[Federal Register Volume 78, Number 148 (Thursday, August 1, 2013)]
[Proposed Rules]
[Pages 46546-46549]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18514]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 636

[Docket No. FHWA-2013-0043]
RIN 2125-AF58


Design-Build Contracting

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: This NPRM provides interested parties with the opportunity to 
comment on proposed changes to the FHWA requirements related to the use 
of alternative technical concepts (ATC) in design-build project 
delivery of highway construction. The revisions are intended to 
eliminate the requirement to submit a base proposal when a contracting 
agency allows design-build proposers to submit ATCs in their technical 
and price proposals. The FHWA seeks comments on the proposals contained 
in this notice.

DATES: Comments must be received on or before September 30, 2013. Late 
comments will be considered to the extent practicable.

ADDRESSES: Mail or hand deliver comments to the U.S. Department of 
Transportation, Dockets Management Facility, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590, or fax comments to (202) 493-
2251. Alternatively, comments may be submitted via the Federal 
eRulemaking Portal at http://www.regulations.gov (follow the on-line 
instructions for submitting comments).
    All comments should include the docket number that appears in the 
heading of this document. All comments received will be available for 
examination and copying at the above address from 9 a.m. to 5 p.m., 
e.t., Monday through Friday, except Federal holidays. Those desiring 
notification of receipt of comments must include a self-addressed, 
stamped postcard or you may print the acknowledgment page that appears 
after submitting comments electronically. All comments received into 
any docket may be searched in electronic format by the name of the 
individual submitting the comment (or signing the comment, if submitted 
on behalf of an association, business, labor union, etc.). Persons 
making comments may review DOT's complete Privacy Act Statement in the 
Federal Register published on April 11, 2000 (Volume 65, Number 70, 
Pages 19477-78), or you may view the statement at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Gerald Yakowenko, Contract 
Administration Team Leader, Office of Program Administration, (202) 
366-2221, or Mr. Michael Harkins, Office of the Chief Counsel, (202) 
366-4928, Federal Highway Administration, 1200 New Jersey Avenue SE., 
Washington, DC 20590. Office hours for the FHWA are from 8:00 a.m. to 
4:30 p.m., e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    You may submit or retrieve comments online through the Federal 
eRulemaking portal at: http:www.regulations.gov. The Web site is 
available 24 hours each day of the year. Electronic submission and 
retrieval help and guidelines are available under the help section of 
the Web site.
    An electronic copy of this document may also be downloaded from the 
Office of the Federal Register's home page at: http://www.archives.gov/federal_register and the Government Printing Office's Web page at: 
http://www.gpoaccess.gov.

Background

    Over the past 20 years, contracting agencies have been gaining 
valuable experience with the design-build project delivery method for 
highway construction. In conjunction with this delivery method, some 
agencies have encouraged design-build proposers to submit ATCs as a way 
to encourage innovation, promote efficiency, reduce risk, accelerate 
project delivery schedules, and reduce project costs.
    An ATC is a request by a proposer to modify a contract requirement, 
specifically for that proposer's use in the proposal process. The ATC 
must provide a solution that is equal or better to the requirements in 
the Request for Proposals (RFP) document. Proposers submit ATCs for the 
contracting agency's conceptual approval during the procurement 
process. The contracting agency may conduct confidential meetings with 
each proposer to review and discuss that proposer's ATCs. If the 
concept is approved by the contracting agency, the proposer may use the 
ATC in its technical and price proposal, thus providing the contracting 
agency with the potential for increased value at reduced costs.
    The FHWA's current regulatory policy in 23 CFR Part 636 allows 
contracting agencies to use ATCs in their procurement process subject 
to two conditions: (1) The ATC must not

