U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

69–010 

" ! SENATE 

114TH CONGRESS

2d Session 

REPORT

2016

114–366 

Calendar No. 656 

CONSTRUCTION CONSENSUS PROCUREMENT 

IMPROVEMENT ACT OF 2015 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 1526 

TO AMEND TITLE 10 AND TITLE 41, UNITED STATES CODE, TO 

IMPROVE THE MANNER IN WHICH FEDERAL CONTRACTS FOR 

CONSTRUCTION AND DESIGN SERVICES ARE AWARDED, TO PROHIBIT THE USE OF REVERSE AUCTIONS FOR DESIGN AND CONSTRUCTION SERVICES PROCUREMENTS, TO AMEND TITLE 31 

AND TITLE 41, UNITED STATES CODE, TO IMPROVE THE PAYMENT PROTECTIONS AVAILABLE TO CONSTRUCTION CONTRACTORS, SUBCONTRACTORS, AND SUPPLIERS FOR WORK PERFORMED, AND FOR OTHER PURPOSES 

OCTOBER 27, 2016.—Ordered to be printed 

Filed, under authority of the order of the Senate of September 29, 2016 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

ANN F. VAN HOUTEN, U.S. Department of Homeland Security Detailee 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

MARY BETH SCHULTZ, Minority Chief Counsel 

BRIAN F. PAPP, JR., Minority Professional Staff Member 

LAURA W. KILBRIDE, Chief Clerk 


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Calendar No. 656 

114TH CONGRESS REPORT " ! SENATE 2d Session 114–366 

CONSTRUCTION CONSENSUS PROCUREMENT 

IMPROVEMENT ACT OF 2015 

OCTOBER 27, 2016.—Ordered to be printed 

Filed, under authority of the order of the Senate of September 29, 2016 

Mr. JOHNSON, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 1526] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 1526) to amend title 10 and title 

41, United States Code, to improve the manner in which Federal 

contracts for construction and design services are awarded, to prohibit the use of reverse auctions for design and construction services procurements, to amend title 31 and title 41, United States 

Code, to improve the payment protections available to construction 

contractors, subcontractors, and suppliers for work performed, and 

for other purposes, having considered the same, reports favorably 

thereon with an amendment (in the nature of a substitute) and recommends that the bill, as amended, do pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 4 

IV. Section-by-Section Analysis .......................................................................... 4 

V. Evaluation of Regulatory Impact .................................................................. 5 

VI. Congressional Budget Office Cost Estimate ................................................ 5 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 6 

I. PURPOSE AND SUMMARY

S. 1526, the Construction Consensus Procurement Improvement 

Act of 2015, seeks to improve the procedure that civilian agencies 

use to select construction companies to perform design and conVerDate Sep 11 2014 04:46 Oct 28, 2016 Jkt 069010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR366.XXX SR366

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1 Joseph C. Kovars, Barbara R. Gadbois and John R. Heisse, Turning a Battleship: Designbuild on Federal Construction Projects, Ober-Kaler (2011), http://www.ober.com/publications/ 

1172–turning-battleship-design-build-federal-construction-projects. 2 Virginia E. Mitchell, Two-Phase Design/Build Selection Process Speeds Contract Review, 

U.S. Army AL&T Magazine (June 2011), http://www.army.mil/article/58694/Two-Phase-DesignBuild-Selection-Procedure-Speeds-Contract-Review/. 3 Id. 

4 Id. 

5FAR 36.301 Use of two-phase design build selection procedures (1997). 

6FAR 36.303–1(a)(4) (1997). 

7 Virginia E. Mitchell, Two-Phase Design/Build Selection Process Speeds Contract Review, U.S. 

Army AL&T Magazine (June 2011), http://www.army.mil/article/58694/Two-Phase-Design-BuildSelection-Procedure-Speeds-Contract-Review/. 8FAR 36.303–2(b) (1997). 

9 Reverse Auctions, What are Reverse Auctions?, (2008), http://reverseauctions.com/index.html. 10Gov’t Accountability Office, GAO–14–108, Guidance is Needed to Maximize COMPETITION 

AND Achieve Cost Savings 3 (2013), http://gao.gov/assets/660/659530.pdf. 

struction projects. The bill reduces Federal Government documentation requirements, reduces costs for construction companies 

bidding on Federal contracts, and ensures that the Government 

does not use a reverse auction to establish a fair and reasonable 

price for certain construction contracts. 

