Best Practices: Top Strategies for Success in the Department of Defense Design-Build Market

The Department of Defense (DoD) and US Government construction market remains dominated by general contractor bidders. However, design-build bidders on government projects are becoming more common, with agency design-build goals for the US Army Corps of Engineers (USACE) and Naval Facilities Engineering Command (NAVFAC) approaching 50 percent for DoD projects.

Other than the mechanisms and the paperwork, design-build contracts with the federal government are really no different than those executed in the private sector. The key then to winning DoD contracts is understanding how the system works and using this knowledge to your advantage.

Following are some suggested strategies that are key to a firm’s successful pursuit of DoD design-build projects.

1. Identify regions where you want to pursue work and start developing relationships with the Department of Defense (DoD) agencies in that region. Developing relationships with the contracting agency will help your firm be a known entity when the RFP comes out so you’re not making cold calls right beforehand.
2. Target projects that match your portfolio — do not chase projects where you have no prior experience. When you propose on a project, you’ll have the strongest chance of winning a project if you have similar projects in your portfolio.
3. Strategic alliances are becoming more critical as the awarding of multiple projects under Multiple Award Task Order Contracts (MATOCs) and Multiple Award Construction Contracts (MACCs) is limiting the number of individual projects for the smaller design-builder to pursue on their own.
   MATOCs and MACCs enable the USACE and NAVFAC to have a prequalified set of capable design-build contractor teams to bid on multiple projects, either at a specific base or throughout a designated geographical region. This eliminates the need for these agencies to have to work through a contractor prequalification phase for individual projects, thereby shortening time it takes to issue a Request for Proposal (RFP) and award a contract for a particular project. Through use of these multi-year task order type contracts, the DoD has made it more difficult for the smaller contractor to prequalify for these larger contract amounts and due to bonding issues, limits them in the projects they can pursue.
   In order to be able to compete for these larger contracts, smaller firms have to form strategic alliances with either smaller firms to where their combined bonding may be able to qualify for the MATOC or ally with one of the larger design-build contractors.
   As an example, most larger MATOC and MACC RFPs will require the team to demonstrate a $100 million or greater concurrent bonding capacity, with the average $30 million to $40 million a year firm being unable to demonstrate that kind of line of bonding available on their own.
4. Target projects early so the right project team can be assembled (A/E, specialty consultants, design-build subcontractors) prior to issuance of the RFP. It is an advantage to have prior working relationships with the project team members on similar type projects. Again, strategic alliances are critical. 
   The list of fiscal year 2008 military construction funded projects was publicized in early February 2007, allowing contractors ample time to identify projects to put together the right project team. Strategic alliances are critical now due to increasing use of MATOCs and MACCS, so the earlier you can target a contract and formalize your team, the better chance you have to develop strategies to win the contract.
5. Be selective on projects that you pursue and increase the chance of winning by choosing projects using the following criteria:
   • Prior project experience in that location. Look at projects located on bases where you’ve worked before or on other bases where contracts are awarded by the same agency district or regional office.
   • Prior design-build experience on similar type projects.
   • Good relationships with the governing agency in that region.
   • Good subcontractor database and relationships in that region. You’ll get better numbers from subcontractors that you’ve worked with before and have a proven relationship.
   • Funding is adequate for the project. Project budgets are often developed two to three years in advance of the RFP advertisement and everyone knows what an impact material cost escalation has had on proposal pricing the past couple of years. You don’t want to spend a lot of money chasing a project and then find out that it’s not awardable within the allowable budget.
   • Proposal time is sufficient to prepare pricing documents and develop a competitive estimate. Forty five days is the preferred minimum. You have to have ample time to prepare pricing documents in order to prepare a competitive price. In some cases, government agencies have issued RFPs that allow the design-build contractor only 30 days to prepare their proposal and pricing, which is really too short of a time frame.
   • If the RFP scope of work is not defined sufficiently, submit a Request for Information (RFI) asking the contracting agency for clarification so that all bidders are on the same level playing field regarding project work scope and proposal pricing.
   • Avoid projects that require the design-builder to commit to subcontractors during the proposal phase. It serves to eliminate competitive market pricing and is contrary to government agency “best value” contracting initiatives.
6. The entire design-build team must fully understand the RFP requirements and prepare the proposal accordingly. If awarded the contract, the design and construction team must do the same. This is really critical. If you’re trying to mitigate risk up front, then the only way to do that is to fully understand the RFP and prepare your proposal pricing accordingly. After the award of the contract your designers and your construction personnel have to really understand the RFP requirements and make sure that all contractual requirements are reflected in the design documents and that effective construction quality control procedures are in place at the job site.
7. The contractor must be involved during the design phase for constructability review and cost control. Having the construction entity involved during the design phase enables the design-build team to jointly decide on means and methods, materials, sequencing, and resolve constructability issues which helps maintain cost control, minimizes RFIs during the construction, and enhances quality control. The design team also must be involved during the construction phase to ensure compliance with the design documents and another avenue for maintaining quality control.
8. The design and construction must be executed by a totally integrated team. It is critical that it is a truly integrated design-build team where you have communication between design and construction throughout the entire project from start to finish.
9. Have a good quality control program during the design and construction phases. Make sure that the design documents are fully coordinated, that they’re independently checked against the RFP requirements. Also critical to project success is having a qualified quality control staff on the site during construction.
10. Staff the project with people who have DoD experience. Government sector work is so different from the private sector with regard to quality control and document control, and there is a tremendous amount of paperwork required in managing DoD work. If you don’t have people accustomed to working in that environment, they can easily get overwhelmed.
11. Have open communications with the contracting agency and make them a part of the decision making process. They are a part of the project team. No surprises should always be the goal. Mistakes will be made, and it is how you address and fix those mistakes that is most important.
12. Deliver a quality project that meets the RFP requirements and that is delivered on time and in a safe manner. Safety is of the utmost importance to both the government and the design-builder.

As government agencies award more and more projects using design-build as a procurement method, following these strategies can help you to better position your firm to win these contracts. The key to success is understanding the process and how it differs from the private sector bidding process.