[[Page 46547]]

conflict with the criteria agreed upon in the environmental 
decisionmaking process, and (2) the contracting agency must require 
proposers to submit a base proposal in addition to supplemental ATC-
based proposals. Specifically, 23 CFR 636.209(b) states: ``At your 
discretion, you may allow proposers to submit alternative technical 
concepts in their proposals as long as these alternative concepts do 
not conflict with criteria agreed upon in the environmental decision 
making process. Alternative technical concept proposals may supplement, 
but not substitute for base proposals that respond to the RFP 
requirements.''
    Thus the current policy allows proposers to submit proposals based 
on an approved ATC, but not as a substitute for the base proposal. The 
requirement for a base proposal and a supplemental ATC-based proposal 
was founded on the perception that this would allow for a fair 
comparison of proposals. In 2002, the FHWA believed that requiring 
every proposer to submit a base proposal would provide contracting 
agencies with quality and price information for each proposer for 
comparison purposes. In addition, contracting agencies could evaluate 
ATC-based proposals from firms desiring to submit innovative concepts. 
The underlying principle in existing policy is to ensure fairness and 
open competition by making certain that all proposers are competing for 
the same project.
    Since 2002, the FHWA has authorized several Special Experimental 
Projects No. 14 (SEP-14) proposals involving 23 CFR 636.209(b). The 
SEP-14 Program permits States and the FHWA to evaluate promising non-
traditional contracting techniques, which may otherwise deviate from 
established policy. The post-project evaluations received from agencies 
with SEP-14 authorization (which can be viewed at: http://www.fhwa.dot.gov/programadmin/contracts/sep14list.cfm) indicate that 
the procurement procedures that allowed for the submission and 
evaluation of ATCs were fair, transparent, and could be conducted in a 
manner that encouraged competition and innovation. The fact that base 
proposals were not available from all proposers did not lead to a 
perception of unfairness or a situation where agencies were evaluating 
significantly different projects. In fact, all contracting agency 
evaluations indicated that the ATC process was a significant factor in 
encouraging innovation, cost savings, and increasing the overall value 
to the agency through the best-value selection process.
    Under the authority of SEP-14, 23 CFR 636.209(b) project or program 
requirement waivers were requested and approved for the following 
contracting agencies:
     East End Crossing-Ohio River Bridge--the Indiana Finance 
Authority and the Indiana Department of Transportation;
     Gerald Desmond Bridge Replacement Project--the California 
Department of Transportation (Caltrans) and the city of Long Beach;
     I-10 widening--the Louisiana Department of Transportation 
and Development;
     I-15/I-215 Interchange Improvement Project--Caltrans;
     I-95--Contee Road Interchange, US 113, Intercounty 
Connector, and programmatic approval by Maryland State Highway 
Administration;
     Longfellow, Whittier, and Braga Bridges--the Massachusetts 
Department of Transportation;
     Louisville-Southern Indiana Ohio River Bridges Project--
the Kentucky Transportation Cabinet;
     Programmatic approval by the Colorado High Performance 
Transportation Enterprise and the Colorado Department of 
Transportation;
     Programmatic approval by the Idaho Transportation 
Department;
     SR-91 Corridor Improvement Project--the Riverside County 
Transportation Commission;
     Tappan Zee Bridge--the New York State Thruway Authority 
and the New York State Department of Transportation;
     Programmatic approval by the Michigan Department of 
Transportation;
     Programmatic approval by the South Carolina Department of 
Transportation; and
     Programmatic approval by the Texas Department of 
Transportation.
    Evaluations provided by these agencies concluded that the use of 
ATCs in the procurement process provides the following benefits:
     A strong potential for increased value at a lower cost by 
allowing contractors to provide innovative cost effective solutions in 
a competitive procurement process,
     increased competition and innovative approaches early in 
the design process, giving contracting agencies the opportunity to 
select proven design and construction solutions,
     consideration and use of innovative solutions through 
early contractor involvement,
     further innovation and competition fostered through 
confidential meetings with proposers and contracting agencies, which 
provided proposers with a degree of comfort that their concepts would 
be accepted, and
     increased use of advanced technology, new materials, and 
innovative construction methods.
    The evaluation reports provided by various contracting agencies 
through the SEP-14 process have been very positive regarding the use 
and implementation benefits of ATCs for design-build project delivery.
    In the April 19, 2010, SEP-14 evaluation of the I-10 widening 
project, the LaDOTD stated:

    This ATC process gives the LaDOTD the ability to factor the 
proposers' technical solutions into the selection process and gives 
the LaDOTD access to solutions from all proposers. It also gives the 
successful proposer a head start on implementation of its ATCs, and 
avoids unnecessary costs for proposers to advance a base design that 
ultimately will not be used. . . . The opportunity to introduce 
innovative concepts resulted in greater competition among the 
proposers by allowing the LaDOTD to consider a broader spectrum of 
technical solutions for the Project. Overall, we feel that the ATC 
process utilized for the I-10 Widening Design-Build Project was a 
success.

