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The Oregon Administrative Rules contain OARs filed through August 15, 2014
 
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DEPARTMENT OF TRANSPORTATION

 

DIVISION 7

PUBLIC IMPROVEMENT CONTRACTS
HIGHWAY AND BRIDGE CONSTRUCTION

731-007-0200

Repealed Rules

As required by OR Laws 2003, Chapter 794, Section 334, OAR 731-007-0010 through 731-007-0190 are repealed effective March 1, 2005. The repealed rules will continue to apply to the solicitation of Public Contracts first advertised, but if not advertised then entered into, before March 1, 2005.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.300 & Sec. 334 & 336, Ch. 794, OL 2003
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0210

Effective Date

OAR 731-007-0200 through 731-007-0400 as amended become effective on January 1, 2010 and apply to Public Contracts first advertised, but if not advertised then entered into, on or after January 1, 2010.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.005 & Sec. 335 & 337, Ch. 794, OL 2003
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05; DOT 5-2009(Temp), f. 12-22-09, cert. ef. 1-1-10 thru 6-30-10; DOT 1-2010, f. & cert. ef. 5-18-10

731-007-0220

Application

In addition to the requirements set forth in chapter 731, division 5, and the definitions therein, OAR 731-007-0200 through 731-007-0400 apply to Public Improvement Contracts. In the event of conflict or ambiguity, the more specific requirements of the rules in Division 7 take precedence over the more general requirements of the Division 5 rules.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0230

Competitive Procurement

ODOT shall solicit Bids for Public Improvement Contracts by Invitation to Bid (ITB), except as otherwise allowed or required pursuant to ORS 279A.030, 279A.100, or 279C.335. See OAR 731-007-0340 through 731-007-0400 regarding the use of Alternative Contracting Methods.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0240

Mandatory Provisions

In addition to the Bidder qualification, selection, rejection, and Disqualification criteria applicable to all public Contracts, certain criteria apply specifically to Public Improvement Contracts. Likewise, in addition to provisions required in all solicitations for public Contracts and resulting Contracts, certain provisions must be included in Public Improvement solicitations and resulting Contracts. Those criteria and mandatory provisions are contained in division 5, and are referenced in this rule for convenience:

(1) Eligibility to bid or propose. See OAR 731-005-0460(1) (Construction Contracts).

(2) Solicitation Document statement of required certification or licensing. See OAR 731-005-0470(3)(a)(K).

(3) Solicitation Document terms and conditions:

(a) Demonstration of drug testing program. See OAR 731-005-0470(3)(d)(B).

(b) Liability for late payment. See OAR 731-005-0470(3)(d)(F).

(c) Right to file complaints with Construction Contractors Board. See OAR 731-005-0470(3)(d)(G).

(d) Environmental and natural resources regulations. See OAR 731-005-0470(3)(d)(I).

(e) Prevailing wage rates. See OAR 731-005-0470(3)(d)(M).

(f) Fee paid to BOLI. See OAR 731-005-0470(3)(d)(N).

(g) Retainage. See OAR 731-005-0470(3)(d)(O).

(h) Prompt payment policy. See OAR 731-005-0470(3)(d)(P).

(i) Contractor's relations with subcontractors. See OAR 731-005-0470(3)(d)(Q).

(j) Certification of compliance with tax laws. See OAR 731-005-00470(3)(d)(T).

(4) Advertising of solicitation in trade newspaper. See OAR 731-005-0520(2)(c).

(5) Bid or Proposal security. See OAR 731-005-0550(2).

(6) Deadline for delivering request for change or protest of Specification or Contract terms and conditions. See OAR 731-005-0570(1)(a).

(7) Rejection of individual Bids or Proposals. See OAR 731-005-0670.

(8) Standards for DBE Disqualification. See OAR 731-005-0710(1)(b)(B)(i) and (iii).

(9) Performance security. See OAR 731-005-0770(1).

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0250

Bid or Proposal Evaluation Criteria

(1) General. A Public Improvement Contract, if awarded, shall be awarded to the Responsible Bidder submitting the lowest Responsive Bid, or to the Responsible Proposer submitting the best Responsive Proposal, provided that such Entity is not listed by the Construction Contractors Board as disqualified to hold a Contract for a Public Improvement. See OAR 731-005-0650, and Rules for Alternative Contracting Methods at OAR 731-007-0360 to 731-007-0400.

