Approval to utilize CMGC for outbound baggage project - signed.pdf

Memorandum

Date: August 29, 2024

To: Sarah Medary, City Manager

From: Noel Dietz, Purchasing Analyst

Subject: Approval to utilize CM/GC solicitation method for Outbound Baggage Project

Background:

The Airport seeks to expand and relocate the Transportation Security Administration (TSA) checked baggage screening facilities and airline baggage makeup area, which constitutes a public improvement project.

City of Eugene public contracting rule (Rule) requires contracts for public improvement projects with an estimated value over $100,000 be awarded through an Invitation to Bid to establish a qualified low bidder. This process facilitates a Design-Bid-Build approach to the public improvement construction in which the design is performed prior to and separate from solicitation of the construction contract (this is the typical method used).

However, Rule permits the use of alternative contracting methods (137-049-0620), which allows the City to consider cost in addition to qualitative factors, when such a method is deemed in the best interest of the City and community by either reducing costs or expediting the project completion.

Attached are the Findings to support use of an alternative contracting method for the Outbound Baggage project. For this project, the Purchasing Office seeks to utilize the Construction Manager/General Contractor (CM/GC) contracting method, which allows the designer, City, and contractor to work collaboratively, thereby expediting the construction, limiting costs and achieving a higher quality outcome.

Process:

Rule requires that the Contract Review Board (City Council) or its delegated purchasing agent approve use of an alternative contracting method. The Purchasing Agent has been delegated the authority to approve these requests. Technically, this allows the Purchasing Agent to approve use of an alternative contracting method, but because of the scope, budget, and public knowledge of this project, Purchasing is engaging the City Manager in this process and seeking approval for use of the alternative contracting method.

If these draft findings are approved, the Purchasing Office and Airport will post a public notice and, if requested, allow comment on the use of an alternative contracting method prior to final adoption of findings.

REQUEST FOR USE OF

CM/GC PROCUREMENT PROCESS

FOR PUBLIC IMPROVEMENT

Findings of Fact Prepared by Noel Dietz, Purchasing Analyst (Finance) and

Mariah Mulcahy, Project Manager (Airport)

ORS 279C.335 (1) requires, with certain exceptions, that all public improvement contracts be based on competitive bidding and, under ORS 279C.375, awarded to the lowest responsible bidder. The construction cost for the Outbound Baggage Project will exceed $100,000, which would ordinarily require an Invitation to Bid procurement process. However, ORS279C.335(2), (City Rule 137-049-0620) permits the use of alternative contracting methods, which allows the City to consider cost in addition to qualitative factors, when such a method is deemed in the best interest of the City and community by either reducing costs or expediting the project completion.

Rule requires that the Contract Review Board (City Council) or its delegated purchasing agent approve use of an alternative contracting method.

Therefore, pursuant to the City’s Administrative Order No. 44-23-01-F, section137-049- 0620, approval is requested to proceed with a Construction Manager/General Contractor (CM/GC) procurement process for the Outbound Baggage Project through a qualifications-based, competitive selection process subject to the following conditions:

• Evaluation criteria to be applied in selecting the CM/GC firm are stated clearly in the solicitation document. Under the proposed CM/GC procurement process, the contractor would be selected utilizing a publicly advertised Request for Proposals (RFP). Criteria used to identify the CM/GC firm that best meets the public contracting needs may include but are not limited to cost, quality, experience relevant to the improvement to be constructed, and time required to commence and complete the improvement.

• The Disadvantaged Business Enterprise Program has identified the use of the CM/GC process for the Outbound Baggage Project as an excellent opportunity to potentially increase the City of Eugene’s utilization of COBID-certified businesses by requiring the General Contractor to outline their approach to engaging COBID-certified businesses as they build their project team.

