310 said:

Well, situation that prompted this question has to with research on "agile software development" and "agile acquisition."  In "agile," the agency doesn't define the requirements up front.  While it defines the scope by making a "Product Vision" (just 1-2 sentences), it doesn't do any more than that.

The Agile Contracts Primer referenced in this thread explores multiple contract pricing arrangements (and is a great read in any case). It seems like T&M may be the basic starting point for a Government agile contract, but it has some other ideas.

As for FAR authorities which would allow you to use a quasi design-build concept outside the construction arena I'd recommend considering a single-award IDIQ that describes the general scope of services to be acquired under the contract (FAR 16.504(a)(4)(iii)) as a starting point.

On 2/16/2023 at 7:52 AM, govt2310 said:

What if an agency just did one contract where the SOW was to both figure out the agency's requirements, write it up, then provide the requirement.  This sounds ludicrous to me, but it is an actual question that has been raised.

@govt2310I am confused by your opening post. Why do you think that hiring a contractor to design and specify something and then produce it is "ludicrous"? Did you see FAR 9.505-2(a)(3)?

Quote

In development work, it is normal to select firms that have done the most advanced work in the field. These firms can be expected to design and develop around their own prior knowledge. Development contractors can frequently start production earlier and more knowledgeably than firms that did not participate in the development, and this can affect the time and quality of production, both of which are important to the Government. In many instances the Government may have financed the development. Thus, while the development contractor has a competitive advantage, it is an unavoidable one that is not considered unfair; hence no prohibition should be imposed.

If I have grossly misunderstood you, please feel free to take a poke at me. But most of the acquisitions that I worked on as a CO and a staffer were for the design, specification, development, test, and production of various things. We've been doing those kinds of acquisitions for a very long time.

Thanks for all the responses.  Both TechFARHub and the GAO Guide say there are already flexibilities in the FAR to do Agile (but then they both only name 1 example, which is modular contracting), but Nash & Cibinic wrote in an article that the FAR is not compatible with Congress' instruction to do "agile."  FAR 9505-2(a)(3) is for "development work."  I believe this is for a situation where the contractor "invented" something, developed a new method/technique, and why would the USG want to cut out the leader in the field here (or rather, the only one who can do it).  A contractor that does software development is different.  The contractor did not invent the software.  What is supposed to happen is, the USG defines its requirements ("the software must accomplish tasks 1, 2, 3, etc . . . . the software must have features 1, 2, 3, etc . . . ."), the the contractor "builds" the software.  The USG did the design, and then the contractor did the build.  Or, the USG can hire contractor #1 to do the design, then contractor #1 has a Biased Ground Rules OCI and cannot bid to become contractor #2, who builds the software.  With agile methodology, the same contractor does both "design" and "build."  Now, I realize there are many sources that say that it is the USG that retains all decision-making authority, approval authority, however, if the requirements are not defined up front, and if agile is about being "collaborative," it is highly likely that the federal employees will just "go with" whatever the contractor thinks the requirements should be.  In that scenario, the contractor is defining the requirements and also fulfilling them.  How can this be ok?  Additionally, if the requirements are not defined up front, how can the USG do the IGCE?  How can the offerors calculate the price to bid?  Everything is too wide open here.  And how can the agency hold the contractor to delivering software that meets all of the requirements?

@gov2310  You’re depicting the situation where the government knows exactly what they want, what it will look like and how it will function, and how it will assess acceptability once it’s delivered.  It that instance, the government writes the detailed requirements or has a contractor do it for them.  But the government always doesn’t want to do it that way.  For example, the government may know what function it wants performed or problem solved.  They may know there are multiple ways to achieve the end result and may also know there are existing software tools already available to perform or a large portion of their work.  They may decide they don’t want to constrict approaches to any single solution so they write a high level statement of need rather than a detailed requirement statement or design.  Then they solicit competing approaches.  

