Design Build to Budget Playbook_V2.0-31 July 2026 (003).pdf

TABLE OF CONTENTS

Contents Introduction Enhancing Project Delivery: Aligning with Industry Best Practices Unit 1: Acquisition Planning Chapter 1.1: Definition of Design-Build to Budget

1.1.1 What is Design-Build to Budget?

1.1.2 The Core Principles of DBtB

1.1.3 DBtB Advantages

Chapter 1.2 – Understanding the DBtB Placemat

1.2.1 Purpose

1.2.2 Delivery Method Key

1.2.3 DBB vs DBtB – Pending Construction Appropriations

1.2.4 DBB vs DBtB – Construction Appropriations Available

1.2.5 Key Takeaway

Chapter 1.3 -PROCUREMENT PROCESS MAP: The DBtB Pre-Award Lifecycle

1.3.1 Navigating the Placemat: The Pre-Award Flow

Chapter 1.4 Early Industry Engagement

1.4.1 General

1.4.2 PDT Roles and Responsibilities

1.4.3 Key Participants

1.4.5 Advantages, Disadvantages, and Issues for Government Attention

1.4.6 Plan of Action for Early Industry Engagement

Best Practice Chapter 1.6: Establishing the Budget

1.6.1 The Budget as a Cornerstone

1.6.2 The Dual-Approach to Setting the CCL

1.6.3 The Role of Cost Schedule Risk Analysis (CSRA)

1.6.4 Crafting the CCL Clause in the RFP

Best Practice Chapter 1.7: Accelerated Design-Build (ADB)

1.7.1 Definition: A New Statutory Authority

1.7.2 Core Component of ADB

1.7.4 Strategic Benefits of ADB

Chapter 1.8: Stipends

1.8.1 Introduction and Purpose

1.8.2 Legal and Regulatory Authority

1.8.3 The “Color of Money”: Funding and Approval

1.8.4 Determining the Stipend Amount

1.8.5 Conditions for Payment (Eligibility)

1.8.6 A Critical Discussion: Government Use of Proposal Content

1.8.7 Sample Solicitation Language

Chapter 1.9: Incentives (Award-Fee)

1.9.1 Introduction and Purpose

1.9.2 Legal and Regulatory Authority

1.9.3 The “Color of Money”: Funding and Approval

1.9.4 Determining the Award-Fee Amount

1.9.5 Example Award Fee Structure

Unit 2: Think Slow – Solicitation and Award Chapter 2.0 Owner/Stakeholder Readiness: Setting the Foundation for Success Chapter 2.1 Overview of the DBtB Selection Process Chapter 2.2 Phase One – Qualification-Based Selection

2.2.1 Phase One Solicitation and Evaluation Requirements

Chapter 2.3 Collaborative Refinement Stage / Proprietary Meetings

2.3.1 Purpose and Goals

2.3.2 Best Practices for Conducting Proprietary Meetings

2.3.3 Requests for Information (RFIs)

2.3.4 Proprietary Meeting #1: Initial Engagement

2.3.5 Proprietary Meeting #2: Design Advancement

2.3.6 Proprietary Meeting #3: Final Confirmation

Best Practice Chapter 2.4 Final RFP and Best Value Selection

2.4.1 General

2.4.2 The Best Value Continuum in DBtB

2.4.3 Establishing Evaluation Factors

2.4.4 Evaluating Proposals: Merit, Betterments, and Risks

2.4.5 Ensuring an Objective and Holistic Review

2.4.6 The Source Selection Decision

2.4.7 Price Reasonableness Determination

Unit 3: Act Fast- Post-Award Execution Chapter 3.1: Partnering for Success

3.1.1 The USACE Partnering Philosophy: A Command Imperative

3.2.1 What is Fast-Tracking?

3.2.2 Project Suitability for Fast-Tracking

Appendix A: Glossary of Terms Appendix B: Project Information Packet (PIP) Template

Appendix C: Market Intelligence Report: Industry Day/First Look Questionnaire Appendix D: References

Introduction

Purpose: This DBtB Playbook provides PDTs with the actionable, standardized guidance – balancing the Government’s regulatory requirements with commercial best practices - to successfully leverage this powerful delivery method to deliver innovative, high-value projects that meet the requirements.

Applicability: This Playbook applies to all construction (Civil or Military) requirements executed using the DBtB project delivery method.

Distribution: Approved for public release; distribution is unlimited.

Enhancing Project Delivery: Aligning with Industry Best Practices

Choices made on day one about project requirements, risks, and acquisition strategy lay the foundation for success.

The core principles of DBtB focus on fostering early partnerships with integrated design-build teams to leverage their innovation within a fixed budget. When applied to the right projects, this approach is the key to delivering facilities with greater speed, higher quality, and absolute cost certainty.

This playbook covers the entire DBtB lifecycle, providing actionable strategies to help the PDT engage with industry, build mutual trust, and deliver results.

• Unit 1: Project Readiness and Planning

• Unit 2: Navigating the Collaborative Procurement Process

• Unit 3: Post-Award Execution Best Practices

Unit 1: Acquisition Planning

Chapter 1.1: Definition of Design-Build to Budget

1.1.1 What is Design-Build to Budget?

Design-Build to Budget (DBtB) is a specific application of the broader two-phase design-build (DB) process. The ultimate outcome is award of a DB contract with a single, integrated team comprising both the designer and the constructor under one contract to provide a complete design and construction solution for a stipulated, fixed price. However, in a DBtB approach, the project’s budget is established as a firm design constraint prior to award. It is distinguished by its commitment to treating the budget as a key driver of the design, rather than an outcome of it.

