2001-24524 RESO
~ I
RESOLUTION NO. 2001-24524
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE
ADMINISTRATION TO ISSUE A REQUEST FOR PROPOSALS
(RFP) FOR THE ESTABLISHMENT OF A JOB ORDER
CONTRACTING (JOe) SYSTEM FOR ACHIEVING TIMELY AND
COST EFFECTIVE PROCUREMENT OF MAINTENANCE AND
CONSTRUCTION SERVICES FOR CAPITAL PROJECTS UP TO
$500,000 IN TOTAL COST.
WHEREAS, the City Commission at its December 20, 2000 meeting, referred to the
Finance and Citywide Projects Committee the Job Order Contracting (JOC) System; and
WHEREAS, the Finance and Citywide Projects Committee at its February 12, 2001
meeting, was provided with a presentation that consisted of the following: a historical
overview, why other public agencies use JOC, the JOC contract documents, the JOC process,
why JOC works, lower costs, and greater participation for small, local and emerging
businesses; and
WHEREAS, an oral report was provided to the City Commission at its February 21,
2001 meeting; and
WHEREAS, JOC will enable the City to achieve its primary objective of being able
to "more rapidly engage contractors" while lowering costs and strengthening internal
controls; and
WHEREAS, JOC does not replace any of the existing contracting systems including
program management services; and
WHEREAS, JOC is an efficient and effective tool for the City to use in
accomplishing its facilities maintenance and construction program.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND
CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor
and City Commission of the City of Miami Beach, Florida, Authorizing the Administration
to issue a Request for Proposals (RFP) for the establishment of a Job Order Contracting
(JOC) system for achieving timely and cost effective Procurement of Maintenance and
Construction Services for Capital Projects up to $500,000 in total cost.
PASSED and ADOPTED this 18th
00' ii"
MAYOR
,2001.
ATTEST:
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CITY OF MIAMI BEACH
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COMMISSION MEMORANDUM NO. l/6 ?-iJ/
TO:
Mayor Neisen O. Kasdin and
Members ofthe City Commission
Jorge M. Gonzalez \., ~
City Manager OI'V 0
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE
ADMINISTRATION TO ISSUE A REQUEST FOR PROPOSALS (RFP) FOR
THE ESTABLISHMENT OF A JOB ORDER CONTRACTING (JOC)
SYSTEM FOR ACHIEVING TIMELY AND COST EFFECTIVE
PROCUREMENT OF MAINTENANCE AND CONSTRUCTION SERVICES
FOR CAPITAL PROJECTS UP TO $500,000 IN TOTAL COST.
DATE: July 18,2001
FROM:
SUBJECT:
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS:
The City Commission at its December 20, 2000 meeting, referred to the Finance and Citywide
Projects Committee the Job Order Contracting (JOC) System. The Finance and Citywide Projects
Committee at its February 12,2001 meeting, was provided with a presentation that consisted of the
following: a historical overview, why other public agencies use JOC, the JOC contract documents,
the JOC process, why JOC works, lower costs, and greater participation for small, local and
emerging businesses. An oral report was provided to the City Commission at its February 21, 2001
meeting.
The Administration has prepared the attached scope of services and the evaluation criteria that will
be incorporated into the RFP.
Why JOC?
Achieving timely and cost effective procurement of maintenance and construction services is one
of the most difficult and challenging facility related tasks facing the City of Miami Beach.
Complying with the standard procurement regulations required for traditional construction services
contracts, combined with the necessary technical component of defining the requirements (i.e.
architectural and engineering drawings and specifications) for bidding, makes it difficult to be
responsive to facility users in a timely manner.
Agenda Item
C7w
'7-1(-0 )
Date
Commission Memorandum
JOC System
July 18, 2001
Page 2 of9
There is an effective solution to minimize these challenges. It is called "JOC" (which is an acronym
for Job Order Contracting). JOC is a tested and proven solution that's been around for over 15 years
and utilized by more and more public agencies each year.
Utilizing a traditional bid process, a "typical" construction project would required 10-12 weeks for
procurement of services and design by a consultant, 4-6 weeks for the solicitation process (i.e.
advertisement, pre-bid, bid opening, evaluating, tabulating, recommending), and 4-6 weeks for
contract award - all for a project which may require as little as two weeks to actually construct.
Furthermore, the design, administrative and advertisement costs associated with these types of
projects can be 15-25% of the construction cost especially for smaller projects.
