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4.3 Design and Construction Purchasing

4.3.1 General

4.3.1.a Applicability. Design and construction purchasing is the purchase of architect/engineer, construction, and related services. This section covers the purchase of:

1. Services related to facilities design;

2. Construction; and

3. Construction management.

4.3.1.b Real estate and Related Services. See 1.1.2 for information regarding the purchase of real estate and related services.

4.3.2 Architect-Engineer Services

4.3.2.a General. Postal Service policy is to purchase architect-engineer services from prequalified suppliers based on demonstrated competence and qualification for the type of services required. Fees are negotiated after selection.

4.3.2.b Applicability. Generally, architect-engineer (A/E) services contracts are awarded following the policies and procedures contained in 4.2. However, when the provisions of this section conflict with any other provision of the guidelines, the provision of this section govern.

4.3.2.c Definitions

1. A/E services are professional services requiring the performance or approval by a registered or licensed architect or engineer associated with the design or construction of real property, as well as incidental services that members of those professions may logically or justifiably perform in relation to construction, alteration, or repair of buildings, site improvements, roads, or other kinds of real property. Such incidental services include master planning, architectural and engineering studies, investigations, surveys , reports, design development, drawings preparation, specification preparation, interior design, space planning, environmental services, and observation and reporting of the work performed during construction, alteration, or repair.

2. Environmental A/E services are those environmental services which require performance or approval by a registered or licensed architect or engineer. Environmental A/E services should be purchased using the procedures in this section. Other environmental services such as continuous monitoring and/or testing for environmental compliance at postal facilities do not require performance by a registered or licensed architect or engineer. These services should be purchased under the procedures contained in 4.5.

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4.3.2.d Selection Procedures

1. Publicizing

(a) For each contract for which the fee is expected to exceed $50,000, a notice of intent to contract for A/E services must be publicized in FedBizOpps (see 3.5.3.b.1). The notice must be prepared and transmitted in accordance with 3.5.3, and must solicit submission of Standards Forms (SF) 254, Architect/ Engineer and Related Services Questionnaire and 255, Architect/Engineer and Related Services Questionnaire for Specific Project.

(b) For each contract for which the fee is not expected to exceed $50,000, publicizing should be limited to the area in which the project will be performed.

2. A/E Selection Team

(a) Contracting officers establish teams to evaluate and select A/E suppliers. Each selection team must be composed of at least two members with one member designated as the chairperson. Team members must be appointed from among professionally qualified Postal Service personnel who collectively have experience in architecture, engineering, construction, and purchasing, although staff limitations or project-specific considerations may require that individuals working under contract for the Postal Service be appointed to the selection team. These individuals may be appointed only on a case-by-case basis subject to approval of the contracting officer. Each project file must contain written certification by each evaluation team member that he or she has no conflict of interest that may impair their objectivity in the selection process (see 1.6.8).

(b) Less complex, low dollar A/E projects may be awarded directly without the formation of an A/E selection team. For these projects, the contracting officer may appoint an individual from the A/E selection team to recommend three or more qualified suppliers from existing SF 254 and SF 255 information. If the number of known qualified suppliers is insufficient to provide a competitive review, then the project may be publicized within the area in which the project is to be performed.

3. Postal Service Cost Estimate. Before discussions of any proposed contract or contract modification is initiated, an independent Postal Service estimate of the cost for the required A/E services must be developed, based on a detailed analysis of the costs expected to be generated by the work. Consideration must be given to the estimated value of the services and to the scope, complexity, and nature of the project. The independent estimate must be revised as required during discussions to reflect changes in or clarification of the scope of the work to be performed. A fee estimate based on the application of percentage factors to cost estimates for the various segments of the project may be developed for comparison purposes, but such an estimate must not be used as a substitute for the independent Postal Service estimate. To the extent necessary, the cost breakdown figures in the Postal Service estimate may be revealed during discussions provided that the overall amount of the Postal Service estimate is not disclosed. Any change in the Postal Service estimate during or after price discussions must be specifically but succinctly explained in the record of price discussions.

4. Cost or Pricing Data. The provisions of Chapter 5 relating to cost analysis, provision of cost or pricing data, and preparation of discussions memoranda apply to purchases of A/E services. Because of the procedures used to purchase A/E services and the lack of price competition, price analysis is normally insufficient.

