Routine Maintenance Contracts

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					                       Routine Maintenance Contracting
Information on routine maintenance contracting was collected using the following
methods:

      A survey of the states using the Research Advisory Council (RAC) Listserve as to
       what they may be may have considered, or may be doing in the area of
       contracting routine maintenance on state system roads.

      A literature search of published reports and findings related to results of
       contracting routine maintenance on state system roads.
Survey
Below is the survey that was sent to the states using the RAC Listserve. Responses
follow.

   Greetings AASHTO RAC Members:

   The Missouri Department of Transportation is interested in gathering information
   regarding routine maintenance contracts. Specifically, what states have considered
   and/or awarded within the past five years and the basis for the decision. For the
   purpose of this research, we are interested in all types of routine maintenance
   contracts including resurfacing projects of all types, winter event response, striping,
   mowing, and bridge maintenance. I would appreciate you answering the following
   questions or forwarding it to the appropriate person within your agency to do so.

   1. Has your state considered contracting routine maintenance on your roads and
      bridges?
   2. Has your state made the decision to contract out routine maintenance?
   3. What type of contract was utilized to administer the routine maintenance?
   4. What routine maintenance operations are included in your contracts?
   5. What advantages has your state identified through the use of contracting routine
      maintenance?
   6. What disadvantages has your state identified through the use of contracting routine
      maintenance?
   7. Whom in your state could we contact for further information? (Please provide
      their contact information)
There were a total of eight responses to the survey. A summary of the responses follows:
    Four of the eight responding states – Florida, Indiana, Maryland, and North
       Dakota – have all instituted contracting on at least a portion of their routine
       maintenance operations.
    Two states – Idaho and Mississippi – have not considered contracting routine
       maintenance at this time.
    The reason given for not pursuing contracting routine maintenance is that is not
       cost effective.
Florida
   1. Yes, both.
   2. Yes.
   3. We have a variety of contract types we use to perform our routine maintenance of
       roadways, bridges, and facilities (rest areas):
            Work Directed contracts
                   o Work Document Driven – Low bid contract where the contract
                       generally describes a focused maintenance activity that needs to be
                       done – as the contract progresses, the contractor is directed
                       specifically what to do when & where by the issuance of Work
                       Documents
                   o Project Specific - Low bid contract where the contract completely
                       describes exactly what to do when & where – there are no
                       issuances of Work Documents
            Performance contract
                   o Asset Maintenance – Long-term (5 to 20 years) “Best Value”
                       contracts (not low-bid) where private contractors are selected to
                       take over all or most of the maintenance within a certain
                       geographical area or roadway corridor – these are results based,
                       not method based (we do not tell them what to do, we just give
                       end-result performance measures they must meet)
                   o Performance-Based – Same as Asset Maintenance only shorter
                       term, cover less area, cover a few specific activities instead of all
                       or most – these can be low-bid or best-value
            Accelerated contracts
                   o Fast Response – Contracts that must be procured and completed
                       very quickly, usually due to urgent need of damage repair like a
                       washout or a sinkhole – normal procurement rules are relaxed
                   o Emergency – Contracts that respond to a disaster (almost always
                       hurricanes or fires) which are usually eligible for Federal
                       reimbursement – normal procurement rules are relaxed
                   o Pre-Event – These are Emergency contracts that are set up ahead
                       of time so we are “ready to go” in event of a disaster – special
                       qualification rules are used, normal procurement rules apply
            Memorandums of Agreement (MOAs) – Agreements with public agencies
               to perform maintenance on state roads within their jurisdictions
    4. See attached handbook detailing all of our maintenance activities.
    5. Cost Savings, Performance contracts share risk and liability with contractors
        (reduces Department risk), Program stability & budget consistency, Performance
        contracts reduce contract administration and inspection efforts, Greater
