ALTERNATIVES TO DESIGN-BID-BUILD FOR AIRPORT CONSTRUCTION PROJECTS
By Jeff Wagner, Shareholder
Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.
Under both federal and state law, publicly owned airports in Mississippi are required to competitively procure construction and, depending on the source of funding, design services for construction projects. Traditionally, airports have used the design-bid-build delivery method for projects. Under this method, the airport operator would enter into an agreement with a design professional (architect or engineer, depending on the project). If using Airport Improvement Program (AIP) or other federal funds, the design professional procurement would need to be a qualifications-based, competitive selection process performed in accordance with the Brooks Act (prohibiting price competition in procurement of professional design services).
The design professional would then produce plans and specifications that would be advertised for bid through a competitive process with the construction work being awarded to the lowest and best bidder (using Mississippi terminology) or the lowest responsible builder (using federal terminology). The construction work would then proceed with the design professional providing construction phase services to the airport operator under its contract and the contractor providing construction services under its contract with the airport operator.
The design-bid-build delivery method works well for most projects, especially where there are established design standards. In addition, this method of project delivery generally keeps the design professional on the airport operator’s side in the event of any construction disputes. However, absent a design defect, the airport operator generally bears the risk of any cost-overruns.
Some large and complicated projects may benefit from one of the alternate delivery methods authorized by state law and allowed under AIP. The first of these alternate delivery methods is the design-build method of contracting where the airport operator enters into a single contract with a team of designers and contractors with the team being responsible for producing a final design acceptable to the airport operator as well as constructing the project. The design-build team then bears the risk of cost-overruns. In Mississippi, the team must include a Mississippi-licensed design professional and a Mississippi-licensed contractor. The design-build method of project delivery is authorized under MISS. CODE ANN. §31-7-13.1.
The second alternate delivery method is the construction manager at risk method. Under the construction manager at risk method of project delivery, the airport operator enters into separate contracts with a design professional and a construction manager. The design professional and the construction manager are expected to cooperate in the development of the project with the construction manager overseeing and managing the construction side of the project, guaranteeing that the project will be completed for a specified amount (the “guaranteed maximum price”). The construction manager may self-perform certain portions of the contracted services but will generally contract most of the construction services required by the project. The construction manager at risk method of project delivery is authorized under MISS. CODE ANN. §31-7-13.2. Although there is no minimum project size for a design-build project, the minimum project size for employing the construction manager at risk method of project delivery under §31-7-13.2 is $25 million.
Although both these alternative project delivery methods are allowed by the Federal Aviation Administration (FAA) on AIP-funded projects, they require prior clearance from the FAA. The airport operator must submit the documentation identified in Appendix G of FAA Advisory Circular 150/5100-14E Change 1 to the Airports District Office (ADO) in order to secure ADO approval. In addition, the airport operator must continue to ensure that all aspects of the procurement meet the requirements of Mississippi law as well as the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200, such as ensuring that the procurement is fair, open and competitive. For example, the construction manager at risk delivery method requires competitive processes for selection of the design professional and construction manager, and the design-build process requires competitive process for the selection of the design and construction team.
For complicated projects, one or the other of these alternate methods may offer an airport operator the best path for project delivery through reduced risk.