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U.S. DEPARTMENT OF TRANSPORTATION, Office of the Secretary, Office of Public Affairs, Washington, DC 20590

Tuesday, December 10, 2002
Contact: Bill Outlaw
Tel: 202-366-0660
FHWA 46-02

FHWA Approves Final Rule For Innovative Contracting Method Aimed at Saving Time, Money

The U.S. Department of Transportation's Federal Highway Administration (FHWA) has published a final rule in the Federal Register to allow design-build contracting, an innovative technique with the potential to save time on transportation infrastructure projects, which in turn can save taxpayer dollars.

"By enabling us to initiate and complete more transportation projects sooner, design-build contracting can save both time and money for everyone involved -- taxpayers, private industry, and all levels of government," FHWA Administrator Mary E. Peters said. "This new rule will now permit state and local transportation agencies to take full advantage of design-build contracting methods."

The regulation allows, but does not require, the use of design-build contracting procedures. When the final rule becomes effective on Jan. 9, 2003, recipients in the federal-aid highway program will be able to use the design-build contracting method just as they would the traditional design-bid-build contracting method.

The design-build method differs from traditional contracting in that it combines, rather than separates, responsibility for the design and the construction phases of a transportation project. In this streamlined process, firms develop technical and cost proposals that optimize their design, construction, and managerial abilities. The contracting agency then rates the proposals considering factors such as design quality, timeliness, capability to minimize traffic disruptions, managerial capability, and cost.

By allowing contractors to optimize their work force, equipment, and scheduling, the design-build concept provides more flexibility for innovation. From the contracting agency's perspective, the potential savings in time are a significant benefit. Also, because design and construction are performed under the same contract, claims for design errors or construction delays are greatly reduced.

The Transportation Equity Act for the 21st Century (TEA-21) required the FHWA to issue the rule. Before TEA-21, the design-build contracting method did not fully comply with existing statutes. The FHWA allowed states to evaluate the design-build method on an experimental basis through Special Experimental Project Number 14 (SEP-14), Innovative Contracting. Under SEP-14, 25 states and several local public agencies have evaluated more than 230 design-build projects over the last 10 years.

Congress limited the design-build regulation to "qualified projects," defined as design-build projects greater than $50 million or Intelligent Transportation System design-build projects greater than $5 million. The SEP-14 program will remain available for projects that do not meet this threshold. The FHWA also provided additional flexibility in the final rule by delegating the approval of these SEP-14 projects to the agency's division offices in the 50 states, the District of Columbia and Puerto Rico.


PDF and Text files of the final rule are available at the Federal Register Web site : http://www.access.gpo.gov/su_docs/fedreg/a021210c.html
(To view PDF files, you need the Acrobat® Reader®)

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