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Despite the general pattern of Government procurement of A-E services, there are some important differences in the selection process among the agencies. The Army and Navy scan their lists of firms to develop a "slating board" to narrow the list." Interviews are sometimes conducted during the actual selection process to determine a finalist. NASA performs a desk screening and negotiates with a preferred firm or, if unsuccessful, the next preferred firm.

The Atomic Energy Commission (AEC) appears to have the most thorough procedure for ranking potential A-E contractors and selecting one for negotiation. Following an initial Form 251 screening, selected firms are invited to submit formal, unpriced, technical proposals for specific projects. The proposals contain considerable detail on proposed organization, key personnel to perform the project under consideration, and experience on similar work. After evaluating the proposals, the AEC evaluation team visits the firms which have submitted the most favorable proposals, usually the top three to five, to ascertain their capability. Although fee, as such, is not discussed during these interviews, AEC does often ascertain the billing rates, overhead rates, and travel and other prospective costs, as well as the estimated level of effort which the firms project. Subsequently, the evaluation team gives each firm a numerical ranking based on technical qualifications. A finalist is then selected by a technical proposal evaluation board. If negotiations with the finalist are

11 ASPR, part 18, sets forth in some detail the procedures currently followed by defense agencies.

unsatisfactory, then the second-ranking firm is interviewed and negotiations begun.12

The General Services Administration (GSA) appoints private architect-engineers to an advisory board which recommends a small number of firms with their qualifications as evaluated by the board. To make this evaluation, GSA rates each considered firm as "excellent," "average," or "poor" on 24 items ranging from the history of the firm to proximity of the firm to the geographical site of the project. Negotiations are begun with the firm selected by the Administrator or his designee as the best from the list. If negotiations with the first firm are unsuccessful, the second firm is invited to the negotiation table.

The Department of Health, Education, and Welfare and the Veterans Administration follow procedures similar to the GSA procedure, with some variations.13

Public Law 92-582

H.R. 16433, introduced in the 91st Congress, supported the "traditional" selection basis by providing that A-Es for Government projects would be selected on the basis of "demonstrated competence and qualification for the type of professional services required, and at fair and reasonable prices," but without discussion of price with more than one firm. The bill was passed by the House and was reported out of Senate Committee but did not come to a vote on the Senate floor.

A modified bill, introduced as H.R. 12807 in the 92nd Congress, was passed by the House on July 27, 1972, and by the Senate on October 14, 1972. This act, Public Law 92-582, is set forth in Appendix A.

APPLICABILITY OF THE ACT

Uncertainty as to the legality of existing procedures for A-E selection stems from the GAO report discussed earlier, which raised

12 See AEC Procurement Instruction 9–56.202-5, 9–56.250 (a), (b), and (c).

13 Interesting discussions of the A-E selection procedures of several agencies, as viewed by the agencies and the profession, are included in the Consulting Engineer, Mar. 1972, pp. 102-139.

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the issue whether the Truth in Negotiations Act required competitive negotiations and consideration of price in the selection. The Truth in Negotiations Act applies only to agencies subject to the Armed Services Procurement Act. The legislative history of Public Law 92-582 indicates that it is not applicable to agencies covered by the Armed Services Procurement Act. Accordingly, the issue of competitive negotiations is not fully resolved as regards agencies not covered by the law.15

Public Law 92-582 represents a modest step in the right direction, insofar as it requires discussions with more than one firm. But our study indicates that the A-E selection method provided by the new law would not provide for adequate competition. Frequent use of the term "traditional" in discussions of A-E selection has led to some confusion. As noted above, the basis for selection has been common among agencies. The procedures used vary widely. A number of agencies will need to modify their procedures immediately to conform to the provisions of Public Law 92-582. These implementing actions should be viewed as interim, and a longer term effort should be started to establish Government-wide policy guidelines for selection of A-E firms. These new statutory requirements for the selection of A-Es have many potentials for varying interpretations, divergent implementing regulations, and protests. We have observed that current agency procedures and practices for A-E selection are not uniform. We also have found there are significant differences in agency regulations implementing the procurement statutes. With this background, we have little reason to expect the new A-E selection requirements will be implemented in a consistent manner absent Government-wide guidelines. Some agencies may well interpret too broadly the repeated assertions expressed in the committee reports and floor debate that Public Law 92-582 was merely codifying existing policies and procedures, and conclude they are not required to

