Best Value Formula - DOC by bsz14056

VIEWS: 15 PAGES: 10

More Info
									                   ACCELERATED PROCUREMENT IN A TIME OF CRISIS:
                          The Interstate 35W Bridge Collapse
Authors1:
      Jeff H. Eckland
      Mark J. Blando
      Timothy M. Connelly
      David S. Laidig
______________________________________________________________________________
         Within a matter of a few seconds on the muggy, summer evening that was August 1,

2007, what had been Minnesota’s busiest highway became an open expanse of dusty air. A

forty-two (42) year-old bridge, spanning the mighty Mississippi River within a stone’s throw of

the heart of Minneapolis, suddenly collapsed into the rushing currents during rush hour. The

Interstate 35W Bridge, over which 140,000 vehicles drove every day, carried over a 100 vehicles

at the time. In the dust and confusion that followed, and before emergency responders had a

chance to arrive, scores of people struggled up the river banks, out of the water, and sought to

help others nearby. Emergency crews and citizen-volunteers converged on the site, and as

officials reacted to the tragedy, heart rendering images were broadcast worldwide on CNN.

         During the following weeks, Minnesota expressed its shock and collectively mourned the

deaths of thirteen (13) people. Shocking reports of victims located in the river were punctuated

by the anger and frustration precipitated by reports of critical bridge deficiencies noted in recent

inspection reports. Many began to question the ability of the State to adequately protect its

citizens. Amidst the public’s loss of security, and the urgent questions surrounding the disaster’s

cause, preparations were being made for the future. The tragedy presented a unique confluence

of economic necessity to rebuild the lost bridge and the desire to demonstrate Minnesota’s


1
    Jeff H. Eckland, Partner, Eckland & Blando LLP
    Mark J. Blando, Partner, Eckland & Blando LLP
    Timothy M. Connelly, Special Counsel, Eckland & Blando LLP
    David S. Laidig, Associate Attorney, Eckland & Blando LLP


                                                     1
perseverance in the face of hardship.         Governor Tim Pawlenty publicly stated that the

replacement for the massive structure would be completed by Christmas 2008, a mere 16 months

after the collapse. Long before rescue efforts even gave way to recovery, the clock began to tick.

Within the self-imposed period of sixteen months, the State had to respond to the victims, clean-

up the site while assisting in the investigations, develop design guidelines for the replacement

bridge, identify funding, award the contract, and complete construction. While each level of

government ultimately agreed on these goals, the actual execution of a contract for a new bridge

proved more difficult. Many became concerned that the rebuilding of a new bridge before the

results of the NTSB investigation were even known imprudently risked another incident. Others

wondered whether the short timeline might lead to a rushed job and a lesser quality, potentially

dangerous, replacement structure. Still others were concerned about how the State would pay for

the replacement bridge considering the facts that transportation funds in already tight budgets

had been allocated, and that future transportation funding was a highly politicized issue. As a

result, each stakeholder in the process began to weigh concerns demanding a slower, more

deliberative response against the desire for a speedier process intended to alleviate economic

hardships and to create a symbol of a community’s healing.

       The main responsibility for managing the rebuilding process rested squarely on the

shoulders of the State, specifically the Minnesota Department of Transportation (MnDOT). This

article discusses the competing concerns that MnDOT faced in implementing the construction

contracting requirements of Minnesota Law within the confines of the intensely scrutinized and

emotional aftermath of this highly publicized event. It concludes with recommendations, to both

public and private contractors, for specific courses of action in similar situations.

I.     Legal Requirements for Contracting in an Emergency




                                                  2
           Contracts in Minnesota generally are awarded to the lowest responsible bidder, with

formal bidding required for contracts with an estimated value of $50,000 or more. 2 Minnesota

possesses the statutory authority to suspend normal competitive bidding requirements during an

emergency.3         On August 2, 2007, Governor Pawlenty issued an emergency declaration.

Although the bridge replacement was not specifically mentioned in the Governor’s declaration,

this act likely supports use of the emergency exception to normal procurement requirements.