The Purchasing Office of the City of Eugene finds as follows:

Project Background. The current Transportation Security Administration (TSA) EDS checked baggage screening facilities at the Eugene Airport are segmented into multiple small rooms with in-line machines that cannot handle oversized luggage. This causes the TSA to need to hand search every oversized piece of luggage creating inefficiencies. The existing in-line machines also only have a single belt which means baggage often jams preventing further screening and oversized luggage stops all screening until the piece of luggage can be cleared from the belt. The current layout of the terminal requires multiple individual screening rooms that must be staffed individually. This ultimately takes more personnel than a centralized system. In addition, the existing baggage makeup area is also segmented into small rooms that are not sufficient in size to serve the larger mainline aircraft that the Airport now sees. This layout greatly limits airline personnel’s ability to effectively process and load luggage onto baggage carts to be brought to aircraft.

Outbound Baggage Project Description. Eugene Airport entered into an Other Transaction Agreement (OTA) with the TSA for the design of a new EDS system that will be coupled with an airport funded expansion and relocation of the existing airline baggage makeup area. The project will consist of a new in-line baggage screening system, baggage conveyance system, building expansion, and airline baggage makeup area.

Input from both the design team and the construction team during the project will be paramount to delivering a concourse expansion that is completed on schedule, addresses changes to project scope required by available grant funding and meets the expectations of the public. To facilitate attaining these goals, it will be advantageous to have the general contractor on board near the beginning of the project to assist the design team.

The City project team believes this would be best accomplished with a CM/GC form of procurement for this construction project. The team believes that the CM/GC procurement process will allow the City to better meet the budget and scheduling requirements of this project without encouraging favoritism in the awarding of this contract or substantially diminishing competition.

1. Project Requirements. This relatively complex project is comprised of the new in-line baggage screening system and baggage makeup area, together with other elements that are dependent upon the receipt of grant funding.

In the interest of meeting budget expectations, collaboration with the City, the Design Team, and the Owner’s Representative will be crucial to ensure the project team maximizes cost efficiencies throughout the design process, while helping to ensure the final product meets expectations.

The CM/GC provides immediate and on-going input to the design team resulting in accelerated design and construction schedules, improved management of the construction budget, and potentially lower costs.

2. The CM/GC Approach. A typical design/bid/build project has six phases: (1) programming; (2) schematic design; (3) design development; (4) construction documents (5) bidding; and (6) construction. Under the proposed method, the CM/GC will be selected prior to completion of phase 2, schematic design, and provide ongoing feedback to the design team on the constructability and cost of their proposed design strategies. Under the design/bid/build approach, the contractor is not selected until the conclusion of phase 5, bidding, potentially adding months to the project schedule as the feedback provided comes after design and construction documents are complete.

3. The CM/GC establishes several variables critical to the project remaining within budget and assuring a fast-track project completion. These include: (i) a Guaranteed Maximum Price (GMP) to complete the project; (ii) committing to a schedule and establishing the sequence of work based on critical path method (CPM) analysis; (iii) commitment by the CM/GC to implement the final project design within the GMP; and (iv) full coordination by the CM/GC of the project design and construction team. This approach ensures that the subcontractor bids can be solicited in a timely manner that should result in best pricing. In the traditional design/bid/build process, the final budget and schedule cannot be established with certainty until after bidding.

4. The CM/GC approach allows value engineering to take place when it is most effective– during design rather than after bidding. Value engineering is a means to determine the best project design that meets the needs and priorities of the owner within the established budget. Value engineering is done most effectively by a team consisting of the owner, architect, consultants, and contractors such as exists with the CM/GC approach. When the contractor participates in evaluating design decisions, the design team receives immediate feedback on issues of constructability, cost, quality, and scheduling of the project. The CM/GC can then commit to implementation of the project design within the prescribed schedule and budget. In the traditional design/bid/build process, value engineering with the contractor does not occur until after bidding, if at all.

5. The CM/GC approach is likely to reduce the number of construction change orders. Having the CM/GC involved during the design process leads to a better understanding by the contractor of the owner’s needs and the architect’s design intent. The design team can also benefit from more effective value engineering when the contractor is involved during the design process. The CM/GC also assumes responsibility for implementation of the project design on time and within budget. Frequent and diligent progress reviews by the CM/GC throughout the design phase results in fewer design corrections and change orders during construction, which reduces budget risks.

