Date: September 25, 2013
To: Board of Directors
From: Neil McFarlane
Subject: RESOLUTION 13-09-58 OF THE TRI-COUNTY METROPOLITAN TRANSPORTATION DISTRICT OF OREGON (TRIMET) BOARD OF DIRECTORS, ACTING IN ITS CAPACITY AS THE TRIMET CONTRACT REVIEW BOARD, EXEMPTING FROM COMPETITIVE BIDDING REQUIREMENTS A CONTRACT FOR CONSTRUCTION MANAGER/GENERAL CONTRACTOR (CM/GC) SERVICES FOR THE PORTLAND-MILWAUKIE LIGHT RAIL PROJECT RESIDENTIAL NOISE MITIGATION PROGRAM
1. Issue or Purpose of the Item.
The attached resolution exempts from the low bid process a public improvement contract for construction manager/general contractor (“CM/GC”) services for TriMet’s Portland-Milwaukie Light Rail Project (“Project”) Noise Mitigation Program, which consists of the delivery of residential retrofits to mitigate noise impacts along the Project alignment. Typical mitigation measures could include the replacement or air-sealing of windows and doors, the addition of insulation, and increased ventilation. Approval of this resolution will allow TriMet to initiate a competitive Request for Proposals (“RFP”) best value process to select the most highly qualified proposer for award of this contract.
2. Reason for Board Action.
This exemption from competitive bidding must be approved by the TriMet Contract Review Board (“TCRB”) in accordance with state law and the TCRB Rules.
3. Background.
TCRB Rule V(A) and ORS 279C.335(2) provide that the TriMet Board, acting in its capacity as the TCRB, may exempt a contract from competitive sealed bidding requirements upon approval of the following written findings submitted by the public contracting agency:
a) It is unlikely that the exemption will encourage favoritism in the awarding of public improvement contracts or substantially diminish competition for public improvement contracts; and
b) The awarding of public improvement contracts pursuant to the exemption will likely result in substantial cost savings to the agency.
An exemption from low bidding is required to enable TriMet to select its contractor using a best value process. Under the traditional low bid procurement method, TriMet may consider only price in selecting a contractor. The competitive RFP process allows TriMet to select a contractor upon consideration of many factors, including price. In addition to price, use of the RFP process allows TriMet to consider things such as experience in similar work, schedule performance, cost control, attention to safety, quality of workmanship, and DBE and workforce diversity programs.
The Final Environmental Impact Statement (“FEIS”) for the Project, published in October 2010, and Record of Decision (“ROD”) published in November 2010, describe the Project’s commitments to mitigate certain impacts on adjacent property owners, including noise impacts, and identified 13 individual properties as potentially requiring noise mitigation. Attachment A to this memorandum contains a map showing the location of the 13 properties and pictures of a few of the residences.
To meet the commitments set out in the FEIS and the ROD, TriMet established a voluntary Noise Mitigation Program (“Program”) for the Project. The Program includes updated testing at impacted properties, development of a scope of appropriate mitigation measures unique to the specific site, and implementation of those measures at each site. Typical mitigation measures could include the replacement or air-sealing of windows and doors, the addition of insulation, and increased ventilation. TriMet needs to contract with a residential construction contractor to design and construct the appropriate mitigation measures for each eligible property.
There will be a variety of home types and vintages, each with its own challenges based upon existing conditions. Contractor involvement in the design process is important to ensure that the optimum construction means and methods are utilized and to allow advanced planning of the construction sequencing and limits of the construction activities.
