Anyone who thinks indefinite delivery, indefinite quantity doesn't beat lowest-bid in this economic environment should talk to Parks and Recreation in Tempe, Ariz. In fact, because job-order contracts are awarded based on performance as well as price, the lowest bid sometimes turns out to be more expensive.
The department's managers were skeptical when Engineering Services Administrator Wendy Springborn urged them to try the procurement method for building shade structures. In 2005 she launched the city's job-order contracting program with the help of Arizona State University's Alliance for Construction Excellence. Since then, she has helped the streets and water departments - among others - issue 17 master contracts representing total capacity $89 million that have generated 146 job orders worth $38 million.
She was sure that Parks & Rec, short-staffed like everyone else, would see that having dependable vendors available virtually immediately was worth the upfront effort of developing a unit price book of standard costs for a job, deciding whether design would be included, advertising the availability of a master contract, and interviewing vendors. She was sure her customers would realize the process provides a better handle on final costs than asking for the lowest bid.
She was wrong.
But they're beginning to see the light. "Because it's a multiple-year contract, job-order contracting is relationship-based and we have fewer surprises," Springborn says. "With low-bid, that change order is the dollar-maker for the contractor." While five years is the standard duration for a master contract, Tempe's are for three years. The city's previous project timeline was 14 months; today, awarding a master contract takes three to six months and individual projects five to nine weeks.
While master contracts usually carry a larger cap, the process works best for job orders of $1 million or less. "Anything higher, you're asking this delivery method to do something it's not set up to do," says Charles Bowers, LEED AP, Arizona JOC operations manager for Parsons Commercial Technology Group Inc. in Phoenix.
In addition to Tempe, he's worked with Maricopa County in Arizona, which puts traffic signal replacement out to bid every four or five years; and Phoenix, which at any given time has 10 general contractors vying for work and has subsequently lowered rates 15% over five years.
Having carefully logged material and labor costs for standard repairs like sidewalk replacement, Phoenix developed it own price book. Most public works departments use RSMeans, which issues updates every 90 days, to establish base prices. Whether for general construction or single trade, the contract outlines an activity's entire scope of work.
American Public Works Association 2010 Congress
"Job Order Contracting - One Answer to Many Public Works Dilemmas"
Charles D. Bowers, LEED AP
Arizona JOC Operations Manager, Parsons Commercial Technology Group Inc., Phoenix
Wendy Springborn, MBA, Engineering Services Administrator, City of Tempe, Ariz.
Tues., Aug. 17
10 - 10:50 a.m.