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[House Report 115-68]
[From the U.S. Government Publishing Office]

115th Congress  }                                           { Report
                        HOUSE OF REPRESENTATIVES
 1st Session    }                                           { 115-68

======================================================================
 
       CONSTRUCTION CONSENSUS PROCUREMENT IMPROVEMENT ACT OF 2017

                                _______
                                

 March 29, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Chaffetz, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 679]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 679) to amend title 41, United 
States Code, to improve the manner in which Federal contracts 
for design and construction services are awarded, to prohibit 
the use of reverse auctions for design and construction 
services procurements, and for other purposes, having 
considered the same, report favorably thereon with amendments 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     2
Section-by-Section...............................................     5
Explanation of Amendments........................................     7
Committee Consideration..........................................     7
Roll Call Votes..................................................     7
Correspondence...................................................     7
Application of Law to the Legislative Branch.....................     8
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     9
Statement of General Performance Goals and Objectives............     9
Duplication of Federal Programs..................................     9
Disclosure of Directed Rule Makings..............................     9
Federal Advisory Committee Act...................................     9
Unfunded Mandate Statement.......................................     9
Earmark Identification...........................................     9
Committee Estimate...............................................    10
Budget Authority and Congressional Budget Office Cost Estimate...    10
Changes in Existing Law Made by the Bill as Reported.............    11

    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:

    Page 5, line 3, after ``shall compile'', insert the 
following: ``and submit to the Director of the Office of 
Management and Budget''.

    Page 5, insert after line 19 the following new 
subparagraph:

                  (C) Submission to gao.--Not later than 30 days after 
                the deadline described under subparagraph (A), the 
                Director of the Office of Management and Budget shall 
                compile and submit the reports submitted to the 
                Director under such subparagraph to the Comptroller 
                General.

    Page 5, line 21, strike ``for each annual report''.

    Page 5, beginning on line 23, strike ``the compliance of 
each executive agency'' and insert the following: ``the reports 
submitted under subsection (a)(2)(C) and agency compliance''.

                     Committee Statement and Views

                          PURPOSE AND SUMMARY

    H.R. 679, the Construction Consensus Procurement 
Improvement Act of 2017, will encourage competition and reduce 
costs associated with participation in federal design-build 
construction contract competitions, particularly for small 
businesses. The bill encourages agencies to utilize a two-step 
bid and proposal process for these contracts. The two-step 
process can also reduce the time spent by contracting officers 
reviewing multiple complicated design proposals in a single 
step process. H.R. 679 will also prohibit use of the reverse 
auction process for complex design-build construction services.

                  BACKGROUND AND NEED FOR LEGISLATION

    In fiscal year 2016, the federal government spent $473 
billion on contracts for goods and services. Approximately $21 
billion (or 4 percent) was spent on federal construction/
architect and engineering (A&E) projects. Small business prime 
contractors receive about $7.4 billion (or 36 percent) of this 
spending.\1\ H.R. 679 would streamline the procurement process 
for design-build construction or A&E projects, reduce 
participation costs, and encourage smaller businesses to 
compete for this work.
---------------------------------------------------------------------------
    \1\Data source is the Federal Procurement Data Systems-Next 
Generation (FPDS-NG), available at http://www.fpds.gov.
---------------------------------------------------------------------------

Current process for buying design-build construction services

    Typically, the federal government uses one of two processes 
for buying design-build construction services--either the 
``design-bid-build'' or the ``design-build'' process. Under the 
``design-bid-build'' process, the procuring entity treats 
design and construction services as two separate requirements. 
With this ``design-bid-build'' process, the procuring entity 
awards contracts sequentially and separately with two contracts 
to two awardees. Alternatively, under the ``design-build'' 
process, the procuring entity combines the design and 
construction services into a single requirement. With this 
``design-build'' process, a single contract is awarded to one 
company (which is often a team) responsible for both the design 
and construction; thereby promoting accountability for 
completing the overall project.\2\
---------------------------------------------------------------------------
    \2\41 U.S.C. Sec. 3309.
---------------------------------------------------------------------------
    There are two source selection processes for the design-
build contracts.\3\ First, there is the single-step design-
build selection process where all construction and design teams 
must submit detailed and costly full proposals up front. Then 
the procuring agency evaluates all proposals and selects an 
awardee. Alternatively, there is a two-phase design-build 
selection process.\4\ Under this alternative process, teams 
submit information related to experience and past performance 
in phase one. The procuring agency then selects a limited 
number of the most qualified offerors (generally three to five) 
to advance to phase two of the competition. During phase two, 
these offerors submit detailed price and technical proposals 
that the procuring agency evaluates in order to make an award 
decision.
---------------------------------------------------------------------------
    \3\The federal government has used this design-build method since 
the late 1980s and early 1990s. Ralph C. Nash & John Cibinic, Design-
Build Contracting: Can the Federal Government Use This Technique 
Effectively? No. 12 Nash & Cibinic Rep. 68 (1994).
    \4\48 C.F.R. Sec. 36.303.
---------------------------------------------------------------------------

