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Design Build 8(a) setaside


DAM

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Hello!   We have have a $700k construction requirement.  We proposed using the design build method, but our plan included the design effort as the base task order requirement and the option would be the construction activities.  Some oppose this method because the construction is not funded at time of task order award.    Any thoughts??

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Interesting.  You have many concepts at play based on the OP.

First IDIQ where a 8(a) set-aside either because the IDIQ is an 8(a) set-aside or because you are limiting competition to a single source under a multiple award IDIQ to an 8(a) contractor.   

You are doing a design-build as other than a two step. 

As a design-build I am making the assumption that the contract type for the Task Order will be FFP.

With these unique facts noted here are my thoughts -

In a general application of the FAR and fiscal law Firm Fixed Price contracts are not doable.  Why?   The total FFP is to be obligated.  This said agency supplement to the FAR such as DFAR 232.704-70 does provide otherwise.

Absent agency supplement the other option is that if the need is a true 8(a) sole source of a design-build project and the agency is not subject to the DFARS I could see where the Task Order could be awarded as a FFP and have wording that supports the award with Government obligation limitations similar to 232.704-70 .  I say this noting in a sole source environment where everything is negotiable except that stipulated by law (statute or case law), Executive order or other regulation.  

To the the caveats, 8(a) as a law would seem to allow in consideration of the further regulation regarding the 8(a) law.  I did not do case law research on the specifics of your scenario in part because if truly an 8(a) sole source I doubt that the matter would have ever surfaced.   I know of no Executive Order that would deal with such a matter. 

Other regulation, I did no research but I darn sure would talk to the appropriate people in what I will call budget and finance to get their view as availability of appropriations and other concepts regarding fiscal responsibility come into play.   Heck even the electronic systems used in contract writing may not allow but I am no expert on the systems.

Overall I have other thoughts based on assumptions as you have not provided facts I would need.   

Hope this helps and no doubt my comments will unleash a stream of other thoughts for you to consider.  

PS - As I expect the OP will unleash lots of discussion here is something I found.  Not saying it helps just my quick two minute research as I am only providing thoughts based on experience not thoughts based on extensive research.

 

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If you are awarding a contract to design a project with an option to construct it, it isn’t a “design-build contract” . It is an A/E contract. A design build contract is an integrated contract upon award with the firm intent to construct a project.

There isn’t any legislative authority to award a design-build contract to design a project with an option to construct it. You must follow the Brooks Act procedures to select the A/E to design the project.

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If you are somehow allowed to award a sole source or competitive set-aside A/E contract, the selected firm cannot subcontract more than 50 percent of the amount paid by the Government for A/E contract performance to subcontractors that are not similarly situated entities (FAR 52.219-14 Limitations on Subcontracting).

Any design work that a similarly situated subcontractor entity further subcontracts will count towards the prime contractor's 50 percent subcontract amount that cannot be exceeded.

For the separately awarded construction option, I think that the A/E prime contractor would have to comply with the 75% or 85% limitation on subcontracting to similarly situated firms.

Since the Limitations on Subcontracting clause has been bastardized to allow almost any method to achieve self-Performance, I suppose that you might be able to award a prime A/E contract to a 8(a) Joint Venture of a design firm and a construction firm.

There might be 8(a) construction companies with their own qualified A/E design staffs or 8(a) A/E firms that perform D-B construction. I don’t know. 

The main challenge is that the primary purpose of the contract is to design the project.  Construction of the project, as an option,  might never be awarded.

For such a small project, subcontracting and/or joint venturing and layering of subs would seem to eat up the budget. And would a consortium of firms be interested in small shares of  a small project?

Small A/E firms might be unable to obtain performance and payment bonds on their own. Bonding companies require some capitalization or other security, since it isn’t insurance.  A surety will generally go back to the bonded contractor to cover any losses. 

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Ok, I overlooked the category of the original post under “Schedules, GWACs, MACs and ID/IQs”.

I didn’t realize that this would be set-aside task order for an 8(a) firm under an ID/IQ or a new ID/IQ.

Are there existing schedules that provide for both A/E design services and construction by the same firm that isn’t design-build? 

I still believe that the initial purpose of the task will be for an A/E effort, since construction might or might not be awarded.

I believe that both A/E design and Construction would have to be within the scope of the ID/IQ. 

Can you please elaborate on what type of task order contract you are planning to use?

 

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