5. Fees for A/E Services. The contracting officer is responsible for negotiating a fair and reasonable fee for the services to be performed. In determining a fair and reasonable fee, the contracting officer should compare the independent Postal Service estimate with the A/E supplier's proposal. Also, the contracting officer should consider previous prices paid for similar services. Additional guidelines are contained in Handbook P-2.

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4.3.2.e Discussions

1. Discussions will be conducted initially with the A/E supplier given the highest technical ranking. If a mutually satisfactory contract cannot be achieved with that supplier, discussions must be terminated. Discussions will then be initiated with the supplier next in order of preference. This procedure must be repeated until a mutually satisfactory contract has been negotiated.

2. In lieu of the discussion procedures described above, the contracting officer may, at his or her discretion, compete A/E requirements under the general procedures set out in 4.2. In these instances, award will be made to the A/E supplier offering the best value to the Postal Service.

4.3.2.f A/E Supplier Performance Evaluation. The project manager responsible for monitoring the performance of an A/E supplier must complete an objective written evaluation of the supplier's performance, including any environmental elements, using Forms 7477-A, A/E's Performance Design Phase Evaluation, and 7477-B, A/E's Performance Construction Phase Evaluation. For further guidance see Handbook P-2.

4.3.2.g Indefinite-Quantity A/E Services Contracts

1. Use. The Postal Service requires that a large number of small repair and alteration, environmental and other projects be performed each year. Indefinite-quantity (IQC) A/E contracts permit a large number of projects to be accomplished at one or more facilities through the issuance of delivery (work) orders against a single contract rather than through individual solicitations. Each indefinite-quantity contract is limited to the geographic area that has been described in the solicitation. Multiple awards may be made if provided for in the solicitation.

2. Limitations. Limitations regarding contract term, dollar limitations, and delivery (work) order limits are issued by the VP, SM, or authorized designee.

3. Solicitation Preparation. Guidance for indefinite-quantity A/E services contract preparation is contained in Handbook P-2.

4. IQC A/E Supplier Performance Evaluation. See 4.3.2.f.

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4.3.3 Construction

4.3.3.a Purchasing Construction

1. Applicability. This section applies to the purchase of construction. When the provisions of this section conflict with any other provision of these guidelines, the provisions of this section govern.

2. Definition. Construction means construction, alteration, repair (including painting and improvements of all types), environmental work (asbestos abatement, UST removal/replacement, etc.), and demolition of buildings, structures, and improvements of all types. The term does not include other investigative work such as engineering, environmental or other studies that is not part of the beginning of the construction process. Normally, construction does not include any construction work pursuant to a lease and performed by the lessor (see Handbook RE-1, Realty Acquisitions and Management).

3. Purchase Method

(a) Generally, construction is purchased in accordance with 4.2. Suppliers should be prequalified (see 3.5.2).

(b) Purchase or prequalification opportunities must be publicized in accordance with 3.5.3.

(c) When the contracting officer determines that the price proposed by a lessor offers the best value to the Postal Service, alterations, repairs, and improvements to be accomplished by the lessor may be performed without competition.

(d) The bonding requirements of chapter 7 must be met for all construction contracts.

4. Contract Types

(a) Generally, contracts for construction should be firm fixed price contracts. Such contracts may be:

(1) Lump-sum contracts for the total work or for defined parts of it;

(2) Unit-price contracts in which a unit price is paid for a specified quantity of work, such as cubic yards of earth or concrete, or square yards of pavement; or

(3) A combination of both.

(b) However, any contract type discussed in 2.4 may be used if approved by the contracting officer.

5. Specifications. See 2.3.1.a and Handbook P-2 for further guidance.

6. Presolicitation Notices

(a) At the contracting officer's discretion, a presolicitation notice may be issued for construction projects (see 3.5.3.b). Notices may be distributed to plan hold rooms, companies on solicitation mailing lists maintained by the purchasing office, and any other known interested parties within the Postal Service or members of the public.

(b) Any presolicitation notice issued must include a statement of the project's magnitude in terms of physical characteristics and an estimated price range (for example, 30,000 sq. ft. building with an estimate cost range of $500,000 to $1,000,000 for the project). However, in no event may the statement disclose the Postal Service estimate.

7. Preproposal Conferences and Attendees. See 4.2.2.f and Handbook P-2 for guidance. The design A/E must be available to help interpret plans and specifications.