TriMet has a history of successfully utilizing the RFP process to select contractors for complex construction projects, both large and small. Selection of contractors for the construction of Interstate MAX, the South Corridor Light Rail Project, and the East and West Segment of the Portland-Milwaukie Light Rail Project were all achieved via the use of RFPs. TriMet has also used the RFP process to select contractors for smaller projects, such as the Merlo Fuel and Wash and LIFT Facility Project and the Rockwood/East 188th MAX Station Reconstruction Project. TriMet has been a national leader in using the RFP process to select CM/GC contractors. Use of the CM/GC contracting method is now widely accepted as a means for constructing public improvement projects. Sound Transit, the Dallas/Fort Worth Airport Authority, Dallas Area Rapid Transit, the City of Phoenix, and the City of Miami, among others, have all used the CM/GC contracting method.
The agency’s written findings in support of the competitive bidding exemption for the Project’s Residential Noise Mitigation Program are attached to Resolution 13-09-58 as Exhibit A. These findings are required by ORS 279C.335.
Pursuant to ORS 279C.335(5), TriMet is required to hold a public hearing to allow comment on the draft findings used to grant this exemption for a public improvement. TriMet held a public hearing on the draft findings on September 3, 2013. Notification of the public hearing was published in the Daily Journal of Commerce on August 16, 2013. There were no attendees and no comments were received.
4. Options.
The only option would be to procure this public improvement contract via the traditional low bid procurement method. This option is not preferred for the reasons outlined above and discussed in the findings.
5. Recommendation.
ATTACHMENT A
TO BOARD MEMORANDUM
RESOLUTION 13-09-58
ATTACH MEN TA TO BOARD MEMORANDUM FO R RESOLUTION 13 Ͳ09 Ͳ58 PAGE 2 of 6 TR15 & 15A Existing windows and doors will be tes te d for sound attenua tion, and repla ced if performance does not meet thresholds.
ATTACH MEN TA TO BOARD MEMORANDUM FO R RESOLUTION 13 Ͳ09 Ͳ58 PAGE 3 of 6 R37 Existing windows and doors will be tes te d for sound attenua tion, and repla ced if performance does not meet thresholds.
ATTACH MEN TA TO BOARD MEMORANDUM FO R RESOLUTION 13 Ͳ09 Ͳ58 PAGE 4 of 6 R38 Existing windows and doors will be tes te d for sound attenua tion, and repla ced if performance does not meet thresholds.
ATTACH MEN TA TO BOARD MEMORANDUM FO R RESOLUTION 13 Ͳ09 Ͳ58 PAGE 5 of 6
ATTACH MEN TA TO BOARD MEMORANDUM FO R RESOLUTION 13 Ͳ09 Ͳ58 PAGE 6 of 6
RESOLUTION 13-09-58
RESOLUTION OF THE TRI-COUNTY METROPOLITAN TRANSPORTATION DISTRICT OF OREGON (TRIMET) BOARD OF DIRECTORS, ACTING IN ITS CAPACITY AS THE TRIMET CONTRACT REVIEW BOARD, EXEMPTING FROM COMPETITIVE BIDDING REQUIREMENTS A CONTRACT FOR CONSTRUCTION MANAGER/GENERAL CONTRACTOR (CM/GC) SERVICES THE PORTLAND-MILWAUKIE LIGHT RAIL PROJECT RESIDENTIAL NOISE MITIGATION PROGRAM
WHEREAS, the TriMet Contract Review Board (“TCRB”) has authority under ORS 279C.335 and TCRB Rule V to exempt a contract from the competitive bidding requirements of ORS Chapter 279C upon approval of written findings submitted by the agency showing compliance with ORS 279C.335; and
WHEREAS, a public hearing was held on the agency’s draft written findings in support of an exemption from competitive bidding requirements for a public improvement contract for construction manager/general contractor (“CM/GC”) services for TriMet’s Portland-Milwaukie Light Rail Project Residential Noise Mitigation Program; and
WHEREAS, TriMet has submitted to the TCRB its written findings that are required by ORS 279C.335 in support of an exemption from competitive bidding requirements for the Residential Noise Mitigation Program; and
WHEREAS, ORS 279C.335(4) and TCRB Rule V(B) provide that in granting exemptions from competitive bidding requirements, the TCRB shall, where appropriate, direct the use of alternate contracting methods that take account of market realities and modern practices and are consistent with the public policy of encouraging competition;
NOW, THEREFORE, BE IT RESOLVED:
1. That the findings stated at (a) and (b) below, and the Findings In Support of Low Bid Exemption attached as Exhibit A submitted in support of (a) and (b) below, to exempt from competitive bidding requirements the contract for CM/GC services for the Residential Noise Mitigation Program, are hereby approved and adopted.