With this scenario, offerors propose varying solutions.  Oferprs might be required to propose a series of steps in contract performance.  The steps might be  high level system design followed by a series of modules or releases.  The government must approve the design prior to the contractor proceeding with the initial development.  The contractor should also propose test plans are various points.  So it’s not a situation where the government just “goes with” what the contractor wants

In this manner the government can leverage individuals experience, expertise, resources and past performance in performing the type of work.  If the government wrote the detailed requirements, the government may likely see only one approach rather than picking among multiple choices.

This is done not just for software but for many other commodities the government buys as Vern Edwards pointed out.

@formerfed   It has sunk in.  I think I see what you are saying.  But I am still doubtful that the agency could make a reliable IGCE based only on a high level Product Vision and that the offerors could price their bids on the same.  But apparently, it is being done.

govt2310 said:

that the agency could make a reliable IGCE

Probably elementary but as I follow the comment made me have this thought.  Sometimes folks forget that the IGCE is a living document.  Adjusted throughout the acquisition process as all learn about the acquisition, inclusive of the Government learning from the experts (hoped for experts) in the private sector, especially those that the Government is actually negotiating with.

C Culham said:

Probably elementary but as I follow the comment made me have this thought.  Sometimes folks forget that the IGCE is a living document.  Adjusted throughout the acquisition process as all learn about the acquisition, inclusive of the Government learning from the experts (hoped for experts) in the private sector, especially those that the Government is actually negotiating with.

Thank you, Carl!

We might also point out to govt2310 that there are various methods for developing IGCEs depending on the amount of detail available about the requirement.

I suggest that govt2310 invest in a copy of Cost Estimating, 2d ed., by the late Rodney Stewart. It's a good elementary treatise.

Stewart also co-edited the Cost Estimator's Reference Manual, 2d ed.

govt2310 might also look at DOD's Independent Government Cost Estimate, Handbook for Services Acquisition

https://www.acq.osd.mil/asda/dpc/cp/policy/docs/sa/DoD_IGCE_for_SA_Handbook.pdf

Lastly, govt2310 should consider devoting some time to studying the history of the acquisition process.

Vern Edwards said:

Thank you, Carl!

De nada

On 2/20/2023 at 2:13 PM, formerfed said:

“ In order to apply this thinking to something else, like software design, development, and delivery, wouldn't an agency need Congress to pass a statute giving it this kind of authority?“

Nope.  Agencies have been using this approach over decades with “waterfall” development.  While many will argue having a single contractor do it all as opposed to competition among vendors at various stages, it often is done with one contractor doing it all.  The acquisition is broken up in the various stages -requirements analysis, design, development, testing, implementation, training, deployment, etc.  A common argument is braking the work into pieces that can be competed among a limited pool of multiple awardees so you aren’t at the mercy of the company that started.  No special authority is needed other than sometimes having to justify your acquisition process with OMB to get funding.

Agile is now a "bad word." Here I am still reminiscing about its praises being sang less than 4-5 years ago...

The more things change...

Government IGCE/SOO are just what they are, estimates.

In construction, design/build or design/bid/build is often done with a catalog software. There are many out there. I've utilized RSMeans.

Civil Engineering is our PM/SME, and develop the SOO. These are GS-7, 9, 11's typically -- or for the very experienced in the group, 12. Our actual engineers typically only worked design or A/E aspects. The SOO is created in RSMeans, but is a giant WAG. Often the person developing it might have a background in a particular trade. They might knock that trade out of the park. They are not a world-beater though when it comes to estimating. Neither is their supervisor, who approves their estimate. When the proposal came in over an internally agreed upon %, a revision was made with provided justification as to what changed and why (ex: "I forgot three other buildings. Didn't realize mold remediation cost so much. Incorrect sizing/amount of materials in initial estimate.") Thus, we had a revised IGCE.

For pure A/E design, it was/is often billed as a way for an organization who has budgetary constraints to finalize design options and defer construction to a later year.

In reality, what happens is the final design is approved, those who approved it leave or rotate prior to its utilization, and the new contracting officer is unfamiliar with FAR 36.608/ responsibility of the designer of record when they inevitably fail to capture 20-30 critical items. Judge advocate refuses to take the A/E to task over the issue, and six months pass while the DOR ignores e-mails. 