1.1.2 The Core Principles of DBtB

Two foundational principles define DBtB:

1. A Single Point of Responsibility: As with all DB projects, the Government has a single contract with a single entity: the design-builder. This integration of the designer and constructor fosters collaboration, streamlines communication, and aligns the entire team toward the common goals of quality, schedule, and budget.

2. The Budget as a Design Driver: This is the defining characteristic of the "to Budget" methodology:

a. The budget is defined upfront and given to the competing teams acting as a proactive and constant consideration from the very beginning.

b. The DB teams are challenged to use their integrated expertise to innovate and optimize a design solution that meets all the project's performance requirements for that specific budget.

1.1.3 DBtB Advantages

Historically, in standard DB, offerors are provided a 35% design (bridging documents) and the DB contract is procured using a best-value tradeoff methodology where offerors provide varying prices based upon the partial design in the solicitation. However, this 35% design limits industry’s ability to innovate.

DBtB offers two distinct advantages:

1. Performance-Based Requirements: DBtB abandons the prescriptive 35% design. Instead, the solicitation tells industry exactly what the facility must achieve (performance metrics) and what the budget is, leaving the how entirely up to them.

2. Proprietary Meetings: DBtB uses confidential, proprietary meetings (interactive discussions) with competing teams during the procurement phase. Instead of waiting for a final submittal, the Government sits down with the offerors, reviews their preliminary concepts, and provides real-time, dynamic feedback. These meetings allow the Government to clarify intent, course-correct misunderstandings, and ensure their innovative ideas perfectly align with the mission goals before they ever submit a final proposal.

Chapter 1.2 – Understanding the DBtB Placemat

1.2.1 Purpose

The DBtB Placemat provides a high-level visual representation of the project lifecycle from project initiation through beneficial occupancy. The placemat illustrates how project delivery decisions interact with the Planning, Programming, Budgeting, and Execution (PPBE) process and demonstrates the impact delivery method selection can have on project schedule, collaboration, and overall project outcomes. The placemat should be used as a roadmap for understanding the concepts discussed throughout this playbook.

1.2.2 Delivery Method Key

The Delivery Method Key provides a simplified comparison between traditional DBB and DBtB. The Key is intentionally structured to make all activities equal durations, whether design, acquisition, or construction, so the individual can see the impact the timing of funding can have on project delivery.

At a high level, DBB follows a largely sequential process where design, acquisition, and construction occur as separate activities. Under DBB, the Government contracts with an Architect-Engineer (A-E) firm (or performs the work with in-house resources) to develop the design, and the construction contractor is typically not involved until the design is substantially complete and advertised for construction.

In contrast, DBtB utilizes an A-E firm [A-E1] during project development to facilitate requirements definition, cost and schedule risk analysis, and development of the Budget Estimate Submission (BES). The purpose of A-E1 is not to fully design the project, but to help establish a realistic scope, schedule, and budget that can be successfully executed. Following acquisition, the selected Design-Builder engages its A-E firm [A-E2] as part of an integrated DB team to complete the design within the budget.

1.2.3 DBB vs DBtB – Pending Construction Appropriations

This placemat compares DBB and DBtB within the constraints of the PPBE process. Both delivery methods must progress through the same BES request for authorization, and receipt of appropriation processes. The difference is how available MILCON Design funds are utilized while awaiting MILCON Construction appropriations. Under the traditional DBB approach, design progresses toward completion while many acquisition and construction activities remain deferred until construction funding becomes available.

Under DBtB, the Government leverages available design funds to conduct the acquisition, select the Design-Builder, and negotiate a firm-fixed-price during the Congressional budget cycle. Through Accelerated Design-Build (ADB) authority for military programs, see chapter 1.7 Accelerated Design Build, the integrated team can continue advancing the design while construction funding remains pending for a MILCON project or an O&M funded project. However, if sufficient funds are available to cover all of design and construction for an O&M funded project it is recommended to obligate all funds at the time of award.

If ADB authority is unavailable, for example a civil works project, contract award for design and construction must wait until receipt of the construction appropriation.

When Military Program Construction funds are appropriated during the Program Year or Execution Year, the project is positioned to immediately transition into construction execution with an advanced design, established construction price, and integrated delivery team already in place. DBtB with ADB does not accelerate Congressional funding. It accelerates project readiness while awaiting funding.

1.2.4 DBB vs DBtB – Construction Appropriations Available

This variation of the placemat illustrates a project environment where construction funding is readily available. In this scenario, DBtB creates schedule savings by shifting critical activities to the left side of the project lifecycle. Early industry engagement, collaborative acquisition planning, proprietary meetings, and integrated design-builder involvement allow the project team to make key decisions earlier than a traditional DBB approach.

Rather than executing design, acquisition, and construction as largely sequential activities, DBtB promotes overlap between planning, design development, procurement, and execution activities. This enables earlier construction starts, supports fast-tracking opportunities, and allows long-lead procurement strategies to be developed sooner.

The representative example shown on the placemat demonstrates that this approach can reduce overall project delivery duration by approximately eleven months when compared to a traditional DBB project of similar scope and complexity.