(a) It is unlikely that the exemption will encourage favoritism in the awarding of public improvement contracts or substantially diminish competition for public improvement contracts; and
(b) The awarding of public improvement contracts pursuant to the exemption will likely result in substantial cost savings to the agency.
2. That the Residential Noise Mitigation Program contract is exempt from the competitive bidding requirements of ORS Chapter 279C.
3. That TriMet is authorized to initiate a Request for Proposal process and negotiate a contract for the specified work subject to final Board approval of the contract award, if required.
Dated: September 25, 2013 ______________________________ Presiding Officer Attest: _________________________________ Recording Secretary
Approved as to Legal Sufficiency:
______________________________ Legal Department
Exhibit A, Page 1 of 6
RESOLUITON 13-09-58 EXHIBIT A
FINDINGS IN SUPPORT OF LOW BID EXEMPTION
Portland Milwaukie Light Rail Project – Residential Noise Mitigation Program A. Competitive Bid Exemption under Oregon Statute
Oregon law requires all local contracting agency public improvement contracts to be procured by a competitive low bid process unless an exemption is granted by the agency’s contract review board or the contract is otherwise exempt from competitive low bidding requirements. For a contract review board exemption, ORS 279C.335(2) requires the agency to develop findings that the alternative procurement process is unlikely to encourage favoritism or substantially diminish competition, and that the award of the contract under the exemption will likely result in substantial cost savings to the agency.
Agency findings must address certain factors defined by ORS 279C.330. These include, but are not limited to, the following:
1. Operational, budget and financial data; 2. Public benefits;
3. Value engineering;
4. Specialized expertise required; 5. Public safety;
6. Market conditions;
7. Technical complexity; and 8. Funding sources.
B. Summary Description of the Residential Noise Mitigation Program
The Final Environmental Impact Statement (“FEIS”) for the Portland-Milwaukie Light Rail Project (“Project”), published in October 2010, and Record of Decision (“ROD”) published in November 2010, describe the Project’s commitments to mitigate certain impacts on adjacent property owners, including noise impacts, and identified 13 individual properties as potentially requiring noise mitigation.
To meet the commitments set out in the FEIS and the ROD, TriMet established a voluntary Noise Mitigation Program (“Program”) for the Project. The Program includes updated testing at impacted properties, development of a scope of appropriate mitigation measures unique to the specific site, and implementation of those measures at each site. Typical mitigation measures could include the replacement or air-sealing of windows and doors, the addition of insulation, and increased ventilation. TriMet needs to contract with a residential construction contractor to design and construct the appropriate mitigation measures for each eligible property.
Exhibit A, Page 2 of 6
C. Critical Factors
The Program will enter into many different private residences, and the selected contractor must be adept at addressing unique existing conditions and individual homeowners and their concerns. Contractors perform many retrofits daily in the private sector; those transactions are different than this Program in that the homeowner is generally the party that prompts the engagement. In the instance, TriMet will initiate the contact with each homeowner by providing information about a noise impact and the potential need to perform work on the residence. To minimize the impact on individual homeowners, TriMet and its selected contractor must be sensitive to the needs and concerns of each.
