Although satisfactory for large, new construction projects, the typical design-bid-build method proved costly for projects in the $50,000 to $500,000 range.
With continued pressure to complete projects more quickly and less expensively, the Chief Engineer of the Army Corps of Engineers for NATO operations in 1981 developed what is known today as job order contracting.
Other branches of the military developed similar versions, before the JOC model was transplanted from the federal market to the broader government and public sectors as local, county and state agencies began to utilize the innovative construction delivery method.
Job Order Contracting:
A competitively bid, open ended, indefinite-delivery indefinite-quantity contract, providing for firm fixed pricing, based on a detailed joint scope of work, a unit price book and a predetermined coefficient for the purpose of managing and completing complex multitrade renovation, repair, rehabilitation and minor construction projects.
Seeking enhanced value, public owners are turning more often to selections that are not tied inflexibly to price, but consider other noncost factors in the total construction cost.
The ability to manage multiple subcontractors and projects while providing the highest quality and safety defines a quality JOC contractor.
Because continued successful performance is a key determining factor for delivery orders issued by the owner, a JOC contractor will provide value-added services to the owner at no additional cost. These may include project scoping during budget cycles, incidental design work and value engineering to help reduce the total cost of the project, while providing the same quality of work, and constructability reviews and life cycle costs analyses.
The JOC contractor seeks to build a long-term relationship with the owner and staff based on collaboration and trust.
As an owner, how do you ensure you receive quality responses to your JOC solicitation while being an effective steward of public funds?
Key to receiving successful responses is the understanding of what makes a quality JOC RFP, which in turn ensures a successful program.
What should an owner expect and require from the contractor? What does the contractor look for when reviewing the solicitation?
A Track Record of Success: The single most important and reliable indicator of success in job order contracting is the successful past performance of the contractor. In the RFP, owners should require that respondents submit five or more years of reference contracts that are similar to the proposed program. Relevant experience with prior JOC or similar contracts, past performance history, claims history and on-time project completion percentages are key elements of the reference performance history and a crucial part of the RFP evaluation criteria.
Predictable Costs: Unit price books allow the owner to know the expected cost of the project up-front. If the contractor’s estimate is higher than expected, the owner can negotiate the scope of work with the contractor to help align the cost with the budget.
Scope of Work Negotiations: The owner should expect to receive a narrative scope of work within a pre-determined time frame, as defined in the RFP. The RFP should allow a degree of flexibility that is related to the size and complexity of the project. The owner can review and discuss the scope of work with the JOC contractor, with any changes agreed upon by both parties, so that each fully understands the project. The JOC contractor will provide a detailed line item estimate once the scope of work is approved.
Reduction/Elimination of the Change Order Philosophy: Since the due diligence of the JOC contractor is heavily utilized in the scoping of the project to ensure all aspects of the project are considered, 99 percent of change orders typically come from the owner. With the knowledge that any change orders not owner requested will cost them money, a seasoned JOC contractor will rely on the experience of their staff to ensure the project is scoped correctly.
Rapid and Reliable Execution of Each Delivery Order: The RFP will define timelines for the contractor’s first site visit, scope of work deadline and project start date. The owner should provide for flexibility and allow for discussions if delays arise.
Minimal Design with Maximum Value Engineering: Since full architectural/engineering design is not required on most JOC projects, the owner needs to ensure the JOC contractor has the ability and experienced personnel to produce incidental design work and any value engineering requirements.
Many owners are moving toward environmentally sustainable building strategies and practices for renovation projects and want a JOC contractor with LEED accredited professionals and experience.
Additional Requirements Owners Should Consider in an RFP: An owner may want to consider additional evaluation criteria within their JOC RFP, such as a technical capabilities section.
Four Essential JOC RFP Questions
What is safety worth? An owner should be interested in the safety record of the contractor and protocols designed to ensure the safety of personnel, construction workers, subcontractors, the owner’s staff and facility users. It is important to include safety processes, procedures and metrics into the value estimate of what is being procured.
Owner’s Volume History: The JOC contractor will review the owner’s projected volume during the term of the contract and the owner’s history for similar work. Depending on the owner’s location, the JOC contractor could experience six to 12 months of negative cash flow while establishing a job site. Although there is typically only a small guarantee of work, $50,000 to $75,000, the JOC contractor wants to feel confident that delivery order opportunities will continue to be issued as they perform.