(2) Bid Evaluation Criteria. Invitations to Bid may solicit lump-sum Offers, unit-price Offers, or a combination of the two:

(a) If the ITB requires a lump-sum Bid, without additive or deductive alternates, or if ODOT elects not to award additive or deductive alternates, Bids shall be compared on the basis of lump-sum prices, or lump-sum base Bid prices, as applicable. If the ITB calls for a lump-sum base Bid, plus additive or deductive alternates, the Solicitation Documents shall provide the criteria for selection; and

(b) If the Bid includes unit pricing for estimated quantities, the total Bid price shall be calculated by multiplying the estimated quantities by the unit prices submitted by the Bidder, and adjusting for any additive or deductive alternates selected by ODOT, for the purpose of comparing Bids. In the event of mathematical discrepancies between unit price and any extended price calculations submitted by the Bidder, the unit price shall govern. See OAR 731-005-0620(2)(b).

(3) Proposal Evaluation Criteria. If DAS has exempted the procurement of a Public Improvement from the competitive bidding requirements of ORS 279C.335(1), and has authorized ODOT to use an Alternative Contracting Method under ORS 279C.335(3), ODOT shall set forth the evaluation criteria in the Solicitation Documents if they differ from those in Division 5 (or the Specifications). See OAR 731-007-0390, ORS 279C.335(2) and (3).

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0260

Disclosure and Substitution of First-Tier Subcontractors

Disclosure and Substitution of First-Tier Subcontractors

(1) Required Disclosure. Within two working hours of the Bid Closing on an ITB for a Public Improvement having a Bid price exceeding $100,000, a Bidder shall submit to ODOT a disclosure form as described by this rule. The disclosure form shall identify any first-tier subcontractors (those Entities that would be contracting directly with the prime Contractor) that will be furnishing labor or labor and materials on the Contract, if awarded, whose subcontract value would be equal to or greater than:

(a) Five percent of the total Contract Bid, but at least $15,000; or

(b) $350,000 regardless of the percentage of the total Bid.

(2) Disclosure Deadline and Bid Opening. For each Bid Proposal or ITB to which this rule applies, ODOT shall:

(a) Receive bids until the time identified as Closing time and at the location described in the ITB and immediately thereafter publicly open the bids;

(b) Set the Bid Opening at the time and place identified in the ITB; and

(c) Consider for Contract award only those Bids for which the required disclosure has been submitted by the announced deadline on forms prescribed by the Agency.

(3) Bidder Instructions and Disclosure Form. For the purposes of this rule, ODOT in its solicitation shall:

(a) Prescribe the disclosure form that must be utilized; and

(b) Provide instructions in a notice substantially similar to the following:

(A) “Instructions for First-Tier Subcontractor Disclosure. Bidders are required to disclose information about certain first-tier subcontractors (see ORS 279C.370). Specifically, when the Bid of a first-tier subcontractor is greater than or equal to:

(i) 5% of the project Bid, but at least $15,000; or

(ii) $350,000 regardless of the percentage, you must disclose the following information about that subcontract within two (2) working hours of Bid Closing:

(aa) The subcontractor’s name;

(bb) The category of work the subcontractor will be performing; and

(cc) The dollar value of the subcontract.

(B) If you will not be using any subcontractors that are subject to the above disclosure requirements, you are required to indicate “NONE” on the accompanying form.

ODOT MUST REJECT THE BID(S) OF A BIDDER WHO, IF REQUIRED TO SUBMIT THIS DISCLOSURE FORM, FAILS TO SUBMIT THE DISCLOSURE FORM WITH THE REQUESTED INFORMATION BY THE STATED DEADLINE. (See OAR 731-007-0270).

(4) To determine disclosure requirements, ODOT recommends that you disclose subcontract information for any subcontractor as follows:

(a) Determine the lowest possible Bid. That will be the base Bid amount less all alternate deductive Bid amounts (exclusive of any options that can only be exercised after Bid award).

(b) Provide the required disclosure information for any first-tier subcontractor whose potential Contract services (i.e., subcontractor’s base Bid amount plus all alternate additive Bid amounts, exclusive of any options that can only be exercised after Contract award) are greater than or equal to:

(i) 5% of the lowest Bid amount, but at least $15,000; or

(ii) $350,000, regardless of the percentage. Total all possible Work for each subcontractor in making this determination (e.g., if a subcontractor will provide $15,000 worth of services on the base Bid and $40,000 on an additive alternate, then the potential amount of subcontractor’s services is $55,000. Assuming that $55,000 exceeds 5% of the lowest Bid, provide the disclosure for both the $15,000 services and the $40,000 services).