8. Inspection of Construction Site and Data. Provision must be made for offerors to inspect the construction site. Also, offerors must be given the opportunity to examine data available to the Postal Service that may provide information affecting performance of the work, such as boring samples, and original boring logs. This information should be assembled in one place and be made available to all offerors in the same manner. When feasible, a record should be kept of the identity and affiliation of all offerors' representatives inspecting the site or examining the data.

9. Performance Time

(a) In establishing the time for contract completion, the contracting officer must consider, among other things, the nature and complexity of the project, the construction seasons involved, the availability of equipment, labor and other factors and the increased cost for an aggressive project schedule.

(b) In any given contract, separate completion periods may be established for separable items of work. When such periods are shown, requests for time extensions must be evaluated for each item, and all affected completion periods must be modified when appropriate.

10. Liquidated Damages

(a) See 2.2.6. For additional information on calculating the liquidated damages rate for construction projects see the guidelines in Handbook P-2.

(b) When different completion periods for separate parts or stages of the work are specified in the contract, the clause may be revised to provide for liquidated damages for each separate part or stage in which delay will damage the Postal Service.

11. Base and Alternate Prices

(a) Solicitations permitting alternate proposals must require the base proposal to include all features considered essential to a sound and adequate building design. Any alternates to be included in the specifications should represent significant amounts of work in relation to the base proposal, and they should generally be structured as "add" or "deduct" alternates.

(b) When accurate cost estimates are not available, a base proposal may be required for the minimum acceptable project, with "add" alternates for desired materials or equipment.

(c) When budget constraints exist, a base proposal may be required for the plans and specifications as stated, with "deduct" alternates for desired materials or equipment to be used to bring proposals back within budget.

(d) Solicitation documents calling for alternates must clearly state that the Postal Service reserves the right to accept or reject any and all alternate prices, as may be determined by the contracting officer to be in the Postal Service's interests.

12. Performance of Work by Supplier. Unless the supplier is required to perform a significant part of the contract work with its own forces, it may be difficult to obtain adequate supplier supervision of the work. To address this problem, each Postal Service construction contract must contain Clause B-42, Performance of Work by Supplier, establishing the minimum percentage of the work that the supplier must perform, consistent with customary or necessary specialty subcontracting and the complexity and magnitude of the work. The percentage may be increased for contracts with unusual requirements (i.e., environmental, mechanical).

13. Solicitations

(a) General. See 4.2.2 and Handbook P-2.

(b) Distribution. Solicitations may be furnished (with plans and specifications) without charge to organizations that maintain plan hold rooms, or other types of organizations, for the benefit of suppliers, subcontractors, and material suppliers. The extent of this distribution (geographical or otherwise) may be determined on a case-by-case basis by the contracting officer.

14. Release of Plan Holders List. See 1.6.5 and ASM 3

15. Award

(a) A notice of intent to make award must be furnished to the successful offeror no later than the time set for acceptance in the solicitation or any extension to which the offeror has agreed. The notice must advise the supplier of any required bonds and the date by which the supplier must execute and return such bonds.

(b) When all required bonds have been received, the contracting officer will make award and issue a notice to proceed. The contracting officer may issue the notice to proceed at the time of award or may issue it at the preconstruction conference. The contracting officer then will send a written notice of the award to all offerors who submitted a proposal and any other known interested parties within the Postal Service or the public.

16. Construction Supplier Performance Evaluations. The project manager responsible for monitoring the performance of a construction supplier must complete Form 5002, Construction Supplier Performance Evaluation, of the supplier's performance, including any environmental elements, for each project. For further guidance see Handbook P-2.

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4.3.3.b Indefinite-quantity Construction Contracts

1. Use. The Postal Service requires a large number of small repair and alteration, environmental, and other projects to be performed each year. Indefinite-quantity construction contracts permit a large number of projects to be accomplished at one or more facilities through the issuance of delivery (work) orders against a single contract rather than through individual solicitations.

2. Procedures

(a) A solicitation must be used to request proposals based on a unit price schedule prepared by the Postal Service. Offerors must be required to submit a multiplier that will apply equally to all prices listed in the unit price schedule. The multiplier submitted by the offeror must not be more than two decimal places
(e.g., 1.22 or 0.97).

(b) Each indefinite-quantity contract is limited to a specific geographic area.

3. Limitations

(a) Limitations regarding contract term, dollar limitations, and delivery (work) order limits are issued by the VP, SM, or authorized designee.