        functional freedom for Performance contractors (can do some things government
        can’t do), Department is much better suited to handle spikes in maintenance
        needs and slowdown of maintenance needs (with more salaried staff, harder to
        gear up and slow down).
    6. Contractors generally will perform maintenance at minimum levels required by
        contracts while maximizing profits (sometimes even unscrupulously), while state
       forces have no interest in profits and only have interests in doing what is best for
       taxpayers. We must keep an eye on this fact and have a solid program of
       identifying and reprimanding unscrupulous contractors.
    7. Mike Sprayberry, State Administrator for Maintenance Contracting
       mike.sprayberry@dot.state.fl.us
       (850)410-5637
Idaho
   1. Not at this time.
   2. Not at this time.
   3. Not Using
   4.
   5.
   6.
   7. Steve Spoor, Maintenance Services Manager/Equipment Fleet Manager
      steve.spoor@itd.Idaho.gov
      Office: (208) 334-8413
      Cell: (208) 859-3083
Indiana
   1. INDOT contracts specific activities (i.e. mowing, guardrail maintenance) in
      certain situations, but has never contracted out total maintenance on a road. It has
      been considered and researched, but determined not to proceed.
   2. No
   3. N/A
   4. N/A
   5. See response to question number six.
   6. Our research showed it was not cost effective.
   7. Dennis Belter, Maintenance Administration Manager
      dbelter@indot.in.gov
Iowa
   1. We have considered routine maintenance contracts.
   2. We have decided not to contract out routine maintenance at this time.
   3. No contracts are being used at this time.
   4. There are no routine maintenance operations included in a contract.
   5. An advantage is that some routine maintenance may get accomplished with a
      contract that was not able to get accomplished before with the state resources
      available at the time.
   6. The main disadvantage is that it costs more to do the work.
   7. Will Zitterich
      william.zitterich@dot.iowa.gov
      800 Lincoln Way, Ames IA 50010
      (515) 239-1396
Maryland
  1. Yes
  2. Yes
  3. Competitive Sealed Bids based on Low Bid. We have recently been testing the
      following three Performance Based Asset Management Contracts where the
      contractor maintains:
        a. All assets of a segment of roadway (except for traffic barrier and snow
            removal due to the high risk factors of these assets)
        b. All assets of a rest area
        c. Specific assets for an entire county (our test one is for the maintenance of all
            RPM's, signing, and miscellaneous pavement markings)
      Note: With the Performance Based Asset Management Contracts we've have re-
      negotiated a lower monthly cost due to the work requirements being reduced in
      order to reduce expenditures, requiring.
  4. We currently bid the following maintenance contracts:
              Hand Mowing (includes litter pick-up and trimming)
              Mowing (includes litter pick-up and trimming)
              Herbicide Application
              Brush and tree cutting and stump removal
              Litter pick-up
              Line striping
              Pavement Markings (thermoplastic)
              Sink hole repairs
              Highway lighting
              Curb and gutter and sidewalk
              Traffic Barrier
              Raised and recessed pavement markers
              Graffiti removal
              Slurry seal
              Joint and crack sealing
              Miscellaneous Structure repairs
              Sweeping
              Rumble Strip
              Drawbridge Operation
              Patching (HMA & concrete)
              Resurfacing and milling
              Concrete pavement repairs
              Noise Abatement wall repairs
              Fence Repairs
              Inlet and drainage repairs
              Snow Removal
  5. With the reduction of manpower these contracts allow our maintenance forces to
      focus on other maintenance tasks. Contractors are specialized in the various types
      of contract work and are therefore better equipped to do the work. When budgets
      are reduced, we can significantly reduce expenditures by cutting back on
      contractual work assignments (whereas state forces cannot be 'laid off' as easily).
   6. Once you have reduced state equipment due to non-use (example: mowers)
      contractors have the edge on their prices, knowing you can't take the operation
      back without the equipment. State maintenance forces have to be trained in
      contract administration.
   7. Janice M. Harris, Assistant Division Chief
      JHarris2@sha.state.md.us
      State Highway Administration
      410-582-5550 – Phone
      410-582-9862 - Fax
Mississippi
   1. No
   2. We evaluated the process on a route in the late 1990’s and decided the cost was
       prohibitive.
   3. N/A
   4. N/A
   5. N/A
   6. N/A
   7. John Vance, P. E., State Maintenance Engineer
       jvance@mdot.state.ms.us
North Dakota
   1-4.
       I think I can answer these first 4 questions just by stating what we do. Our
       roadway projects are funded largely using Federal Aid. We do not have a large