(5) For determination of compliance with the disclosure requirements, ODOT will use the total Bid amount submitted by the contractor as verified by ODOT.”

(6) Submission. A Bidder shall submit the disclosure form required by this rule within two working hours of Bid Closing in the manner specified by the ITB.

(7) Late Submission. Compliance with the disclosure and submittal requirements of ORS 279C.370 and this rule is a matter of Responsiveness. Bids that are submitted by Bid Closing, but for which the separate disclosure submittal has not been made by the specified deadline, are not Responsive and shall not be considered for Contract award.

(8) Substitution. Substitution of affected first-tier subcontractors shall be made only in accordance with ORS 279C.585. ODOT does not have a statutory role or duty to review, approve or resolve disputes concerning such substitutions. However, ODOT is not precluded from making related inquiries or investigating complaints in order to enforce Contract provisions that require compliance generally with laws, rules and regulations.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.370 & 279C.585
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05; DOT 5-2009(Temp), f. 12-22-09, cert. ef. 1-1-10 thru 6-30-10; DOT 1-2010, f. & cert. ef. 5-18-10

731-007-0270

Contract Suspension; Termination Procedures

(1) Suspension of Work. In the event ODOT suspends performance of Work for any reason considered by ODOT to be in the public interest other than a labor dispute, the Contractor shall be entitled to a reasonable extension of Contract time, and to reasonable compensation for costs, including a reasonable allowance for related overhead, incurred by the Contractor as a result of the suspension.

(2) Termination of Contract by mutual agreement for reasons other than default.

(a) The parties may agree to terminate the Contract or a divisible portion thereof if:

(A) ODOT suspends Work under the Contract for any reason considered to be in the public interest (other than a labor dispute or any judicial proceeding relating to the Work filed to resolve a labor dispute); and

(B) Circumstances or conditions are such that it is impracticable within a reasonable time to proceed with a substantial portion of the Work.

(b) When a Contract, or any divisible portion thereof, is terminated pursuant to section (2) of this rule, ODOT shall pay the Contractor a reasonable amount of compensation for preparatory Work completed, and for costs and expenses arising out of termination. ODOT shall also pay for all Work completed, based on the Contract Price. Unless the Work completed is subject to unit or itemized pricing under the Contract, payment shall be calculated based on percent of Contract completed. No claim for loss of anticipated profits will be allowed.

(3) Public interest termination by ODOT. ODOT will include in its Contracts, terms detailing the circumstances under which the Contractor shall be entitled to compensation as a matter of right in the event ODOT unilaterally terminates the Contract for any reason considered by ODOT to be in the public interest.

(4) Responsibility for completed Work. Termination of the Contract or a divisible portion thereof pursuant to this rule shall not relieve either the Contractor or its surety of liability for claims arising out of the Work performed.

(5) Remedies cumulative. ODOT may, at its discretion, avail itself of any or all rights or remedies set forth in Division 7 rules, in the Contract, or available at law or in equity.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.650 - 279C.670
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0280

Waiver of Delay Damages Against Public Policy

Any clause in a Public Improvement Contract purporting to waive, release, or extinguish the rights of a Contractor to damages resulting from ODOT's unreasonable delay in performing the Contract is void and unenforceable, as against public policy. However, Contract provisions requiring notice of delay, providing for alternative dispute resolution such as arbitration or mediation, providing other procedures for settling Contract disputes, or providing for reasonable liquidated damages, are enforceable.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats Implemented: ORS 279C.315
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0290

Retainage

(1) Withholding of Retainage. ODOT may retain payment but shall not retain an amount in excess of 5 percent of the Contract Price for Work completed. If the Contractor has performed at least 50 percent of the Contract Work and is progressing satisfactorily or if all Work on a subcontract is complete, upon the Contractor’s submission of Written application containing the surety’s Written approval, ODOT may, in its discretion, reduce or eliminate retainage on any remaining progress payments. ODOT shall respond in Writing to all such applications within a reasonable time. When the Contract Work is 97-1/2 percent completed, ODOT may, at its discretion and without application by the Contractor, reduce the retained amount to 100 percent of the value of the remaining unperformed Contract Work. ODOT may at any time reinstate retainage. Retainage shall be included in the final payment of the Contract Price.

