A statute went into effect Aug. 28, 2016, that adds Missouri to the list of states embracing design-build as an acceptable delivery method for public improvements.
Under the new statute, R.S. Mo. § 67.5060, design-build is an optional delivery method for:
- All civil works projects of any cost (such as roads, bridges, utilities and storm drainage)
- Any other public improvement over $7 million.
Public entities eligible to use the design-build method include any “political subdivision” of Missouri, which likely includes special districts and public school districts. In addition, this statute authorizes any political subdivision to use a design-build contractor for wastewater and water treatment projects. Metropolitan sewer districts established under the Missouri Constitution, however, are not eligible.
Under the new statute, design-builders can qualify for contracts in a three-phase selection process involving a point system similar to a best-value procurement system.
The phases and the point system
In phase I of the selection process, design-builders essentially have to qualify to submit proposals. Design-builders must submit a statement of qualification that includes references of owners, qualifications of personnel (for both the primary design consultants and primary trade contractors), and a resume of previous experience with similar projects. The political subdivision can select no more than five and no fewer than two design-builders to move on to phases II and III.
Phase II involves submission of a design for the project to the level of detail required by the request for proposal (RFP). The submitted designs are then evaluated and assigned points by the criteria in the RFP. Importantly, the phase II proposals cannot refer to cost.
Phase III involves submission of a firm, fixed cost for design and construction. The phase III proposal may be accompanied by bid security and other items, such as minority participation. The lowest cost proposal is awarded the maximum number of points available for phase III. Points for the remaining cost proposals are calculated by reducing the maximum available points by at least 1 percent for each percentage point by which the cost proposal exceeds the lowest bid.
Each design-builder must submit its phase III cost proposal along with the phase II design proposal. However, the cost proposals are opened only after the political subdivision has evaluated the design proposals and assigned points.
Phases II and III each account for at least 40 percent of the total point score (so phases II and III together constitute at least 80 percent). The remaining points (up to 20 percent) may be based on each design-builder’s qualifications and ability to design, contract and deliver the project on time.
Participation stipends and contract award
Obviously, submitting design proposals to the required level of detail and preparing cost estimates for both design and construction can require a significant investment from prospective candidates. For this reason, the political subdivision must pay each design-builder that submits phase II and III proposals a minimum stipend for its participation. The stipend amount must be at least one-half of 1 percent of the total project budget. For example, a $10 million project would offer a minimum $50,000 stipend to each design-builder submitting phase II and III proposals. In exchange, the political subdivision acquires a non-exclusive right to use the phase II design proposal.
Naturally, the design-builder with the highest point total is awarded a design-build contract, with the caveat that the political subdivision has the option to reject all proposals. In that event, the design-builder with the highest point total receives double the stipend amount.
Under the new statute, the authority to use the design-build method expires on Sept. 1, 2026, giving eligible public entities exactly 10 years to experiment with this progressive delivery method. Presumably, the Missouri legislature will evaluate the success of the design-build method in Missouri as 2026 approaches and decide whether to modify or extend the authority granted under the statute.