“We Mean It, Maaannnn”—New Proposed Regulation Seeks to Encourage Higher-Quality Proposals by Boosting Enforcement of Five-Bidder Limit in Two-Phase Procurements for High-Value Construction Contracts
On October 8, 2015, the U.S. Department of Defense (“DoD”), National Aeronautics and Space Administration (“NASA”), and the U.S. General Services Administration (“GSA”) jointly proposed a change to the Federal Acquisition Regulation (“FAR”) that would make it more difficult for agencies to bypass the existing five-bidder limitation in two-phase procurements for design-build projects worth more than $4 million. The proposed rule, which was published in the Federal Register, aims to improve the quality of the proposals submitted in such procurements.
In phase one of a two-phase design-build construction procurement, contractors provide the procuring agency with their qualifications to perform the design and construction work rather than a full proposal. Based upon those qualifications, agencies are supposed to select no more than five bidders to advance to phase two and submit detailed proposals. However, agencies can—and frequently do—bypass the five-bidder limitation with a contracting official’s permission. Indeed, it is not uncommon to see as many as 10 or 15 contractors competing in the second phase of the process.
The proposed rule, which would implement Section 814 of the recently-enacted National Defense Authorization Act, seeks to make it more difficult for agencies to skirt the five-bidder limitation in two-phase design-build procurements valued at more than $4 million by amending the FAR to require approval from “the head of the contracting activity, delegable to a level no lower than the senior contracting official” before allowing more than five bidders to advance to phase two. The Federal Register proposal notes that, by making it more difficult to exceed the five-bidder limit, this new rule is intended to provide an incentive for those contractors that make it to phase two to submit better proposals because “[a] potential offeror may be more inclined to invest their pre-award efforts on solicitations where they have an increased chance of award.”
Comments on the proposed rule are due on or before December 7, 2015.