14 The military agencies, the Coast Guard, and NASA.

15 House Report 92-1188 on H.R. 12807, which became Public Law 92-582, states that the bill does not apply to "agencies falling within the jurisdiction of the Armed Services Procurement Act of 1947." See p. 9, H. Rept. 92-1188. An attempt on the House floor to extend the bill to those agencies was defeated. 118 Cong. Rec. H6898, daily record for July 26, 1972. But see S. Rept. 92-1219, accompanying H.R. 12807, p. 6, and section 704 of the Military Construction Authorization Acts for fiscal years 1971, 1972, and 1973.

make any changes in their A-E selection procedures. Our studies reflect that many A-E selections are made under procedures which would not meet even the requirements of Public Law 92-582.

Thrust of Commission Recommendations

Throughout our report, we have sought to recommend ways to ensure that the procurement procedures used by the Government make use of the benefits of competition to the maximum extent possible. We have also recommended that, to the fullest extent practicable, agencies follow uniform policies and procedures in like situations. We have urged that Congress avoid freezing procurement procedures into a set pattern to be followed regardless of the circumstances at hand. Each of these principles is applicable to Government contracts for A-E services.

No one familiar with the nature of A-E services, and their importance in minimizing the costs of constructing, maintaining, and using a facility, advocates formal advertising for sealed bids to do A-E work; nor do we advocate competition on the basis of the fee charged. However, we believe that the architect-engineer fee is an appropriate factor for consideration in instances where competing A-E firms are otherwise equal.16 The legislative history of Public Law 92-582 shows a clear intent to prohibit in all cases consideration of fee as a selection factor.17

Competitive Negotiations

Many A-E contracts are relatively small in

18 We are aware of the opposition of many members of the A-E profession to estimating prices in a competitive environment. Only recently, as a result of suits brought by the Department of Justice under the antitrust laws, have the American Institute of Architects, the American Society of Civil Engineers, and other organizations dropped provisions restricting competition among their members from their canons of ethics. The Commission emphasizes at the same time that it does not favor "competitive fee bidding," a concern frequently expressed.

17 Both H. Rept. 92-1188, p. 10, and S. Rept. 92-1219, p. 8, state that in "no circumstances should the criteria. . . relating to the ranking of architects and engineers on the basis of their professional qualifications include or relate to the fee to be paid to the firm, either directly or indirectly."

size. Those estimated to fall below the ceiling on small purchase procedures 18 should be handled informally. For larger contracts, the Government should strive for more formal competition than is now normally obtained.

Our primary recommendation is that the A-E firm be selected, where practicable, through competitive negotiations.19 With rare exceptions, more than one firm is qualified and available to design the facility. After such screening as the agency may use to narrow the list of potential competitors to manageable proportions, negotiations should be conducted with the remaining firms. In this process, technical competence in the areas considered by the agencies today should have major significance. For example, with all but the smallest firms and most routine design tasks, the plans of the A-E for assignment of individuals to the work are important.

In appropriate cases, the A-E concepts of the end product and their preliminary estimates of construction costs should be considered during the competition. The variety of facilities involved, differing practices in the timing of A-E selection, and varying degrees of agency in-house A-E competence make hard and fast rules impractical in this area. Artist's sketches and rough cost estimates would be of little use in selecting an A-E for most Government work. But in an era of rapidly changing construction techniques and escalating prices, competition frequently can be a useful tool in fostering innovation in design concepts, selection of basic construction methods or materials, and cost reduction. The weight given these factors should depend on the situation at hand. Some agencies contract with A-E firms for the development of initial construction cost estimates. Requiring cost estimates as a factor in the competition would not make sense in such cases. In other instances, the Government

