Transcript 2009 Harry H. Mellon Award of Excellence in Job Order

Administering Your
Programs with Less
Funding
Strategies from the Field
Scott Stevenson – Los Angeles County CDC
[email protected]
Joseph Hollett – The Gordian Group
[email protected]
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The Bad News for L.A. County….
 From this year to next year, 22% reduction in CDBG funding -
$26.9M reduced to $21.9M
 Over the last 10 years – 46.8 % reduction, from $39.5M to
$21.9M for the 2012-13 program year
 Reduction from the highest grant year in 1995-96 at $42.8M-
51% or a loss of $21.8M
 In terms of administrative dollars over the last 5 years – a
loss of $1.9M or 31.6%
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Coping Mechanisms
 Staffing reductions – 9 positions going into the 2012-13
program year. Highest 60 positions, next year 33
 However…improved efficiency through automated grant
system allowed staffing reductions through attrition for
several years
 Urban County remedy – eliminate general admin authority
from participating cities – 10% general admin-7.5%-0%
 Raise public service contract minimum from $10k to $20k
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Coping Mechanisms (cont’d)
 Strategic monitoring using more desktop and report reviews
 Refine monitoring risk analysis to possibly reduce
monitoring load
 Allocate some staff costs away from general admin to
activities such as capacity building
 Cost savings and efficiency through a streamlined
procurement method – Job Order Contracting or JOC
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Streamlining Procurement
through the
Job Order Contracting System
Joseph Hollett
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Agenda
Overview of Job Order Contracting (JOC) Process
Job Order Contracting Benefits
Job Order Contracting Implementation Options
Discussion
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The Challenge
Elapsed Time
Traditional Design - Bid - Construct Model
It can take 6-12 months to get a typical
repair/alteration project under contract
using the design/bid/construct model
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Impact of the JOC Solution
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Job Order Contracting Overview
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Job Order Contracting Definition
 Job Order Contracting (JOC) is a Firm Fixed Priced, Competitively Bid,
Indefinite Quantity Procurement Process Primarily Used for Repair,
Alterations, and Minor New Construction Projects.
 Provides the Public Agency with a Team of “On-Call” Contractors where
all future pricing has already been fixed through a competitively bid
process
 Fundamentally Different Construction Procurement Relationship

Contractors are subjected to different motivations and behaviors

Non-adversarial relationship between Owner & Contractor
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Job Order Contracting Documents
 Customized Pricing Structure
 Technical Specifications
 Standard Details
 General Conditions
 Bid Documents
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Customized Pricing Structure
 A list of all construction tasks to be included in the contract is developed
 A price to install and/or demolish is established for each task

Direct Cost Only

Local prevailing labor rates, local material prices & local equipment prices
 The list of tasks represent the “Scope of Work” for the contract
 Gordian’s JOC pricing structure is the Construction Task Catalog® (CTC)
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Technical Specifications
 Customized technical
specifications for each task

Incorporates unique needs of the
owners
 Pricing Structure and Technical
Specifications must be
coordinated
 Critical to Bidder's confidence
in the Pricing Structure of the
JOC Process
 KEY POINT!


Must know what you are buying!
Essential that each construction
task be tied to a concise technical
specification!
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Contract Terms and Conditions
 Critical document
JOC Specific Clauses
 Must accurately explain the JOC
process
 Some standard clauses need to be
modified for JOC
 Poorly drafted contract language
increases risks & costs
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
Overview of Contract

Procedure for Ordering Work

Proposal Preparation

Updating Adjustment Factors
Modified Standard Clauses

Scope of Work

Extra Work

Time Extensions

Liquidated Damages

Substantial Completion

Payment

Close Out
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JOC Structure & Bid Guidance
 Facility Owner establishes a fixed initial term


Typically one year
May include options to extend
 Facility Owner establishes a guaranteed minimum dollar value

Some nominal amount - typically $25,000
 Facility Owner sets a pre-established maximum value