But MnDOT officials instead issued a request for qualifications (RFQ) within three days of the

bridge collapse, in effect opting for a modified design-build procurement.4 MnDOT has taken

the position that the procurement was in fact guided by the statutes (although modified as to

submission timelines), a position reflected in subsequent litigation.

II.        Review of the Contracting Process in the Aftermath of the Bridge Collapse

           A.      Emergency Action Phase

           In the days following the collapse, the search and rescue operations became a search and

recovery effort. The site was subject to investigations conducted by the NTSB, state officials,

and other entities. In the midst of all this activity, as well as the public vigil that effectively

continued until the recovery of the last victim, government officials began laying the

groundwork for the rebuilding process. Using an emergency exception, and in anticipation of the

rebuilding efforts, Minnesota awarded a no-bid time and materials contract worth an estimated

$15 million for cleaning up the site. With less than six weeks to go before the contract award for




2
 For a summary of Minnesota’s procurement statutes and regulations, see the American Bar Association: Public
Contract Law Section’s database. http://www.abanet.org/dch/committee.cfm?com=PC501800.
3
    Minn. Stat. § 16C.10.
4
 MnDOT was headed by the Lt. Governor Carol Molnau, who simultaneously served as the Commissioner for
Transportation.


                                                     3
a new Interstate 35W bridge, this accelerated effort reflected time sensitive concerns warranting

the circumvention of more traditional competitive bidding processes.

        B.       Award of the Bridge Contract Phase

                 1. Summary of the Contracting Process

        On August 4th, three days after the bridge collapse, MnDOT issued a request for

qualifications (RFQ) describing the design concept and design-build selection process. The RFQ

process served as a screening device to ensure that agency time spent evaluating proposals was

not wasted on frivolous submissions. The Aug. 4th RFQ stressed the ability to complete the

contract within the allocated time. Five teams pre-qualified, and four teams ultimately submitted

proposals. Twenty-two (22) days after the collapse, MnDOT issued the request for proposals

(RFP) subject to six subsequent amendments. The RFP gave instructions to segregate key

factors, such as replacement costs, upgrade costs, and costs associated with completion time.

The four design-build teams submitted technical proposals another twenty-two days later, on

September 14. The technical review consisted of several days of review and scoring by teams of

officials, all culminating in a designer team presentation and interview. On September 19, forty-

nine days after the collapse, MnDOT announced that the joint venture of Flatiron-Manson was

the apparent bid winner. Disappointed bidders protested within 24 hours.5 The award decision

was upheld through administrative appeals and on October 8, sixty-eight (68) days after the

collapse, MnDOT awarded the I-35W replacement bridge contract.

                 2. The Bid Protest

        Two of the four pre-qualified design teams challenged the award. Minnesota law does

not provide for formal bid protest procedures. The RFP, however, specified various procedures


5
  The first filing was within 24 hours, as directed by the RFP. Ambiguity in the actual deadline to protest led to a
six-day extension.


                                                         4
that were designed to be binding upon all parties submitting proposals. Thus, the protesters were

required to follow the procedures included in the RFP. Following an agency response and

rebuttal, the bid protest determination was published.6 The bid protest raised three issues,

specifically; (i) the scoring results; (ii) the general conclusion that the highest bidder was the

“best value”; and (iii) the procedures required by the bid protest. The protest officials deemed

the criteria permissible by statute, and characterized the formula for calculating the award winner

as an illustration of how “best value” can differ from “low bidder.” Regarding the protests

themselves, the deadline for filing passed before the agency revealed specific data on the scoring,

which led to concerns that the protesters could not adequately pursue a remedy given that they

had been denied access to potential evidence. However, the protest officials considered the

criticism of the actual protest procedures to be beyond the scope of their authority to remedy.7

III.    Challenges faced

        A.       Time Pressures

        The greatest challenge to the procurement process was the short time frame and the size

of the undertaking. The decision to have a replacement structure by the end of 2008 guided each

decision in the contracting process. While one can argue that the deadline was arbitrary the

underlying fact is that Minnesota’s economy would suffer for as long as the bridge remained

impassable. The economic incentive to rebuild as quickly as possible remained whether one set

the deadline at Dec. 25, 2008 or some other date. Additionally, the short construction time added

pressure to completing the elements of a successful rebuild project. The new bridge must not