18 Elsewhere, we recommend that this ceiling be set at $10,000, with provision for periodic adjustment.

19 Our Study Group on A-E services reported complaints that A-E projects were not uniformly announced in a timely manner. At present most agency selection procedures do not require any contact between agency officials and qualified A-E firms until one firm has been selected for negotiation of a contract. We believe that the provision in Public Law 92-582 for publicly announcing needs for A-E services and requiring discussions of anticipated concepts and the relative utility of alternative methods of approach with at least three firms is the first step in strengthening opportunities for broader participation in Government work, particularly by small firms and firms that have not been able to participate previously.

has chosen the basic construction concepts before seeking A-E services. Here, design concepts would often be of little interest, although the possibility of better ideas during the competition should not always be summarily dismissed.

ROLE OF A-E FEE

The A-E firms selected for consideration should make known their estimated fees during the competitive negotiations. The price of the A-E contract is of relatively small importance in relation to the quality of the resulting design, since the design controls facility construction and maintenance and operation costs, which are many times the A-E cost. The proposed A-E fee should therefore be the determining factor in the selection process only when other factors are essentially equal. However, knowing and discussing the proposed fee can aid the selection process in other ways. Experience in contracting for other services, such as research, has shown that analysis of the proposed price of competing contractors can often lead to a better understanding of the efforts they intend to apply (whether too much or too little) and of their comprehension of the nature of the work required. In addition, competitive price analyses can lead to "tradeoffs" in final agency decisions on the scope of work desired.

It has been argued that disclosure of proposed fee during competition will lead ultimately to excessive haggling over price, pure price competition, and consequent degrading of the quality of services performed by A-E firms. There is no objective evidence to support such a conclusion. This has not resulted in other areas of competitive negotiation for Federal contracts of a similar nature, where price estimates are required. We do not see any reason to believe it would result in the A-E selection process.

LIFE-CYCLE COSTS

As the design job increases in size and cost, it is reasonable to expect competitors to expend more effort in submitting proposals.

Where construction costs are estimated to exceed $500,000, the Government should seek A-E estimates of the life-cycle costs of the facility when practicable. As discussed above with regard to design costs, benefits could be derived from focusing the attention of competitors on ways to reduce life-cycle costs of proposed facilities.

REIMBURSEMENT OF PROPOSAL COSTS

Our recommendations for increased emphasis on competitive consideration of the kind, quality, and cost of A-E services illustrate our concern that the process of selection of A-E firms be brought more in line with practices in other areas of Government procurement. In order to achieve realistic competition in some cases, especially those involving complex, costly facilities or unusually difficult design problems, it may be desirable to carry competition through the early phases of design. This is frequently the case in research projects leading to large investments, such as weapon systems or ships. It is unreasonable to expect the typical A-E firm to bear the costs of competition in all cases; thus, where necessary, the Government should be prepared to fund the cost of design competitions in cases where carrying competition this far would be cost-effective. This principle has been followed in other areas. Both the House and Senate reports on Public Law 92-582 acknowledge that in "unique situations involving 'prestige' projects such as in the design of memorials and structures of unusual national importance, when the additional cost justifies the approach, and when time allows, the agency head can rely on design competition under the recognized procedures that have been traditionally applied to this type of procurement.” 20

In summary, we recommend a departure from current Federal practice in the selection of Architect-Engineer firms for facility design and a strengthening of Public Law 92-582. We reject the concept that present practice leads to adequate competition,21 and that selec

20 H. Rept. 92-1188 at p. 10; S. Rept. 92-1219, p. 8.

21 A recent survey shows that the top 20 A-E firms selected by four Government agencies during fiscal 1971 performed the following percentages of agency A-E business:

tion of A-E firms must differ from the selection of contractors to perform other similar professional services.

DISSENTING POSITION

Three Commissioners do not support the concept presented in the Commission position. They offer the following comments on the Commission position and a recommendation they would support.

