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Does QBS Save Money?

Posted By John Palatiello, Friday, April 26, 2013

A colleague from the engineering profession asked me an interesting question, "Does the qualifications based selection (QBS) process for selecting firms for architecture, engineering (A/E) and related services (including surveying and mapping) save or cost taxpayers money?”

That is a frequently asked question. 

The federal law was codified in 1972 ("Brooks Act”, 40 U.S.C. 1101 et. seq. and implemented in part 36.6 of the Federal Acquisition Regulation (FAR), 48 CFR 36.6) to protect the interest of taxpayers. It is federal law because over the life of a project, the engineering and related design services account for less than one-half of one percent of total costs. Yet, these important services play a major role in determining the other 99.5 percent of the project's "life cycle costs”, such as construction, operation, and maintenance.

While many services performed under the Brooks Act are not related to construction, such as surveying and mapping activities that support resource management, program administration, E-911 and a variety of other non-design or construction projects and applications, the savings are nonetheless realized.

The process has been so successful at the federal level that it is recommended by the American Bar Association in its model procurement code for state and local government. Some 47 states have enacted their own competence and qualifications based selection laws for architecture, engineering, surveying and mapping services. Others use it as standard procedure. No state has a specific law requiring bidding of these services.

The rationale for Congress codifying a practice that had been successful for more than 100 years before Congress passed, and President Nixon signed the Brooks Act on a bipartisan basis in 1972 was quality, public safety, and cost-effectiveness.

QBS was recognized as a competitive process in the landmark Competition in Contracting Act (P.L. 98-369) which Congress enacted in 1984 in response to the coffee pot and toilet seat scandal in the Pentagon. During an earlier Senate debate on the federal A/E selection law, Senator Gurney of Florida said, "any Federal procurement officer...will tell you that competition based on professional-technical qualifications is every bit as hot and demanding as competition based on price, perhaps more so.” 

Government contracting officers, who are accustomed to buying specific products, rather than professional services, gravitate to low bids. As Senator Henry "Scoop” Jackson of Washington State said on the floor of the U.S. Senate during debate on the federal QBS law, a "contracting officer faced with widely ranging price proposals or bids would be under pressure to accept the low price.”

Among the studies which have concluded that QBS in fact has saved tax dollars include An Analysis of Issues Pertaining to Qualifications Based Selection by Paul S. Chinowsky, PhD (University of Colorado) and Gordon A. Kinsley, PhD (Georgia Tech). It found that government agencies that use qualifications-based selection are better able to control construction costs and achieve a consistently high degree of project satisfaction than those using price based procurement methods.

The study drew from a database of approximately 200 public and private construction projects in 23 US states, included transportation, water, commercial, and industrial projects, ranging in size from relatively small projects to those costing hundreds of millions dollars. Its authors compared various procurement methods, including QBS, Best Value, and Low-Bid, with such factors as total project cost, projected life-cycle cost, construction schedule, and project quality outcome. Results showed that using QBS to procure the design component of a construction project "consistently meant lower overall construction costs, reduced change orders, better project results and more highly satisfied owners than in other procurement methods.”

The authors, both experts and noted researchers in the engineering and construction field, concluded that QBS should continue to be the procurement method of choice for public contracting officers seeking to acquire A/E services to meet increasingly challenging infrastructure needs.

A specific study comparing costs between agencies that use QBS and those that select on price also found that the QBS process saves money. Selecting Architects and Engineers for Public Building Projects: An Analysis and Comparison of the Maryland and Florida Systems compared projects in Florida, which used QBS, with those in Maryland, which for a period of time employed price competition. The comparative study found Maryland’s A/E selection process was significantly more time consuming and expensive than Florida’s. In Maryland, the necessity of preparing detailed programs on which A/Es can base price proposals results in added expense to the state in the form of administrative staff, time delays and consultant costs, and overall budget. The increased administrative costs in Maryland resulted from the necessity of preparing detailed programs on which A/Es can submit price proposals. These additional system costs were not evident in Florida. While A/E fees were lower in Maryland than in Florida, the added costs of the Maryland process far outweighed the savings in A/E fees that resulted from a process in which the state developed detailed programs and A/E selections were made with price as an initial factor.

Since Maryland’s law requiring selection based on price went into effect, there was an 11.6 percent increase in personnel and a 17.9 percent increase in the budget (in constant dollars) for construction projects.

Maryland’s A/E selection process took considerably longer to complete than Florida’s. The total delay relating to the A/E portion of the capital construction process in Maryland was almost 10 months. The delays occurred while detailed program descriptions were being prepared, during the actual selection process and during the design and approval phase. The Maryland Department of General Services completed the A/E portion of the capital construction process, from the point that funds are approved to the beginning of the actual construction cycle, in 31 months. The same steps are completed, on average, in 21 months in Florida agencies.

The study concluded that Maryland’s A/E selection process was significantly more time consuming and expensive than Florida’s. In Maryland, the necessity of preparing detailed programs on which A/Es can base price proposals results in added expense to the state in the form of administrative staff, time delays and consultant costs.

As a result, the Maryland legislature repealed its bidding law and enacted a state "mini-Brooks Act” or QBS statute.

The United States is fortunate that major building failures are rare. After incidents such as the collapse of the Hyatt Regency in Kansas City (MO) and the implosion of the roof of the Hartford (CT) Civic Center, Congress investigated these incidents and issued a report on "Structural Failures in Public Facilities” in 1984. It found, "procurement practices that lead to or promote the selection of architects and engineers on a low bid basis should be changed to require prequalification of bidders with greater consideration given to prior related experience and past performance.” The chairman of the subcommittee conducting the study and publishing the report was then Rep. Al Gore, Jr. (D-TN).

No study making an "apples to apples” comparison of bidding versus qualifications selection has ever been conducted on surveying, mapping or geospatial services. However, numerous agencies such as the U.S. Army Corps of Engineers, U.S. Geological Survey, and National Oceanic and Atmospheric Administration report high satisfaction with the process.

The simple answer is yes, QBS saves money. The famous showman, P.T. Barnum is well known for saying, "There’s a sucker born every minute”. What is less known is that Barnum also observed, "The smartest way of deriving the greatest profit in the long run is to give people as much as possible for their money.”?

The Council on Federal Procurement of Architectural and Engineering Services (COFPAES), of which MAPPS is a member, will host a workshop on successful implementation of the qualifications based selection (QBS) process for procurement of professional A-E and related services on Tuesday, May 14 in Washington, DC.

The workshop is designed for Federal, state and local government personnel responsible for contracting for professional A-E services, including surveying and mapping, as well as private practice professionals and firm personnel involved in marketing, business development, and contract administration. Click here to learn more.

Tags:  Architecture  Budget  COFPAES  Engineering  Mapping  Money  Procurement  QBS  Surveying 

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