SUMMARY OF BEST VALUE CONTRACTING FOR CONSTRUCTION LAW

What does the new law do?  The new law provides an alternative to the current low-bid contracting system.  This alternative is Best Value Contracting (BVC), which uses the relationship between performance and price to achieve the best overall value and lowest long-term cost for government construction projects.  The new law allows State agencies, cities, counties, townships, school boards, and other project owners to choose this new procurement system for their construction projects.

Best Value Definition: The new Best Value Contracting (BVC) law applies only to construction projects.  The law requires two factors to be considered during the procurement process: price and performance.  Additional factors may be considered as part of the request for proposal (RFP) process, including but not limited to:

1. the quality of the vendor’s or contractor’s performance on previous projects;
2. the timeliness of the vendor’s or contractor’s performance on previous projects;
3. the level of customer satisfaction with the vendor’s or contractor’s performance on previous projects;
4. the vendor’s or contractor’s record of performing previous projects on budget and ability to minimize cost overruns;
5. the vendor’s or contractor’s ability to minimize change orders;
6. the vendor’s or contractor’s ability to prepare appropriate project plans;
7. the vendor’s or contractor’s technical capacities;
8. the individual qualifications of the contractor’s key personnel; or
9. the vendor’s or contractor’s ability to assess and minimize risks.

The law specifically states that “performance on previous projects” does not include whether someone has asserted a previous legal challenge against the project owner.

Who may use Best Value Contracting: The new BVC program is open to all construction contractors who submit detailed information on their past performance and qualifications to the government agency awarding the contract.  The program has three phases.  Phase I, which begins July 1, 2007, allows all State agencies, all counties and cities, and school districts with the highest 25% enrollment of students in the State to use Best Value Contracting.  Phase II begins July 1, 2009, and includes all users in Phase I and also all school districts with the highest 50% enrollment.  Phase III begins July 1, 2010, and includes all users in Phase I and II, as well as all other townships, school districts, and political subdivisions in the State.

Limits on Best Value Contracting: In addition to the phase-in component, there is a 20% cap on the number of projects that can use Best Value Contracting in the first three years of the program.  However, the cap is relaxed for small project owners, who may use BVC for either one project annually or 20% of their projects, whichever is greater.

What information must be in the RFP?  The criteria used to evaluate BVC projects must be included in the RFP and must be evaluated in an open and competitive manner.  The RFP must also state the relative weight of price and other selection criteria.  If a project owner uses an interview of the vendor or contractor’s personnel as a factor in the selection criteria, the relative weight of the interview must be stated in the RFP and applied accordingly.

Training component: Any staff or consultants who administer procurement procedures for a BVC project owner must receive training in the RFP process for BVC for construction projects.  The Commissioner of the Department of Administration is given authority to establish a training program for State and local government officials, as well as vendors and contractors, and is allowed to charge for this training.  However, the law is flexible regarding the type and amount of training required, and may be conducted by entities other than the Department of Administration.