Since 1990, the FHWA has been allowing the State DOTs to evaluate non-traditional contracting techniques which are competitive in nature but do not fully comply with the requirements in Title 23 United State Code. Federal-aid construction contracts that utilize a method of award other than the lowest responsive bid must be evaluated under FHWA's Special Experimental Project No 14 (SEP-14) - "Innovative Contracting". The non-traditional practices originally approved for evaluation were: cost-plus-time bidding, lane rental, design-build contracting, and warranty clauses.

Based on the generally positive experiences of State DOTs, on May 4, 1995, FHWA decided that cost-plus-time bidding and lane rental were techniques suitable for operational use. Warranties became operational through an interim final rule on August 25, 1995.

On December 10, 2002 in response to section 1307 of TEA-21, FHWA published the final rule which established regulations for design-build contracting as 23 CFR Part 636. Subsequent modifications required by section 1503 of SAFETEA-LU resulted in revisions published in a final rulemaking on August 14, 2007. Among the revisions made by SAFETEA-LU were the elimination of the dollar thresholds for "qualified" projects; and permission to release an RFP or award a design-build contract prior to completion of NEPA. Design-build procurement processes which deviate from the requirements of 23 CFR 636 may require an SEP-14 work plan and approval.

Authority/Legal Basis

1. Laws

   • Title 23 U.S.C. 112
   • Title 23 U.S.C. 502

2. Regulations

   • 23 CFR 635.413 - Guaranty and warranty clauses
   • 23 CFR 636 - Design-build Contracting

3. Orders

   • None

4. Policy

   • Headquarters memo issued February 13, 1990 - Innovative Contracting Practices Initiative and Special Experimental Project No. 14
   • Headquarters memo issued May 4, 1995 - Special Experimental Project No. 14
   • August 13, 2007 final rule on design-build
   • Headquarters memo issued November 8, 2012 – Programmatic Approval of Alternative Type Pavement Bidding

Guidance

1. General Information

   • SEP-14 Briefing Paper
   • Current SEP-14 Project List
   • FHWA's Design-Build home page includes links to several documents concerning the FHWA's design-build rule making process, State DOT design-build legislation, State DOT design-build web sites, sample RFQ/RFP/ITP documents, etc.
   • Alternative Contracting Guidelines
     • NCHRP Synthesis #379: "Selection and Evaluation of Alternative Contracting Methods to Accelerate Project Completion" (.pdf)
     • Caltrans - April 2008 "Alternative Procurement Guide" (.pdf)
     • Minnesota DOT - "Innovative Contracting Guidelines" (.pdf)
     • Ohio DOT - Innovative Contracting Manual (.pdf)
     • Oregon DOT - Design-Build Decision Matrix (.pdf)
     • PennDOT - Pub 448 - "Innovative Bidding Toolkit" (.pdf)
   • Performance Contracting
     • Performance Contracting Framework
     • Performance Contracting for Construction
     • Performance Contracting for Construction - The Michigan Experience
     • Performance Contracting - A New Approach for a New Era
   • Design-Build Institute of America
   • Utah State University Innovative Contracting Home Page provides work plans, evaluations and other information collected from the FHWA's Innovative Contracting Program SEP-14.
   • University of Colorado - Window to Design-Build provides guidance for project selection, literature summary, and other guidance for effective design-build delivery.
   • Finnish Road Enterprise - "Innovative Project Delivery Methods for Infrastructure An International Perspective" (pdf, 665 kb)

2. Training

   • FHWA Contract Administration Core Curriculum (Course Description)