The schedule savings are achieved through improved collaboration, earlier decision-making, and more efficient sequencing of activities.

It is not achieved by reducing quality, eliminating required reviews, or increasing project risk.

1.2.5 Key Takeaway

The DBtB placemat demonstrates a fundamental principle of this playbook:

Think Slow. Act Fast.

Whether a project is awaiting Congressional funding or operating with construction funds already available, the greatest opportunity to improve outcomes occurs early in the project lifecycle. By investing time upfront to define requirements, validate budgets, engage industry, and develop an executable acquisition strategy, PDTs can reduce uncertainty and position projects for successful execution.

Under DBtB, industry engagement begins early through market research, early exchanges of information, proprietary meetings, and collaboration with integrated design-build teams. This allows constructability, cost, schedule, and risk considerations to influence project decisions before they become fixed requirements.

The objective of DBtB is not simply to award contracts faster. The objective is to optimize the budget by leveraging industry innovation, expertise, and collaboration to maximize project value within available funding. Through competition and innovation, DBtB seeks to balance scope, quality, schedule, durability, and lifecycle performance to deliver the highest-performing facility achievable within the established budget.

By shifting critical decisions and activities to the left, DBtB improves cost certainty, increases innovation, reduces schedule growth, and accelerates project delivery. The chapters that follow provide the tools, processes, and best practices necessary to implement this approach successfully.

Chapter 1.3 -PROCUREMENT PROCESS MAP: The DBtB Pre-Award Lifecycle

Below is the DBtB Process Overview Placemat. This visual roadmap outlines the critical path from initial planning through contract award. Each of the stages below (0-4) will be discussed in greater detail in the following chapter. The information below provides a high-level overview of the process.

1.3.1 Navigating the Placemat: The Pre-Award Flow

The left and center sections of the placemat represent the Pre-Award Lifecycle, broken into three distinct, sequential stages, that are the foundation for success.

Stage 0: Planning and Early Engagement (The "Think Slow" Phase) This stage validates the acquisition strategy and budget and occurs months before the Government issues a formal solicitation.

• Establish Requirements & Target Construction Cost Limitation (CCL): Define what the facility must achieve (performance) and what the absolute maximum budget is (the CCL).

• Market Research & Feasibility Assessment: Engage industry early to ensure the Government’s performance requirements are achievable and identify associated risks.

If industry indicates the project cannot be priced confidently, the Government must pivot to and consider alternative strategies like Progressive DB, Integrated Design and Construction, etc. (Ref. Chapter 1.4 for greater details)

• Request For Proposal (RFP) Development (Zero Prescriptive Design): If DBtB is validated, the Government drafts a performance-based RFP (not greater than a 10- 15%) and by minimizing the level of design, explicitly encourages Industry innovation within the fixed budget.

Stage 1: Phase 1 Qualifications (FAR 36.3): Launching Early to Protect the Schedule A major schedule benefit of the DB process is the ability to overlap procurement with final planning activities (ex. issue the Phase 1 solicitation prior to finalizing the complete RFP package).

As soon as a Statement of Objectives (SOO) is developed to a level that clearly describes the project's scope, mission, and budget, the Government can immediately issue the Phase 1 RFP under FAR Part 36.3. While industry is preparing and the Government is evaluating Phase 1 proposals, the PDT and the stakeholders finalize and validate the Program for Design (PFD) and Project Requirements Document (PRD). This parallel track ensures requirements are 100% locked down prior to entering the Collaboration Stage. (See Chapter

2.3 for more details)

• Solicitation & Evaluation: The Phase 1 RFP focuses purely on the qualifications, past performance, and integrated DB experience of the competing teams. The Government evaluates who the best teams are, not how they will design the building.

• Down-Select: Evaluate the Phase 1 proposals and select a maximum of three of the most highly qualified, competitive teams to proceed to Phase 2. This down-select ensures the Government only conducts intensive, resource-heavy, proprietary meetings with firms that have a genuine chance of award.

Stage 2: The Collaborative Path

• Proprietary Meetings (Interactive Discussions): This is the critical difference in DBtB from standard DB or traditional DBB. A draft RFP is issued to the most highly qualified offerors invited to proceed to Phase 2. Then over a period of several weeks, the Government’s technical team holds a series of confidential, proprietary meetings with each offeror. The Source Selection team will review each offeror’s preliminary design concepts, provide real-time feedback, and course-correct misunderstandings to ensure that solutions maximize the value of the fixed budget.

• Final Proposal Revisions (FPR) & Award: After the meetings conclude, the Government will issue the final Phase 2 RFP, which will include any needed changes resulting from the proprietary meetings and additional program documents to support final proposal submission.

Stage 3: Phase 2: Issue Final RFP and Conduct Proposal Evaluation (FAR 15)

• Issuing the Final RFP: The final, detailed, Phase 2 RFP is issued exclusively to the down-selected teams. This RFP includes the validated, performance-based requirements, establishes the firm CCL, and clearly defines the basic scope.

• Evaluating Betterments and Technical Merit: Proposals are evaluated by the Source

Selection Evaluation Board (SSEB) for baseline compliance. In DBtB, the SSEB also evaluates the "betterments" (added scope, higher-performing systems, increased durability) that the offeror proposes within the fixed budget. The evaluation of betterments is an important aspect of DBtB and the SSEB assigns higher technical ratings to proposals that incorporate the high-priority items defined in the Government’s requirements.