       state aid program. Most state aid dollars go into matching the federal program.
       With that, what we do as far as what can be considered routine or preventive
       maintenance is: We contract out the first chip seal on a new pavement using
       federal aid (through a typical construction contract, set of plans, bid opening,
       etc.). Then we follow up with additional chip seals approximately every 7 years
       with either construction contracts using state aid (through a typical construction
       contract, set of plans, bid opening, etc.) or use district forces with district funds
       (maintenance contract for materials, oil and chips). We have also used federal
       and state funds to do thin overlays, contract patching, slurry seals, and micro
       surfacing (through a typical construction contract, set of plans, bid opening, etc.).
       We also let statewide striping contracts and bridge maintenance contracts using
       state funds (through a typical construction contract, set of plans, bid opening,
       etc.). We do not have the equipment to do mainline paving work or long striping
       projects. We do lay short patches and can stripe our patch work. We are
       equipped to do our own crack sealing, chip sealing, snow removal and mowing.
       We tried contract mowing (maintenance contract) on one stretch of road with less
       than desired results then went back to doing it ourselves. I think the contract was
       paid by the mile and the cut was not clean. We had to redo it with our own forces
       again anyway. Our employees were inspecting the work and could have just as
       well been doing it themselves.
   5. If a contractor can do some items, then we don’t have to gear up with all the
       equipment needed to perform the work with our own forces. Some things the
      contractor does more of and can do it better. For example: (mainline paving and
      long patches, chip sealing, slurry sealing, micro surfacing, striping.)
   6. For some items we can just do it cheaper and just as good as the contractor if not
      better. For example: (mowing, snow removal, crack sealing, chip sealing).
      Typically our employees are not paid as well as contract employees and the
      contractor needs to make a profit to be in business. Some items need to be done a
      certain way so they don’t affect other operations down the road such as mowing
      so it doesn’t affect snow removal etc. It’s hard for the contractor to have this
      detailed experience. Some things the contractor doesn’t like to do or charges a lot
      for doing such as tedious work like fixing potholes or cracks prior to chip sealing
      or paving. The contractor tends to like bigger projects where they can move
      rapidly. We seemed to have fallen into a good mix over time based on what the
      contractor does and what we do with our own forces.
   7. Mike Kisse, Maintenance Division
      mkisse@nd.gov
      Phone 701-328-4410
Washington
  1. Periodically, our state legislature has shown some interest in contract maintenance
     but it’s never progressed to the point of developing and implementing contracts
     for state highway maintenance work. This work has traditionally been conducted
     by state employees and continues to be carried out in this manner.
  2. This work continues to be carried out by state employees. There are currently no
     discussions of any changes in this.
  3. N/A
  4. N/A
  5. Part of past discussions was that there are no clear advantages of contract
     maintenance compared to having our state employees complete this work.
     Evaluations of contract maintenance experiences in other states has not shown
     clear advantages either. Additional information on this issue can be found in a
     report via this link.
     http://www.wsdot.wa.gov/Maintenance/Accountability/outsourcing.htm
  6. The experiences of other states have shown some disadvantages, or the lack of
     advantage…see report via web link listed above.
  7. Rico Baroga
     barogar@wsdot.wa.gov
     (360) 705-7864
Literature Search
Most recent literature on contracting highway maintenance comes in the form of guides
and best practice publications. Notable exceptions to this include reports covering South
Carolina, Indiana, Virginia, Texas, Ontario, and Alberta. All of these States and
Provinces have been reviewed at since 2004. A comprehensive evaluation of best
practices; however, may require state audits and other primary sources to achieve better
conclusions.
Abstracts:
Identifying the Appropriate Contract Types for Highway Maintenance and
Rehabilitation Projects on the Basis of Project Characteristics
Link: See Below
Innovative outsourcing approaches currently sought by highway agencies aim to reduce
costs, increase efficiency, and improve performance. It is often sought to identify which
types of contracts are most appropriate for which types of projects. While previous
research has provided insight into the factors that affect these characteristics, the findings
have often been limited because the relationships between duration, length and cost have
not been fully considered. In this study, highway project data from the United States and
abroad are analyzed using equation models for the traditional and innovative contract
types.


