Surface Transportation:

States Are Experimenting With Design-Build Contracting

RCED-97-138R: Published: Apr 29, 1997. Publicly Released: Apr 29, 1997.

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John H. Anderson, Jr
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Pursuant to a congressional request, GAO provided information on the Federal Highway Administration's (FHwA) pilot project to test and evaluate design-build contracting, a new approach to procurement, focusing on the: (1) extent to which states have used design-build contracting under the pilot project; (2) advantages, cited by proponents, of this approach over traditional contracting and the conditions under which the approach can be applied to highway projects; and (3) obstacles to using the approach for highway projects.

GAO noted that: (1) under FHwA's pilot program, the states are experimenting with design-build contracting; (2) as of January 1997, 13 states had initiated over 50 design-build projects that vary widely in cost; (3) although some of these states have approved a second round of projects, only three states have completed one or more design-build projects; (4) according to proponents, design-build contracting: (a) improves coordination between the designer and the builder; (b) requires less monitoring by the sponsor or owner; and (c) reduces the potential for legal disputes; (5) additionally, proponents maintain, the approach can save time and reduce costs; (6) however, design-build contracting may not be applicable to some types of highway projects, such as a simple resurfacing; (7) FHwA has concluded that the states' experience is still too limited to assess the broad benefits, costs, and applicability of the approach; and (8) several obstacles limit the use of design-build contracting for highway projects: (a) laws in 17 states, as well as federal laws, do not permit the use of design-build contracts for most highway projects; (b) the construction industry has been cautious about the approach because of liability and cost concerns; and (c) funding may not keep pace with construction for larger projects.

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