6
  Officials within Minnesota’s Department of Administration served as an administrative appeal, reviewed the
MnDOT procedures, and made a recommendation to the Commissioner of Transportation to affirm the earlier
decision and award the contract. The recommendation was accepted and the award was made the very same
afternoon.
7
  For a further critique of the bid protest procedures and an argument for its chilling effect upon contractors, see
Dean B. Thomson, Mark Becker, & Jeffrey Wieland, A Critique of Best Value Contracting in Minnesota, 34 WM.
MITCHELL L. REV. 25, 57 (2007).


                                                         5
only correct the as yet undetermined deficiencies of the old bridge, but must also support a

cohesive transportation system into the future. Incorporating the area’s future transportation

needs requires a level of planning and political consensus that did not exist at the time of the

collapse.    Members of the State Legislature and the Governor had been hotly debating

transportation projects for several years leading to two, narrowly upheld, transportation funding

vetoes in 2005 and 2007, as well as a grass-roots initiative in 2006 to amend the State

Constitution to dedicate specific tax revenues to transportation funding. This political context

spilled over into whether the replacement bridge would be capable of supporting a light-rail line,

a transit service that has divided the legislature.8

        B.       Funding an Unplanned Construction Project

        Much political debate followed the disaster. Most of it centered on investigating the cause

and how to fund the replacement bridge. Transportation funding in Minnesota has become a

divisive issue, both as between the political parties as well as among the geographic regions in

the state. Allocating funds, and identifying sources, became more contentious in the wake of the

tragedy. The political intensity was increased by the federal rule that emergency federal funds

could only be used to replace the functional equivalent of the lost structure. Thus, one option

was to build a technically equivalent replacement with little impact to Minnesota taxpayers. But

some groups wanted to the replacement to meet future, and arguably current, transportation

needs by, for example, including the possibility of a light rail line on the bridge. The bridge was

scheduled to be replaced between 2020 and 2025, and of course the time for debate over the

capacity of the replacement was not only accelerated but the subjects of that debate were




8
 The light rail component was originally included in early presentations by MnDOT officials, then rejected by the
Governor’s administration. But light rail was ultimately incorporated into the design.


                                                       6
intensified by the collapse.9             Ultimately, the design incorporated future alternative transit

options, and the cost of the upgrades was segregated for statutory funding purposes.

           C.       Selecting the Type of Contract

           As a matter of objective policy, one cannot say whether rebuilding a bridge should ever

be an emergency procurement. It seems appropriate to buy water, tents, or food for a town

ravaged by a natural disaster. But it is not as easy to classify a project that will continue months

or years after the initial crisis has passed. Additionally, the structure of the statutorily mandated

process is useful for evaluating the build options. Procuring a bridge without any guidelines or

set method seems overwhelming and likely to lead to inefficiency. The inclusion of large

structures in emergency procurement remains a question of policy for government to decide;

however, to the extent that the policy questions are not decided, they become points of

contention in the emotionally charged atmosphere of a crisis.

           D.       “Best Value” Did Not Equal “Lowest-Bidder”

           In what is arguably the most visible procurement decision in Minnesota’s recent history,

MnDOT awarded the contract to the design-build team with the longest completion time and the

highest cost. Awarding a contract to the highest bidder led to public criticism and an attempt to

explain the concept of “best value” in layman’s terms. Minnesota generally requires that at least

30% of evaluation points be awarded based on cost. But the I-35W bridge contract was subject

to a statutory exception, enacted in 2001, resulting in a best value formula of cost divided by the

technical score.10 While the formula for determining the award winner was identified in the

RFP, and the public can generally endorse the idea that the quality of the design should be

valued, the counter intuitive result required a public explanation.

9
    The construction on the original bridge began in 1964 and it was opened to traffic in 1967.
10
     See Minn. Stat. § 161.3426.