(b) Delivery (work) orders are limited to the geographic area described in the contract.

(c) No new construction or building expansion work may be ordered under an indefinite-quantity construction contract, except for site preparation or foundation work for a pre-engineered building purchased directly from the manufacturer.

(d) The contracting officer may request quotations from an indefinite-quantity construction supplier for work items not covered by the unit price schedule and order such items, in addition to ordering covered work. However, not more than 25 percent of the cost of any delivery (work) order may be for such uncovered work.

4. Solicitation Preparation. Guidance for indefinite-quantity construction contract preparation is contained in Handbook P-2, Design and Construction Purchasing Practices.

5. Liquidated Damages. See 4.3.3.a2-10. If Clause is not included in the basic IQC contract, a contracting officer may not include liquidated damages in subsequent delivery (work) orders.

6. IQC Construction Supplier Evaluation. See 4.3.3.a.1.

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4.3.4 Design-Build Contracting

4.3.4.a Applicability. Generally, design-build contracts are awarded following the same policies contained in 4.2. However, because these purchases call for a combination of services, the purchasing process is somewhat unique. When the provisions of this section conflict with any other provision of these guidelines, the provisions of this section govern.

4.3.4.b Definition. Under design-build contracting, one entity or supplier performs both architecture-engineering and construction under one single contract providing single-source responsibility for delivering the project design and construction. The design-build entity or supplier can assume several organizational Structures. Most common are suppliers possessing both design and construction resources in-house. Others are combinations of a joint venture between designer and supplier, a constructor-led team with the designer in a subcontract role, or a designer-led team with the constructor in a subcontractor role.

4.3.4.c Purchase Method. The policies contained in 4.2 and the procedures listed in Handbook P-2 regarding publicizing, solicitations, and contracts apply to the purchase of design-build services. The prequalificiation procedures in 3.5.2 should ordinarily be used in connection with design-build services, regardless of contract type.

4.3.4.d Contract Types

1. Fixed-Price Design-Build Contract. Fixed-price design-build contracts are suitable for use on small, simple projects with well-defined scopes, for which design has been developed to at least the 30 percent level through Standard Plans or otherwise. The fixed-price is comprised of fixed fees for A/E services (which cover all costs of remaining design work and A/E construction services, plus associated overhead and profit) and a fixed-price to complete all construction work (which covers all construction overhead and profit). The contract is awarded based upon the procedures covering evaluation of technical and management and price proposals (see 4.2).

2. Cost-Reimbursable Design-Build Contracts

(a) Cost-reimbursable design-build contracts are suitable for use on all major projects for which the scope or complexity dictate the use of design-build construction delivery services. Cost-reimbursable design-build contracts must be based on a Guaranteed Maximum Price (GMP) which must be determined through competition or through discussions. The GMP is comprised of fixed fees for A/E services (which cover all costs of remaining design work and A/E services during construction, plus associated overhead and profit), reimbursable direct construction costs, and a construction services fee (which covers all construction overhead and profit). If the supplier's total fees and actual construction costs together exceed the GMP as adjusted for changes (if any), the adjusted GMP is the amount paid for complete performance; if they do not exceed the adjusted GMP, the Postal Service and the supplier share the savings in accordance with a contractually established ratio.

(b) Cost-reimbursable design-build contracts with a competitive Guaranteed Maximum Price (GMP) are suitable for use on projects for which design has been developed to at least the 30 percent level and a reliable estimate of the maximum cost to construct the facility can be made. The contract is awarded based upon the procedures covering evaluation of technical and management proposals and price proposals (see 4.2).

(c) Cost-reimbursable design-build contracts with a negotiated Guaranteed Maximum Price (GMP) are suitable for use on all major projects when factors such as significant ambiguities concerning the scope of the project, requirements for integration with fixed mechanization, or new types of projects prevent the development of a reliable estimate of the maximum cost to construct the facility. The Postal Service provides the offerors with design which is less than 30 percent developed (typically only 10 percent developed) along with a Construction Cost Limit (CCL). The CCL is the Postal Service budget estimate of the total cost to construct the facility including the offeror's overhead and profit. These contracts are awarded through the following purchase process:

(1) Phase I covers the completion of design to the point where a GMP can be reasonably negotiated and is awarded based upon the procedures covering evaluation of technical and management proposals and price proposals.

(2) Phase II covers all remaining design and all construction work and is awarded based upon negotiation of a CCL within the GMP.

