Mr. Major Clark, assistant chief counsel for procurement, U.S. Small Business Administration addressed AGC members at the annual Federal and Heavy Construction Division meeting

The AGC Federal Contractors Conference offers AGC members and federal agencies immeasurable value. Contractors have a chance to voice concerns, raise questions and have realistic and meaningful dialogue with the federal agencies in charge of construction contracting.Federal agencies as well have a rare opportunity to discuss current issues from concerned industry contractors in a neutral forum. These meetings often produce information that produces results in two substantial ways: 1) in the form of new guidance to agency field personnel; and, 2) new information becomes readily available to contractors on the needs of the federal government.

Reverse Auctions once again took center stage at the Conference as the U.S. Army Corps of Engineers (USACE) first revealed the final report of their legislatively-mandated pilot program on reverse auctions. The final report reveals that the acquisition of construction services cannot and should not be equated with commodities for the following reasons:

• Within the operational parameters of Department of Defense contracting regulations, the dynamics are much too diverse between construction services and commodities;
• Virtually all of the USACE construction services…are one-of-a-kind projects under one-of-a-kind conditions with numerous and consistent variables for cost and no-cost factors;
• Additionally, the Office of Federal Procurement Policy (OFPP) has recently supported this very significant fact. In a July, 2003 memorandum recognizing that construction services cannot be equated to commodities or manufactured goods when she acknowledged, “new construction projects and complex alterations and repairs…involve a high degree of variability.”

The USACE report stated that there was no proof that reverse auctions provide any significant or marginal edge in savings over the sealed bid process for construction services for the following reasons:

• There was no proof that a consistent, reliable and valid measurement method for projecting savings could be established from reverse auctioning;
• Absent any specific price history for an identical project under identical conditions, there is no practical way to measure or compare any projected savings by reverse auctions over sealed bidding; and,
• There is no proof reverse auctions provided any significant or marginal savings in comparison to the government estimate.

The USACE report was an important new development on the procurement front because owners have increasingly considered the use of reverse auctions to procure construction projects. Clearly, the USACE report recommends reverse auctions are an inappropriate acquisition tool.

Continuing contracts also proved to be a critical issue raised during the conference. AGC believes the Continuing Contracts Clause, a provision in all Corps of Engineers contracts, must be revised to meet the reality of limited funding allocated to the Corps. The clause is so burdensome that it leaves contractors working on projects with limited funding only two unworkable choices: 1) suspend the project and absorb the associated demobilization and remobilization costs of the project; or 2) self fund the project. AGC members told the Corps that the clause must be amended to provide contractors with an equitable adjustment in cost and performance time required for the performance of all work arising from the exhaustion of appropriated Civil Works funding.

NAVFAC contractors raised concerns over the administration of discuss the “Military Housing Privatization Initiative” authorized by the 1996 Defense Authorization Act. Some contractors expressed concerns that the direction of this program has created economic trends that have been problematic for some contractors which have been the primary designers and builders of military housing in the past.

To thoroughly review and discuss concerns with these issues, and most importantly, come to resolution on these outstanding issues, members agreed to participate in issue specific task forces. Final reports will be presented no later than next year’s 2005 Federal Contractors Conference.

Other workshops were held throughout the week. Another workshop was held this year focusing on the new AGC Guide to Federal Contracting, which provided an overview of considerations Federal construction contractors should take into account as they conduct their normal business operations. Other workshop panels included representatives from the Corps of Engineers, Naval Facilities Engineering Command, the Small Business Administration, Unisys, Inc., and Primavera Systems, Inc.

(From  left) The Honorable J.P. Woodley, assistant secretary of the Army (Civil Works) and AGC President, Jim Waltze.