    The December 21, 2011, SEP-14 evaluation submitted by MDSHA for the 
I-95/Contee Road interchange project included the following findings:

    The proposed ATC process gave the SHA the ability to factor each 
proposer's technical solutions into the selection process, allowing 
a true ``Best-Value'' selection and gave the SHA access to solutions 
from all proposers. It also gave the successful proposer a head 
start on implementation of its ATCs and avoided unnecessary costs 
and risks for proposers to advance a base design that may not [be] 
used.
    As part of the ATC submittal and review process, the Proposer 
was required to provide details concerning how the ATC would impact 
vehicular traffic, environmental impacts (favorable or unfavorable) 
identified on appropriate environmental documents, community 
impacts, and safety and life-cycle project and infrastructure costs 
(including impacts on the cost of repair and maintenance). The ATC 
process, therefore, led to approved ATCs that minimized the impact 
on the environment, did not reduce the overall quality of the final 
product, and would provide the ``Best-Value'' for the contract.

    The December 4, 2008, SEP-14 evaluation by the MDSHA for the 
Intercounty Connector Contracts A, B, and C stated:

    Over the past three years and procurement of approximately $1.5 
billion in design-build contracts, the Administration has received 
numerous benefits from using the ATC process. SHA believes that 
these compelling benefits included not only permitting

[[Page 46548]]

flexibility and innovation from the design-build teams, but they 
have also allowed opportunities for cost saving measures in a very 
complex and expensive program, in addition to reductions in 
environmental impacts on a highly sensitive project. Seven short 
listed design build firms competed for three contracts and submitted 
133 ATCs. We did not receive any complaints regarding the ATC 
process and specifications used on these three contracts from the 
seven short listed forms. The ATC process and specifications used by 
SHA allowed for fair and open competition and ensured that all 
propose[r]s were competing for the same project.

    The 2011 Annual Report, titled ``Alternate Technical Concepts in 
Design Build Contracting at WSDOT,'' stated the following:

    The ATC process, as practiced at WSDOT, is a valuable and 
effective tool that helps to further refine our design build 
projects and obtain the best value for taxpayers. It is well 
established and accepted by industry as evidenced by the level of 
participation during procurement. The experience documented in this 
report confirms this success by both statistical and anecdotal data. 
This ATC process provides another avenue for application of the 
competitive market influence to the design build procurement method 
within the bounds of the level playing field and to the benefit of 
our taxpayers. Additionally, this process makes use of the FHWA 
waiver authorization to avoid extra, duplicative efforts by our 
proposers and evaluation teams associated with the preparation and 
review of a second, unaltered proposal.

    In consideration of the successful deployment of ATC by various 
contracting agencies, the FHWA is proposing to revise its requirements 
to eliminate the base proposal submittal requirement in 23 CFR 
636.209(b). The use of ATCs is acceptable so long as the RFP document 
clearly describes the contracting agency's requirements for ATC 
content, submission, review procedures, confidential meetings 
procedures (if used), and how ATCs will be evaluated in the proposal 
review process.