II. BACKGROUND AND THE NEED FOR LEGISLATION

Currently, many Federal construction contracts are awarded 

using a two-phase ‘‘design build’’ procedure.1 The first phase begins 

with an agency soliciting general design and background information from construction companies.2 The agency then reviews the information and selects a subset of the companies to participate in 

the second phase of the selection process.3

In the second phase, the agency requests detailed design and cost 

information from the selected companies, evaluates that information, determines a fair and reasonable price, and awards the contract to the company that will provide the best value to the Government.4

While this two-phase design build procedure is generally useful, 

it has several downsides. First, for smaller projects, the requirement that the contracting officer confirm that ten criteria were reviewed and satisfied before beginning the two-phase procedure can 

be onerous both for the Government and the contractors.5

Second, the contracting officer must consider not less than five 

bidders in the second phase of the procedure.6 Some estimate that 

it costs a company between $50,000 and $100,000 to submit the full 

design documentation required at this stage of the procedure.7

When a contracting officer includes bidders in the second phase of 

the process that do not have a reasonable chance of winning the 

contract, it wastes their time and money. 

Finally, the design build procedure outlined in statute and detailed in the Federal Acquisition Regulation (FAR) lack guidance 

on how to determine a fair and reasonable price. Without this guidance, a contracting officer could use a reverse auction to determine 

a fair and reasonable cost to the Government.8 In a reverse auction, the sellers continually lower their prices in order to win the 

award, as opposed to a regular auction where buyers raise their offers until they win the item for sale.9 To win the auction, in most 

cases the company must be the low bidder at the end of the auction.10 While this procedure generally results in a low price for the 

item, the quality of the product, delivery terms, and other imporVerDate Sep 11 2014 04:46 Oct 28, 2016 Jkt 069010 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\SR366.XXX SR366

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11 Id. 12FAR 36.303–2(a) (1997). 13Gov’t Accountability Office. GAO–14–108, Guidance is Needed to Maximize Competition and 

Achieve Cost Savings, http://www.gao.gov/products/GAO–14–108. 14Office of Federal Procurement Policy. Memorandum on Effective Use of Reverse Auctions 

(June 1, 2015), https://www.whitehouse.gov/sites/default/files/omb/procurement/memo/effectiveuse-of-reverse-auctions.pdf. 15Press Release, Joint-Hearing Finds The Use Of Reverse Auction Contracts Limits Competition, Increases Costs For Taxpayer, H. Comm. on Small Business, Subcomm. On Contracting & 

Workforce (Dec. 11, 2013), http://smallbusiness.house.gov/news/ 

documentsingle.aspx?DocumentID=364146. 16 U.S. Dep’t of Transp. Fed. Highway Admin. Office of Int’l Programs, Design-Build, http:// 

international.fhwa.dot.gov/contractadmin/04.cfm (last visited Oct. 24, 2016). 17 Id. 18Tim Duggan & Darshan Patel, Design-Build Project Delivery Market Share and Market 

Size Report (May 2013), http://www.dbia.org/resource-center/Documents/rsmeansreport— 

2013rev.pdf. 19 Id. 

tant features may be lacking.11 Therefore, reverse auctions are not 

appropriate for design build contracts that require design concepts, 

key personnel and technical solutions.12

The Government Accountability Office (GAO) recommended that 

the Director of the Office of Management and Budget issue guidance on the appropriate use of reverse auctions in a 2013 report.13

While in 2015, the Office of Federal Procurement Policy (OFPP) 

issued a memorandum mentioning reverse auction guidance, OFPP 

has failed to include reverse auction policy within the FAR.14 Without a FAR provision, agencies may use reverse auctions to set 

prices for design build contracts or to contract for building materials using the reverse auction process. For example, concerns with 

the use of reverse-auctions were highlighted when the United 

States Army Corps of Engineers issued a policy to stop using reverse auctions for construction contracts after finding that the reverse-auction methodology did not work for construction contracts 

due to their high degree of variability, and that they did not deliver 

promised savings.15

According to a study commissioned by the Department of Transportation, the use of the design build procurement process has been 

steadily increasing in the United States public building sector for 

more than ten years.16 Most of the design build contracts surveyed 

used the two-phase selection procedure because it assessed qualitative factors rather than relying solely on the low-cost bid.17 A 

2013 report by Reed Construction Data corroborated this finding 

when it reported that more than 80 percent of the Department of 

Defense’s construction projects were awarded using the design 

build procedure.18 The report also found that slightly more than 30 

percent of all government construction projects used the design 

build procedure in 2012.19 Based on the body of support for twophase design build procurements, it is important to address the 

flaws that may keep civilian agencies from using this procurement 

process for most of their construction contracts. 

