Infra Insight Blog : written by Nossaman LLP Infrastructure attorneys, covers infrastructure project delivery, including Public-Private Partnerships, Operations & Management Agreements, policy, and news.

The Obama Administration recently outlined its proposal for enhanced federal safety oversight of subways, light-rail and municipal bus systems. USDOT Secretary Ray LaHood said, “Now, would we prefer that states regulate their own systems? You bet. But some states simply lack the resources to do that. And, in a pinch, some state will cut safety items from their budgets. For transit passengers those cuts are too dear.”     

The proposed “Public Transportation Safety Program Act of 2009” would authorize the Secretary, through the Federal Transit Administration (FTA), to set and enforce minimum federal transit safety standards and ensure that transit safety efforts grow in tandem with increased ridership.

USDOT is currently prohibited from establishing federal transit safety standards, and instead relies on 27 State Safety Oversight Agencies (SSAs) to monitor transit safety as provided in 49 CFR Part 659.   Following several transit incidents earlier this year, FTA Administrator Peter Rogoff announced the Administration’s intent to enhance federal oversight.  [See “FTA Considering New Safety Oversight for Rail Transit.”]  Funding, independence, and enforcement powers are critical concerns for SSAs, which average less than one staff person per transit agency and in some cases rely on transit revenues from the systems they oversee.  

Under the proposed program, FTA would be authorized to promulgate minimum national standards for rail transit safety, applicable to all fixed rail systems not currently under Federal Railroad Administration jurisdiction. (The legislation would also authorize bus safety regulatory authority but DOT expects its initial focus to be on rail transit safety.)

States could choose to continue transit safety oversight on behalf of FTA, but only when FTA finds that the SSA has:  

•          an adequate number of fully-trained staff to enforce federal regulations;
•          been granted sufficient authority by its governor and state legislature to compel compliance by the transit systems it oversees; and
•          sufficient financial independence from any transit systems under its purview. 

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A recent court case upholds the concepts of innovative design and quality performance utilized by alternative delivery methods that have become necessary due to shrinking public agency budgets and the need to accelerate critical projects. The case concerned the U.S. Army Corps of Engineers’ (Corps) use of an Indefinite Delivery/Indefinite Quantity (IDIQ) Contract through a two phased proposal process for a $301 million construction project to build a series of military facilities to be performed under a series of future task orders. 

An IDIQ Contract allows the procuring agency flexibility to engage contractors before the exact times and/or exact quantities of future supplies and/or services become known. The goal of the Corps’ project was to meet time, cost and quality targets set by the Army as well as to standardize construction methods to provide new facilities for soldiers and their families. The Corps determined, through market research, that the use of an IDIQ contract was the most appropriate method to meet these goals.

The government’s use of an IDIQ contract was challenged by Tyler Construction Group, a small business general contractor, on the ground that the Federal Acquisition Regulation (FAR) did not authorize the use of an IDIQ procurement for the acquisition of large design-build military construction projects or for major construction projects generally and its use violated the Small Business Act.  The award of the IDIQ Contract was upheld in June 2009 by the U.S. Court of Appeals for the Federal Circuit. (SeeTyler Construction Group v. United States, No. 2008-5177, 2009 WL 1796702 (Fed. Cir. June 25, 2009). 

The Court reasoned that explicit legal authorization is not required to use an IDIQ contract where it is in the best interests of the government, not addressed in the FAR and is not prohibited by law. Further information may be found in the Construction Litigation Reporter, Volume 30, Number 9, September 2009, p. 363-366. 

Although this case involved a federal agency procurement, the reasoning of the court may also apply to state and local agencies interested in using IDIQ to meet their goals. Any agency interested in using IDIQ should consult with counsel before undertaking any procurement action.

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A client recently asked our firm about delivery methodologies commonly used for mega-projects.  A recent ENR article highlights this trend towards use of alternative delivery methods, including design-build, contractor at risk and PPPs. 

According to the article, the US Army Corps of Engineers is using design-build and construction management at risk (which the Army Corps calls Early Contractor Involvement (ECI)) on many projects to speed up delivery of the Hurricane and Storm Damage Risk Reduction System, including the Gulf Intracoastal Waterway West Closure Complex (GIWWCC).

The GIWWCC project was the New Orleans District’s first ECI contract. “By using ECI for this key project, our design teams and GIC are able to proceed in construction of some features, while actively participating in and providing pre-construction design services of other features,” says Colonel Alvin Lee, the Corps New Orleans District commander.

In April, Gulf Intracoastal Constructors (GIC), a joint venture of Omaha-based Kiewit Corp. and Traylor Bros. Inc. of Evansville, Ind., was awarded the $6.97-million base portion of the ECI contract for pre-construction services and pile load tests. That allowed the contractor to begin design and construction sequencing even before being awarded the $854.8 million construction portion of the contract June 26 and the pump portion May 28—which has resulted in a much faster delivery schedule than would have been the case had they used design-bid-build. 

According to Susan Maclay, president of the Southeast Louisiana Flood Protection Authority West, local stakeholders are concerned about the uncertainty associated with use of alternative delivery, but having protection in place by June 1, 2011, is a welcome trade-off. “We applaud the Corps for thinking 'outside of the box’ to allow the contractor to use ECI, to design while delivering,” Maclay says.

While the Corps is now utilizing ECI to help protect New Orleans from future hurricanes, it is not the first project sponsor to use the approach. The Louisiana Department of Transportation and Development (LA DOTD) used a similar approach on the Twin Spans repair project to expedite the re-opening of I-10 following Hurricane Katrina. Subsequently, LA DOTD has used a design build approach for the John James Audubon Bridge across the Mississippi River and the I-12 widening Project and is currently in the process of procuring design build contractors for the I-10 Widening Project and the US 90 Interchange @ LA 85.  

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