(2) Form of Retainage. Unless a Contracting Agency that reserves an amount as retainage finds in writing that accepting a bond or instrument described in part (a) or (b) of this section poses an extraordinary risk that is not typically associated with the bond or instrument, the Contracting Agency, in lieu of withholding moneys from payment, shall accept from the Contractor:

(a) Bonds, securities or other instruments that are deposited and accepted as provided in subsection (4)(a) of this rule; or

(b) A surety bond deposited as provided in subsection (4)(b) of this rule.

(3) Deposit in interest-bearing accounts. ODOT shall deposit cash retainage in an interest-bearing account through the State Treasurer, for the benefit of ODOT. Earnings on such account shall accrue to the Contractor.

(4) Alternatives to cash retainage. In lieu of cash retainage to be held by ODOT, the Contractor may substitute one of the following:

(a) Deposit of bonds, securities and other instruments of the character described in ORS 279C.560(6):

(A) The Contractor may deposit bonds, securities and other instruments with ODOT or in any bank or trust company to be held for the benefit of ODOT. If ODOT accepts the deposit, ODOT shall reduce the cash retainage by an amount equal to the value of the bonds, securities and other instruments, and reimburse the excess to the Contractor. Interest or earnings on the bonds, securities or other instruments shall accrue to the Contractor.

(B) Bonds, securities and other instruments deposited or acquired in lieu of cash retainage must be of a character approved by the Director of the Oregon Department of Administrative Services, including but not limited to:

(i) Bills, certificates, notes or bonds of the United States.

(ii) Other obligations of the United States or agencies of the United States.

(iii) Obligations of a corporation wholly owned by the Federal Government.

(iv) Indebtedness of the Federal National Mortgage Association.

(v) General obligation bonds of the State of Oregon or a political subdivision of the State of Oregon.

(vi) Irrevocable letters of credit issued by an insured institution, as defined in ORS 706.008.

(C) Upon ODOT’s determination that all requirements for the protection of ODOT’s interests have been fulfilled, it shall release to the Contractor all bonds, securities and other instruments deposited in lieu of retainage.

(b) Deposit of surety bond: ODOT, at its discretion, may allow the Contractor to deposit a surety bond in a form acceptable to ODOT in lieu of all or a portion of funds retained or to be retained. ODOT requires that the first $10,000 of retainage be held as cash, before the retainage bond takes effect. A Contractor depositing such a bond shall accept surety bonds from its subcontractors and suppliers in lieu of retainage. In such cases, retainage shall be reduced by an amount equal to the value of the bond, and the excess shall be reimbursed.

(5) Recovery of costs. ODOT may recover from the Contractor all costs incurred in the proper handling of retainage, bonds, securities and other instruments, and surety bonds, by reduction of the final payment.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.560, 279C.570 & 701.420
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05; DOT 5-2009(Temp), f. 12-22-09, cert. ef. 1-1-10 thru 6-30-10; DOT 1-2010, f. & cert. ef. 5-18-10

731-007-0300

Contractor Progress Payments

(1) Progress payments. Each month ODOT shall make a progress payment based upon an estimated percentage of the Contract Work completed. Progress payments will not be made for less than $1,000 in any given month unless requested by the Contractor. At ODOT's discretion, this request may also include the value of material to be incorporated in the completed Work, that has been delivered to the premises and appropriately stored. The sum of these estimates is referred to as the "value of completed Work." With these estimates as a base, ODOT will make a progress payment to the Contractor, which shall be equal to the value of completed Work:

(a) Less those amounts that have been previously paid;

(b) Less other amounts that may be deductible or owing and due to ODOT for any cause; and

(c) Less the appropriate amount of retainage.

(2) Progress payments do not mean acceptance of Work. Progress payments shall not be construed as an acceptance or approval of any part of the Work, and shall not relieve the Contractor of responsibility for defective workmanship or material.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.570
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0310

Interest

(1) Prompt payment policy. ODOT shall pay promptly all payments due and owing to the Contractor on Contracts for Public Improvements.

(2) Interest on progress payments. Late payment interest shall begin to accrue on payments due and owing on the earlier of 30 Days after receipt of invoice or 15 Days after Agency approval of payment (the "Progress Payment Due Date"). The interest rate shall equal three times the discount rate on 90-day commercial paper in effect on the Progress Payment Due Date at the Federal Reserve Bank in the Federal Reserve district that includes Oregon, up to a maximum rate of 30 percent.