S. 1526 addresses the flaws in the current design build process 

to expand its use to award civilian construction contracts. First, the 

bill requires the use of the two-phase process for all construction 

projects over $750,000. This eliminates the documentation requirement for many civilian agency construction projects. Second, the 

bill discourages the contracting officer from including more than 

five construction companies in the second phase by requiring the 

agency to report to Congress all design build procurements that 


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allow more than five firms to participate in the second phase of the 

design build procedure. Third, S. 1526 prohibits reverse auctions as 

part of the two-phase design build selection procedure. This prevents agency contracting officers from experimenting with inappropriate methods to determine a fair and reasonable price. 

III. LEGISLATIVE HISTORY

S. 1526, the Construction Consensus Procurement Improvement 

Act of 2015, was introduced on June 8, 2015, by Senators Rob 

Portman (R–OH) and Mazie Hirono (D–HI). Senators Kelly Ayotte 

(R–NH) and Jeanne Shaheen (D–NH) joined as cosponsors on July 

8, 2015, and August 5, 2015, respectively. The bill was referred to 

the Committee on Homeland Security and Governmental Affairs. 

The Committee considered S. 1526 at a business meeting on February 10, 2016. During the business meeting, Senator Portman offered a modified substitute amendment, which made improvements 

to the bill and removed language that had already been enacted 

into law through the Fiscal Year 2015 National Defense Authorization Act, Public Law 113–291, enacted December 19, 2014. The 

Committee approved the bill, as modified by the Portman modified 

substitute amendment, en bloc by voice vote. Members present for 

both the vote on the amendment and on final passage were: Johnson, McCain, Portman, Paul, Lankford, Ayotte, Ernst, Sasse, Carper, McCaskill, Tester, Baldwin, Heitkamp, Booker, and Peters. 

III. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title 

This section establishes the short title of the bill as the ‘‘Construction Consensus Procurement Improvement Act of 2015.’’ 

Section 2. Congressional findings 

This section makes six findings: (1) acquisition procedures that 

are often used effectively for the procurement of other products and 

services are not always appropriate for design and construction 

services; (2) the Federal Government often effectively adopts contracting techniques from the private sector to procure products and 

services; (3) the design-build technique is a private sector practice 

adopted by the Government that works well for design and construction services; (4) the current statutory framework for designbuild could benefit from legislative refinement; (5) reverse auctions 

are another private sector procurement technique that Federal officials have adopted and used successfully to award contracts for the 

purchase of products that are commercially equivalent to commodities; and (6) reverse auctions are generally inappropriate for procurement of design and construction services. 

Section 3. Design-build construction process improvement 

This section replaces the current requirements in 41 U.S.C. 

§ 3309(b) with a requirement that the two-phase selection procedure be used for design and construction of a public building, facility, or work valued at or above $750,000. For smaller projects, having a value of less than $750,000, it retains the requirement that 

the contracting officer perform an analysis of the project’s complexity before using the two-phase selection procedure. 


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This section also requires the head of each agency to create and 

publically post information regarding the procedures used to award 

design and construction contracts in fiscal years 2017 through 

2021. Each agency must state the number of times that more than 

five bidders are included in the second phase of the two-phase procedure, as well as the number of design and construction contracts 

awarded using a procedure other than the two-phase selection procedure. The Director of the Office of Management and Budget is directed to facilitate public access to these reports. Finally, the section directs GAO to perform a one-time compliance review of this 

section within 270 days after enactment. 

Section 4. Prohibition on the use of a reverse auction for the award 

of a contract for design and construction services 

This section requires the Federal Acquisition Regulatory Council 

to prohibit the use of reverse auctions as part of the two-phase selection procedure for awarding contracts for construction and design services. The section includes a definition of design and a construction service that is consistent and broadly covers all contracts 

for design and construction of a public building, facility, or work. 

The section includes a definition of a reverse auction that the Federal Acquisition Regulatory Council is directed to include in the 

regulation so there is a clear and consistent understanding of the 

term and procedure across all Federal agencies. 

IV. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this act and determined that the act will 

have no regulatory impact within the meaning of the rules. The 

Committee agrees with the Congressional Budget Office’s statement that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act and 

would not affect the budgets of state, local, or tribal governments. 

V. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, March 29, 2016. 

Hon. RON JOHNSON, Chairman, 

Committee on Homeland Security and Governmental Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1526, the Construction Consensus Procurement Improvement Act of 2015. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

KEITH HALL. 

Enclosure. 


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S. 1526—Construction Consensus Procurement Improvement Act of 

2015 

S. 1526 would amend current law to modify the federal government’s procedures for awarding design and construction contracts 

for federal facilities and to prohibit the use of reverse auctions for 

such procurements. Specifically, the legislation would require a 

two-phase selection process for designing and constructing any federal facility with a cost of more than $750,000. In phase one, firms 

would provide basic information on their experience and past performance; agencies then would select a few firms and invite them 

to submit a more detailed proposal in phase two. 

