By Madla S.B. No. 298 77R413 JD-F 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: 1-24 (A) an engineer or an architect; and 2-1 (B) a builder qualified to engage in highway 2-2 construction in this state. 2-3 (4) "Transportation project" means: 2-4 (A) an improvement, addition, or extension to 2-5 the state highway system that is undertaken by the department; or 2-6 (B) a turnpike project, as defined by Section 2-7 361.001, that is undertaken by the authority. 2-8 Sec. 223.162. POWER TO ENTER INTO DESIGN-BUILD CONTRACTS. 2-9 Notwithstanding any other law of this state, for a transportation 2-10 project that has an estimated total cost of more than $50 million, 2-11 the department or the authority may: 2-12 (1) use the design-build method in this subchapter for 2-13 the development of a transportation project; and 2-14 (2) enter into one or more design-build contracts 2-15 under this subchapter for the services of a design-build firm. 2-16 Sec. 223.163. REQUEST FOR QUALIFICATIONS. (a) The 2-17 department or the authority shall prepare a request for 2-18 qualifications that includes general information about the 2-19 transportation project, proposed location, project scope, budget, 2-20 time schedules, selection criteria, and other information that may 2-21 assist design-build firms in submitting qualifications for the 2-22 transportation project. The department or the authority shall also 2-23 prepare a request for proposals that includes more detailed 2-24 information on the project. 2-25 (b) If the preparation of the request for qualifications or 2-26 request for proposals requires engineering or architectural 2-27 services that constitute the practice of engineering within the 3-1 meaning of The Texas Engineering Practice Act (Article 3271a, 3-2 Vernon's Texas Civil Statutes) or the practice of architecture 3-3 within the meaning of Chapter 478, Acts of the 45th Legislature, 3-4 Regular Session, 1937 (Article 249a, Vernon's Texas Civil 3-5 Statutes), those services must be provided in accordance with the 3-6 applicable law. 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. 3-22 (d) The department or the authority may interview the 3-23 design-build firms that respond to the request for qualifications, 3-24 and if the department or authority interviews firms, the department 3-25 or authority must qualify at least two firms for phase two of the 3-26 evaluation and selection process. 3-27 (e) In phase two, the department or the authority shall 4-1 prepare a request for proposals seeking additional information 4-2 regarding demonstrated competence and qualifications, 4-3 considerations of the safety and long-term durability of the 4-4 transportation project, the feasibility of developing the project 4-5 as proposed, the ability of the offeror to meet schedules, costing 4-6 methodology, and any other factor the department or authority 4-7 considers relevant or necessary. 4-8 (f) The department or the authority may require the 4-9 design-build firms to submit detailed engineering or architectural 4-10 designs as part of the proposal and interview one or more of the 4-11 design-build firms responding to the request for proposals. 4-12 (g) The department or the authority shall rank each 4-13 responding design-build firm on the basis of the criteria in the 4-14 request for proposals and select the design-build firm submitting 4-15 the proposal that offers the best value considering price, time for 4-16 project completion, technical evaluation factors, and any other 4-17 factor described in the request for proposals. 4-18 Sec. 223.165. NEGOTIATIONS WITH SELECTED DESIGN-BUILD FIRM. 4-19 (a) The department or the authority shall first attempt to 4-20 negotiate a contract with the selected design-build firm. 4-21 (b) If the department or the authority cannot negotiate a 4-22 satisfactory contract with the selected design-build firm, it 4-23 shall: 4-24 (1) formally and in writing end negotiations with that 4-25 firm; and 4-26 (2) attempt to negotiate with the next design-build 4-27 firm in the order of the selection ranking until: 5-1 (A) a contract is entered into; 5-2 (B) negotiations with all ranked firms end; or 5-3 (C) the department or the authority determines 5-4 that it is no longer in the best interest of this state to enter 5-5 into a design-build contract for the proposed transportation 5-6 project. 