• Evaluating Full Budget Utilization: Under DBtB, a proposal that is significantly under the stated budget cap by offering only a baseline, minimally acceptable design, is not advantageous. A more favorable rating should be assigned to the offeror who maximizes the utility of the full budget to deliver the highest quality, most durable facility. (See Chapter 2.4 for more details)

Stage 4: Best Value Trade-Off and Award:

Since the price is constrained near the stated budgetary cap, the Source Selection Authority (SSA) executes a trade-off analysis focused on technical merit. Contract award is made to the offeror who demonstrates the most robust betterments and the lowest execution risk— fully utilizing the budget to deliver the best possible long-term value for the Nation.

Chapter 1.4 Early Industry Engagement

1.4.1 General

Early into the procurement planning phase the Government asks industry directly: ' Will this acquisition strategy work? Is our budget realistic for this scope, and can you price this risk?' The primary objective of this engagement is to conduct transparent market research that informs the Government’s requirements, validates the budget, and reduces acquisition risk. Under DBtB, the Government provides industry with the project's goals, performance requirements, budget and schedule constraints, and allows industry to develop the best technical solution and value creation. See Appendix C for sample market research questionnaire

1.4.2 PDT Roles and Responsibilities

• The Procuring Contracting Officer (PCO) is the single point of control for all industry communication, ensuring compliance with the RFO and maintaining the integrity of the procurement.

• The Project Manager (PM) is responsible for communicating the project vision, mission requirements, and operational constraints.

• Technical Subject Matter Experts (SMEs) and End-Users are responsible for identifying functional requirements and performance objectives, providing industry with the necessary context to develop innovative solutions.

The collective responsibility of the PDT is to act as a unified front, gathering market research to refine project scope and ensure alignment between the budget and the customer’s needs.

1.4.3 Key Participants

Effective industry engagement requires participation from a broad spectrum of stakeholders.

• Government Participants: Key government participants include the PCO, PM, and technical SMEs. The inclusion of End-User representatives is critical to ensure the proposed solutions are functional and fit for purpose.

• Industry Participants: Industry teams often form well in advance of a solicitation. These teams may include Prime Contractors, A-E Firms, and key Subcontractors or Suppliers. Engaging this full spectrum provides the Government with a holistic view of the market’s capabilities, constraints, and potential for innovation.

1.4.5 Advantages, Disadvantages, and Issues for Government Attention

While early engagement offers significant benefits, the PDT must remain aware of potential risks and disadvantages.

• Advantages:

o Allows the Government to validate its budget against market realities.

o Uncovers innovative and cost-effective solutions.

o Reduces the risk of unrealistic proposals and post-award performance issues.

o Allows for early identification of technical, environmental, or site-specific risks early enough to develop mitigation strategies before the final RFP.

o Early outreach allows the Government to identify Small Business (SB) and other socioeconomic groups early, facilitating their inclusion as primary partners or subcontractors.

• Disadvantages and Risks:

o Potential for real or perceived unfair competitive advantage if communication is not equitable.

o The process can be resource-intensive for the Government team.

o Industry may be hesitant to share proprietary data without a firm Government commitment.

o Extensive pre-award outreach can be expensive for firms. If the Government does not offer stipends or honoraria, smaller or specialized firms may opt out of the competition.

o If outreach is not documented or shared across the Government team properly, critical market intelligence gained during meetings may not translate into the final contract requirements.

To mitigate these risks, the PDT must give strict attention to maintaining the integrity of the procurement. All interactions must be documented and controlled by the PCO. Open forums like Industry Days are highly encouraged to ensure transparency. The PDT must remain disciplined, focusing discussions on the "what" and "why" of the requirement, while avoiding any direction on "how" industry should perform the work. A fair and transparent process is paramount to realizing the full benefits of early industry engagement.

1.4.6 Plan of Action for Early Industry Engagement

A structured Plan of Action is essential for executing a fair and effective engagement strategy. The objective is to validate the government's budget, refine the project scope, and reduce acquisition risk. This plan is structured in three distinct phases.

1.4.6.1 Phase 1: Internal Planning & Preparation (Weeks 1-2)

This phase ensures the PDT is prepared, aligned, and has a clear strategy before contacting industry.

1. Establish Engagement Objectives: The PDT defines the key questions to be answered by industry, such as budget realism, primary cost drivers, potential innovations, and significant risks.

2. Assemble the Government Team: The core team is formally identified to include the PCO, PM, Lead Engineer, and End-User representatives. The PCO is designated as the control point for all communications pre-award. The Administrative Contracting Officer (ACO) is designated as the control point for communications post-award. The PM is designated as the control point for communications with the stakeholder. The team should also consider the addition of SMEs as needed, along with Construction Representatives such as the Resident or Area Engineer (RE or AE).

3. Develop the Industry Engagement Package: The team creates a standardized information packet. This is not a draft RFP. It defines the project vision, constraints (e.g., the budget is paramount), high-level scope, and a proposed timeline, but will not include a prescriptive design or statement of work (SOW). (See Appendix B: Project Information Packet (PIP) Template for minimum requirements)

4. Establish Ground Rules of Engagement (ROE): The PCO drafts and disseminates clear rules, including requirements for presence at all meetings, a documentation plan, and a commitment to share non-proprietary information with all potential offerors.

