Market Research Summary 6-25-09 V2 FINAL.doc

Edith Green-Wendell Wyatt Modernization Project

Summary of Market Research/Early Exchanges

6/22/09 The following summarizes market research/early exchange activity for GSA R10’s Edith Green-Wendell Wyatt Modernization Project.

Firms Participating (to date):

JE Dunn

Hoffman Construction Company

Mortenson

Absher Construction

OPUS Northwest

Skanska

Walsh Construction Company

Bayley

PCL

Howard S. Wright Construction

Lease, Crutcher, Lewis

Hensel Phelps Construction

Grunley Construction Particulars:

Meetings were conducted during the weeks of April 9-12; 20-24; April 27-May 1; May 4-6; and May 25-29. GSA participants included P. Brunner, Senior Contracting Officer and Project Executive and Chad O’Brien, Contract Specialist. Paul Witherspoon, Assistant Project Manager attended the meeting with Mortenson, JE Dunn and OPUS.

Meetings were conducted at the location suggested by the firms interested in meeting. Most were conducted at the contractor’s location/offices. Two were done by teleconference.

A list of participants and related contact information is attached.

All participants were asked if they had any objection to release of the contact information, none objected.

Information Provided/Shared:

1. History of project (construction previously solicited but put on hold pending receipt of construction funding). Funding not provided for two years.

2. When the construction project solicitation was being prepared two years ago, GSA R10 planned a CMc delivery with GMP contract type. GSA R10 secured a deviation to the Federal Acquisition Regulation (FAR) to allow a GMP contract type. Based on a market survey GSA R10 did of potential contractor, GSA R10 also secured a waiver to the Cost Accounting Standards (CAS).

3. The project is now being funded under the American Recovery and Reinvestment Act (ARRA). Project scope will be revisited to more closely align with energy conservation emphasis of ARRA as well as requirements of the Energy Independence and Security Act 2007 (EISA).

4. The project scope, 2 years ago, was based on the building remaining substantially occupied during construction. The plan was to provide the construction team 2-3 floors at a time, with existing tenants being moved to swing space within the building. Vacating the building was not considered feasible given the lack of comparable and available rental space in the Portland market. Given the current market conditions, GSA is aggressively exploring the possibility of vacating the building to accommodate construction.

5. GSA intends to “re-scope” the project by starting with an High Performance Building workshop. GSA was considering allowing any contractors, interested in competing for the construction contract, to participate in the workshop.

6. Obligation and expensing limitation, imposed by ARRA, were discussed. Construction funding must be obligated by September 2010, and that funding liquidated/expensed by September 2014. Projects that cannot obligate ARRA funding by September 2010 will most likely loose that funding to other projects that can.

7. GSA was considering a variety of delivery methods, to include traditional, design-build-bridging, and Construction Manager as Constructor (CMc) [equivalent to the commercial Construction Manager/General Contractor (CM/GC)].

8. GSA was considering a variety of contract types, to include firm-fixed-price, fixed-price with incentive fees, and guaranteed maximum price.

9. Participants were provided a graphic identifying the various delivery methods/contract types along with the potential related duration to solicit/award. That information was contrasted to the constraints of ARRA (with respect to obligating and expensing funds) as well as effort/activity needed to re-scope the project. The graphics provided are attached.

10. Participants were provided a brief outline of GSA R10’s CMc solicitation method/template/protocol, specifically contractor submissions typically required during the solicitation; oral interviews; the voluntary shortlist function; value and evaluation of the GMP; subcontract selection and management; and intent to develop and negotiate all project processes during the design phase. GSA reiterated the bi-lateral nature of the construction phase options.

11. GSA shared recent experiences with collaborative delivery, specifically integrating the AE with CMc then optimizing that relationship. GSA has experienced significant challenges in converting delivery methods (traditional to collaborative), mainly integrating the teams. GSA is contemplating the value of a “design-build CMc” by adding an option to acquire AE services from the CMc after award. The “AE option” would be exercised if agreement on shared processes and AE scope could not be reached. AT THIS POINT, GSA HAS CONTRACTED WITH SERA ARCHITECT (THE ARCHITECT OF RECORD) TO “RESTART” THE DESIGN SERVICES. PROSPECTIVE CMc CONTRACTOR WOULD NOT PROPOSE AN AE AS PART OF THEIR TEAM DURING THE CMc SOLICIATION.

12. GSA intended to use the Federal Business Opportunities (FedBizOpps) web page, not only for required notifications, but to post relevant technical documentation, to include renderings, technical studies, workshop summaries.

13. GSA suggested industry input would be evaluated and potentially a second round of market research-early exchanges conducted before the solicitation document was finalized.

Recommendations/Feedback Provided:

1. All firms participating stated that the market research discussions were valuable and very much appreciated.

2. All firms participating strongly supported the use of collaborative delivery, CMc-GM/GC-GC-CM. A majority of the participants believed collaborative delivery with a guaranteed maximum price contract arrangement was most appropriate for complex capital projects. There was broad consensus that collaborative delivery/GMP pricing fit the project best given the project’s technical requirement/full scope was not fully articulated.

3. Firms that have competed for GSA R10 CMc opportunities over the past 5 years believe the GSA R10 template is very appropriate and allows broad participation with low cost. The only concerns expressed involved past performance questionnaires, specifically the length, and the challenge with getting potential references to respond. Most firms having an opinion on past performance questionnaires stated that “responsiveness” was an issue on solicitations for both public and private opportunities.

4. All firms believed vacating the building during construction would be beneficial to the owner and tenants. Most believed a “vacate” strategy would dramatically reducing project duration (from 50-60 months occupied, to 24-36 vacant). Reducing the project’s duration makes the project more attractive to industry from a resource utilization and management perspective and maximizes the benefit of current favorable market conditions. It also increases safety and allows for alternate ECM’s and construction means/methods.

5. A majority of the firms participating expressed value in being allowed to audit the High Performance Building workshop and had no objection to any GSA limits (e.g., limiting the number of participants or restricting some agenda items to GSA/AE discussion only).

6. No firms expressed a concern with GSA including an AE option. Most, with an opinion, thought that was a reasonable mitigation with respect to CMc/AE integration risk.

7. All firms acknowledged the significant cost of preparing GMP submissions.

8. All firms believed there is a direct correlation between the value/accuracy of the GMP and the level of development/articulation with respect to the requirements package (Construction Drawings (CD’s) and project specifications). GMP proposals solicited during early stages of the technical requirements package development (i.e., schematics, 50% DD’s etc.,) will be less accurate. There was broad agreement that solicitations initiated before completion of the technical requirements package should not include GMP submissions. Instead price competition should be based on qualifications and design phase fees alone.

9. Several contractors suggested that the time needed to reach a GMP could be dramatically reduced by soliciting a CMc team, or the prime along with 3-5 critical first tier subcontractors.

10. Most firms stated that soliciting the GC with selected subcontractors may involve exclusivity agreements that would limit some subcontractor from proposing for multiple GC’s. Most firms acknowledged this is a normal commercial market arrangement/restriction.

11. Those firms familiar with Cost Accounting Standards (CAS) did not believe it provided any additional benefit to the owner/GSA, given commercial “open-book” requirements.

12. A majority of the firms participating in market research, especially those that regularly do business in the Portland market believed this was an exceptionally good time for an Owner/Buyer to enter the market. Several added that there was a surplus of trade labor and given market conditions a very high probability of favorable subcontract pricing (potentially 6%-12% pricing conditions that existed 12-20 months ago.

Attachments:

1. POC Contact List

2. Delivery Methods/Contract Type, Project Milestone Graphics Package (updated to 6-22-09)

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