5-7 Sec. 223.166. COMPLETION OF DESIGN BY SELECTED DESIGN-BUILD 5-8 FIRM. (a) The engineers or architects of the design-build firm 5-9 with which the department or authority contracts shall complete the 5-10 design of the transportation project and submit all design elements 5-11 for review and determination of scope compliance to the department 5-12 or the authority before or concurrently with construction of the 5-13 transportation project. 5-14 (b) An engineer shall have responsibility for compliance 5-15 with the engineering design requirements and all other applicable 5-16 requirements of The Texas Engineering Practice Act (Article 3271a, 5-17 Vernon's Texas Civil Statutes). 5-18 (c) An architect shall have responsibility for compliance 5-19 with the requirements of Chapter 478, Acts of the 45th Legislature, 5-20 Regular Session, 1937 (Article 249a, Vernon's Texas Civil 5-21 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 engineering, or verification 5-26 testing services necessary for acceptance of the transportation 5-27 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 computed using the stated 6-21 methodology for any design costs incurred in preparing that 6-22 proposal. 6-23 (b) After payment of the stipulated amount, the department 6-24 or the authority owns all of the rights to reproduce, transfer, 6-25 publish, or otherwise use or make use of any design contained in 6-26 the proposal, including the technologies, techniques, methods, 6-27 processes, and information contained in the design. 7-1 (c) The methodology for computing the stipulated amount must 7-2 be stated in the request for proposals. 7-3 Sec. 223.170. DISADVANTAGED AND SMALL BUSINESSES. The 7-4 department and the authority shall: 7-5 (1) ensure that disadvantaged and small businesses 7-6 have an opportunity to participate in the performance of contracts 7-7 under this subchapter; and 7-8 (2) use the same procedures that exist for removing 7-9 barriers to participation by disadvantaged and small businesses in 7-10 other department and authority construction and design contracts. 7-11 Sec. 223.171. PROJECTS FUNDED BY FEDERAL FUNDS. If a 7-12 transportation project procured under this subchapter is funded in 7-13 whole or in part by federal funds and subject to federal 7-14 procurement laws, rules, regulations, and procedures, the 7-15 requirements of this subchapter shall be applied in a manner 7-16 consistent with the applicable federal procurement laws, rules, 7-17 regulations, and procedures. 7-18 Sec. 223.172. RULES. The department and the authority shall 7-19 each adopt rules to implement and administer this subchapter. 7-20 Sec. 223.173. PILOT PROGRAM; INTERIM STUDY; REPORTS. (a) 7-21 The use of design-build contracts by the department and the 7-22 authority under this subchapter is a pilot program. 7-23 (b) Before December 31, 2009: 7-24 (1) the department may not use design-build contracts 7-25 under this subchapter for more than 16 transportation projects; and 7-26 (2) the authority may not use design-build contracts 7-27 under this subchapter for more than 24 transportation projects. 8-1 (c) Money spent by the department or the authority for a 8-2 project under the pilot program is not included in computing the 8-3 amount required to be spent for engineering and design contracts 8-4 under Section 223.041 in any fiscal year. 8-5 (d) Not later than February 1 of each odd-numbered year, the 8-6 department and the authority shall each submit a report to the 8-7 legislature relating to the use of design-build contracts under 8-8 this subchapter during the preceding two years. 8-9 (e) In addition to submitting the reports required by 8-10 Subsection (d), the department and the authority shall each conduct 8-11 a study to examine the use of design-build contracts under this 8-12 subchapter. In conducting the study, the department and the 8-13 authority may include any aspect of design-build contracts that the 8-14 department or the authority considers appropriate. The department 8-15 and the authority shall each submit to the 79th Legislature a 8-16 written report regarding the findings of its interim study, 8-17 accompanied by any proposals for recommended legislation. The 8-18 reports must be submitted not later than February 1, 2005. 8-19 (f) Not later than February 1, 2009, the department and the 8-20 authority shall each submit a final report to the legislature 8-21 relating to the use of design-build contracts under this subchapter 8-22 as part of the review of the department in 2009 by the Sunset 8-23 Advisory Commission under Chapter 325, Government Code (Texas 8-24 Sunset Act). 8-25 (g) This section expires December 31, 2009. 8-26 SECTION 2. This Act takes effect September 1, 2001.