PROCEEDINGS OF THE WORKSHOP ON INTERNATIONAL TRANSIT TURNKEY AND JOINT DEVELOPMENT. SESSION 2: PROCUREMENT AND SUBCONTRACTING

Session highlights are as follows: (1) A negotiated procurement or a two-step procurement is recommended for design-build/turnkey contracts. Discussions between the owner and proposers facilitates a true meeting of the minds; allows crafting of tailored solutions for contractor concerns; and achieves the optimum balance of risk and price. (2) Federal, state and local procurement regulations offer varying degrees of flexibility for the procurement process necessary for design-build. The federal government and most states allow turnkey for some agencies and/or projects. Some states have recently expanded regulations to permit design-build contracts. This trend is likely to continue and could be facilitated by federal incentive. (3) Turnkey requires a well-conceived, complex contract. Using conventional contract documents (terms and conditions) does not effectively address the melding of the design, construction, and operations elements of the turnkey contract. Some clauses that warrant special analysis and consideration include: change order, contractor job cost system requirements, audit, performance bonds and warranties. (4) The turnkey approach has the potential to reduce the opportunity for Disadvantaged Business Enterprises, small and mid-sized firms. Because the number of prime contracts is reduced and mega-teams will be required to respond to turnkey scope, these small and mid-sized firms will likely be relegated to less visible roles, without direct client interaction. The main concern is that these firms will fail to develop the experience needed to grow and contribute meaningfully to the next project and will instead become merely body shops. (5) If turnkey does not result in project completion on time within budget, it is no better than the conventional design and construction approach. Turnkey procurement was conceived to achieve project implementation with a possible saving of time and greater certainty of budget. Like all approaches, the turnkey procurement strategy must be evaluated and measured with respect to the project implementation objectives. Effective techniques implemented by some turnkey projects include: requesting industry comments on documents prior to solicitation, following a detailed and fair selection process, selecting one prime contractor for a single-point of responsibility, and establishing detailed cost elements for the fixed price to facilitate change order negotiations.