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ments, with some being more acceptable or desirable than others for various reasons. The "proposal" approach could serve to eliminate the best qualified firm if it happened to choose one of its ideas, rather than another, for presentation in the proposal. Secondly, it is the minority's firmly held belief that, in most cases, it is the function of responsible officials within the Government, together with Congress, to determine the sum that should appropriately be spent in satisfying a particular need; the majority's approach would tend to move this internal governmental management decision into the hands of an outsider who would be focusing exclusively upon a single project rather than weighing the needs of a single project against competing requirements in terms of an entire program and the request for appropriation therefor.

The majority's second recommendation calls for inclusion, in the competing proposals envisaged under its first recommendation, of the respective architect-engineers' estimate of lifecycle costs. This recommendation reflects a total lack of understanding of the integral part life-cycle cost considerations play in the development of a design. Any forecast of lifecycle costs made in advance of the design development is meaningless. Development of estimated life-cycle costs is not a function of competition but one of the services to be provided once an A-E has been selected and awarded a contract. In developing his design, the A-E can take into consideration the comparative life-cycle cost of elements of the structure and make reasoned choices among the various possibilities open to him. Only when the design is thus firmed up, and the choices made, can a realistic estimate of total life-cycle costs for the project be made. The agency itself has the opportunity to participate in making these choices.

Dissenting Recommendation 1. The procurement of A-E services should continue to be based on a competitive selection process as outlined in Public Law 92-582, which focuses on the technical competence of interested prospects. Solicitations of a price proposal and negotiations as to price should be undertaken only when the best qualified firm has been ascertained; if mutual agreement can

not be reached, the next best qualified firm should be asked for a price proposal, followed by negotiation; and if necessary, the process should be repeated until a satisfactory contract has been negotiated. [Offered in lieu of Commission recommendations 1 and 2.]

Professional services contracts with architectengineers include contracts for preliminary studies; preliminary and master planning; architectural and engineering studies, consultation, investigations, and surveys; and the preparation of designs, drawings, specifications, and cost estimates.

The prevailing method for selection of an A-E is generally as follows. Information is developed from contacts within the profession and former clients to identify potential sources of the desired services. Information is obtained from the identified prospects themselves and from their professional colleagues; additional information may be developed from contacts with the builders, owners, and even the occupants or users of buildings or facilities designed by the several prospects. This information relates, but is not necessarily limited to, factors such as the following:

• The professional qualifications, registration, previously designed projects, and general reputation of the principals of the firm and key personnel other than principal.

• The extent of in-house capabilities and the extent to which the prospect ordinarily draws upon consultants or must draw upon consultants for the particular project contemplated.

• The caliber of consultants regularly or frequently engaged.

• Prior major design projects, any unusual architectural, structural, or functional design solutions developed for those projects; overall degree of client satisfaction with results or client experience with shortcomings.

• Standing within the profession.

• Record of designing within construction fund limits and on schedule.

The depth and sophistication of the inquiries vary with the resources for making inquiries

and the size of the project contemplated. In general, Federal agencies which regularly contract for design services have relatively good information-gathering resources and have the staff capability for making a relatively sophisticated evaluation of the information secured. This structured evaluation process screens out the unqualified firms, identifies those capable of providing service of a high order of quality, and ultimately pinpoints the firm best able to perform the services contemplated. At that point, the firm is approached for the purpose of negotiating a mutually acceptable agreement on price, schedule, and other details. If agreement on these elements is reached, a contract is signed. If not, the next best qualified firm is approached.

The Federal Government has detailed independent estimates made by qualified technical personnel who are experienced in the procurement of A-E services, and these estimates are used in negotiating for a reasonable price. In addition, if the price exceeds $100,000, the selected A-E must furnish cost and pricing data which he is required to certify and which is verified by a pre-award audit.

The combination of a structured evaluation of factors pertinent to, and significant in, the selection of an A-E (including evaluation of technical qualifications), together with the measures taken to ensure that the fee agreed upon is reasonable, assures the Federal Government of securing quality service at a fair and reasonable cost.

This generally recognized and accepted method of A-E selection insures continued support of the "Guiding Principles for Federal Architecture" approved by President Kennedy in 1962 and endorsed by Presidents Johnson and Nixon. President Nixon's concern for architectural excellence in Federal construction was also expressed in his speech before the Associated Council of the Arts of May 26, 1972, and in his Design Message of May 18, 1972.

In considering actions to improve and strengthen the present system, the Office of Federal Procurement Policy should prescribe a structured system for evaluation of A-E technical competence so as to achieve a greater degree of uniformity of application. Selection criteria should be consistent with the nature and scope of services to be procured. The level

of effort devoted to the selection process by the Government and the competing firms should be consistent with the nature and scope of services to be provided. Government agencies should make a conscientious effort to afford opportunities to as many different firms as possible, consistent with maintaining high standards of performance and quality. Additionally, newly established or small firms should be given fair consideration for projects within their capabilities.

STATUTORY LIMITATIONS ON A-E FEES

Recommendation 4. Repeal the statutory sixpercent limitation on A-E fees. Authorize the Office of Federal Procurement Policy to provide appropriate policy guidelines to ensure consistency of action and protection of the Government's interest.

