By Hamric H.B. No. 3237 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to contracts for the development of transportation 1-3 projects by the Texas Department of Transportation and the Texas 1-4 Turnpike Authority division of the Texas Department of 1-5 Transportation. 1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-7 SECTION 1. Chapter 223, Transportation Code, is amended by 1-8 adding Subchapter E to read as follows: 1-9 SUBCHAPTER E. DESIGN-BUILD CONTRACTS FOR TRANSPORTATION 1-10 PROJECTS 1-11 Sec. 223.161. DEFINITIONS. In this subchapter: 1-12 (1) "Authority" means the Texas Turnpike Authority 1-13 division of the department. 1-14 (2) "Design-build contract" means a single contract 1-15 for any combination of the following: 1-16 (A) preconstruction services, including 1-17 planning, environmental review, right-of-way services, design 1-18 services, and engineering services; 1-19 (B) construction services; and 1-20 (C) post-construction services, including 1-21 operations and maintenance. 1-22 (3) "Design-build firm" means a legal entity or team 1-23 that includes: 2-1 (A) an engineer or an architect; and 2-2 (B) a builder qualified to engage in highway 2-3 construction in this state. 2-4 (4) "Design criteria package" means a set of documents 2-5 that provides sufficient information to permit a design-build firm 2-6 to prepare a response to the department's or the authority's 2-7 request for qualifications and request for proposals and includes 2-8 the criteria for selection. A design criteria package may include, 2-9 as appropriate, the legal description of the site, survey 2-10 information, cost or budget requirements, time schedules, quality 2-11 assurance and quality control requirements, special material 2-12 requirements, applicable ordinances, provisions for utilities, and 2-13 any other applicable requirements. 2-14 (5) "Transportation project" means: 2-15 (A) an improvement, addition, or extension to 2-16 the state highway system that is undertaken by the department; or 2-17 (B) a turnpike project, as defined by Section 2-18 361.001, that is undertaken by the authority. 2-19 Sec. 223.162. POWER TO ENTER INTO DESIGN-BUILD CONTRACTS. 2-20 Notwithstanding any other law of this state, for a transportation 2-21 project that has an estimated total cost of more than $50 million, 2-22 the department or the authority may: 2-23 (1) use the design-build method in this subchapter for 2-24 the development of a transportation project; and 2-25 (2) enter into one or more design-build contracts 2-26 under this subchapter for the services of a design-build firm. 3-1 Sec. 223.163. REQUEST FOR QUALIFICATIONS. The department or 3-2 the authority shall prepare a request for qualifications that 3-3 includes general information about the transportation project, 3-4 proposed location, project scope, budget, time schedules, selection 3-5 criteria, and other information that may assist design-build firms 3-6 in submitting qualifications for the transportation project. 3-7 Sec. 223.164. EVALUATION AND SELECTION OF DESIGN-BUILD FIRM. 3-8 (a) The department or the authority shall evaluate and select a 3-9 design-build firm in two phases. 3-10 (b) In phase one, the department or the authority shall 3-11 prepare a request for qualifications and evaluate each responding 3-12 design-build firm's experience, technical competence, and 3-13 capability to perform, the past performance of the design-build 3-14 firm and the members of that firm, and other appropriate factors 3-15 submitted by that firm, except that cost-related or price-related 3-16 evaluation factors may not be used. 3-17 (c) Each design-build firm that responds to the request for 3-18 qualifications must certify to the department or authority that 3-19 each engineer or architect who is a member of the design-build firm 3-20 was selected on the basis of demonstrated competence and 3-21 qualifications in the manner required by Section 2254.004, 3-22 Government Code. 3-23 (d) The department or the authority may interview the 3-24 design-build firms that respond to the request for qualifications, 3-25 and if the department or authority interviews firms, the department 3-26 or authority must qualify at least two but not more than four firms 4-1 for phase two of the evaluation and selection process. 4-2 (e) In phase two, the department or the authority shall 4-3 prepare and provide to qualified firms a design criteria package 4-4 and a request for proposals seeking additional information 4-5 regarding demonstrated competence and qualifications, 4-6 considerations of the safety and long-term durability of the 4-7 transportation project, the feasibility of developing the project 4-8 as proposed, the ability of the offeror to meet schedules, 4-9 conceptual engineering plans and designs, costing methodology, and 4-10 any other factor the department or authority considers relevant or 4-11 necessary. 4-12 (f) The department or the authority may interview one or 4-13 more of the design-build firms responding to the request for 4-14 proposals. 4-15 (g) The department or the authority shall rank each 4-16 responding design-build firm on the basis of the criteria in the 4-17 request for proposals and select the design-build firm submitting 4-18 the proposal that offers the best value considering price, time for 4-19 project completion, technical evaluation factors, and any other 4-20 factor described in the request for proposals. 