5. Identify the Industry Audience: A list of potential industry partners is compiled, including prime contractors, A-E firms, key subcontractors, and industry associations.

Important Note: Execute the following steps before the team holds any industry days, issue Requests for Information (RFIs), or conduct market research meetings:

1. Mandatory OC Briefing: PDT must attend a formal Procurement Integrity briefing provided by the Office of Counsel (OC).

2. Execute Initial Participation Agreements: Every team member signs a Source Selection Participation Agreement (Non-Disclosure Agreement) specifically covering the upcoming early industry engagement activities.

3. Update Agreements at Phases 1 & 2: These agreements are not static documents.

When PDT members officially enter each distinct phase of the formal procurement, all participation agreements must be updated. Ensure the updated documents explicitly list the names of the competing offerors and incorporate any new personnel who have joined the PDT.

By taking these steps, agency personnel protect the procurement from conflicts of interest, protests, establish clear boundaries for communication, and ensure your team understands the legal framework of the RFO before they speak with industry.

1.4.6.2 Phase 2: Execution of Industry Engagement (Weeks 3-4)

This phase involves direct, structured interaction with industry partners.

1. Issue Public Notice: The PCO and/or Contract Specialist (CS) posts a formal notice on the Governmentwide Point of Entry (GPE) announcing the engagement, providing the information packet, and inviting interested parties to an Industry Day and one-on-one sessions.

2. Conduct the Industry Day Forum: An open forum is held for the PDT to present the project vision and objectives to all vendors, followed by a public, moderated Q&A session.

3. Hold One-on-One Sessions: A series of short, scheduled market research meetings are held with individual companies. The recommended length of time for these sessions is typically 30 to 60 minutes. Experience has shown that 15-minute sessions are generally too short for meaningful dialogue, while 30 minutes is often adequate for standard interactions, with up to an hour reserved for more complex discussions.

These are not negotiations. The PCO ensures all ground rules are followed.

4. Issue an RFI: Alternatively, the PCO can include with the public notice a formal RFI with written questions to allow companies to provide detailed, confidential feedback.

1.4.6.3 Phase 3: Analysis & Integration (Weeks 5-6)

This phase focuses on converting collected feedback into actionable intelligence.

1. Consolidate and Analyze Feedback: The PDT synthesizes all information gathered to identify common themes, innovative ideas, and key risk areas.

2. Develop a Lessons Learned Report: A formal report is drafted to summarize findings, directly answering the questions from Phase 1, and providing a statement on budget reasonableness.

3. Refine the Acquisition Strategy & RFP: Based on the report, the team makes data-driven decisions to adjust the project goals in the SOO, refines performance requirements to allow for innovation, and finalizes the formal solicitation package with a high degree of confidence.

Best Practice

RISK REGISTER CHECKPOINT As the team conducts market research and engages with industry, actively listen for risks the market perceives in the project (e.g., supply chain shortages, aggressive schedule, vague minimum requirements). Do not just note these, add them directly to the Project Risk Register. Understanding what scares the market allows the PDT to adjust the RFP before solicitation, minimizing cost premiums baked into the proposals.

Chapter 1.6: Establishing the Budget

1.6.1 The Budget as a Cornerstone

In DBtB, the budget is a fundamental design constraint, as critical as any physical or performance requirement. The CCL represents the maximum amount the PDT has determined is necessary to design and construct the project. Setting a realistic and well-supported CCL is paramount to project success.

1.6.2 The Dual-Approach to Setting the CCL

The PDT establishes the CCL by using two complementary approaches to create a defensible budget range.

• Bottom-Up Estimate: This approach builds the budget from the ground up and includes:

• The estimated cost to design and construct the project based on programmatic requirements.

• Military Construction (MILCON) Design funds required for all pre-award activities. (Or appropriate design funding for Civil Works (CW) or Interagency & International Services Program (IIS))

• Supervision & Administration (S&A) costs to be set aside for post-award management.

• Appropriate Contingency for project (e.g. Program standard %, CSRA input, etc.)

• Top-Down Constraints: This approach considers the maximum funding available from external sources, including:

• The Programmed Amount (PA) authorized for the project.

• The legislative cap for a given funding or project type.

• Cost and Schedule Contingency, informed by a CSRA, set aside to cover unforeseen conditions and mandatory changes.

• Management Reserve, a contingency set aside to accommodate items like differing site conditions. There should be minimal user requested change orders required due to stakeholder continuous involvement in the development and finalization of the RFP. Stakeholder agreement to the “Freeze Period” formally confirms the Final RFP meets their mission needs, thereby preventing post-award scope creep, user requested changes and contributing to fewer change orders.

The final CCL is selected from the range established by these two analyses, based on the PDT's assessment of project risks and opportunities.

1.6.3 The Role of Cost Schedule Risk Analysis (CSRA)

As required for all MILCON projects over $20M and CW projects over $40M (as of FY24) as outlined in USACE Recommended Best Practices, Cost & Schedule Risk Analysis, dated March 2024, the CSRA is a critical tool in establishing a realistic budget. It provides three essential outputs:

1. Schedule Contingency & Confidence: An analysis of the time required to absorb potential schedule risks.

2. Cost Contingency & Confidence: A probabilistic analysis that determines the appropriate amount of cost contingency needed to achieve a certain confidence level (e.g., 80%) of finishing within budget.

