FHWA Proposes Fix Avoiding Need for Special Approval to Include Alternative Technical Concepts in Design-Build Procurements

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On August 1, 2013, the Federal Highway Administration (FHWA) issued a Notice of Proposed Rulemaking (NPRM) and request for comments regarding proposed changes to FHWA’s design-build regulation that would eliminate a requirement for proposers to submit base proposals where the contracting agency allows them to submit alternative technical concepts (ATCs) in their proposals.  ATCs have proved to be highly beneficial, encouraging innovation, cost savings and reduction of environmental impacts and increasing the overall value to procuring agencies through the best value selection process.

In 2002, when the FHWA regulation was originally promulgated, design-build procurements were experimental, and there was very little experience with use of ATCs.  The 2002 rule regarding ATCs (23 C.F.R. 636.209(b)) stated, in part, that ATC proposals may supplement, but may not substitute, for base proposals that respond to the RFP requirements.  The policy underlying this requirement was to ensure fair and open competition and to ensure that all proposers are competing for the same project. 

During the eleven years since the original rule was adopted, agencies asking proposers for ATCs have concluded that the base/option proposal requirement is impracticable.  ATCs can have a significant impact on the project design, and the cost of advancing two (or more) different design concepts and preparing alternative proposals is high.  The policies underlying the original rule can easily be addressed by placing boundaries on the ATCs, for example, by requiring that the ATC be equal or better than the underlying RFP requirements.  That is the approach that has been adopted by most of the transportation agencies using ATCs, obtaining approval from FHWA to deviate from the regulatory requirement through SEP-14 applications.

FHWA is now proposing to revise paragraph (b) of the original rule by deleting the requirement to submit base proposals where a contracting agency is allowing the submission of ATC proposals and adding a sentence providing that the confidentiality of ATCs will be maintained except to the extent disclosure is necessary for the contracting agency to maintain compliance with a permit or other applicable legal requirement.  Such disclosure may be necessary, for example, if a submitted ATC demonstrates that a feasible and prudent 4(f) alternative exists for which a 4(f) determination had concluded that there was no such alternative, in which case the alternative must be disclosed to maintain 4(f) compliance.

The NPRM can be viewed at:  http://www.gpo.gov/fdsys/pkg/FR-2013-08-01/pdf/2013-18514.pdf.  FHWA is inviting comments, in particular, regarding the anticipated economic impact of the proposed changes.  The NPRM provides that comments must be received on or before September 30, 2013 and that late comments will be considered to the extent practicable.