(3) Interest on final payment. Final payment on the Contract Price, including retainage, shall be due and owing no later than 30 Days after Contract completion and acceptance of the Work. Late-payment interest on such final payment shall thereafter accrue at the rate of one and one-half percent per month until paid.

(4) Settlement or judgment interest. In the event of a dispute as to compensation due a Contractor for Work performed, upon settlement or judgment in favor of the Contractor, interest on the amount of the settlement or judgment shall be added to, and not made part of, the settlement or judgment. Such interest, at two times the discount rate but not to exceed 30% on 90-day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve District that includes Oregon on the date and accruing from the later of:

(a) The Due Date of any Progress Payment received under the Contract for the period in which such Work was performed; or

(b) Thirty Days after the date on which the claim for payment under dispute was presented to ODOT by the Contractor in Writing or in accordance with applicable provisions of the Contract.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.570
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0320

Final Inspection

(1) Notification of Completion; inspection. The Contractor shall notify ODOT in Writing when the Contractor considers the on-site Contract Work completed. Within 15 Days of receiving the Contractor's notice, ODOT will inspect the project and project records, and will either accept the Work or notify the Contractor of remaining Work to be performed.

(2) Acknowledgment of acceptance. When ODOT finds that all Work required under the Contract, both on-site and administrative, has been completed satisfactorily, ODOT shall acknowledge acceptance of the Work in Writing.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.570
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0330

Agency Payment for Unpaid Labor or Supplies

(1) Contract incomplete. If the Contract is still in force, ODOT may, in accordance with ORS 279C.515(1), pay a valid claim to the Entity furnishing the labor or services, and charge the amount against payments due or to become due to the Contractor under the Contract. Under terms of the Contract it is the Contractor's responsibility to make payment on any such claims. The Contractor and the Contractor's surety shall not be relieved from liability for unpaid claims.

(2) Contract completed. If the Contract has been completed and all funds disbursed to the prime Contractor, all claims shall be referred to the Contractor's surety for resolution. ODOT shall not make payments to subcontractors or suppliers for Work already paid for by ODOT.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279C.515
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

Alternative Contracting Methods

731-007-0340

Purpose

These rules are intended to provide guidance regarding the use of Alternative Contracting Methods for Public Improvement Contracts, as referenced in ORS 279C.335(3)(a). Those methods include, but are not limited to, Design/Build and A plus B forms of contracting.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0350

Definitions

In addition to those definitions at OAR 731-005-0430, the following definitions shall apply to OARs 731-007-0340 to 731-007-0400, unless the context requires otherwise:

(1) Alternative Contracting Methods: Innovative techniques for obtaining Public Improvement Contracts, utilizing processes other than the traditional method of design-bid-build with award based solely on price (in which a final design is issued with formal Bid documents, construction services are obtained by sealed Bid awarded to the lowest Responsive, Responsible Bidder, and the project is built in accordance with those documents). In industry practice, such methods commonly include variations of Design/Build and Cost Plus Time forms of contracting, which are specifically addressed in these rules.

(2) Design/Build: A form of contracting that results in the construction Contractor providing or obtaining specified design services, participates on the project team with ODOT, and manages both design and construction. In this form of Contract, a single Entity provides ODOT with all of the services necessary to both design and construct the project.

(3) Cost Plus Time: A Bid process (also known as A plus B) where time is assigned a monetary value and is Bid along with the Work and materials.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0360

Use of Alternative Contracting Methods

(1) Competitive Bidding Exemptions. ORS Chapter 279C requires a competitive bidding process for Public Improvement Contracts unless a statutory exception applies, a class of Contracts has been exempted or an individual Contract has been exempted in accordance with ORS 279C.335 and any applicable DAS rules. Alternative Contracting Methods are therefore an exception to the prescribed public contracting practices in Oregon, and their use must be justified in accordance with the public contracting law and these rules. See OAR 731-007-0370 regarding required findings.