   Identifying the
Appropriate Contract Types for Highway Maintenance and.pdf


Performance-Based Contracting—Yes or No: An In-Depth Analysis
Link: http://onlinepubs.trb.org/onlinepubs/circulars/ec135.pdf
In the fall of 2006 the Indiana Department of Transportation (INDOT) initiated a study to
investigate performance-based contracting (PBC) of maintenance operations. One of the
main impetuses for the study is that INDOT started a 10-year road-building program
called Major Moves that will add more than 1,000 lane miles to the current network.
With this addition and coupled with a trend of reduction in maintenance personnel,
INDOT is planning how maintenance will be performed. This study evaluated many
aspects of PBC and produced an in-depth analysis of PBC. Information on how to
implement, pros and cons, and recommendations to consider are described in this paper.
Other options are discussed.
Outsourcing Versus In-House Highway Maintenance: Cost Comparison and
Decision Factors
Link: http://www.ces.clemson.edu/t3s/scdot/pdf/projects/SPR%20653.pdf
A research project was conducted by Clemson University for the South Carolina
Department of Transportation (SCDOT) to examine the relative merits of outsourcing
highway maintenance activities as opposed to performing those activities with in-house
forces. The project examined the costs associated with maintenance work performed
within the state for 20 maintenance-related activities in FY03-04. The project also
included workshops conducted in all seven SCDOT district offices to examine subjective
factors that impact local decisions as to whether or not it is appropriate to outsource
various maintenance activities.

Contracted Maintenance Services at the Ministry of Transportation in Ontario
Link: http://tinyurl.com/ygdo7lz
Following a shift in strategies, the Ministry of Transportation in Ontario has come to
consider the privatization of its highway maintenance operations a success. Maintenance
work is being delivered to standard, and the province's standards have been reformatted
to support the new delivery methods. The ministry has monitored and carried out quality
assurance on the contractor's performance and is confident that the ministry's legislated
responsibilities are being fulfilled. Contractors have made job opportunities available to
the ministry's former staff, thus retaining knowledge within the industry.
The Evolution of Highway Maintenance Outsourcing in Alberta
Link: http://tinyurl.com/ygpx8c6
In 1995, Alberta Transportation and Utilities took its first steps of many to outsource
highway maintenance work. This work covered all summer and winter maintenance of
the provincial highway network. Following the outsourcing and prior to the next round of
tendering, the department along with the industry conducted a major reengineering of the
existing maintenance process. During this period the department also sold its
maintenance shops and increased its responsibility by assuming approximately 15,000
km of secondary highways from local municipalities. All of these changes were
incorporated into the contracts prior to the second round of retendering. As a result of
these changes there were significant savings.
Contracting for Road and Highway Maintenance
Link: http://www.reason.org/htg21.pdf
The condition of the roads and highways in the United States is less than stellar. In order
to help the government get more for its money, highway maintenance and construction
are often contracted out. This how to guide provides best practices and lessons learned in
outsourcing highway projects.
A Guide for Methods and Procedures in Contract Maintenance
Link: Available only through partner library
Contract maintenance is one of many tools used by transportation agencies to meet their
goals. This guide summarizes current contract maintenance practices for transportation
systems, and is intended to provide an overview of current practices to those agencies
considering the use of contract maintenance. While this guide is not meant to serve as a
handbook, it does contain sufficient information to differentiate between the types of
contract maintenance currently being used, to identify some key issues that should be
considered in developing a contract, and to illustrate the potential benefits through case
studies.
Annual Report on Initiatives for Outsourcing, Privatization and Downsizing Within
VDOT
Link: http://virginiadot.org/projects/resources/4_09_2008_Final_Outsourcing_Report.pdf
The Virginia Department of Transportation (VDOT) is required to report annually on its
outsourcing, privatization, and downsizing activity and on efforts for maximizing the
generation of revenue from existing assets of the Department. Facing a long-term
economic decline, VDOT has sharpened its focus on developing the best possible
roadway system, business priorities, and workforce organization to fulfill its mission.
This report details activity for 2008.
Who Should Fix the Potholes?
Link: http://www.governing.com/column/who-should-fix-potholes
For some time now, many states, cities and counties have looked to save money by hiring
contractors to perform governmental tasks. Debates raged over whether it was fair to
government workers to give their jobs to others, but few questions have been asked about
whether real savings were inevitable. The Texas Department of Transportation relies
heavily on contracted services. But, a 2008 internal audit found that potholes filled by
DOT workers cost $23 each to repair while the ones repaired by contractors cost $129
each. Sealing cracks cost $327 per square mile for state workers and more than twice that
amount for contractors. Design and engineering work also turned out to be more
expensive when it was undertaken outside the department.
Progress Report: Department of Transportation Expedites Privatization, But
Savings Uncertain; May Be Feasible to Eliminate More Positions
Link: http://www.oppaga.state.fl.us/reports/pdf/0330rpt.pdf
As recommended in a 2001 report, FDOT has expedited its employee position reduction
plan. In some areas, the department demonstrated that its efforts to reduce in-house
employees and increase privatization of services have produced cost savings. However,
for many programs, the department cannot demonstrate whether such efforts reduced
overall costs. In these areas, the department lacks the data needed to compare the costs of
state employees providing a service versus private contractors providing that service.
The department could reduce the number of employees needed to monitor contracts by
expanding its use of asset management and performance-based contracts. However, the
department will need to retain sufficient employees to effectively manage and monitor its
contracts with private companies.
Contract Maintenance
Link: http://on.dot.wi.gov/wisdotresearch/database/tsrs/tsrcontractmaintenance.pdf
This 2002 WisDOT synthesis outlines the state of highway maintenance outsourcing. It
covers several State DOT practices along with one Canadian province. Links to resources
and citations are provided as well.
Synopsis of WsDOT’s Review of Highway Maintenance ‘Outsourcing’ Experience
Link: http://www.wsdot.wa.gov/NR/rdonlyres/8C2B4EEC-8F37-49A8-BEF7-
D59E21B5BFDF/0/outsourcing.pdf
This paper gathers after-the-fact reviews of highway maintenance outsourcing
performance from programs in five states and British Columbia. On inspection, cases are
found where costs may have gone up instead of down, services deteriorated rather than
improved, administrative and supervisory arrangements proved problematic, and
contractor failures left states scrambling to provide services or caught in the distraction of
litigation. Despite the range of experiences common themes emerging from these reviews
can be translated into “lessons learned” for state officials considering programs of this
type.