Design-Build in theory is a less contentious process, since the DOR is a sub of the prime and they are responsible for the design. The problem becomes that the original drawings provided to the contractor fail to mention thousands of miles of pipe. CE insists the contractor should have accounted for the risk that these additional pipes existed, for they had the opportunity to spend tens of thousands of dollars alongside the other contractors to scope the effort prior to award. Not a differing site condition at all, they cry -- insisting the contractor should eat the additional $2-3M.

I do miss construction. Never a dull moment.

On 2/28/2023 at 4:15 PM, Self Employed said:

Design-Build in theory is a less contentious process, since the DOR is a sub of the prime and they are responsible for the design. The problem becomes that the original drawings provided to the contractor fail to mention thousands of miles of pipe. CE insists the contractor should have accounted for the risk that these additional pipes existed, for they had the opportunity to spend tens of thousands of dollars alongside the other contractors to scope the effort prior to award. Not a differing site condition at all, they cry -- insisting the contractor should eat the additional $2-3M.

govt2310 initially wondered how it is legal to do design-build and whether specific legal authorization is required to apply the concept to other types of acquisitions. My input only addressed the design-build aspects of govt2310’s questions.

Although not germane to the original post, Self Employed’s example likely pertains to design-build situations where the government provides industry a partially prepared, preliminary design for the D-B contract or task order competition.

The D-B industry disparages this approach and refers to it as “draw-build”. I was a member of the Design-Build Institute of America for many years,  was a “DBIA Designated Design-Build Professional” and and a member of the Federal Markets Committee.

DBIA membership includes all categories of stakeholders involved in D-B. Owner members of DBIA include private and various government and Institutional/Academic practitioners. 

Furnishing partially prepared designs with a mix of prescriptive and performance design criteria often causes all sorts of problems, which may result in claims and litigation over who is responsible for the adequacy of the design.

The government might not escape responsibility for “draw-build” design criteria provided to proposers. There are many case-specific factors to consider.

The “Spearin Doctrine” (see, for example: https://en.m.wikipedia.org/wiki/United_States_v._Spearin ) has developed from a 1918 US Supreme Court Decision applicable to a government furnished design on a traditional design-bid-build project. 

“…The owner impliedly warrants the information, plans and specifications which an owner provides to a general contractor. The contractor will not be liable to the owner for loss or damage which results solely from insufficiencies or defects in such information, plans and specifications.”)

The Doctrine has also been applied in modified forms where a party other than the “owner” may become responsible where it provides a design or specific portions of a design on a construction contract or on a design-build contract.

For design-build, the Doctrine can be complicated and might involve only various parties of the design-build contractor team or it may involve the owner and the design-build contractor.

See this article, for example:  https://static1.squarespace.com/static/5b73429c1137a64304bdfdba/t/5ba27dfe032be4e0fea66cfb/1537375766382/Spearin_Doctrine.pdf   “Can the Spearin Doctrine Survive in a Design-Build World: Who Bears Responsibility for Hybrid Specifications?”

While researching the USACE Engineer Pamphlet 715-1-7 ARCHITECT-ENGINEER CONTRACTING IN USACE, dated 29 Feb 12, this morning, I copied this paragraph in Chapter 2, “Acquisition Planning” in response to govt2310’s initial post:

“2-3 Definition of A-E Services

”…b. Design-Build. A design-build contract is procured as a construction contract in accordance with FAR Part 36, and not as an A-E contract, since the A-E services are not the principal part of a design-build contract. If an A-E firm is used to prepare a Request for Proposal for a specific design-build contract, then the A-E firm will typically NOT be ineligible for participation in the design-build contract due to the conflict of interest and unfair competitive advantage (FAR Subpart 9.5) of the A-E firm preparing the RFP.”

https://www.publications.usace.army.mil/portals/76/publications/engineerpamphlets/ep_715-1-7.pdf

Note that the conflict of interest/competitive advantage concept there applies to preparation of a competitive solicitation for a requirement.

The conflict of interest and competitive advantage concern may be applicable to a firm hired to prepare the solicitation for the contract to design, develop and deliver software or other types of acquisitions.

But it isn’t  analogous to a firm selected for software design, development, and delivery.