A JOC System has been successfully used by other public entities faced with conditions similar to
the City. Essentially, JOC provides for contractors by establishing unit prices and technical
specifications according to which the General Contractor will perform any work stipulated by the
City over the term of the contract.
Once the contract is in place, individual projects are identified and the scope is developed jointly
with the JOC contractor. An automated system provides for preparation of a cost proposal and
issuance of the work order. The contractor is responsible for preparation of design plans and
obtaining permits, if necessary. The system is analogous to issuing a series of small designlbuild
projects at a price that has been pre-established through a competitive bid process.
What are the benefits of JOe?
The benefits associated with procuring maintenance and construction services utilizing JOC include
all of the following:
. Significant time savings - an average savings of between 60-180 days per project.
. Lower overall construction costs- typically in the range of 8-15%.
. A consistent increase in the level of quality.
. An increase in contractual control.
. A significant reduction in claims and changes.
. A substantial increase in the utilization oflocal, minority and women-owned businesses.
The City's dynamic enviromnent has created a need for facility managers to have a more responsive
contracting technique for the accomplishment of maintenance, repair and minor construction
projects. Constraints imposed by the existing supply, contracting and personnel systems limit the
facility manager's ability to respond to urgent and time sensitive requirements. JOC is an innovative
contracting system that was developed to enhance responsiveness while providing a higher level of
quality work at a lower cost.
The Job Order Contracting system is a great deal more than just a unit price book and some
prepackaged software. JOC is a comprehensive procurement system for obtaining construction
services. It was specifically designed to help public agencies complete routine construction services
more rapidly and at a significantly lower cost than the traditional system of construction contracting.
Commission Memorandum
JOC System
July 18,2001
Pagd of9
Since that time the Federal Government has used JOC to accomplish over $5 Billion worth of minor
construction projects. The JOC concept has proven that facility managers, given the proper tools,
can consistently provide efficient and cost effective support to their customers.
How Does It Work?
The Job Order Contract is a specially designed indefinite quantity contract that is awarded on a
periodic basis to one or more contractors. Each JOC is competitively procured using either a sealed
bid or a request for proposal and has a pre-established minimum and maximum dollar amount. Work
is accomplished by the issuance of a series of individual work orders to the contractor. This
continuing incentive allows the contractor to be continually rewarded for providing quality and
responsive work.
The Job Order Contract package consists of three major documents:
. A location specific Unit Price Book containing over 140,000 construction tasks. Each task contains
a task description, unit of measurement, and a unit price. Each unit price contains locally developed
direct costs for material, equipment, and labor. The construction tasks encompass all aspects of
construction work.
. A set of detailed technical specifications for each of the 140,000 construction tasks. The
specification set incorporates the City's own specifications.
. The terms and conditions that contain the specific contract language concerning the execution of
the contract.
The general guidance given to potential contractors during the advertisement phase is that the City
cannot give any specific information regarding individual projects or types of projects. No
commitment is made with regard to which specific tasks will be used or in what quantities. Since
the contract value ranges from some nominal minimum to a maximum amount the intending bidders
are advised that the City is only obligated to award the minimum amount during the term of the
contract.
Intending bidders are required to submit a "bid" on all work contained in the unit price book by
quoting a single adjustment factor that would be applied for work accomplished during normal
working hours and a single adjustment factor for work to be accomplished during other than normal
working hours. These two adjustment factors represent the contractor's only adjustment to the prices
published in the unit price book and must include all indirect cost such as overhead, profit, bonds,
insurance, design and contingency costs.
For example, an adjustment factor of25% would be bid as 1.25. During the execution of the contract
the unit price of a specific construction task is multiplied by the appropriate adjustment factor to
obtain the final price to be paid for the specific task. JOC represents a competitively bid, firm fixed
price contract since all the prices and the adjustment factors are established before the contract is
awarded.
Commission Memorandum
JOC System
July 18, 2001
Page 4 of9
The actual JOC execution process begins with joint review of the scope of work between the City
and the contractor. This review will include an on-site inspection. After the scoping conference the
City provides the contractor with a formal scope of work. The level of detail and design included in
the scope of work is a function of the difficulty of that particular project. The contractor breaks the
scope of work down into individual tasks and prepares his pricing proposal using the unit price data
contained in the unit price book. The total price is achieved by multiplying the specific construction
task by the appropriate quantities for that task and then multiplying by the adjustment factor.