Five statutory provisions 22 set forth a sixpercent limitation on A-E fees, measured by estimated construction costs. Initiated by a 1939 statute authorizing the use of private A-E firms by the military services, the limitation is arbitrary and inappropriate for certain services and projects.23 Some small projects might require a 12-percent fee; others less than six percent, because they involve designs which have been used repetitively. Our studies indicate that inconsistencies and ambiguities in the five statutes limiting A-E fees have created confusion in both Government and industry.

Only those A-E services involving the preparation of designs, plans, drawings, and specifications bear a direct relationship to construction costs. Other A-E services, such as feasibility studies, site investigations, subsurface exploration, and services during the construction process vary widely in their rela

22 Armed Services Procurement Act, 10 U.S.C. 2306(b); Federal Property and Administrative Services Act, 41 U.S.C. 254 (b); and specific A-E statutes for the Army, Navy, and Air Force, 10 U.S.C. 4540, 7212, and 9540.

23 While Public Law 92-582 did not expressly deal with the existing statutory provisions limiting A-E fees to six percent, the broad definition of "architect-engineer services" used in the act could be construed as broadening of the kind of services subject to the limitation. H. Rept. 92-1188 indicates that the Committee considered and rejected the Comptroller General's recommendation to repeal the statutory limitation on A-E fees.

tionship to the estimated construction cost. In addition to questions as to what A-E services the limitation applies, it is unrealistic in today's market to apply a six-percent limitation to complex construction projects. Some agencies which have large in-house A-E capability contract out work within the limitation and use their own personnel to perform the remaining work. Other agencies which lack such inhouse capability have difficulty in living with the current limitations.

The tie-in of the limitation to estimated construction costs also creates problems, as such costs are not necessarily related to the value of A-E services rendered and are not always known at the time the fee limitations must be applied. Furthermore, some A-E contracts do not involve construction projects.

Although some of these problems could be solved by increasing the ceiling on A-E fees, or perhaps by providing exceptions for specific types of work or projects, it is likely that over a period of time agencies would again be faced with problems similar to those prevalent under the existing statutes.

While some ceiling or control on A-E fees may be desirable for most Federal projects, the present across-the-board limitation creates problems for both agencies and A-Es on small jobs, renovation projects, and facilities requiring an usually high degree of design effort. We feel it is inappropriate for a fixed percentage of fee limitation to be set out in a statute. A specific percentage limitation set forth in a statute may over the years become outmoded and too restrictive in the light of new de

velopments. It may also result in varying interpretations as to intended coverage. It is our opinion that the Office of Federal Procurement Policy 24 should be given the responsibility to establish appropriate policy guidelines for A-E fees and for interpretation of the controls applicable thereto. This arrangement would provide the necessary controls as well as the flexibility for adjustment and modification as deemed necessary.

Consolidation of Statutory Ceilings

If the statutory ceiling provisions are to be retained, the five existing statutes limiting A-E fees should be redrafted into a single statute applicable on a Government-wide basis and incorporating the following features:

• Application of the percentage limitation to the preparation of designs, plans, drawings, and specifications only

• Exemption from the limitation of (1) all rehabilitation, remodeling, and renovation. projects; (2) projects with a construction cost estimated to be less than $500,000; (3) A-E contracts which do not involve programmed construction projects; and, (4) at the discretion of the agency head or his designee, unusual, complex, or highly technical projects which would require an especially high level of design effort.

24 See Part A, Chapter 2, for a discussion of this recommended policy group.

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Our studies included a review of significant problems relating to the basic construction process. Serious shortcomings have been prevalent in the policies regarding initial decisions whether to lease or buy facilities, and in the funding of construction. Since our studies began, major changes have been made to cope with these shortcomings in public building programs. It is too early to assess how well these policy revisions will work in practice.

In recent years, construction by the General Services Administration (GSA) of a $10 million office building has taken an average of almost 5 years. The average construction period for comparable private buildings is 2 years. Citing "incremental funding" as a main cause of this disparity, the Administrator of GSA sought congressional approval for an improved pattern of approval and funding of public works.1

Under the incremental funding process, de

1 Testimony of Robert L. Kunzig, Administrator, GSA, in Hearing before the House Subcommittee on Public Buildings and Grounds, Committee on Public Works, on H. R. 10488 and related bills, 92d Cong., 1st sess., Sept. 22, 1971, pp. 16-38.

PUBLIC BUILDING FUND

The act establishes a fund for use in design, construction or acquisition, repair, alteration, and operation of real property for the Government. The major receipts of the fund are to be in the form of "rent" paid by users, mainly the Federal agencies, for space provided by GSA. Previously, agencies normally occupied GSA-controlled space without charge to their appropriations.

PROJECT APPROVAL

Until the passage of Public Law 92-313, in order to proceed with acquisition of public buildings estimated to cost more than $100,000, GSA was required to obtain specific authorization and appropriation actions by the Congress. Now, the threshold is $500,000, and GSA need only obtain approval by the Public Works Committees of the House and Senate and wait 30 days after notifying the Appro

2 For a discussion of delays in the budget process, see Part A, Chapter 7.

386 Stat. 216, approved June 16, 1972. Kunzig, note 1, supra.

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