(2) Post-Project Evaluation. ORS 279C.355 requires that ODOT prepare a formal post-project evaluation of Public Improvement projects in excess of $100,000 for which the competitive bidding process was not used. The purpose of this evaluation is to determine whether it was actually in ODOT's best interest to use an Alternative Contracting Method. The evaluation must be delivered to the DAS Director within 30 Days of the date ODOT "accepts" the Public Improvement project, which event is typically defined in the Contract. In the absence of such definition, acceptance of the project occurs on the latter of the date of final payment or the date of final completion of the Work. ORS 279C.355 describes the timing and content of this evaluation, with three required elements:

(a) Financial information, consisting of cost estimates, any guaranteed maximum price, changes and actual costs;

(b) A narrative description of successes and failures during design, engineering and construction; and

(c) An objective assessment of the use of the Alternative Contracting Method as compared to the exemption findings.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065, 279C.335 & 279C.355
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0370

Findings

(1) When findings are required under ORS 279C.335(2) and 279C.335(3)(b) to exempt a Contract or class of Contracts from competitive bidding requirements, the "substantial cost savings" criterion at ORS 279C.335(2)(b) requires consideration of the type, cost, amount of the Contract, number of Entities available to bid, and "such other factors as may be deemed appropriate."

(2) Likewise, the statutory definition of "findings" at ORS 279C.330 means the justification for ODOT's conclusion that includes, but is not limited to, information regarding eight identified areas.

(3) Accordingly, when the Contract or class of Contracts under consideration for an exemption contemplates the use of Alternative Contracting Methods, the "substantial cost savings" requirement may be addressed by a combination of:

(a) Specified findings that address the factors and other information specifically identified by statute; and

(b) Additional findings that address industry practices, surveys, trends, past experiences, evaluations of completed projects required by ORS 279C.355 and related information regarding the expected benefits and drawbacks of particular Alternative Contracting Methods. To the extent practicable, such findings should relate back to the specific characteristics of the project or projects at issue in the exemption request.

(4) The criteria at ORS 279C.335(2)(a) that it is "unlikely" that the exemption will "encourage favoritism" or "substantially diminish competition" may be addressed in contemplating the use of Alternative Contracting Methods by specifying the manner in which an RFP process will be utilized, that the procurement will be formally advertised, that competition will be obtained, and that award will be made based upon identified selection criteria.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0380

Pricing Mechanisms

(1) A Request for Proposals may result in a lump sum Contract Price, as in the case of competitive bidding. Alternatively, a cost reimbursement Contract may be negotiated.

(2) Economic incentives or disincentives may be included to reflect stated ODOT purposes related to time of completion, safety or other public contracting objectives, including total least cost mechanisms such as life cycle costing.

(3) When cost reimbursement Contracts are utilized, ODOT shall provide for audit controls that will effectively verify rates and ensure that costs are reasonable, allowable and properly allocated.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0390

RFP Process

ODOT may utilize the RFP process for Public Improvement Contracts, allowing flexibility in both Proposal evaluation and Contract negotiation, only in accordance with ORS Chapter 279C and OAR chapter 731 division 5.

(1) Proposal Evaluation. Factors in addition to price may be considered in the selection process, but only as set forth in the RFP. Proposal evaluation shall be as objective as possible. Evaluation factors need not be precise predictors of future costs and performance, but to the extent possible such evaluation factors shall:

(a) Be reasonable estimates based on information available to ODOT;

(b) Treat all Proposals equitably; and

(c) Recognize that public policy requires that Public Improvements be constructed at the least overall cost to ODOT. See ORS 279C.305(1).

(2) Evaluation Factors.

(a) In basic negotiated construction contracting, where the only reason for an RFP is to consider factors other than price, those factors may consist of firm and personnel experience on similar projects, adequacy of equipment and physical plant, sources of supply, availability of key personnel, financial capacity, past performance, safety records, project understanding, proposed methods of construction, proposed milestone dates, references, service, and related matters that affect cost or quality.

(b) In Design/Build contracting, in addition to subsection (a) of this section, those factors may also include design professional qualifications, specialized experience, preliminary design submittals, technical merit, the ability to respond to the technical complexity or unique character of the project, project management including coordination and integration of multiple disciplines, the time required to commence and complete the improvement, design/builder team experience and related matters that affect cost or quality.

