TITLE: CONCERNING THE AUTHORITY OF THE DEPARTMENT OF TRANSPORTATION TO ENGAGE IN DESIGN-BUILD CONTRACTING FOR TRANSPORTATION PROJECTS.

Fiscal Impact Summary	FY 1999/2000	FY 2000/2001
State Revenues Cash Fund
State Expenditures Cash Fund
FTE Position Change	0.0 FTE	0.0 FTE
Other State Impact: None
Effective Date: Upon the Governor’s signature
Appropriation Summary for FY 1999-2000: None
Local Government Impact: None

The bill would allow the Colorado Department of Transportation (CDOT) with the Transportation Commission’s approval to utilize the design-build concept to award contracts for transportation construction projects. Design-build combines the design and construction phases of a project in a single contract with a firm or firms that are capable of providing the necessary engineering and construction services. Warranty provisions may be included in a design-build contract that would require the contractor to perform follow-on maintenance services on the completed transportation facility.

The bill would authorize CDOT to use the design-build contract if the design work must be completed before a bidder can develop a cost proposal and if CDOT’s chief engineer determines that a design-build contract is appropriate. A design-build contract may be used regardless of the estimated cost of a transportation project. Public notice procedures, specifications for the transportation project, and selection procedures to be used would be required for each design-build project. Preference would be given to Colorado residents in awarding a design-build contract but the preference may be waived if federal money may be denied as a result of the preference. CDOT may cancel a request if the department determines that the cancellation or rejection is in the state’s best interest. CDOT may pay design-build firms that are not awarded a design-build contract a fee. The bill authorizes the CDOT to adopt rules and regulations to implement this bill.

The bill would allow CDOT to utilize an alternative method of awarding a transportation construction contract rather than the current "low bid procurement" process. Under the current process, a request for proposal (RFP) is submitted for each phase of a project, bids are received, and a contract is awarded for each portion of a multi-year project to the lowest bidder based on CDOT’s estimated costs. Each phase of the project requires an additional RFP and subsequent contracts are awarded based on the lowest bid.

This bill would allow CDOT to issue a construction contract to a contractor for the entire multi-year project based on elements the contractor would provide in the proposal. Under this scenario, a project would not have more than one set-up and start-up cost for contractors, costs of CDOT’s bid process would be reduced, and CDOT could consider innovations, quality, and other elements in the project costs.

Generally, allowing CDOT to consider elements other than just the lowest bid to award a contract would increase the cost of a construction project. This bill would allow CDOT to attempt to achieve financial and operational goals, including the use of technology innovation, improved flexibility, quick turn-around response, reduced startup costs, and lower contract administration and project management costs. A design-build contract may, in many cases, reduce the opportunity for field change orders which can significantly affect the total design and construction costs.

CDOT would not require any additional state appropriation to administer the provisions of this bill during FY 1999-2000. However, this fiscal note cannot assess how the provisions of this bill will affect design and construction costs for state transportation construction projects.

This fiscal note implies no new state appropriation would be required to implement this bill in FY 1999-00.