# Presentation: 872820

## Questionnaire Regarding State DOT Approaches for Dealing with Unsatisfactory Contractor Performance 

*Jerry Yakowenko*
*Task Force Secretary*
*FHWA, Headquarters*
*202.366.1562*
*gerald.yakowenko@fhwa.dot.gov*

- AASHTO Subcommittee on Construction  / Contract Administration Task Force

## Agenda

- Results of survey
- Example States
- Other experience
- Conclusion

## State Transportation Agency Responses

**WFLHD**

**EFLHD**

**CFLHD**

**PR**

## 1) How does your state define unsatisfactory contract prosecution and progress?  

## Definition of “unsatisfactory progress”

- % time - % completion
- 25% - AL,
- 20% - MS, OK,
- 15% (HI, NM, TN,
- 10% - EFLHD
- Expiration of time / work not complete (FL, HI,
- Case-by-case – NV, VT,
- Other – IA, UT, GA, LA*

## Louisiana - “unsatisfactory progress”

| Elapsed Time (Te) | %time - % complete |
| --- | --- |
| < 55% |  > 40% |
|  55%  < Te < 70% | prorate allowable difference |
|   > 70% | > 25% |

| Elapsed Time (Te) | %time - % complete |
| --- | --- |
| < 55% |  progress >20% behind scheduled earnings |
|  55%  < Te < 75% | prorate allowable difference |
|   > 75% | > 25% behind scheduled earnings |

*Non-CPM  projects*

*CPM  projects*

## 2) List the methods currently available in your agency for dealing with unsatisfactory contract prosecution and progress.

## 3) Which method in Question #2 is used the most in your state to deal with unsatisfactory contract prosecution?

## 4) Does your state generally inform the contractor's bonding company when it is determined that the contractor's prosecution and progress is unsatisfactory?

## 5) If the answer to question No. 4 is yes, does the involvement of the bonding company generally result in improved contract prosecution and progress?

## 6) How does your State define unacceptable quality in the performance of the work? 

## 7) How does the State use contract performance evaluation data? 

- Performance evaluations directly lead to an adjustment of prequalification capacity rating with the completion of every contract (7)
- Performance evaluations indirectly lead to an adjustment of prequalification capacity rating only when consistent or below average performance is noted over several contracts (18)
- Removal from the prequalification list (15)
- Increase retainage on future contracts (3)
- Initiate termination procedures (13)
- Other (23)

## 8) Does your state have a process for rewarding above average performance (other than QA specs)?

- No – 32, Yes – 14, Other – 3
- Examples:
- early completion incentives (8)
- congratulation letters from the contract engineer to the top 15 performers – no $ (IA)
- increase prequalification rating (IL, KS, MA, WA)
- Reduction in retainage (MD)
- Financial incentive (up to 5%) being developed (NJ)
- Yearly recognition awards for quality, prosecution and contract compliance (MO, PA, )

## 9) Does your state have a contractor prequalification process? 

- No – 12, Yes – 34, May be used on individual projects –2, Other (1)
- Qualifications:
- some states rely on licensing and bonding requirements in-lieu-of prequalification
- Others make responsibility determinations
- some may require specific qualifications (SSPC)

## 10) If your state has a contractor prequalification process, is contractor performance a criterion that is used in the adjustment of ratings or in a non-responsibility determination?

- No – 7, Yes – 20, Other explanation–3
- Unique qualifications:
- NC – utilize bonding capacity and safety rating

## Example States

## Project manager completes an evaluation for each project
Contractor may appeal the evaluation rating to the ODOT Area Manager
ODOT evaluates a 12-month rolling average of scores for corrective actions (potential removal from prequalification list)
Two page evaluation form available
References: http://landru.leg.state.or.us/ors/home.html (279.041); administrative rules http://arcweb.sos.state.or.us/rules/alpha_index.html (734 division 10)

- Contractor may appeal the evaluation rating to the ODOT Area Manager
- ODOT evaluates a 12-month rolling average of scores for corrective actions (potential removal from prequalification list)
- Two page evaluation form available
- References: _[http://landru.leg.state.or.us/ors/home.html](http://landru.leg.state.or.us/ors/home.html)__ (279.041); administrative rules __[http://arcweb.sos.state.or.us/rules/alpha_index.html](http://arcweb.sos.state.or.us/rules/alpha_index.html)__ (734 division 10)_

## Pilot program started in 2001
Resident Engineer completes project check lists / evaluations (up to 46 pages)
Low ratings may affect prequalification rating; high ratings may result in an incentive payment up to 5%

- Resident Engineer completes project check lists / evaluations (up to 46 pages)
- Low ratings may affect prequalification rating; high ratings may result in an incentive payment up to 5%

## Since 1991, project questionnaire to evaluate quality, contract compliance, prosecution
Statistical analysis of all summaries
Excellent = mean + 2 std. dev.
Average = mean +/- 1 std. dev.
Below average  = mean – 1 std. dev.
Unacceptable = mean- 2 std. dev.
Implementation
Unacceptable rating in 1st year – probation; 2nd – suspension for one year; 3rd - debarment
Awards (certificates and plaques) by category: Heavy/medium/light volume, specialty contractors, etc.
Evaluation forms available (10 pages)

- Statistical analysis of all summaries
- Excellent = mean + 2 std. dev.
- Average = mean +/- 1 std. dev.
- Below average  = mean – 1 std. dev.
- Unacceptable = mean- 2 std. dev.
- Implementation
- Unacceptable rating in 1st year – probation; 2nd – suspension for one year; 3rd - debarment
- Awards (certificates and plaques) by category: Heavy/medium/light volume, specialty contractors, etc.
- Evaluation forms available (10 pages)

## Missouri Results

- For 2001:
- notices of suspension - 2 contractors
- probationary notices - 4 contractors
- continue on probation from previous years - 10 contractors
- achieved significant improvement and are reinstated to good standing - 7 contractors
- Upon review, the Chief Engineer waived disciplinary action against seven (7) contractors.
- Reference – MO Code of State Regulations: _[http://www.sos.state.mo.us/adrules/csr/current/7csr/7c10-10.](http://www.sos.state.mo.us/adrules/csr/current/7csr/7c10-10.pdf)__[pdf](http://www.sos.state.mo.us/adrules/csr/current/7csr/7c10-10.pdf)_
- Jerry Hirtz, MODOT, 573.751.7600

## Federal Contracting

- Emphasis on “Best Value” since 1994
- BV used for over 50% of projects (applied to over 66% of Federal construction $)*
- Projects range from $50,000 to over $1 billion

** Gerard Waites, “Overview of Best Value Contracting Process”*

## AGC Position

- Neutral appeals process for a contractor to question an adverse evaluation. (due process)
- Evaluations should not rely on the opinion of one individual
- One negative project should not negate an otherwise positive performance record.  Should be a process to eliminate or at least mitigate a single poor performance evaluation.

## Additional references

- Office of Federal Procurement Policy – “Best Practices for Collecting and Using Current and Past Performance Information” _[http://www.arnet.gov/Library/OFPP/BestPractices/pastpefguide.doc](http://www.arnet.gov/Library/OFPP/BestPractices/pastpefguide.doc)_
- “Quality-Based Performance Rating of Contractors for Prequalification and Bidding Purposes” – NCHRP D10-54

## Additional references

- “Guide to Collection and Use of Past Performance Information”, The Deputy Under Secretary of Defense (Acquisition Reform);  Includes: _*“Past Performance Top Ten Tips”*__*;*_ _[http://www.acq.osd.mil/ar/doc/ppiguide.doc](http://www.acq.osd.mil/ar/doc/ppiguide.doc)_