The majority report purports to urge that Congress avoid freezing procurement procedures into a set pattern but in fact proposes to freeze the procedures for procuring architect-engineer services into the same mold of procedure as for procurement of goods and nonprofessional services. The majority's first recommendation would force the Federal Government to abandon the competitive selection procedure and to follow the set pattern of taking proposals as the basis for selecting an A-E.

One of the objectives for creating the Commission was to find ways in which the bureaucratic complexity of Government procurement could be simplified. With respect to the procurement of A-E services, however, the majority's Recommendation 1, rather than streamlining, would fasten upon the Government and A-Es an unnecessarily burdensome, bureaucratic, and expensive procurement procedure.

It also states that "our study" indicated that the newly enacted Public Law 92-582 (which formally adopted the traditional competitive selection method used throughout the Government and the private sector) would not provide for adequate competition. The statement implies that inquiries were made which developed information indicating that the traditional competitive selection method was not the most effective means of securing quality in design and that selection based on competitive proposals would yield better results. In fact,

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however, the recommendation to base selection on evaluation of proposals is totally at variance with the conclusions to be drawn from information developed by the Study Group appointed by the Commission by hearings, interviews, and inquiries.

The majority acknowledges that the objective in selecting an A-E is obtaining quality of service, rather than the lowest priced design work. In footnote 21 the majority cites percentage figures purporting to show that the bulk of Government design work goes only to a few firms.

The minority would note, first, that the discussion in the majority report contains nothing to show how selection of A-Es on the basis of competitive proposals would obtain better quality of service than does the traditional method. It may be that the majority intended that the footnote 21 figures be understood as demonstrating that government design contracts are awarded to a favored few for the most part, as a means of supporting its proposition that the traditional competitive selection procedure does not generate adequate "competition." However, the figures from which the footnote percentages were drawn represent the aggregate fees paid the firms on the lists. Among the 20 top firms on the Department of Defense list are Newport News Ship Building and Dry Dock Company and the Federal Republic of Germany. Newport News performs design services of a peculiarly specialized nature for which there are few sources. It is entirely possible (or perhaps even probable) that those contracts would have been awarded to Newport News had the procurements been effected by the method outlined in the majority's Recommendation 1 rather than by the traditional method. The minority would also surmise that the contracts with the Federal Republic of Germany would have been awarded to that "firm" whatever method of A-E selection might have been current at the time. The picture the majority report would paint with the percentage statistics is further distorted by the fact that a firm which got one large design contract would appear on the list whereas another firm of equal competence, having been awarded two or even three relatively small design contracts would not. In short, the majority report fails to demonstrate that there exists

any lack of competition in the selection of A-Es to support its proposal that competition should be increased by adoption of Recommendation 1.

Further, if an undue number of contracts were being awarded on the basis of favoritism rather than competence, members of the profession would be the first to urge that Congress impose some method for selecting A-Es other than the one in use throughout the Government (as well as the private sector). It is well known that the profession favors continued use of the traditional method.

That the majority's recommended method of selection would, in fact, be less effective in securing top quality professional services is almost self-evident. Under the traditional competitive selection method, the procuring agency makes its initial selection on the basis of information obtained not just from the prospects but also from independent sources. But if the selection were to be made on the basis of an evaluation of proposals, the procuring agency would find itself limited to considering only such information as the prospects themselves might choose to provide in the proposals, and unable to include in the evaluation information obtained from independent sources as to the prospects' respective abilities to produce satisfactory results for their clients.

The content of the technical proposal, which the majority would make the basis of selection, would include a concept plus the A-Es estimate of cost, the latter being the "primary factor" for selection purposes. The discussion, which ordinarily would be expected to support the recommendation, instead points out some of the objections to use of these very factors for selection purposes. The report notes that artists' sketches and rough cost estimates would be of little use; that requiring cost estimates as part of the proposal makes no sense where the services to be procured are preparation of cost estimates; and that the Government itself has frequently established the desired concept before securing design services to carry out the concept. To this list of factors which show that the type of proposal envisioned would not serve satisfactorily as a basis for selection, the minority would add other shortcomings and deficiencies. A top architect-engineer is able to generate a number of concepts, any one of which would satisfy the Government's require

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