Design-build Contracts for Colorado Highway Construction: New Contractual Issues-part I

• Publication year: 2000
• Pages: 49
• Citation: Vol. 29 No. 2 Pg. 49

29 Colo.Law. 49 Colorado Lawyer 2000.

2000, February, Pg. 49. Design-Build Contracts for Colorado Highway Construction: New Contractual Issues-Part I

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49

Vol. 29, No. 2, Pg. 49

The Colorado Lawyer
February 2000
Vol. 29, No. 2 [Page 49]

Specialty Law Columns
Construction Law Forum
Design-Build Contracts for Colorado Highway Construction: New Contractual Issues - Part I
by Charlotte R. Robinson

On April 9, 1999, Governor Bill Owens signed into law a design-build statute that will significantly change the way the Colorado Department of Transportation ("CDOT") conducts business.1 The design-build method of project delivery allows CDOT to contract with one entity to provide both the design and construction of a transportation project With the recent approval of Referendum A and Referendum 4-A by Colorado voters, the largest design-build transportation/transit project in the country will be administered jointly by CDOT, the Regional Transportation District ("RTD"), Federal Highway Administration ("FHWA"), and Federal Transit Administration ("FTA").2

As use of the design-build method of procurement has increased, new legal issues have emerged involving the relationships of the design professional,3 the construction contractor, and the government owner. Part I of this article discusses the history of design-build contracting and potential legal issues between the design-build contractor and CDOT. Part II (to be published in the March issue of The Colorado Lawyer) will address legal issues between the design professional and the contractor. The issues addressed are not meant to be all-inclusive. Many other contractual issues exist between the participants in the design-build process This article focuses on some of the more contentious and unresolved issues

Design-Build Contracting

Colorado's new law allows CDOT to enter into design-build contracts on the basis of "best value." Best value means the maximum value of a proposal considering numerous factors, including the time needed for design and construction of the project, the degree of innovation of the approach, aesthetics, and cost.4

In the past, CDOT was required by statute to award all transportation construction projects through a competitive bidding process.5 If a bid was responsive, i.e., complied with CDOT's specifications, and was made by a responsible bidder, the contract was awarded to the low bidder. CDOT had no authority to assign any value for subjective benefits such as innovation, aesthetics, or early completion.6

CDOT traditionally has used the "design-bid-build" method of project delivery, which is widely used in the transportation construction business. Under the design-bid-build method, CDOT either designs a project or contracts with a designer to finalize the entire design before the contract is released for bid. CDOT then enters into a separate contract with the construction contractor to build the project.

"Design-build" contracting combines the design and construction of a project into one contract with a single design-build firm or a combination of firms capable of providing the necessary engineering and construction services.7 The most widely used process for public sector design-build contracts is two-phased.8 In the first phase, a Request for Qualifications ("RFQ") is issued, and the qualifications of the responding design-build firms are evaluated. After CDOT selects a limited number of the most qualified firms to bid on the project,9 CDOT will solicit proposals through a Request for Proposals ("RFP") from the short-listed firms.10 CDOT may then enter into formal discussions with the short-listed firms to clarify its RFP. If the formal discussions result in the need to revise the contractors' proposals, CDOT will then request a "best and final offer," which includes revisions to the technical or price proposals from the contractors.11 The proposals are then evaluated and the contract is issued based on the best and final offers.

Colorado's enactment of H.B. 99-1324 follows a nationwide trend toward use of the design-build method by government agencies, both at the state and federal levels.12 Design-build procurement saves these agencies time, money, administrative burdens, and risks.13

History of Design-Build Contracting

The design-build method of construction project delivery is not new. It can be traced back to ancient Mesopotamia, where the Code of Hammurabi imposed strict liability on "master builders" for both design and construction of buildings, temples, and civil works.14 The fields of architecture and construction evolved as distinct professions during the Renaissance period. The function of the architect became restricted to designing and planning of buildings and supervision of construction, while actual construction was performed by the builder.15

As the practice of architecture became more specialized courts developed a requirement of proof of negligence for liability of architects.16 Construction contractors, however, face a more stringent standard of liability, analogous to strict liability.17...