Section-by-Section Discussion of the Proposed Changes

Part 636--Design-Build Contracting

    The FHWA proposes to revise 23 CFR part 636--Design-Build 
Contracting as follows:
    In relation to 23 CFR 636.209, the FHWA proposes to revise 
paragraph (b) to delete the submission requirement for base proposals, 
where a contracting agency is allowing the submission of ATC proposals. 
Contracting agencies may allow proposers to submit ATCs, as long as the 
RFP document clearly describes the contracting agency's requirements 
for ATC content, submission, review, confidential meeting procedures 
(if used), and how ATC will be evaluated in the proposal review 
process.
    Additionally, a sentence is proposed to be added to paragraph (b) 
stating that the confidentiality of ATCs will be maintained, except to 
the extent disclosure is required in order for the contracting agency 
to maintain compliance with a Federal or State permit or other legal 
requirement necessary for the delivery of the project. Contracting 
agencies and design-build proposers need to be aware that, in certain 
instances, it may be necessary for the contracting agency to issue 
addenda to the RFP, to inform all proposers of a RFP revision that was 
prompted by another proposer's ATC submission. For instance, if an ATC 
submitted by a proposer demonstrates that a feasible and prudent 4(f) 
alternative exists on a project for which a 4(f) determination had 
already concluded that there was no feasible and prudent 4(f) 
alternative, the contracting agency and FHWA must disclose the 
alternative to maintain 4(f) compliance.
Rulemaking Analyses and Notices
Executive Order 12866 (Regulatory Planning and Review), DOT Regulatory 
Policies and Procedures, and Executive Order 13563 (Improving 
Regulation and Regulatory Review)
    The FHWA has determined that this action would not be a significant 
regulatory action within the meaning of Executive Order 12866, or 
within the meaning of DOT's regulatory policies and procedures. After 
the consideration of alternatives and analysis of impacts, the FHWA 
anticipates that the economic impact of this rulemaking would be 
minimal and would not adversely affect any sector of the economy in a 
material way. Additionally, this action complies with the principles of 
Executive Order 13563. Interested parties are invited to comment on the 
anticipated economic impact. In addition, these changes would not 
interfere with any action taken or planned by another agency, and would 
not materially alter the budgetary impact of any entitlements, grants, 
user fees, or loan programs.
Regulatory Flexibility Act
    In compliance with the Regulatory Flexibility Act (RFA), the FHWA 
has evaluated the effects of this NPRM on small entities and 
anticipates that this action will not have a significant economic 
impact on a substantial number of small entities. The proposed 
amendment provides procedures for use of ATCs in design-build project 
delivery of highway construction. As such, it primarily affects States, 
which are not included in the definition of small entity set forth in 5 
U.S.C. 601. Therefore, States do not meet the definition of a small 
entity and the RFA does not apply. The FHWA further certifies that the 
proposed action will not have a significant economic impact on a 
substantial number of small entities.
Unfunded Mandates Reform Act of 1995
    The FHWA has determined that this NPRM will not impose unfunded 
mandates as defined by the Unfunded Mandates Reform Act of 1995 (UMRA). 
Section 202 of the UMRA, 2 U.S.C. 1531-1538, requires Federal agencies 
to prepare a written assessment of proposed Federal mandates likely to 
result in the expenditure by State, local, or tribal governments, in 
the aggregate, or by the private sector, of more than $100 million in 
any one year. The FHWA anticipates that this proposed rulemaking will 
not result in the expenditure by State, local, or tribal governments, 
or by the private sector, of more than $100 million annually. Thus, the 
FHWA is not required to prepare a written assessment under the UMRA.
Executive Order 13132 (Federalism Assessment)
    Executive Order 13132 requires agencies to assure meaningful and 
timely input by State and local officials in the development of 
regulatory policies that may have a substantial, direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. This proposed action has been analyzed in 
accordance with the principles and criteria contained in Executive 
Order 13132 dated August 4, 1999, and the FHWA has determined that this 
proposed action would not have a substantial direct effect or 
sufficient federalism implications on the States. The FHWA has also 
determined that this proposed action would not preempt any State law or 
regulation or affect the States' ability to discharge traditional State 
governmental functions.
Executive Order 12372 (Intergovernmental Review)
    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing 
Executive Order 12372 regarding intergovernmental consultation on 
Federal programs and activities apply to

