Search WWW Search wifcon.com

To Contents

Design-Build Construction - 2 Phase - Paying Stipends
By Katherine Roseberry on Thursday, March 08, 2001 - 12:50 pm:

Joel, On 4 and 5 Aug 1998 you posted messages at the "Water Cooler" indicating the COE's interest in finding an authorization to allow payment of a "stipend" to unsuccessful second phase offerors under the 2 Phase Design-Build Construction selection procedures covered by FAR 36.3. According to your counsel, at USACE and in the Districts, the problem was how to legally justify the payment and how to legally phrase it in the RFP. I go back to the water cooler for a very long time and consequently don't know how this particular discussion ended. The forum archive doesn't go back to 98. Do you have any information you can share on the stipend issue beyond 5 Aug 98?

By joel hoffman on Thursday, March 08, 2001 - 04:53 pm:

Katherine, I know that at least one District has payed "stipends" to the unsuccessful phase 2 offerors and a couple others were recently planning to. It is not illegal. Vern Edwards had advised me that the Air Force has paid something like this on major weapons systems acquisitions.

The key is to obtain rights (limited rights) to a product. I have developed a Special Contract Requirement for use on a two phase D-B acquisition, outlining the Government's and the Offeror's rights concerning the technical proposal.

Other bits of advice. Make acceptance of a stipend voluntary. The Offeror retains all rights to the design proposal if it declines to participate in the stipend. A contractor proposed this idea to me at an industry seminar.

Establish minimum technical acceptability requirements to be eligible for a stipend. That will assure that the offeror expends the effort to develop a reasonable proposal, instead of just submitting something to get paid , then withdrawing from the competition or deliberately submitting such a proposal as to be eliminated.

Pre-establish the amount of the stipend and state it in the RFP. My rule of thumb is to get your technical experts to develop a rough estimate of the costs to prepare the phase 2 design proposal. Then take a percentage (say, no more than 50%) as a Government share of the risk to develop a design proposal. Don't pay anything for the management and performance capability proposal - that is something contractors are used to preparing for an RFP.

My attorney at Headquarters USACE has stated that stipends are legal - as long as the Government receives a tangible benefit for it. The key is to balance the Government's and the unsuccessful offeror's rights. Don't eliminate someone, then infuse their significantly better design into the winner's design. My special contract requirement ("special clause", "special requirement", "special conditions", or whatever term your agency uses) addresses this trade-off consideration.

I believe there may have been some discussion in this WIFCON forum, last year. You might want to search the archives for that discussion.

Does this help? Happy Sails! Joel Hoffman

By Katherine Roseberry on Friday, March 09, 2001 - 08:51 am:

Joel, thanks for the information. I still would like to get the text of your "special contract requirement" clause. I went through the forum archive (under design-build) and found nothing. I found a listing of the old Water Cooler topics which looked promising but I got error notices when I tried to access them. If it is not too much trouble, could you please send me the clause?
Two last questions. Is the Design-Build class that you teach open to Air Force folks and can you recommend any worthwhile commercial D-B classes? Thanks again for your help.

By joel hoffman on Friday, March 09, 2001 - 02:30 pm:

Katherine, I sent you the STIPENDS SCR. The Air Force often sends students to the COE PROSPECT Course, #425 Design-Build Construction. If you know any PM's at AFMC - WPAFB, many have attended. I sent you the course director's phone number for availability of spaces. You can ask for standby spaces. We always seem to have one or two last minute cancellations.

There are no inherent roles and responsibilities or legal duties of the various parties, in design-build. The FAR does not have clauses covering the unique roles and responsibilities in Government design-build construction contracts. Unfortunately, many people try to simply use A-E
contract clauses. We have developed several successful SCR's and guide specs for design-build. The guide specs are in final review for formal adoption at our headquarters. We're trying to get the SCR's adopted as EFARS clauses but the USACE bureaucratic wheels turn slowly. You may view the D-B guidance, through Bob Antonio's GUIDANCE PAGE link, at


The problem with commercial organizations' material is that there are several forums with model contract guidelines. You must understand that each organization's material- roles, responsibilities, risk assignment, etc. is drafted in the best interest of its constituents. However, I think the best commercial training and guidance is available through the Design-Build Institute of America. They have good material on preparing performance oriented specifications, conceptual estimating for proposal preparation, etc. Their home page is found at


Hope this info helps. Happy Sails! Joel