3. Risk Register: A living document that identifies and tracks project risks throughout the project lifecycle.

The CSRA process gives the PDT a data-driven basis for establishing contingency, moving beyond simple percentages to a true risk-informed budget.

1.6.4 Crafting the CCL Clause in the RFP

The language used in the RFP to define the budget has significant contractual implications.

There are two primary options:

• "Shall Not Exceed" Language (Hard Cap) - Recommended for all Military Construction Projects:

“The available funding for this project is capped at $XXX.00. Offerors should design to, and propose a price that approaches, this maximum budget to maximize the technical value and betterments offered to the Government. Any proposal exceeding this $XXXX.00 cap may (or will – depending on how hard the cap is) be deemed non-compliant and ineligible for award.”

Effect: This language puts offerors on notice that any proposal price exceeding the CCL is ineligible for award or stipends. It is a rigid, absolute limit.

• *NOTE: For solicitations subject to 236.570, DFARS 252.236-7006 will need to be included.

• "Target Ceiling" Language (Soft Cap) - Recommended for CW and IIS (where appropriate):

“The target ceiling for design and construction is $XXX.00, based on currently available funding. Offerors should design to, and propose a price that approaches, this target ceiling to maximize the technical value and betterments offered. While the Government cannot guarantee that additional funding can be made available, proposals exceeding this target ceiling by more than [Insert Percentage, e.g., 5% or 10%] may be excluded from further consideration.”

• Effect: This language allows the Government to consider proposals that exceed the CCL. It provides flexibility, giving an otherwise superior offeror an opportunity to revise their proposal to come within the budget during discussions.

Target Ceiling: Unless absolutely prohibited, use the "target ceiling" language. It provides the Government with greater flexibility and reduces the risk of disqualifying a potentially excellent proposal on a technicality.

Shall Not Exceed: This definitive phrasing is best utilized for projects governed by strict statutory funding thresholds, such as UMMC or O&M-funded project that includes new construction. Using this language in these specific scenarios ensures strict adherence to legal ceilings by precluding the acceptance of any proposals that exceed the maximum allowable award amount.

1.6.5 Statutory Design Fee Limit: The limit for design fee is applicable to contracts for A-E Services under 10 USC 4540 and does not apply to the preparation of a Design Build RFP nor does it apply to a Design Build contract. See EP 715-1-7 and AR 420-1 Chapter 4-37(b).

Chapter 1.7: Accelerated Design-Build (ADB)

1.7.1 Definition: A New Statutory Authority

ADB is a specific project delivery authority granted by Section 2809 of the FY 2026 National Defense Authorization Act (NDAA), which amends 10 U.S.C. § 3241(f). It is not synonymous with the general industry term "fast-tracking." ADB authorizes the award of a single, incrementally-funded DB contract for a military construction (MCA / O&M)project before the construction project is authorized and before funds are appropriated for the construction portion of the project.. When utilized in conjunction with DBtB, ADB allows the Government to follow the DBtB process, make award to the design builder for the entire scope of the military construction (MCA / O&M) project, but only requires the Government to fund the design portion at time of award.

This authority allows a Military Service to enter into a unified DB contract that is split-funded:

• The design portion is funded at the time of award using MILCON Design Funds or O&M funds. For MILCON, the construction portion remains unfunded until the project is subsequently authorized and MILCON construction funds are appropriated by Congress. For O&M the construction funds may be appropriated in the year of design, or the year construction funds are made available.

1.7.2 Core Component of ADB

ADB authority is defined by key legal and procedural components that differentiate it from standard DB contracts:

1. Incremental & Split Funding: ADB allows the Government to obligate funds for the design portion of the contract at award, while the construction portion is funded as a subsequent increment after receiving authorization and an appropriation by Congress.

This is the mechanism that "accelerates" the process by allowing the design to proceed before full project funding is in place.

2. Limitation of Government Liability: To manage the risk of awarding a contract for which construction is not yet funded, the legislation requires a specific condition. In the event of a termination for convenience before construction funds are appropriated, the Government's liability is limited to the amount attributable to the final design of the project. This is achieved by including RFO Defense FAR Supplement (DFARS) clause 252.232-7007, Limitation of the Government's Obligation, in the contract.

1.7.4 Strategic Benefits of ADB

• Accelerated Delivery: By allowing the design-builder to be selected and the design to commence using design funds, ADB significantly shortens the overall project delivery timeline compared to standard DB. It puts design-build procurement on an equal financial and execution footing with traditional DBB.

• Reduced Reprogramming Needs: This process allows the Military Services to submit a known, exact amount to Congress for the construction increment of an already awarded contract, dramatically reducing the need for pre-award cost variation reprogramming. This is because the construction award amount is based on a firm proposal from the selected design-builder, providing Congress with a highly reliable cost figure and minimizing the need for cost variation adjustments.

This new authority enables USACE to deliver critical facilities faster and with greater cost certainty.