The goal of the Program will be to assess residential impacts and mitigate them in the appropriate manner with the least possible disruption to homeowners. Use of a Request for Proposals (“RFP”) process will provide TriMet the best chance to meet this goal. Under the typical low bid process, the Program would likely establish a group of several homes, test these homes, develop a scope of work and specifications, and then proceed through a process of putting each group of homes out for low bid separately. Use of a straight low bid process would create a number of potential risks to TriMet and impacts to the homeowner, including:
• Reduced flexibility to consider each home’s specific challenges and adapt to them. • Difficulty assessing constructability challenges and health and safety considerations that
need to be addressed, increasing the likelihood of costly change orders.
• Lengthening the timeframe from initial Program intake to retrofit and closeout, because homeowners would need to wait for the bundling of projects and a bid process before their home gets into the queue for this work, increasing the impact and inconvenience on the homeowner.
Therefore, the agency has submitted findings in support of a low-bid exemption as set forth below.
D. Findings
1. Operational, budget and financial data
The budget for the Program is fixed and has limited contingency. The sooner TriMet and the contractor enter negotiations and agree upon delivery methods, support personnel, and rates for labor and overhead and profit the better the opportunity to manage the budget.
Because of the unique complexities at each residence, TriMet seeks to minimize risks of design changes, construction delays, and contractor misunderstandings inherent in the
Exhibit A, Page 3 of 6
traditional design-bid-build process in order to control Program budget. Involving the construction contractor during the assessment and design is a proven approach for containing costs through implementation of more constructible designs that are reflective of realistic construction means and methods. Early construction contractor involvement also allows the TriMet to obtain market-based pricing that assists in decision-making and budget adherence in the design.
Finding: For the reasons stated above, a procurement process that involves the construction contractor during design will allow TriMet to better control costs through early understanding of budget ramifications for different mitigation methods and conditions. Low bid provides insufficient opportunity to involve the construction contractor during design, while the RFP process enables this interaction.
2. Public benefits
The Program is delivered to homeowners who are impacted beyond Federal Transit Administration (“FTA”) and/or Federal Highway Administration (“FHWA”) permitted thresholds. In light of this fact, it is important to implement the measures with as little disruption as possible for the homeowners. One way of achieving this is minimizing the number of times the homeowner needs to provide assistance in the facilitation of testing, inspections, and construction. In order to do so, it is important that the Contractor be involved in the design of mitigation measures.
Finding: Use of the RFP process will enable TriMet to select a contractor that has experience in the design and construction of residential noise mitigation measures. Additionally, involving the contractor in the design process will allow a significantly shorter overall experience for the property owners, since individual homeowners will not have to wait for mitigation measures at other homes to be designed and low bid before work can begin. This should increase efficiency and reduce delay.
3. Value Engineering
TriMet’s experience is that the greatest savings through value engineering are achieved during the design phase, before design decisions are finalized and before money is spent to develop a design only to change it later. Contractor input during the testing/assessment phase will enhance the value engineering opportunities, since options can be considered while the design is being finalized, without issuance of change orders during construction. Options can also be considered in terms of their implications to constructability. The RFP procurement method will allow the construction contractor to work with TriMet and incorporate value engineering ideas into the design.
Finding: The RFP procurement method allows TriMet to capture value engineering ideas prior to completion of design, thereby maximizing potential savings.
Exhibit A, Page 4 of 6
There will be a wide variety of conditions to consider across the residences identified. Some of the residences are identified as Oregon State Historic Register eligible, while others may be severely impacted by deferred maintenance issues. This work will require a seasoned contractor with retrofit experience across a wide range of housing stock to address the noise mitigation needs in context of the other health, safety, and regulatory considerations. Additionally, due to the volume of projects and desire for timely delivery, there is a need for a contractor to have experience in managing multiple projects simultaneously.
Finding: Under the RFP procurement process, TriMet can evaluate and rank the expertise of each proposer. This will enable TriMet to select a contractor who has experience and success in the specific, specialized type of work required for the Program. Low bid entails more risk that the needed special expertise may not be obtained.