Bibliography:
Anastanopoulos, P., Labi, S., McCullouch, B. “Identifying the Appropriate Contract
       Types for Highway Maintenance and Rehabilitation Projects.” Transportation
       Research Board 88th Annual Meeting. 2009. See .pdf file above.
Anastanopoulos, P., McCullouch, B. “Performance-Based Contracting—Yes or No: An
      In-Depth Analysis.” Transportation Research E-Circular, No. E-C135. 2009.
      Online: http://onlinepubs.trb.org/onlinepubs/circulars/ec135.pdf

Dlesk, R., Bell, L. “Outsourcing Versus In-House Highway Maintenance: Cost
       Comparison and Decision Factors.” South Carolina Department of Transportation.
       2006. Online: http://www.ces.clemson.edu/t3s/scdot/pdf/projects/SPR%20653.pdf

MacLean, M., […] et al. “Contracted Maintenance Services at the Ministry of
     Transportation, in Ontario.” Annual Conference of the Transportation
     Association of Canada. 2005. Online: http://tinyurl.com/ygdo7lz

Bucyk, N., Lali, M. “The Evolution of Highway Maintenance Outsourcing in Alberta”
       Annual Conference of the Transportation Association of Canada. 2005. Online:
       http://tinyurl.com/ygpx8c6

Segal, G., Moore, A., McCarthy, S. “Contracting for Road and Highway Maintenance.”
       The Reason Foundation. 2003. Online: http://www.reason.org/htg21.pdf

“A Guide for Methods and Procedures in Contract Maintenance.” AASHTO. 2002.

“Annual Report on Initiatives for Outsourcing, Privatization and Downsizing Within
      VDOT.” Virginia Department of Transportation. 2008. Online:
      http://virginiadot.org/projects/resources/4_09_2008_Final_Outsourcing_Report.p
      df

Barrett, K., Greene, R. “Who Should Fix the Potholes?” Governing. 2009. Online:
        http://www.governing.com/column/who-should-fix-potholes

“Progress Report: Department of Transportation Expedites Privatization, But Savings
       Uncertain; May Be Feasible to Eliminate More Positions.” Florida Office of
       Program Policy Analysis and Government Accountability. 2003. Online:
       http://www.oppaga.state.fl.us/reports/pdf/0330rpt.pdf

McLawhorn, N. “Contract Maintenance.” CTC & Associates. 2002. Online:
     http://on.dot.wi.gov/wisdotresearch/database/tsrs/tsrcontractmaintenance.pdf

Ribreau, N. “Synopsis of WsDOT’s Review of Highway Maintenance ‘Outsourcing’
       Experience.” Washington State Department of Transportation. 2004. Online:
       http://www.wsdot.wa.gov/NR/rdonlyres/8C2B4EEC-8F37-49A8-BEF7-
       D59E21B5BFDF/0/outsourcing.pdf

				
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