Chapter 1.8: Stipends

1.8.1 Introduction and Purpose

In a DBtB framework, the Government’s goal is to attract the industry’s top talent. One significant tool to achieve this is the use of stipends. A stipend is a payment made by the government to unsuccessful, down-selected offerors in recognition of the substantial effort required to prepare a comprehensive proposal for a best value DB competition. Including pointed questions during the market research phase or industry day one-on-one sessions such as “If a proposal stipend is not offered, how significantly would that impact your firm’s decision to submit a proposal for this requirement?” or “If I proposal stipend is offered, what stipend range or percentage of the Government’s maximum budget would you consider fair to offset your upfront risk?” may better inform the PDTs decision on the value of including stipends.

While stipends are paid to unsuccessful offerors pre-award, incentives (such as award fees) are a post-award tool used to motivate the selected contractor to achieve performance objectives beyond the contract's basic requirements. This chapter focuses primarily on the policy and procedures for using stipends in two-phase DB acquisitions.

1.8.2 Legal and Regulatory Authority

The authority for USACE to pay a stipend is governed by the "necessary expense" rule, as detailed in the Chief Counsel's memorandum dated 30 September 2004. This rule allows an agency to incur expenses that are not explicitly detailed in an appropriation act, provided the expense is necessary to carry out the agency's function.

For USACE, the sole legal justification for paying a stipend is to promote or maintain a reasonable level of competition to ensure price competition and program success (e.g. it is a necessary expense for the project). It is not intended to fully cover an offeror's proposal costs.

Stipends are to be used only in rare circumstances where competition is uniquely constrained, and the decision must be supported by a written justification memorandum.

Key Regulatory Points (from ER 1180-1-9, Appendix B):

• Stipends are not to be used on a routine basis.

• They should be considered a good business investment expected to significantly enhance the quality of competitive proposals.

• The decision to use a stipend must be made early in the acquisition cycle and documented in the PMP.

1.8.3 The “Color of Money”: Funding and Approval

Proper funding is critical for the compliant use of stipends. To ensure compliance, the source of funds must align with the purpose of the expense, following the principle that funds from a specific appropriation can only be used for their intended purpose.

https://www.publications.usace.army.mil/Portals/76/Users/182/86/2486/ER_1180_1_9_Erata%20sheet.pdf

• Funding Source: For MILCON projects, the appropriate fund source for stipends is MILCON Design funds. This is because the stipend is a pre-award cost incurred to promote competition for a construction contract.

• For Civil Works projects, the appropriate funding source for stipends is project funds.

• Approval: Prior written approval from the project’s MILCON Design funds manager is required to pay a stipend. ER 1180-1-9, Appendix B, lists the various fund managers for different MILCON Design fund accounts (e.g., Military Construction for Army, Air Force, Navy, etc.). The acquisition team must secure this approval before proceeding.

1.8.4 Determining the Stipend Amount

The value of the stipend is at the discretion of the acquisition team but should be established based on a reasoned analysis.

• Industry Benchmark: The DBIA notes that stipends often range from 0.01% to 0.25% of the project budget.

• USACE Guidance: It is recommended that agency estimators approximate the cost for an offeror to produce a design proposal that meets the minimum solicitation requirements and then use a percentage of that estimate to establish the stipend amount.

• Guiding Principle: The amount should be sufficient to encourage participation but not so high that it is seen as covering the full cost of proposal preparation.

• Fairness: In the interest of fairness and to avoid potential protests, all qualifying unsuccessful offerors must receive the same stipend amount. The amount should not be scaled based on the evaluation of their proposal.

1.8.5 Conditions for Payment (Eligibility)

To be eligible for a stipend, an unsuccessful offeror must meet a specific set of criteria that should be clearly stated in the solicitation. Payment is contingent upon the following:

• Appropriate funds are identified and available, with appropriate approvals obtained.

• A written determination confirms that competition is uniquely constrained.

• The offeror submitted a complete Phase 2 proposal.

• The proposal was evaluated as technically acceptable or better.

• The offeror actively participated in all scheduled proprietary meetings.

• The offeror did not receive the final contract award.

• The offeror did not withdraw its proposal before the final award decision.

1.8.6 A Critical Discussion: Government Use of Proposal Content

A common question is what rights the Government receives in exchange for a stipend. The governing principle is that a stipend is not a mechanism to purchase design ideas.

• The Prohibition (The "Red Line"): The 2004 legal memo and ER 1180-1-9 are unequivocal: "Taking ownership of unsuccessful proposal design ideas is not proper consideration for the stipend payment, because it would be an acquisition of design services outside the A-E Statute." The Government cannot use a stipend to acquire ownership of or rights to a firm's proprietary design.

• The Nuance (The "Green Line"): However, there is a crucial distinction between proprietary and non-proprietary information. Modern USACE practice, as reflected in the draft language provided, allows the Government to leverage certain information.

The stipend serves as consideration for a license to use the non-proprietary aspects of a proposal for Government purposes. This may include general concepts, approaches, and methods that can benefit the overall program. Offerors must clearly mark any data they wish to restrict from disclosure in accordance with RFO 52.215-1(e). Unmarked data is considered non-proprietary.

This nuanced approach allows the Government to learn from the competition and incorporate innovative, non-proprietary ideas without infringing on a firm's protected intellectual property.

1.8.7 Sample Solicitation Language

The following sample language offers a template for incorporating stipend provisions into a Phase 2 RFP.