As part of the pricing proposal, the contractor also develops a schedule and assembles any technical
data requested by the City. The proposal is then evaluated against the City's in-house estimate and
any differences in scope or quantities are verified. If the client is satisfied that the contractor's
proposal represents a fair and reasonable price for the work, then a firm fixed priced, Iwnp swn work
order can be issued to the contractor. This work order is the contractor's notice to proceed. Inspection
and acceptance of work are accomplished in the normal fashion.
What's the Major Advantage of JOC?
The m~or advantage of the Job Order Contracting System is that the individual work orders give
the contractor a "continuing incentive" to do timely and high quality work. The incentive is generated
because each work order only represents a small portion of the total possible contract. By doing
responsive and high quality work, the contractor can expect follow on work orders.
Other Significant advantages of JOC include:
Increased Responsiveness
Independent studies have shown that JOC can save between 75-85% in the time it takes to engage
construction contractors over the more traditional contracting methods.
Lower Costs
JOC can save the City between 8-15% in actual costs as compared to traditional contracting methods.
These cost savings occur from reduced design costs, lower procurement costs, lower project costs
and reduced post award costs.
Design costs are reduced since a majority of the typical JOC projects can be described without
having to develop full design docwnents. In those cases where some design is required, the design
only needs to be completed to the point of being "priceable" and "biddable". For every project the
specifications are already developed as part of the basic JOC contract. Design savings range from
2-6%.
Lower Procurement costs will be realized since the public agency will not have to develop, advertise,
and award individual firm fixed priced contracts for every small to medium sized project. The cost
of reproducing the contract documents alone can range from '12-1 % of the cost of construction. The
average procurement cost using the traditional methods for medium sized projects is $0.40 per
thousand, for JOC the cost drops to $0.16 per thousand. Typical overall procurement savings can
range from 2-4%.
Commission Memorandum
JOC System
July 18,2001
Page 50f9
Studies have shown that when analyzing comparable work JOe is 4-8% cheaper because of
reduced indirect costs and the absence of large contingencies. For example, if you consider a
single project that is being advertised under the traditional system, intending bidders will
include in their bid anticipated overhead costs for the full duration ofthe project. These costs
will represent field as well home office costs.
Under JOe, the contractors spread their anticipated overhead cost over the entire contract and
therefore, the individual overhead allocation against anyone project is a small percentage of
the total overhead. Other studies have shown that contractors, when developing their
Joe bid, will lower the contingency cost because he/she will have the opportunity to inspect
~~~~m~~~~~~b~~&~~
What about Change Orders and Claims?
Post award costs primarily include change orders and claims. Under JOe the contractor jointly
scopes the work with the client and any misunderstanding or confusion is openly discussed and
resolved. If a question arises during the proposal development the contractor is free to contact
the City's representative and get the appropriate answers. This non-adversarial relationship
eliminates the underlying cause of most claims and changes. Another key issue is that since
Joe is a series of individual work orders it is generally not in the contractors' best interest to
submit claims. Change orders arising from changes in the scope of work, or as a result of
differing site conditions, are handled as separate work orders. Post award cost savings have
been shown to be I -3% of the cost of construction.
Enhanced Opportunities for Small Business Owners
JOe has been designed to enhance the participation of small business owners. Since no
commitment is made to the JOe contractor regarding specific projects or items of work, the
contractor cannot profitably develop an in-house work force and is forced to maximize the use
of subcontractors. Over the past 5 years, more than 40% of all JOe work has been
subcontracted to small or minority-owned businesses.
JOC Produces Higher Quality Construction
Since the structure of the JOe is a series of sequential work orders, the contractors have an
on-going financial incentive to produce quality projects. If the contractor fails to maintain the
desired level of quality, the City can elect to give future projects to other JOe contractors or
to accomplish the projects in the traditional manner.
The "contractual motivation" under JOe is the complete reverse of the traditional system
where the contractor has been awarded a one time, fixed price contract. With the traditional
system the contractor must make as much money as shelhe can off that one opportunity. The
contractor typically increases their profit by cutting corners and submitting requests for claims
and change orders. This sort of contractual behavior is not found with Joe since it would only
serve to diminish future opportunities.
Commission Memorandum
JOC System
July 18,2001
Page 60f9
Joe has been approved for use by the General Accounting Office
The General Accounting Office (GAO) has fully reviewed the JOC concept and found it to be
consistent with all Federal procurement laws and policies. Therefore, any federal funds
received by the City can be obligated through the JOC process.