Duration: The JOC contractor wants to establish a long-term relationship with the owner that will develop to a point where they can be considered a part of the owner’s staff. An RFP that allows for a longer term based on the number of option years, four to five years, as opposed to a shorter term, of one to three years, will be more enticing to a JOC contractor prepared to open a job-site office solely for the purpose of servicing the owner.
Type of Work: The JOC contractor will evaluate the type and size of projects the owner plans to place through the contract.
With JOC projects typically ranging from in value $50,000 to $1 million, the contractor will review to see if the owner allows for the right of first refusal on projects with a value outside a certain threshold — for example, less than $50,000 or more than $1 million. Since the goal of the JOC contractor is to provide the best service and performance, knowing that projects outside certain thresholds are optional will allow the contractor to work within their specific business model.
The contractor will also consider if the owner plans to limit the types of projects to single or multitrade. Job order contracting is best suited for complex, multitrade projects and trade/work specific contracts are not typically attractive to the JOC contractor.
The contractor will also want to determine if a specific geographic area is defined.
Which Unit Price Book Utilized: Although not as significant, the JOC contractor will make sure that the unit price book being utilized fits within their business model. In addition, the contractor will review how the owner plans to handle escalation, non-pre-priced items (items not found in the unit price book), and which city cost index and cost column will be used.
Additional Key Items Reviewed by the JOC Contractor: The contractor will review requirements for liquidated damages, design requirements, reimbursement and self-performance requirements. High percentages of self-performance requirements can increase the cost to the agency on indefinite-delivery indefinite-quantity contracts.
Due to the indefinite nature of job order contracting, it is difficult to predict the variety and type of staff required. With periods of inactivity between each delivery order, maintaining a large crew at 100 percent efficiency is very difficult. Subcontracting eliminates this inefficiency, which would otherwise be passed to the agency in the contract pricing. The contractor will review the owner’s subcontracting goals or requirements, permitting needs, retainage, prevailing wage requirements and handling of taxes and invoices.
Most JOC RFPs are advertised publicly via a single step or a two-step RFP.
The single-step model allows for the qualifications/evaluation criteria and the price components to be included in one document, with contractors submitting a single response.
Under the two-step RFP, the price component is not revealed or requested until a short list of approved JOC contractors is selected based on qualifications. The owner will review the contractors’ JOC experience, past performance, technical capabilities, project management experience, quality control, safety program, subcontractor support and other proprietary criteria.
Once a short list of respondents is developed, the owner requests the contractors prepare pricing coefficients and possibly a formal presentation. The JOC contract will be awarded on the basis of the owner’s estimation of best value, which is not necessarily the bid with the lowest coefficient.
Since job order contracting is not focused on low-bid procurement, the JOC contractor must determine how the owner will evaluate and assign points to the qualification criteria used to award the contract. Heavily weighted past performance criteria will reveal the contractors’ JOC history.
Similarly, the more technical capabilities required by the RFP, the more the contractor must explain how they will manage the JOC program.
With weighted evaluation requirements it is less likely the owner will receive responses based on a low-bid strategy. Such procedures require more proposal preparation effort on the part of the contractor, but reduce the risk to the owner of selecting a contractor who cannot perform as required or who provides substandard quality, untimely or unsafe work.
A successful JOC program goes beyond the success of the RFP. Both owner and contractor staffs must be aligned to a common goal: to build a long-term relationship based on collaboration, performance and trust.
JOC champions should exist throughout the owner’s organization, from the construction, facilities and maintenance departments to procurement and accounts payable.
A properly drafted JOC RFP allows an owner to select the best-fit and most qualified JOC contractor; one that will work hand-in-hand with the owner’s staff to ensure that each delivery order is completed on-time and within budget, with the highest quality and safety considerations foremost.
A former U.S. Air Force contracting officer, Kelvin King is director of market development for Centennial Contractors Enterprises. Vince Duobinis is senior market development manager.
Headquartered in northern Virginia, Centennial Contractors Enterprises Inc. has more than 45 offices throughout the United States.