Represents the expected amount of work to be accomplished
Based on Facility Owner’s budget
 Prior to Bid the Facility Owner does not:


Identify or commit to any specific project or location
Identify or commit to any specific quantities or tasks in the catalog of construction
tasks
 TGG’s JOC Complete Solution Typically has multiple
contracts/contractors

Promotes post-bid competition on the basis of service
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JOC is Competitively Bid
 Each contractor must tender Adjustment Factors to be
applied to the unit prices published in the Pricing Structure
 Two Adjustment Factors are typically bid

Normal Working Hours

Other Than Normal Working Hours
 Adjustment Factors must include all overhead and profit
 Adjustment Factors fixed for one year
 The same Adjustment Factors apply to every task in the
Pricing Structure
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JOC Process
 Joint Scope Meeting
 Owner & contractor jointly develop Detailed Scope of Work
 Owner determines final scope and level of documentation required
 A/E & subcontractors may also be part of scoping team
 Contractor Prepares Proposal
 Contractor prepares Price Proposal
 Cost of each project = unit prices x quantities x adjustment factor
 Price is fixed, always based on unit prices, never negotiated
 Contractor also develops schedule, list of subcontractors, submittals
 Owner Review
 Contractor’s price proposal & other information is reviewed & approved
 Owner Issues a Lump Sum Job Order
 The risk of performance remains with Contractor
 No adjustment of quantities after Job Order issued
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Job Order Contracting Benefits
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Better Result with Higher Quality
 Contractor is guaranteed a small amount of work – typically
$25k
 Potential to earn much greater volume of work
 Key to earning more work is good quality work delivered
timely – future job orders depend on it
 Otherwise – The Penalty Box!
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JOC Cost Savings
 Cost of construction

Contractor offers discount because bidding a large volume of work, not one small project

Overhead and profit spread over entire value of contract

Independent LAUSD Audit showed a 9.2% savings (1 December 2011)
 Lower procurement and administrative costs

JOC eliminates the need to use the full procurement cycle for each and every project
 Fewer change orders and claims

Joint scoping process eliminates misunderstandings about Detailed Scope of Work

Detailed Scope of Work and JOC general conditions written to make Contractor responsible
for errors and omissions
 Reduction of A/E fees

Currently many small projects are "designed" primarily for procurement purposes

JOC projects can be defined with less than a full bid package of plans and specifications
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Greater Business Participation
JOC Increases the Number of Opportunities for Small, Local, Disadvantaged
and Emerging Businesses

No Pre-established quantities inhibits trade staffing by Prime Contractor

Responsiveness requires Prime Contractor to use multiple local subcontractors

Agency Review & Approval Prior to Issuance of each Job Order ensures Compliance with
any Established Participation Goals

Advantages for Disadvantaged Business Contractors Include:

Prime JOC Contractor establishes a “Mentoring Program”

Expanded business opportunities

No Bonding requirement for the sub-contractor

Fast payment

Less Red Tape
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Greater Scheduling Flexibility
 Joint Scope process allows Owner and Contractor to discuss and agree to
scheduling issues before the Owner is Obligated

Issues include site access, work hours, stand down time etc.
 No Shelf Life for prices or Job Orders

Projects may be scoped and proposals developed in advance of work actually
starting.

Allows for flexibility in ordering long lead items
 No Time Delay Claims in Job Order Contracting

Joint Scope process eliminates misunderstandings about scope and schedule

Liquidated Damages may be assessed on a project by project basis
 A Better Solution for Non-Performance is No Further Work!
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NAHRO Innovation Awards
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Section 3 and JOC Contracting
 Section 3 preferences are incorporated into the JOC bidding
process
 Proactive interaction with JOC contractors at pre-bid to
explain Section 3 preference in bidding process
 Once subcontractors are identified, they are provided Section
3 compliance information and forms at the pre-construction
meeting
 Performance based approach under JOC provides leverage
and incentive for contractors to meet Section 3 commitments
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Discussion
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