(3) If a CCL cannot be negotiated within the GMP, the Postal Service may require the supplier to redesign within the CCL at no cost to the Postal Service or may withdraw from the project. If the supplier withdraws, the Postal Service keeps the design and uses it to contract with a different supplier using a fixed-price design-build contract or a cost-reimbursable design-build contract with a competitive GMP.

3. Fixed-price contracts with economic price adjustment may be used. See 2.4 and Handbook P-2 for further guidance.

4. Contracts with performance incentives may be used. See 2.4 and Handbook P-2 for further guidance.

4.3.4.e Solicitations for Design-Build Contracts. Solicitations/contracts for design-build are unique. Guidelines regarding applicable contract clauses and solicitation provisions are provided in Handbook P-2.

4.3.4.f Requirements for Design-Build Proposals. In addition to the technical proposal, offerors must also furnish Standard Form 254, Architect-Engineer and Related Services Questionnaire, and Standard Form 255, Architect-Engineer and Related Services Questionnaire for Specific Project. See Handbook P-2 for further guidance.

4.3.4.g Design-Build Supplier Performance Evaluations. The project manager responsible for monitoring the performance of a design-build contract must complete an objective written evaluation of the supplier's performance including any environmental elements. See 4.3.4.f.

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4.3.5 Construction Management Support Services

4.3.5.a Applicability. Generally, construction management support services (CMMSS) contracts are professional services contracts and are subject to the guidelines contained in 4.5.3.

4.3.5.b Definition. A CMSS supplier monitors the management, coordination, and general direction of the work and progress of a construction supplier. the CMSS supplier maintains a full-time staff at the project site during construction. A CMSS supplier may be retained at any time during the project planning, design, or constricting phase, During the construction phase the CMSS supplier must maintain a full-time staff at the project site.

4.3.5.c Purchase Method. The general policies set forth in 4.5.3 and other chapters of the PM and the procedures listed in Handbook P-2 regarding publicizing, solicitations and contracts apply to the procurements of construction management support services.

4.3.5.d Contract Types. Contracts for construction management support services may be indefinite-quantity contracts or a single fixed-price contract for a single project.

1. Indefinite-Quantity Contracts. In order to facilitate the expeditious assignment of CMSS suppliers to projects where their services are needed, construction management support services contracts are generally awarded as indefinite-quantity contracts requiring the CMSS supplier to provide a range of construction services for multiple construction contracts over a specified period of time and within a specified geographic area.

2. Indefinite-Quantity Contract Duration and Cost Limits. Limitations regarding contract term, dollar limitations, and (delivery) work order limits are issued by the VP, SM, or an authorized designee.

4.3.5.e CMSS Contract as an Alternative to A/E Contract Options. The Postal Service may contract with a CMSS supplier rather than exercising an A/E construction-management option to perform field duties during construction. The CMSS supplier may not prepare working drawings, design, or specification that will be used for construction services.

4.3.5.f Solicitations for Construction Management Support Services Contracts. Guidelines regarding applicable contract clauses and solicitation provisions are provided in Handbook P-2.

4.3.5.g Selection Processes for Construction Management Support Services Contracts. See Handbook P-2 for guidance on the evaluation and selection process.

4.3.5.h Evaluation of Price Proposals. The offeror's price proposal is a multiplier factor that is applied to each work-day category. The multiplier submitted by the offeror must not be more than two decimal places (e.g., 1.22 or 0.97).

4.3.5.i Contracts Award. See Handbook P-2 for guidance on the contract award process.

4.3.5.j Contract Management Support Services Supplier Performance Evaluations. the project manager responsible for monitoring the performance of a CMSS supplier must complete an objective written evaluation using Form 7477-A, A/E's Performance Design Phase Evaluation and 7477-B, A/E's Performance Construction Phase Evaluation, of the supplier's performance, including any environmental elements, for each project. For further guidance see Handbook P-2.

4.3.5.k Environmental Engineering services. When the Postal Service requires environmental engineering services such as the design and/or monitoring of environmental mitigation, abatement, or clean-up measures, an engineering supplier should be retained using the procedures applicable to procurement of A/E services (see 4.3.2). In those cases where a supplier is hired to both design and perform environmental mitigation, abatement, or clean-up measures, the supplier should be retained using the procedures applicable to purchase of design-build services (see 4.3.4).

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