The JOC concept was designed with internal controls as an integral part of the check and
balance process. The JOC concept relies on automated software, which provides an excellent
audit trail of all JOC work orders and transactions as well as various verification programs to
ensure the integrity of the JOC database.
How much would it cost?
The consultant fee under JOC is typically 3% of the dollar value of work orders issued. It is
estimated that over the duration of the JOC contracts the consultant fee (typically 3%) could
be covered by the savings in advertisinglbidding costs alone.
The JOC System provides for procurement of an "annual General Contractors" through a
traditional bid process. An indefinite quantity contract is established with fixed unit prices,
against which work orders are issued for individual projects.
In summary, the Job Order Contracting System will enable the City to achieve its primary
objective of being able to "more rapidly engage contractors" while lowering costs and
strengthening internal controls. JOC does not replace any of the existing contracting systems
including program management services. JOC is just an efficient and effective tool for the
City to use in accomplishing its facilities maintenance and construction program. JOC is a
proven system that can offer immediate as well as long-term benefits. The Administration
therefore recommends that the City Commission adopt the attached resolution.
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Commission Memorandum
JOC System
July 18,2001
Page 70f9
SCOPES OF SERVICES
Scope of Services. The City of Miami Beach ("the City") is seeking Proposals from qualified
Consultants to develop, implement and assist in executing a Job Order Contracting System.
This system is necessary to enhance the current contracting operations. The main objective of
the system would be to enable the City to rapidly engage contractors to perform construction
and construction related services. The minimum required scope of services is as follows:
A. Document Preoaration. The Consultant must develop the full set of customized Job Order
Contracting documentation including a City of Miami Beach specific Unit Price Book,
Technical Specifications and the Contractual Terms and Conditions.
(I). The City Unit Price Book shall contain no less than 100,000 individual construction
tasks along with an associated unit price. Each unit price shall be developed based on the
prevailing equipment, material and labor prices within the City's geographical region. The use
of factors in localizing prices is not acceptable.
(2) The Technical Specifications shall be developed in conjunction with the Unit Price Book
and, where available, the City standards must be incorporated.
(3) The contractual Terms and Conditions shall be developed in conjunction with the City's
staff and shall include all appropriate contract language and forms.
B. Procurement Suooort. The JOC consultant must be capable of providing the City with complete
technical and marketing support during the procurement phase. Qualified staff with extensive public
sector procurement experience must provide this support. The JOC consultant will be required to
organize and conduct pre-bid meetings with the intending bidders as well as make presentations on
behalf of the City with various business and contracting organizations.
C. Svstems. The JOC Consultant must provide to the City a comprehensive JOC management
information and support system. This system must be compatible with the Windows operating
system for personal computers. The JOC management information and support system must be
capable of providing full project tracking, automated development of cost proposals and independent
the City estimates, generation of all project documentation, providing a project scheduling capability,
budget and cost control, and the generation of customized reports. The system must be capable of
incorporating current the City forms and documentation.
Commission Memorandum
JOC System
July 18, 2001
Page 80f9
D. Training. Training is essential to ensuring that the JOC system functions properly. As part of the
proposal, the consultant needs to consider the development of specialized training courses that would
involve all parties utilizing the system. This may include:
Procurement Staff
Field Staff
Engineers
Clerical Administrative Staff and
Contractors
All aspects of the system are to be covered in the training. This must include but is not limited to
the following:
JOC Execution
Implementation Procedures
System Training
Post Implementation Follow Up
Refreshers as needed.
All training is to be "Hands On" with functional use and individual performance as the objective.
E. Technical Sunnort. A major component of the proposed system should include the follow on
technical support. Expectations would include assisting the City in execution procedures,
troubleshooting, implementation, and continuous system monitoring. Technical support is considered
to be an on-going management support for the operational system.
Commission Memorandum
JOC System
July 18, 2001
Page9of9
SELECTION CRITERIA
Selection Criteria.
a. Selection of firms to be included in the evaluation and selection process will be based
on the following prerequisites:
(1) Responsiveness to submission requirements.
b. Selection of the most qualified firm will be based on the following criteria and
weights:
Criteria
Weight/Score
1. Firm's Experience Relative to the full Development
and Implementation of Job Order Contracting Systems
2. Organization Structure/Staffing
3. Qualifications of Personnel
4. References
5. Fee Proposal
6. Methodology and Approach
30
10
15
10
15
20
Total - All Criteria
100