Opinion
Opinion By: Chris Gorman, Attorney General; Gerald R. Gehard, Assistant, Attorney General
Re: Whether County May Procure Construction of a Facility on a Design/Build Basis. AGO Corr. No. 92-(O)-1386.
By letter of September 8, 1992 you ask, in substance, whether a county may procure, utilizing the "design/build" construction procurement method, construction of a facility to be used for county purposes.
First, the view expressed here should not be taken as general approval of the legality of a county's use of the design/build approach to obtaining construction of a public facility. We have reservations, some of which are alluded to below, about the propriety of procurement of construction at the county level via the "design/build" method.
Despite the remarks above, if there are sufficiently definite specifications describing the scope of construction sought, so that meaningfully competitive bids could be submitted for substantially the same facility by different bidders, for a sum certain which includes design costs, and bids are invited for design and construction of such project in accordance with competitive bidding requirements, procurement of both design and construction, in combination, might lawfully be obtained as a single procurement. Discussion follows.
The "design/build" approach to construction procurement is one in which both design and construction are obtained as a single procurement. Typically, where design/build is involved, reasonably detailed plans are not developed before a contractor is hired, so as to enable solicitation of bids for a reasonably defined product or project. This approach differs from what might be termed the "traditional approach," in which detailed construction specifications are prepared by an architect or engineer hired by an owner, and the specifications are advertised for bids from general contractors to carry out the construction phase of a project. Under the "traditional approach," detailed plans are approved by a procuring agency, which thus knows the scope of the project. These detailed plans enable solicitation of bids from different contractors each of whom can know what the agency seeks, and can accordingly prepare a bid for construction of a facility having known specifications. The traditional approach facilitates the competitive bidding process since potentially competing contractors can bid to supply the same product. See, As the Walls Came Tumbling Down: Architects' Expanded Liability Under Design/Build Construction Contracting, 17 John Marshall Law Review 1, 8 (1984). And see, Design/Build for Design Firms, Florida Institute of Consulting Engineers, Tallahassee, Florida (1991).
In the case of Floyd County, which is understood not to have adopted the Kentucky Model Procurement Code, procurement of construction of facilities for public use is governed by KRS 424.260. This statute requires newspaper advertisement for bids for public construction projects involving an expenditure of more than $ 10,000. Professional services (e.g., those of an architect or engineer) are excepted from the general requirement that bids be solicited.
In Opinion of the Attorney General (OAG) 72-233, this office observed, regarding construction procurement via the "turnkey" approach (a term sometimes used interchangeably with "design/build" ) (see Architect's Handbook of Professional Practice, Volume 2, The project, 2.1 "Delivery Approaches," American Institute of Architects, Washington, D.C. (1987)), that, while we found no statutes prohibiting use of the "turnkey" method, the bidding requirements of KRS 424.260 must be complied with.
Implicit in the requirement that bids be solicited is that bids be characterized by specifications that are sufficiently definite to allow potential bidders to discern what is being sought, so that meaningfully competitive bids for the same product for a sum certain may be submitted, and in order that a basis for exact comparison of bids is provided. See for example, OAG 74-420, cited favorably in Handy v. Warren County Fiscal Court, Ky.App., 570 S.W.2d 663 (1978), pointing out that the bidding process involves three important principles: (1) An offering to the public, (2) an opportunity for competition, and (3) a basis for an exact comparison of bids. That opinion indicated that the ultimate goal of the competitive bidding process in public procurement is to
'secure economy in the construction of public works and the expenditure of public funds for materials and supplies needed by public bodies, to protect the public from collusive contracts, to prevent favoritism, fraud, extravagance, and improvidence in the procurement of these things for the use of . . . local self-governing subdivisions, and to promote actual, honest, and effective competition to the end that each proposal or bid received and considered for the construction of a public improvement . . . may be in competition with all other bids upon the same basis . . . . 43 Am.Jur. (1st ed.) Public Works and Contracts, § 26, p. 767.'
(Emphasis added.)
If sufficiently definite specifications are not present at the time of solicitation of bids a process of advertising for bids for design and construction of a project might be little more than a subterfuge for a negotiated procurement of construction, which is not consistent with KRS 424.260. In the absence of detailed plans and specifications for which bids are solicited, selection of a contractor is left to the subjective judgment of public officials.
If reasonably detailed specifications describing the scope of a project are first prepared, such that competing potential bidders can know with particularity the product for which a bid might be tendered, and bids are solicited in relation to those specifications in conformity with the statutes (e.g., KRS 424.130, 424.140), the "design/build" approach to construction procurement might be utilized by a county.
In the fact situation you are concerned with, we understand, from a review of documentation presented to this office by Roger Rectenwald, executive director of the Big Sandy Area Development District, that detailed plans were developed for a facility for which the Floyd Fiscal Court seeks construction. We further understand that bids in relation to such plans, which were to include a sum certain for the project, were advertised in at least the Floyd County Times, presumably in a manner consistent with statutory advertising requirements for bids. Additionally, we understand that four substantively responsive bids were received.
Under these facts, assuming them to be accurate, it appears that the design/build approach followed was consistent with KRS 424.260.
Again, we emphasize that this letter should not be taken as generally approving use of the "design/build" approach in obtaining construction of public projects at the county level.