Generally, design-build contracts are awarded following the same guidelines contained in the Supplying Practices. However, because these purchases call for a combination of services, the purchasing process is somewhat unique. When the guidelines of this section conflict with any other guidelines of the Supplying Practices, these govern.
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.
The practices discussed in the Supplying Practices and the procedures listed in Handbook P-2, Design and Construction Purchasing Practices, regarding publicizing, RFPs, and contracts apply to the purchase of design-build services. Prequalificiation procedures should ordinarily be used in connection with design-build services, regardless of contract type.
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 guidelines contained in the Supplying Practices.
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.
Cost-reimbursable design-build contracts with a competitive 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 on the guidelines in the Supplying Practices.
Cost-reimbursable design-build contracts with a negotiated 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:
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.
Fixed-price contracts with economic price adjustment and contracts with performance incentives may be used. See the Supplying Practices and Handbook P-2, Design and Construction Purchasing Practices, for further guidance.
RFPs and contracts for design-build are unique. Guidelines regarding applicable contract clauses and solicitation provisions are provided in Handbook P-2, Design and Construction Purchasing Practices.
In addition to the technical proposal, offerors must also furnish SF 254, Architect-Engineer and Related Services Questionnaire, and SF 255, Architect-Engineer and Related Services Questionnaire for Specific Project. See Handbook P-2, Design and Construction Purchasing Practices, for further guidance.
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.