4-21 Sec. 223.165. NEGOTIATIONS WITH SELECTED DESIGN-BUILD FIRM. 4-22 (a) The department or the authority shall first attempt to 4-23 negotiate a contract with the selected design-build firm. 4-24 (b) If the department or the authority cannot negotiate a 4-25 satisfactory contract with the selected design-build firm, it 4-26 shall: 5-1 (1) formally and in writing end negotiations with that 5-2 firm; and 5-3 (2) attempt to negotiate with the next design-build 5-4 firm in the order of the selection ranking until: 5-5 (A) a contract is entered into; 5-6 (B) negotiations with all ranked firms end; or 5-7 (C) the department or the authority determines 5-8 that it is no longer in the best interest of this state to enter 5-9 into a design-build contract for the proposed transportation 5-10 project. 5-11 Sec. 223.166. COMPLETION OF DESIGN BY SELECTED DESIGN-BUILD 5-12 FIRM. (a) The engineers or architects of the design-build firm 5-13 with which the department or authority contracts shall complete the 5-14 design of the transportation project and submit all design elements 5-15 for review and determination of scope compliance to the department 5-16 or the authority before or concurrently with construction of the 5-17 transportation project. 5-18 (b) An engineer shall have responsibility for compliance 5-19 with the engineering design requirements and all other applicable 5-20 requirements of The Texas Engineering Practice Act (Article 3271a, 5-21 Vernon's Texas Civil Statutes). 5-22 Sec. 223.167. INSPECTION AND TESTING SERVICES. (a) The 5-23 department or the authority shall provide or contract for, 5-24 independently of the design-build firm, any inspection services, 5-25 testing of construction materials, or verification testing services 5-26 necessary for acceptance of the transportation project. 6-1 (b) Section 2254.004, Government Code, applies to the 6-2 procurement of services contracted for under Subsection (a). 6-3 Sec. 223.168. PERFORMANCE AND PAYMENT BONDS. (a) If a fixed 6-4 contract amount or guaranteed maximum price has not been determined 6-5 when a design-build contract is awarded, the penal sums of the 6-6 performance and payment bonds or equivalent security or collateral 6-7 delivered by the design-build firm must be in an amount equal to 6-8 the transportation project budget, as specified in the request for 6-9 proposals. 6-10 (b) The design-build firm shall deliver the bonds not later 6-11 than the 10th day after the date the design-build firm executes a 6-12 contract unless the design-build firm furnishes a bid bond or other 6-13 financial security acceptable to the department or authority to 6-14 ensure that the design-build firm will furnish the required 6-15 performance and payment bonds when a guaranteed maximum price is 6-16 established. 6-17 Sec. 223.169. PAYMENT TO UNSUCCESSFUL DESIGN-BUILD FIRMS. 6-18 (a) The department or the authority shall pay an unsuccessful 6-19 design-build firm that submits a response to a request for 6-20 proposals the stipulated amount of at least one-half of one percent 6-21 of the final contract price for any costs incurred in preparing 6-22 that proposal. 6-23 (b) After payment of the stipulated amount, the department 6-24 or the authority may make use of any design contained in the 6-25 proposal, including the technologies, techniques, methods, 6-26 processes, and information contained in the design. The use by the 7-1 department or the authority of any design element contained in an 7-2 unsuccessful proposal is at the sole risk and discretion of the 7-3 department or the authority and does not confer liability on the 7-4 recipient of the stipulated amount under this section. 7-5 (c) The methodology for computing the stipulated amount must 7-6 be stated in the request for proposals. 7-7 Sec. 223.170. DISADVANTAGED AND SMALL BUSINESSES. The 7-8 department and the authority shall: 7-9 (1) ensure that disadvantaged and small businesses 7-10 have an opportunity to participate in the performance of contracts 7-11 under this subchapter; and 7-12 (2) use the same procedures that exist for removing 7-13 barriers to participation by disadvantaged and small businesses in 7-14 other department and authority construction and design contracts. 7-15 Sec. 223.171. PROJECTS FUNDED BY FEDERAL FUNDS. If a 7-16 transportation project procured under this subchapter is funded in 7-17 whole or in part by federal funds and subject to federal 7-18 procurement laws, rules, regulations, and procedures, the 7-19 requirements of this subchapter shall be applied in a manner 7-20 consistent with the applicable federal procurement laws, rules, 7-21 regulations, and procedures. 7-22 Sec. 223.172. RULES. The department and the authority shall 7-23 each adopt rules to implement and administer this subchapter. 7-24 Sec. 223.173. PILOT PROGRAM; INTERIM STUDY; REPORTS. (a) 7-25 The use of design-build contracts by the department and the 7-26 authority under this subchapter is a pilot program. 8-1 (b) Before December 31, 2009, the department and the 8-2 authority may not use design-build contracts under this subchapter 8-3 for more than 24 projects. 8-4 (c) Money spent by the department or the authority for a 8-5 project under the pilot program is not included in computing the 8-6 amount required to be spent for engineering and design contracts 8-7 under Section 223.041 in any fiscal year. 8-8 (d) Not later than February 1 of each odd-numbered year, the 8-9 department and the authority shall each submit a report to the 8-10 legislature relating to the use of design-build contracts under 8-11 this subchapter during the preceding two years. 8-12 (e) Not later than December 1, 2008, the state auditor, the 8-13 department, and the authority shall each submit a final report to 8-14 the legislature relating to the use of design-build contracts under 8-15 this subchapter as part of the review of the department in 2009 by 8-16 the Sunset Advisory Commission under Chapter 325, Government Code 8-17 (Texas Sunset Act). 8-18 (f) This section expires December 31, 2009. 8-19 SECTION 2. This Act takes effect September 1, 2001.