How to Develop a
Winning Design-Build
Project Delivery Team
Thursday, August 20, 2015
Federal Project Symposium
8:00 - 9:30 a.m.
Introducing Our Panel
• Reggie Jones
– Fox Rothschild
– Chair, Federal Government Contracts & Procurement Practice Group
• Michael Daniels
– W.M. Jordan Company
– Vice President of Preconstruction Services
• Nick Solosky
– Fox Rothschild
– Attorney, Federal Government Contracts & Procurement Practice
Group
Why We Are Here
The Teamwork Required for “Design Build Done Right”
Designer-Contractor Teams on Federal Projects
2013 DBIA Award Winner
Smithsonian-Mason Conservation Studies Program in Front Royal, Virginia
Why We Are Here
• Increased Opportunity to Team on Federal
Projects (Designer/Contractor)
• Authorized Under FAR 9.6 (Teaming
Arrangements – Joint Venture or Agreement
to Subcontract)
• New Opportunities =
• Ready to Jump into Bed with a New
Teammate?
Importance for the
Design-Build Industry
• Good Teaming . . .
– High Quality Product & Happy Client
– Fast Tracking Project Delivery
– Cost Control & Greater Profits
• Bad Teaming . . .
– Late Delivery & Unhappy Client
– Risk Allocation
– $ Loss Allocation
Developing a Team:
The Checklist for Success
1. Corporate Culture
Is a teaming relationship right for me?
2. Team Composition
How should I structure my team?
3. Lines of Communication
How do I communicate internally and externally?
4. Risk Management
How do I allocate team risks and rewards?
5. Financial Considerations
How do I finance the team and team projects?
Corporate Culture
• Design-Build Teaming Requires Mutual Trust
and Cooperation
– The team will not be successful without it!
• Take the Time In Advance to Think About
Compatible Corporate Philosophies:
– Company Principals
– Conflicts of Interest
– Motivations for Teaming
Corporate Culture
• Things to Consider Before Teaming:
– Why Does Each Teammate Need the Other?
– Synergy: Mutually Beneficial and
Compatible Experience
– Compatible Technology
– Compliance Issues (EPLS, Size, etc.)
• False Claims Act Implications
Corporate Culture
• Past Experience Matters!
– Prior History
• Experience Working Together
• Experience with the Client
• Experience and Compliance with the RFP
• The Best Teams Have a Solid Foundation and
an Eye to the Future
– Greater Chance of Winning
– Better End Results
Corporate Culture
• Focus on Individual Team Members
– Must be savvy to design-build teaming issues
• Open Communication
• Global Problem Solving
• Holistic Project Thinking
• KEY REMINDER:
– RFP/RFP RESPONSE GOVERNS
Team Composition and Compatibility
How Does the Federal Acquisition Regulation
(FAR) Recognize Teaming? FAR 9.603:
The Government will recognize the integrity and
validity of contractor team arrangements;
provided, the arrangements are identified and
company relationships are fully disclosed in an
offer or, for arrangements entered into after
submission of an offer, before the arrangement
becomes effective.
Two Types Of Team Arrangements
• FAR 9.601:
– “Contractor team arrangement” means an
arrangement in which—
• Two or more companies form a partnership or joint
venture to act as a potential prime contractor.
• A potential prime contractor agrees with one or more
other companies to have them act as its subcontractor
under a specified Government contract or acquisition
program.
Team Structure
Structure of the Business Relationship between
Designer and Contractor:
1. Joint Venture
2. Agreement to Subcontract
• Considerations:
– Legal Form or Structure
– Organization and Control of the Business Venture
– Capitalization and Finance
Beware: Large-Small Joint Venture
• A small business and a large business may not joint
venture except in an approved, SBA 8(a)
Mentor/Protégé relationship or in a DoD
Mentor/Protégé relationship
• Reason?
– The Affiliation Rule (13 C.F.R. 121.103(a)(6))
• In calculating the size of a joint venture, the SBA will combine
the gross receipts of the small firm with those of the large
firm
• Thus, a small business affiliated with a large business is no
longer a small business eligible to pursue set-aside work
Agreements to Subcontract
• FAR 9.601: A potential prime contractor agrees
with one or more other companies to have them
act as its subcontractors under a specified
Government contract or acquisition program.
• A large business can be a subcontractor to a small
business.
– The prime/sub team is small if the prime contractor
qualifies as small for the procurement.
• The prime/sub team is small if the prime
contractor qualifies as small for the procurement
• Ostensible Subcontractor Rule
Lines of Communication
• Efforts to Obtain Contract
– Marketing and Bidding
– Proposal Phase
• Definition of Roles
– Early Engagement by All Team Members
– Team Leaders
– Technology Compatibility
Lines of Communication
• The Role of the Project Owner
– Communicating and Interfacing with the Owner
• Roles and Responsibility
• Assurances and Allowances
• Can be Difficult for the Designer
– Owner Often Not Active in Developing the
Original Scope of Work / RFP
*The RFP/RFP Response Governs*
Risk Management
• Risks Vary by Project
• No Solutions – Possibilities to Study and Consider
• Identify and Describe
– Allocate Consequences and Losses
• Projecting Profits and Losses
– Allocation of Savings if Project Exceeds Goals
– Allocation of Losses if Project Fails to Meet Goals
• Compensation
– Amount
– Timing of payment
– Conditions
Risk Management
Non-Exhaustive List:
• Insurance
– Coverage to be procured by each party, including limits,
terms, etc.
• Bonding
– Description of bonds to be procured, by whom, terms, etc.
• Design Errors / Construction Defects
– Indemnity Provisions
• Disputes and Litigation
• Pre-Existing Conditions
• Health and Safety Considerations
Risk Management
Dispute Resolution
• Sequence of Dispute Resolution Actions.
– Step negotiations between senior management.
– Non-binding mediation
– Binding arbitration (or litigation)
BONUS TIP: CONFIDENTIALITY PROVISIONS
•
•
•
•
Confidentiality of Information
Exclusivity Provisions
Agreements Not To Compete
Future Marketing / Sales Efforts
– Responsibility of each party
– Provisions regarding mutual commitment,
exclusivity
Financial Considerations
Risks and Rewards . . .
• Cash Flow
• Project / Team Financing
• Sources of Capital
• Accounting Responsibilities
• Taxes
• Phantom Income Retainage
• Compensation
• Performance Incentives
• Shared Savings
Questions ?
Nick Solosky
Phone: (202) 696-1460
Email: [email protected]
Reggie Jones
Phone: (202) 461-3111
Email: [email protected]
Blog: http://governmentcontracts.foxrothschild.com/