5. Public safety
Each of the homes receiving a retrofit for noise mitigation will be altered by TriMet. In the process of improving the sound mitigating characteristics of the building shell, the transfer of air from outside to inside may be altered, and care must be taken to ensure that healthy air conditions are maintained within the house. Therefore, it is important to select a contractor that is knowledgeable about assessing and addressing the health implications of this work. TriMet requires a contractor with a successful performance record for safety and protection of the homeowner during this type of work. A negotiated procurement allows TriMet to evaluate the contractor’s experience in working safely and effectively on similar past projects.
Finding: An RFP offers TriMet the best opportunity to carefully evaluate the contractor’s prior safety performance and mitigate risk in a collaborative way that would not be possible in a low-bid procurement.
6. Market conditions
The nature of the residential retrofit market is traditionally such that volume of work on the contractor’s books can have a profound influence on the pricing for the next project. During the course of a year, the price fluctuations for similar scopes of work can be dramatic between the summer “high” season and the winter “low” season.
The contract to deliver retrofits for the identified properties will take place over more than 15 months. A negotiated procurement will allow the contractor and TriMet to engage in a dialog about current market forces and allow TriMet to potentially mitigate some of the seasonal pricing uncertainty.
Finding: An RFP procurement will allow TriMet to mitigate market risk by negotiating a stable delivery schedule that will not fluctuate dynamically with the contractor’s workload outside of the contract.
Exhibit A, Page 5 of 6
7. Technical complexity
The Program will be encountering a variety of unique property conditions. There will be no one “typical” project because of the need to tailor both the design and the construction methods to the specific site, structure, and owner.
Finding: A negotiated procurement allows TriMet to select a contractor with due consideration given to the contractor’s past technical performance in similar work.
8. Funding sources
Funding for these projects comes from the Project grant, which involves financing from several sources. Complex intergovernmental agreements are in place regarding Project funding. The financing partners, including the Federal Transit Administration, demand tight budget control.
Finding: Early and continued budget certainty is highly desired. A negotiated procurement will offer a better method than low bid to achieve early budget certainty.
9. Unlikely to Encourage Favoritism or Substantially Diminish Competition
The steps taken to ensure maximum competition and fair opportunity for this work will include advertisement on TriMet’s public procurement system, Ebid, which is available on the TriMet website. Further steps will include the appointment of an evaluation committee that will evaluate proposals in accordance with the stated RFP evaluation criteria.
Finding: By marketing this opportunity and attempting to notify all known potential respondents, TriMet will implement a process that does not encourage favoritism or substantially diminish competition.
A best value procurement process will also allow TriMet to evaluate the contractor’s program for utilizing opportunities for participation by minority and women-owned businesses, which would not be possible in a traditional low bid procurement.
10. Cost Savings
An RFP procurement process will allow TriMet to select a contractor based upon performance criteria as well as price competition. By selecting the most qualified contractor, TriMet will minimize the risk of delays, cost increases, and other impacts to the public.
Exhibit A, Page 6 of 6
In TriMet’s experience, the low bid contracting method is likely to result in contractor initiated change orders, since no early dialog occurs regarding project assumptions and contractors must, as part of the low bid process, assume optimum conditions to remain competitive. As a result, the overall cost of the project may increase well beyond the initial contract price. Typically, TriMet finds that for work it has procured through the best value procurement method, changes and claims during construction are significantly less than in low bid projects. This provides TriMet with increased budget certainty and an increased ability to manage available funds.
Use of the RFP procurement method allows TriMet to select a contractor based upon performance and price competition. It allows selection of a contractor whose proven experience matches the nature of the required work. By selecting the most qualified contractor and getting that contractor’s input in the design process, TriMet minimizes the risk of coordination delays and project cost risks
Finding: Award of the contract pursuant to the exemption will result in cost savings and budget certainty to TriMet.
E. Preferred Contracting Method: RFP
For the reasons set forth above, use of the RFP procurement method is preferred for the Program.