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this program. Local entities should refer to the Catalog of Federal 
Domestic Assistance Program Number 20.205, Highway Planning and 
Construction, for further information. Accordingly, the FHWA solicits 
comments on this issue.
Paperwork Reduction Act
    The FHWA has analyzed this proposed rule under the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq.) and has 
determined preliminarily that this proposal does not contain collection 
of information requirements for the purposes of the PRA.
National Environmental Policy Act
    The FHWA has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 et seq.), 
and has determined that this action would not have any effect on the 
quality of the environment and meets the criteria for the categorical 
exclusion at 23 CFR 771.117(c)(20).
Executive Order 12630 (Taking of Private Property)
    The FHWA has analyzed this proposed rule under Executive Order 
12630, Governmental Actions and Interference with Constitutionally 
Protected Property Rights. The FHWA does not anticipate that this 
proposed action would affect a taking of private property or otherwise 
have taking implications under Executive Order 12630.
Executive Order 12988 (Civil Justice Reform)
    This action meets applicable standards in sections 3(a) and 3(b)(2) 
of Executive Order 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.
Executive Order 13045 (Protection of Children)
    The FHWA has analyzed this proposed rule under Executive Order 
13045, Protection of Children from Environmental Health Risks and 
Safety Risks. The FHWA certifies that this proposed action would not 
cause an environmental risk to health or safety that might 
disproportionately affect children.
Executive Order 13175 (Tribal Consultation)
    The FHWA has analyzed this action under Executive Order 13175, 
dated November 6, 2000, and believes that the proposed action would not 
have substantial direct effects on one or more Indian tribes; would not 
impose substantial direct compliance costs on Indian tribal 
governments; and would not preempt tribal laws. The proposed rulemaking 
addresses obligations of Federal funds to States for Federal-aid 
highway projects and would not impose any direct compliance 
requirements on Indian tribal governments. Therefore, a tribal summary 
impact statement is not required.
Executive Order 13211 (Energy Effects)
    The FHWA analyzed this proposed rule under Executive Order 13211, 
Actions Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. The FHWA has determined that this rule is not a 
significant energy action because the rule is not a significant 
regulatory action under Executive Order 12866, and the rule is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. Therefore, a Statement of Energy 
Effects is not required.
Executive Order 12898 (Environmental Justice)
    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionately high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations. The FHWA has 
determined that this rule does not raise any environmental justice 
issues.
Regulation Identification Number
    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN number contained in the 
heading of this document can be used to cross-reference this action 
with the Unified Agenda.

List of Subjects in 23 CFR Part 636

    Construction, Construction manager, General contractor, Grant 
programs, Transportation, Highways, and Roads.

    Issued on: July 16, 2013.
Victor M. Mendez,
Administrator.

    In consideration of the foregoing, the FHWA proposes to revise 
title 23, Code of Federal Regulations, part 636 as follows:

PART 636--DESIGN-BUILD CONTRACTING

0
1. The authority citation for part 636 is revised to read as follows:

    Authority:  Sec. 1503 of Pub. L. 109-59, 119 Stat. 1144; Sec. 
1307 of Pub. L. 105-178, 112 Stat. 107; 23 U.S.C. 101, 109, 112, 
113, 114, 115, 119, 128, and 315; 49 CFR 1.85(b).
0
2. Amend Sec.  636.209 by revising paragraph (b) to read as follows:


Sec.  636.209  What items must be included in a phase-two solicitation?

* * * * *
    (b)(1) At your discretion, you may allow proposers to submit 
alternative technical concepts (ATCs) in their proposals if:
    (i) The alternative concepts do not conflict with criteria agreed 
upon in the environmental decision making process, and
    (ii) The RFP document clearly describes the contracting agency's 
requirements for ATC:
    (A) Content,
    (B) Submission,
    (C) Review,
    (D) Confidential meetings procedures (if used), and
    (E) Evaluation in the proposal review process.
    (2) The confidentiality of ATCs will be maintained, except to the 
extent disclosure is necessary to maintain compliance with Federal or 
State permitting or other legal requirements necessary for the delivery 
of the project.

[FR Doc. 2013-18514 Filed 7-31-13; 8:45 am]
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