CBO reviewed information on the process of awarding construction contracts by the Army Corps of Engineers (Corps) and the 

General Services Administration, two agencies that oversee construction of many federal facilities. Those agencies often use a twophase process to select firms for construction projects but also use 

other acquisition strategies to award contracts. On the basis of information from those federal agencies, CBO estimates that implementing S. 1526 would cost $10 million over the 2017–2021 period—$2 million a year—because some agencies that currently 

evaluate certain projects using a one-phase process would incur 

somewhat higher costs to evaluate two rounds of proposals before 

selecting a firm for each construction project. 

CBO also reviewed information on the use of reverse auctions in 

government procurement contracts by the Corps and GSA. Those 

agencies have found that using reverse auctions in complex procurements does not consistently result in lower procurement costs 

than would result from other methods such as sealed bids or negotiated procurements. Those agencies generally do not use reverse 

auctions to obtain such services. Consequently, CBO estimates that 

implementing S. 2139 would not result in any significant change in 

the government’s bidding practice and thus would not have a significant effect on the federal budget. 

Because enacting the bill could affect direct spending by agencies 

not funded through annual appropriations, pay-as-you-go procedures apply. CBO estimates, however, that any net change in 

spending by those agencies would be negligible. Enacting the bill 

would not affect revenues. CBO estimates that enacting S. 1526 

would not increase net direct spending or on-budget deficits in any 

of the four consecutive 10–year periods beginning in 2027. 

S. 1526 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contacts for this estimate are Matthew Pickford 

and Aurora Swanson. This estimate was approved by H. Samuel 

Papenfuss, Deputy Assistant Director for Budget Analysis. 

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows: (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 


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UNITED STATES CODE 

* * * * * * * 

TITLE 41—PUBLIC CONTRACTS 

* * * * * * * 

Subtitle I—Federal Procurement Policy 

* * * * * * * 

DIVISION C—PROCUREMENT 

* * * * * * * 

CHAPTER 33—PLANNING AND SOLICITATION 

* * * * * * * 

SEC. 3309. DESIGN—BUILD SELECTION PROCEDURES 

(a) * * * 

ø(b) CRITERIA FOR USE.—A contracting officer shall make a determination whether two-phase selection procedures are appropriate 

for use for entering into a contract for the design and construction 

of a public building, facility, or work when— 

ø(1) the contracting officer anticipates that 3 or more offers 

will be received for the contract; 

ø(2) design work must be performed before an offeror can develop a price or cost proposal for the contract; 

ø(3) the offeror will incur a substantial amount of expense in 

preparing the offer; and 

ø(4) the contracting officer has considered information such 

as the following: 

ø(A) The extent to which the project requirements have 

been adequately defined. 

ø(B) The time constraints for delivery of the project. 

ø(C) The capability and experience of potential contractors. 

ø(D) The suitability of the project for use of the twophase selection procedures. 

ø(E) The capability of the agency to manage the twophase selection procedure. 

ø(F) Other criteria established by the agency.¿ 

(b) CRITERIA FOR USE.— 

(1) CONTRACTS WITH A VALUE OF AT LEAST $750,000.—Twophase selection procedures shall be used for entering into a contract for the design and construction of a public building, facility, or work when a contracting officer determines that the 

project has a value of $750,000 or greater, as adjusted for inflation in accordance with section 1908 of this title. 

(2) CONTRACTS WITH A VALUE LESS THAN $750,000.—For 

projects that a contracting officer determines have a value of 

less than $750,000, the contracting officer shall make a deterVerDate Sep 11 2014 04:46 Oct 28, 2016 Jkt 069010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6603 E:\HR\OC\SR366.XXX SR366

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mination whether two-phase selection procedures are appropriate for use for entering into a contract for the design and 

construction of a public building, facility, or work when— 

(A) the contracting officer anticipates that 3 or more offers will be received for the contract; 

(B) design work must be performed before an offeror can 

develop a price or cost proposal for the contract; 

(C) the offeror will incur a substantial amount of expense 

in preparing the offer; and 

(D) the contracting officer has considered information 

such as— 

(i) the extent to which the project requirements 

have been adequately defined; 

(ii) the time constraints for delivery of the 

project; 

(iii) the capability and experience of potential 

contractors; 

(iv) the suitability of the project for use of the 

two-phase selection procedures; 

(v) the capability of the agency to manage the 

two-phase selection procedure; and 

(vi) other criteria established by the agency. 

Æ 


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