                                                            7
         E.       Contractor Liability and the Spearin Doctrine

         The investigation into the cause of the collapse is still incomplete. But several factors are

being considered. These factors include: the age of the structure; maintenance history; load

tolerances; maintenance work at the time of the collapse; corrosion due to weather elements or

de-icing chemicals; and whether there was a design flaw in the original construction. The NTSB

released a preliminary finding which indicated that portions of the gusset plates originally used

in the 60’s may have been too thin for the task. Although the bridge capacity (and weight) was

increased over the decades, the designers are faced with potential liability in the wake of the

collapse.11

         F.       Confusion in Context

         Other, structural, aspects of the procurement process also led to conflict. For example,

the bid protests discussed the assumption held by some designers that the evaluation process

reflected an unspoken preference regarding the competing design goals to rebuild or to improve.

Some builders felt that the circumstances required that a steel bridge needed to be built, since

using concrete takes longer and is more expensive. But no such preference was ever stated in the

solicitation.    Additionally, the discussion over the inclusion of subjective factors in the

procurement process will likely continue, as will the discussion over whether a rushed

presentation is an appropriate way to measure them. Issues of confidentiality also created

difficulty balancing public accountability against protecting bidder’s information.12                         These

structural flaws would likely be remedied by a slower, more deliberate, process. But slowing


11
   The Spearin Doctrine broadly governs the assignment of liability between the government and government
contractors. This doctrine is derived from the Supreme Court decision in United States v. Spearin, 248 U.S. 132
(1918) and its progeny.
12
  In the arena of public transportation, issues of confidentiality can broach national security concerns as government
officials try to limit public dissemination of knowledge regarding technical failures.



                                                          8
down is not always reasonable in the face of a crisis. A plan for accelerated procurement should

address as many of these concerns as possible.

IV.    Recommendations to Future Stakeholders

       Reviewing Minnesota’s response to the 35W bridge disaster yields recommendations for

both the public and private sector in preparing emergency contracts for a large rebuilding project.

First, both State and Federal agencies should have specific contingency plans in place outlining

the methods for emergency and accelerated procurement.            These contingency plans would

specify the appropriate subject matter (e.g., buildings that are critical, highways with daily travel

above a set threshold, etc.) and the methods to evaluate plans.

       Second, agencies should strive to set policy priorities (e.g., replacement vs. upgrade) and

requirements as specifically as possible. Since rebuilding a similar bridge is quicker and cheaper

to build in a time sensitive situation, discussions prior to an emergency should set out this policy.

In Minnesota, the impending end-date of the bridge’s useful life led to the decision to rebuild

with improvements for capacity and transportation infrastructure. Finally, public contractors

should endeavor to segregate functionally equivalent features from improvements and use every

pre-proposal opportunity to clarify ambiguous RFP provisions. As Minnesota did in its RFP, the

segregation of upgrade costs allows an easier evaluation for emergency federal funding.

       In a political society with many divergent opinions and priorities, completing any large-

scale public project can be a daunting task. The level of difficulty is increased when one

considers the natural stressors of rebuilding after a crisis. The charged atmosphere creates a need

for advanced planning and heightened communication between all parties to ensure a clear

articulation of needs and goals.




                                                 9
[Possible “Sidebar”]

Recommendations to Future Stakeholders

1. Both State and Federal agencies should have specific contingency plans in place outlining the
methods for emergency and accelerated procurement.

2. Agencies should also strive to set policy priorities (e.g., replacement vs. upgrade) and
requirements as specifically as possible.

3. Public contractors should endeavor to segregate functionally equivalent features from
improvements and use every pre-proposal opportunity to clarify ambiguous RFP provisions.




Timeline

Aug 1, 6:05pm – Bridge Collapse
Aug 2 – Emergency declaration by Gov.
Aug 4 – MnDOT issues RFQ
Sep 99 – MnDOT issues first RFP
Sep 11 – MnDOT issues 6th (and last) amendment to RFP
Sep 14 – Technical docs submitted
Sep 19 – MnDOT identifies apparent contract award winner
Sep 20 – Bid protest submitted
Oct 8 – Contract Awarded




                                                 10

								
To top