Finally, after nearly two years and 12 extensions of the previous transportation authorization law, Congress has approved the Safe, Accountable, Flexible, Efficient, Transportation Equity Act – A Legacy for Users, H.R. 3, and otherwise known as SAFETEA-LU. The conference report was approved in the House of Representatives by a vote of 412 to eight and in the Senate by a vote of 91 to four. The President signed the bill into law on August 10. This $286.4 billion bill authorizes transportation expenditures over six years (Fiscal years 2004-2009).
DBIA worked hard to include in the bill language to expand the use of design-build on federal highway projects. This language was supported by The American Association of State Highway and Transportation Officials (AASHTO), Design-Build Institute of America (DBIA), Texas Department of Transportation (DOT), Louisiana DOT, Georgia DOT, Colorado DOT, Delaware DOT, and Virginia DOT. Without this language, states have been hindered in their use of innovative contracting by the Federal Highway Administration’s (FHWA) rule promulgated in 2002 to implement design-build, which imposes procurement restrictions affecting states wishing to use such contracts for Title 23 projects. (67 FR 75926, pp. 75901-75935.)
Representative Michael Burgess (R-TX) and Senator Saxby Chambliss (R-GA) took a leadership role in achieving this legislative victory. Both sponsored legislation enabling innovative use of design-build. Representative Don Young (R-AK) (Chairman of the House Transportation and Infrastructure Committee) and Representative Tom Delay (R-TX) (House Majority Leader) also took active roles in supporting design-build efforts. DBIA is also especially grateful to our members who urged their Congressional delegations to support the language.
FHWA’s design-build rule has discouraged state and local transportation agencies from using certain alternative procurement methods that could accelerate project timelines. Although FHWA now grants waivers from provisions of the rule under its Special Experimental Projects Nos. 14 and 15 (“SEP 14” and “SEP 15”), the process to obtain such waivers can delay procurements by many months, often resulting in substantially increased project costs. The new language and subsequent rulemaking should encourage states to use design-build more often.
Key areas of the new law:
- The new law includes design-build language (Section 1503) that allows state departments of transportation (DOTs) more flexibility to use design-build for federal highway projects. The language amends the definition of “qualified projects” to eliminate the $50 million threshold, thereby eliminating the need for waivers due to project size. In addition, the new language requires U.S. DOT to issue regulations within 90 days after enactment that clarify that design-build contracts may be awarded prior to final National Environmental Policy Act (NEPA) approval. The U.S. DOT secretary must approve these pre-NEPA activities and agree that it will not influence the NEPA review. DBIA will be actively involved in this rulemaking process.
- Value Engineering Analysis. States are required to use value engineering analysis or other cost reduction analysis on any federal highway project of $25 million or more, or any bridge project of $20 million or more, or any project that the Secretary of U.S. DOT deems appropriate.
- Highway for Life pilot program (Section 1502). This program creates a flexible project funding opportunity. Projects using innovative technologies, manufacturing processes, financing, or contracting methods that improve safety, reduce congestion due to construction, and improve quality can qualify.
- Surface Transportation Program: $32.5 billion over the life of the new law (until 2009). This includes a 10 percent set-aside for transportation enhancement projects.
- Congestion Mitigation and Air Quality Improvement program: funding set at $8.6 billion.
- Changes to transportation planning requirements include requiring metropolitan planning organizations and states to publish an annual list of projects for which federal funds have been obligated in the preceding year.
- Several new reports/studies are requested including:
- Infrastructure Investment Needs Report (Section 5201) (will look at the estimates of future highway, bridge, and transit needs and the current backlog of needs)
- Community Enhancement Study (Section 1925) (will study the role of well-designed transportation projects in promoting economic development, protecting public, health, safety, and environment, and enhancing the architectural design and planning of communities)
- Transportation research on emerging issues (section 5208) ( a five year strategic plan to guide federal transportation research and development activities)
- Agreement was reached on the “donor-state” issue and the final bill increases the minimum rate of return in aid from the current 90.5 cents on the dollar to 92 cents on the dollar starting in FY08. To accommodate those states which receive more in transportation trust fund money than they pay in gasoline taxes there was agreement that all states receive at least a 19 percent boost in federal highway aid.
- The new law makes several changes that are intended to streamline the current environmental review process. It places restrictions on filing lawsuits after the completion of projects and sets additional deadlines on public comment and agency environmental review of projects.
- The new law includes a provision (Section 3025) that requires states to use qualifications-based selection (QBS) provisions of the Brooks Architect-Engineers Act of 1972, or an equivalent state law in public transportation (transit) project contracts for program management, architectural or engineering services, construction management, feasibility studies, and preliminary engineering designs. If states have not adopted a state QBS law by the effective date of SAFETEA-LU then states must use the federal procedures for QBS. This section of the law also includes a good definition of design-build projects.
DBIA will continue to work with U.S. DOT to ensure that design-build is a viable option for federal transportation projects. This bill, long awaited, is a big step forward in achieving that end.
The final Design-Build language is as follows:
SEC. 1503. DESIGN BUILD.
Section 112(b)(3) of title 23, United States Code, is amended —
(1) by redesignating subparagraph (D) as subparagraph (E); and
(2) by striking subparagraph (C) and inserting the following:
“(C) QUALIFIED PROJECTS.—A qualified project referred to in subparagraph (A) is a project under this chapter (including intermodal projects) for which the Secretary has approved the use of design-build contracting under criteria specified in regulations issued by the Secretary.
“(D) REGULATORY PROCESS.—Not later than 90 days after the date of enactment of the SAFETEA-LU, the Secretary shall issue revised regulations under section 1307(c) of the Transportation Equity Act for 21st Century (23 U.S.C. 112 note; 112 Stat. 230) that—
“(i) do not preclude a State transportation department or local transportation agency, prior to compliance with section 102 of the National Environmental Policy Act of 1969 (42 U.S.C. 4332), from—
“(I) issuing requests for proposals;
“(II) proceeding with awards of design-build contracts; or
“(III) issuing notices to proceed with preliminary design work under design-build contracts;
“(ii) require that the State transportation department or local transportation agency receive concurrence from the Secretary before carrying out an activity under clause (i); and
“(iii) preclude the design-build contractor from proceeding with final design or construction of any permanent improvement prior to completion of the process under such section 102.”