SECTION 00 21 00 – SAMPLE RFP LANGUAGE

Stipends

1. Stipend for Unsuccessful Phase 2 Offerors

The Government intends to award a stipend in the amount of $[PDT to determine appropriate fixed amount between 0.01% to 0.25% of the Government’s maximum budget] to eligible Offerors who submit a technically acceptable proposal in response to this Phase 2 solicitation but do not receive the final contract award.

2. Eligibility for Stipend Award

To be eligible to receive a stipend, an Offeror must satisfy all of the following conditions:

• The Offeror must submit a Phase 2 proposal that is evaluated as technically acceptable or better by the Government, based on the non-cost/non-price evaluation factors specified in this solicitation.

• The Offeror must actively participate in all scheduled proprietary meetings with the Government as directed by the Contracting Officer. Failure to fully participate, as determined by the Contracting Officer, will result in forfeiture of the stipend.

• The Offeror must not withdraw its proposal prior to the Government's final contract award decision.

3. Consideration for Stipend The stipend payment serves as consideration for the offeror submitting a technically acceptable proposal, participating in all proprietary meetings, and for the Government's right to use the offeror’s non-proprietary data for the benefit of the Government, in accordance with

RFO DFARS 227.7103.

4. Rights in Non-Proprietary Proposal Data

By submitting a proposal, the Offeror grants the Government a non-exclusive, non-assignable, royalty-free license to reproduce, use, and disclose, for Government purposes, the non-proprietary aspects of the technical proposal. This includes all general concepts, approaches, and methods, even if the Offeror is not awarded the contract.

5. Protection of Proprietary Data

Data in the proposal that the Offeror wishes to restrict from disclosure or use by the Government for purposes other than proposal evaluation must be marked with the restrictive legend in accordance with RFO 52.215-1(e), "Instructions to Offerors—Competitive Acquisition." The Government will evaluate the Offeror's request for restrictions and will only protect data that is appropriately marked and determined to be proprietary. Any unmarked data will be considered non-proprietary and subject to the Government's right of use as described above.

Chapter 1.9: Incentives (Award-Fee)

1.9.1 Introduction and Purpose

While stipends are paid to unsuccessful offerors pre-award, incentives (such as award-fees) are a post-award tool used to motivate the selected contractor to achieve performance objectives beyond the contract's basic requirements. This chapter focuses primarily on the policy and procedures for using award fees in two-phase DB acquisitions.

1.9.2 Legal and Regulatory Authority

The authority for USACE to pay an award-fee is governed by RFO 16.4 and documented in the Government’s Determination and Findings (D&F) for use of an award-fee and the Government’s Award-Fee Plan (AFP). The D&F must be completed in accordance with RFO 16.401-2 justifying the use of an award-fee contract is in the best interest of the Government while the AFP (RFO 16.402-2(c)) establishes a general framework for evaluating Contractor performance and how an award-fee incentive structure is utilized to motivate superior performance beyond satisfactory contract requirements.

1.9.3 The “Color of Money”: Funding and Approval

Proper funding is critical for the compliant use of award-fees. To ensure compliance, the source of funds must align with the purpose of the expense, following the principle that funds from a specific appropriation can only be used for their intended purpose.

Funding Source:

• For MILCON projects, the appropriate fund source for award-fees is MILCON

Construction funds. This is because the award-fee is a post-award cost incurred to incentivize superior performance beyond satisfactory contract requirements.

• For Civil Works projects, the appropriate funding source for award-fees is project funds.

Approval: The objective of this award fee is to motivate the contractor for performance excellence. In accordance with RFO 16.402-2(b), the amount of award fee earned must be in line with the contractor’s overall performance as measured against the criteria in the AFP. No award fee shall be earned if the contractor’s overall cost, schedule, and technical performance in the aggregate is below satisfactory. The basis for all award-fee determinations must be documented in the contract file. The award fee earned is paid in addition to the firm-fixed price of the contract. The award fee determination is a unilateral decision made solely at the discretion of the Award Fee Determining Official (AFDO).

1.9.4 Determining the Award-Fee Amount

The value of the award-fee is at the discretion of the acquisition team but should be established based on a reasoned analysis. Rollover of unearned award-fee from one evaluation period to another is prohibited.

Note: The Award Fee determination is a unilateral decision made solely at the discretion of the Government and is not subject to the Disputes clause of the contract, except to the extent of determining whether the Government’s actions were arbitrary or capricious.

1.9.5 Example Award Fee Structure

Evaluation of the contractor’s performance shall occur at periodic stages and specific milestones of the contract, as follows:

Evaluation Stages Performance Incentive Award Fee

1. First evaluation Advanced Design Development & Mobilization (75% POR design / 100% Site Design / Mobilization)

2. Second evaluation Site Work / Utilities / Foundations Initial Installation Complete

3. Third evaluation Major Structure Completion

4. Fourth evaluation 75% Construction Completion

5. Fifth evaluation Substantial Completion and Acceptance of the Work

6. Final evaluation Six (6) months after Government occupation & use of facilities

Unit 2: Think Slow – Solicitation and Award

Chapter 2.0 Owner/Stakeholder Readiness: Setting the Foundation for Success

As discussed in Chapter 1, the success in a DBtB acquisition begins long before a solicitation is issued. Early planning is critical to the success of a project. This foundational stage is crucial for establishing the project's direction and aligning the internal team for effective management and decision-making.

Key readiness activities for the PDT include:

• Defining Project Goals: Articulate the project's mission,…