by Louis J. Jenny and Geoff Corey | May 15, 2014
This week the key bipartisan leadership of the Senate Environment and Public Works Committee, Senators Barbara Boxer (D-CA), David Vitter (R-LA), Tom Carper (D-DE) and John Barrasso (R-WY), introduced a critical bill renewing transportation programs and funding in the United States (S. 2322). DBIA worked with the respective offices to retain language from the corresponding 2012 Act which singled out design-build as an innovative project delivery method. We’re pleased to report that language was retained in this bill, and we’re (cautiously) optimistic it will survive through the legislative process.
The use of design-build has grown extensively in the transportation sector over the past few decades and federal legislation has reflected that growth. In fact, transportation is now the fastest-growing design-build sector in the United States, with transportation design-build projects doubling in the past five years, both in quantity and value of projects.
This all began in 1988, when the Federal Highway Administration established an experimental project that would allow state transportation agencies to test and evaluate innovative contracting practices. This project was called the Special Experimental Project Number 14 (SEP-14). It allowed states to experiment with innovative contracting methods like design-build in order to determine if the benefits found in vertical design-build construction would hold true in the transportation sector. The results of SEP-14 led to similar provisions in the 1998 transportation reauthorization law, TEA-21 (Transportation Equity Act for the 21st Century). That act authorized design-build for projects that were more than $50 million. It also authorized the use of Public-Private Partnerships (P3s) for some federal projects. TEA-21 paved the way for design-build at the state level and further expansion in future reauthorization bills. Within five years, more than 20 states had some design-build authority for their DOTs. Subsequent reauthorization bills streamlined the design-build process and today 44 states, plus the District of Columbia, authorize design-build for transportation projects in some fashion.
In 2012, as new surface transportation legislation was being debated and DBIA saw an opportunity to increase federal support for design-build. In a significant achievement for DBIA, we were able to add language defining design-build project delivery as an innovative project delivery method. The final Act, known as MAP-21 (Moving Ahead for Progress in the 21st Century) has a section defining innovative project delivery methods as “technologies, manufacturing processes, types of financing or contracting methods that improve the quality, extend the service life or decrease the long-term costs of highways and bridges.” MAP-21 increased to 100 percent the Federal share payable to projects that the Secretary of Transportation determines contain innovative project delivery methods. This basically means that design-build projects are more likely to receive federal funding than typical design-bid-build projects. The final Act also expanded the Transportation Infrastructure Finance and Innovation Act (TIFIA), which has become so important to financing public-private partnerships (P3s).
This September, however, the 2012 Act expires, meaning legislation to reauthorize MAP-21 is necessary to maintain critical funding for surface transportation projects across the country. The bill from the Senate Environment and Public Works Committee is a great start, proposing to extend transportation funding for six more years while maintaining our language giving design-build projects more federal support. S. 2322 must go through the always arduous legislative process, and there is contention around the funding aspects of the bill, so its path to final passage is not clear. However, there’s been a good first step.
We will be working with our DBIA colleagues and DBIA members to monitor this developing legislation over the next few months. So far, so good.