(3) Contract Negotiations. Contract terms may be negotiated to the extent allowed by the RFP and these rules, provided that the general Work scope remains the same and that the field of competition does not change as a result of material changes to the requirements stated in the Solicitation Document. See OAR 731-005-0470(3). Terms that may be negotiated consist of details of Contract performance, methods of construction, timing, assignment of risk in specified areas, fee, and other matters that affect cost or quality. Negotiations must always be in keeping with the least cost policy for public improvements.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065, 279C.305 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

731-007-0400

Design/Build

(1) General. The Design/Build form of contracting, as defined in OAR 731-007-0350(2), has technical complexities that are not readily apparent. ODOT shall only utilize this contracting method with the assistance of knowledgeable staff or consultants who are experienced in its use. In order to utilize the Design/Build process ODOT must be able to reasonably expect the following types of benefits:

(a) Obtaining, through a Design/Build team, engineering design, plan preparation, value engineering, construction engineering, construction, quality control, and required documentation as a fully integrated function with a single point of Contractor responsibility;

(b) Integrating value engineering suggestions into the design phase, as the construction Contractor joins the project team early with design responsibilities under a team approach, with the potential of reducing Contract changes;

(c) Reducing the risk of design flaws, misunderstandings and conflicts inherent in construction Contractors building from designs in which they have had no opportunity for input, with the potential of reducing Contract claims;

(d) Shortening project duration as construction activity (early submittals, mobilization, subcontracting and advance Work) commences prior to completion of a final design, or where a design solution is still required (as in complex or phased projects); and

(e) Obtaining innovative design solutions through the collaboration of the Contractor and design team, which would not otherwise be possible if the Contractor had not yet been selected.

(2) Authority. Agencies shall utilize the Design/Build form of contracting only in accordance with the requirements of Division 7 rules. See particularly OAR 731-007-0360 on "Use of Alternative Contracting Methods."

(3) Selection. Design/Build selection criteria may include those factors set forth in OAR 731-007-0390(2).

(4) Qualification Based Selection (QBS). Inapplicable. Because the value of construction services predominates the Design/Build form of contracting, and ODOT is not issuing a personal service Contract, the QBS process mandated by ORS 279C.110 for State Agencies is not applicable. See ORS 279C.100(5) and 279C.110(2)(a).

(5) Licensing. Where the Design/Build Contractor is not a licensed or registered design professional, the Design/Build process contemplates that state licensing and registration requirements related to architectural and engineering services may be fulfilled by design professionals who are employees, subcontractors, joint venturers or in other lawful business relationships with the Design/Build Contractor. Under this approach, Design/Build Contractors are not required to fulfill design licensing or registration requirements at the time of submitting Proposals, but shall specifically identify the licensed design professionals by individual or firm names.

(6) Performance Security. ORS 279C.375(3)(b) provides that for Design/Build Contracts the surety's obligation on performance bonds, or the Bidder's obligation on cashier's or certified checks accepted in lieu thereof, includes the preparation and completion of design and related professional services specified in the Contract. This additional obligation, beyond performance of construction services, extends only to the provision of professional services and related design revisions, corrective Work and associated costs prior to final completion of the Contract (or for such longer time as may be defined in the Contract). The obligation is not intended to be a substitute for professional liability insurance, and does not include errors and omissions or latent defects coverage.

(7) Contract Requirements. ODOT shall conform its Design/Build contracting practices to all of the following requirements:

(a) Design Services. The level or type of design services required must be clearly defined within the Solicitation Documents and Contract, along with a description of the level or type of design services previously performed for the project. The services to be performed shall be clearly designated as either design Specifications or performance standards, and performance measurements must be identified.

(b) Professional Liability. The Contract shall clearly identify the liability of design professionals with respect to the Design/Build Contractor and ODOT, as well as requirements for professional liability insurance.

(c) Risk Allocation. The Contract shall clearly identify the extent to which ODOT requires an express indemnification from the Design/Build Contractor for any failure to perform, including professional errors and omissions, design warranties, construction operations and faulty Work claims.

(d) Warranties. The Contract shall clearly identify any express warranties made to ODOT regarding characteristics or capabilities of the completed project (regardless of whether errors occur as the result of improper design, construction, or both), including any warranty that a design will be produced that meets the stated project performance and budget guidelines.

(e) Incentives. The Contract shall clearly identify any economic incentives and disincentives, the specific criteria that apply and their relationship to other financial elements of the Contract.

(f) Honoraria. If allowed by the RFP, honoraria or stipends may be provided for early design submittals from qualified finalists during the solicitation process on the basis that ODOT is benefited from such deliverables.

Stat. Auth.: ORS 184.616, 184.619, 279A.050 & 279A.065
Stats. Implemented: ORS 279A.065, 279C.100-110 & 279C.335
Hist.: DOT 2-2005, f. 2-16-05, cert. ef. 3-1-05

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