6. The CM/GC selection process will encourage competition. To ensure full public disclosure of all information, the City’s Request for Proposals (RFP) solicitation package will include project goals and objectives, a detailed project description, contract terms and conditions, selection process, evaluation criteria, role of evaluation committee, provisions for comments, and complaint process and remedies available. The Purchasing Office proposes to select a CM/GC using objective criteria under the following competitive process:

A. Advertisements, pursuant to ORS 279C.360 (1), will be placed in the Daily

Journal of Commerce and posted on OregonBuys.

B. A pre-proposal vendor conference will be held, open to all interested parties.

During the pre-proposal conference - and up to ten (10) days before the proposal due date - interested parties will be able to ask questions, request clarifications, and suggest changes in the solicitation documents if such parties believe that the terms and conditions of the solicitation are unclear, inconsistent with industry standards, or unfair and unnecessarily restrictive of competition.

C. Sealed proposals will be submitted by the date and time specified in the RFP.

D. An evaluation process will determine whether a proposal meets the minimum requirements of the RFP, and to what extent, as set forth in the RFP. These requirements include, but are not limited to, the contractor’s experience and qualifications, experience with value engineering, and the ability to meet bonding requirements specified in the RFP.

E. The evaluation committee will use clear, objective criteria to evaluate and score the candidates. The evaluation committee may interview the top rated, qualified candidate(s). The City will then proceed to negotiate and enter into a contract with the top ranked firm and authorize the Phase I portion of the contract for pre-construction CM/GC design assistance. Once an acceptable GMP can be agreed upon, the City will execute a GMP Amendment for the Phase II portion of the work, construction, which will include a fixed fee based on a percentage of direct costs.

7. The RFP document sets forth clearly the contractual requirements of the CM/GC for soliciting, receiving, and awarding sub-bids. These include, but are not limited to:

A. Advertisements will be placed in the Daily Journal of Commerce and on

OregonBuys.

B. Proactive contractor engagement with COBID-certified suppliers eligible to complete sub-contracted portions of the work.

C. Competition will be strongly encouraged with attempts to obtain at least three (3) bids for most portions of the work.

D. Sealed bids will be required and opened publicly at the time specified in the bid advertisements.

E. The CM/GC may self-perform the work of the “General Conditions” and other minor “pick-up” work but is prohibited from performing portions of the trade work without bidding against other qualified sub-bidders.

F. Adherence to prevailing wage rates and all other standard conditions of Oregon public works contracts.

8. This request complies with the criteria outlined in 279C.335 (2):

A. It is unlikely the exemption will encourage favoritism in the awarding of public improvement contracts or substantially diminish competition for public improvement contracts. The process used will not involve favoritism nor diminish competition. The selection process for the CM/GC will be done in a competitive, qualifications-based manner. Evaluation committee members will evaluate proposals based on clear, objective criteria outlined in the RFP. Public notices will be published, and notices sent to firms that have expressed interest. Market conditions indicate there are sufficient entities with CM/GC experience to have a competitive RFP process. Further, the project will be competitively bid at the subcontractor level.

B. The awarding of public improvement contracts under the exemption will result in substantial cost savings to the contracting agency. The CM/GC process will result in substantial cost savings to the City of Eugene by requiring the City, the architect, and the contractor to work together as a team to maximize design and cost efficiencies. The proposed CM/GC method has the element of a guaranteed maximum price (GMP) ensuring that project funding requirements will be met.

The CM/GC process maximizes value engineering by promoting collaboration between the owner, architect, and contractor during design, sub-bidding, and construction. Utilizing the traditional design/bid/ build process would be more costly and require significantly more time to complete the project.

Based on the Findings of Fact presented to me, I approve utilization of the alternative contracting method proposed.

Sarah Medary, City Manager

Date

09/03/2024 https://cityofeugene.na2.documents.adobe.com/verifier?tx=CBJCHBCAABAAzOic66q2zavjz71weTcXvXUoVmPxcC2J https://cityofeugene.na2.documents.adobe.com/verifier?tx=CBJCHBCAABAAzOic66q2zavjz71weTcXvXUoVmPxcC2J https://cityofeugene.na2.documents.adobe.com/verifier?tx=CBJCHBCAABAAzOic66q2zavjz71weTcXvXUoVmPxcC2J