Research Trends and Results

Study of introducing the negotiated bidding method
into bidding and contracting of public works
MORITA Yasuo, HeadOHIRA Kazuaki, Senior Researcher
TAJIMA Takashi, Researcher
UMANO Koji, Guest Research Engineer
SHIRAISHI Kaoru, Guest Research Engineer
NAKAMURA Keiji, Guest Research Engineer
Construction Management Division, Research Center for Land andConstruction Management(Key words) Public works, bidding and contracting, Quality and Cost Based Selection , negotiated bidding method

Rank of winning bidder
Work nameTechnologyevaluation score

Bid price○○district box culvert work

3rd2nd□□bridge damage restoration and restoration of a collapsed
bridge1st

1st△△district multi-purpose utility tunnel work

2nd

1st

3rd

1st

3rd

1st

◆◆Viaduct superstructure work

6th

1st

◇△Bridge superstructure work

2nd

1st

●●Dam redevelopment and construction of tunnel outlet works
gate room system
××Dam redevelopment, construction of tunnel outlet works
system of inlet●
State where the company which made the best technology proposal cannot be specified
Company with the lowest technical evaluation score (6th) won the bid with the lowest price etc.

3. Studying the negotiated bidding method
Under the negotiated method which is now being
studied based on the state of the technical proposal
evaluation type (type A) of this kind, the contract issigned after the company which has made the best
technical proposal has been designated as thecompany with first refusal rights, negotiations are
conducted with that company to confirm the execution
methods based on the technical proposal, and set theprice (unit price or rate), and the negotiations havereached an agreement. (If these negotiations fail, theorderer negotiates with the party with second rights ofrefusal.)ＮＯ

Signing contract

Deciding on contractor

Setting selling price andadjusting estimates

Agreement YES
reached?

Confirming work methods
and negotiating price withcompany with right ofsecond refusal[Directions of study]
If the negotiations with the company with rightof first refusal fails, negotiations with thecompany with right of second refusal begins

Confirming work methods
etc. and negotiating priceDeciding the party withright of first refusal(Technical dialogue, andimprovement of thetechnical proposals etc.)
Screening of Technology

Figure. Flow Chart of Negotiated Bidding Method
Submission of technicalproposals

2. Diverse bidding and contracting methods(negotiation bidding method)
The negotiated bidding method is already used
overseas under the EU Public Procurement Directiveor the U.S. Army Corps of Engineer’s ECI (EarlyContractor Involvement) procurements, and in Japan,
a similar method is applied under the construction
consultants’ proposal method. For public works
projects in Japan, the Quality and Cost Based
Selection (technical proposal evaluation type (type A),
which uses the superior technical capacity of privatecompanies based on technical proposals, for works forwhich the orderer cannot prepare standard
specifications for example, is applied, but as shown in
the table, it is difficult to use private sector knowhow
etc. without specifying the company that has made thebest technical proposal.

Table. Table of Advanced Technical Proposal Type in
FY2012

Announcement

1. Introduction
Almost 100% of works under the Ministry of Land,
Infrastructure, Transport and Tourism are handled
uniformly by Japanese bidding and contracting
methods such as the open competitive bidding andQuality and Cost Based Selection, etc., and it isdifficult to use diverse bidding and contracting
methods to adapt to the needs of the times or tocharacteristics
ofprojects.
Therefore,
theCentral Council
forConstruction Contracting
Business has announced that it intends to revise thesystem by, for example, systematically positioning
diverse bidding and contracting methods orintroducing the negotiated bidding method: selecting
the company with the highest level of technology
through a public subscription and then signing acontract based on negotiations concerning price andconstruction methods.

This method is described with reference to a method
given a trial in the selection of a CM contractor by theUrban Renaissance Agency.
4. Future schedule
The negotiated bidding method is being studied byapplying it to a case where it is difficult to set
specifications because of characteristics of the work(case where it is necessary to use this method
considering the past ordering by the orderer), but inthe future, we will study details of procedures for its
operation while hearing the views of the Advisory
Board on Future Construction Production And Control
Systems to Fulfill Orderers’ Responsibilities, which
was established in 2013, including possibility ofapplying it to works where local conditions and otherexecution conditions are complex and highly unique,so it is difficult to specify specifications in advance.