Encouraging use of the two-step design-build process

    In contrast to the design-bid-build process, the design-
build contracting process offers key benefits. For example, 
combining the design and construction in a single award and 
having a single prime contractor promotes accountability. The 
Design-Build Institute of America has cited metrics comparing 
design-build with design-bid-build project delivery 
demonstrating that the design-build method lowers unit costs (6 
percent lower); increases delivery speed (33 percent faster); 
and decreases schedule growth (11 percent less).\5\
---------------------------------------------------------------------------
    \5\Design-Build Institute of America Presentation to Staff (Dec. 
2016) citing Construction Industry Institute/Penn State research.
---------------------------------------------------------------------------
    The design-build procurement process may involve a one or 
two-step process. However, the two-step process offers 
recognized benefits. First, the two-step process is a best 
practice in construction contracting.\6\ Second, the two-step 
process encourages competition by reducing overall 
participation costs. The one-step process requires highly 
complicated and costly proposals from all participants before 
determining participants' qualifications to complete the work. 
Experts have said that in order to develop accurate 
construction cost proposals, proposal teams must complete up to 
80 percent of the design work and determine detailed space and 
material needs.\7\
---------------------------------------------------------------------------
    \6\Design-Build Institute of America, Federal Sector Design-Build 
Done Right--Best Design-Build Practices at 5-6 (Nov. 2015).
    \7\Assessing Government's Use of Design-Build Contracts: Hearing 
before the Subcomm. On Federal Workforce, US Postal Services and the 
Census of the H. Comm. on Oversight and Gov't Reform, 113th Cong. 
(2013) (statement of Charles D. Dalluge on behalf of the American 
Institute of Architects).
---------------------------------------------------------------------------
    Current law does encourage the use of a two-step process 
for design-build contracts and the selection of no more than 
two-to-five firms for phase two to encourage selection of the 
most qualified firms and encourage competition.\8\ However, 
there have been concerns expressed that agencies awarding 
construction contracts--typically the General Services 
Administration and the U.S. Army Corps of Engineers (USACE)--
are overly reliant on the one-step design-build contract 
process. In addition, when the two-step process is used there 
are concerns that these agencies may be allowing too many 
offerors into phase two; thereby increasing the burden on 
contracting officials and offerors.\9\
---------------------------------------------------------------------------
    \8\41 U.S.C. Sec. 3309(d).
    \9\Assessing Government's Use of Design-Build Contracts: Hearing 
before the Subcomm. On Federal Workforce, US Postal Services and the 
Census of the H. Comm. on Oversight and Gov't Reform, 113th Cong. 
(2013) (statement of Charles D. Dalluge on behalf of the American 
Institute of Architects); The Hill, A Better Way to Build More 
Efficient Government by Helen Combs Dreiling (Oct. 4, 2014).
---------------------------------------------------------------------------
    While the one-step process can offer the advantage of speed 
to the government, it can also be more expensive, burdensome, 
and time-consuming for potential contractors because they must 
make a significant investment on proposal costs with somewhat 
limited chances of winning the overall contract. This can 
discourage firms from competing and ultimately reduce the 
number of federal market participants.
    A 2012 survey by the American Institute of Architects found 
that between 2007 and 2011, architecture firms spent a median 
of $260,000 for each design-build project, which is a 
significant investment particularly for small businesses.\10\ 
With the two-step process, there is a lower entry cost because 
bidders' proposals focus on demonstrating experience and past 
performance qualifications. Then, as the number of potential 
bidders decreases in phase two, bidders have a greater chance 
of winning the award and therefore a greater return on 
investment with their cost proposals. The advantages of the 
two-step process are limited though when over five bidders 
advance to phase two.
---------------------------------------------------------------------------
    \10\Assessing Government's Use of Design-Build Contracts: Hearing 
before the Subcomm. On Federal Workforce, US Postal Services and the 
Census of the H. Comm. on Oversight and Gov't Reform, 113th Cong. 
(2013) (statement of Charles D. Dalluge on behalf of the American 
Institute of Architects).
---------------------------------------------------------------------------
    The Construction Consensus Procurement Improvement Act of 
2017 encourages the use of the two-step process where potential 
offerors initially submit information regarding their 
experience and past performance. During this initial phase of 
the competition, the government considers this information and 
down selects to the most qualified offerors. Then in phase two, 
the offerors, that have been deemed qualified, submit detailed 
price and technical proposals. The two-step design-build 
process will encourage the federal government to select the 
most qualified participants for phase two. Then, those phase-
two participants have a greater incentive to submit a 
competitive proposal because they have a greater chance of 
winning the award. Encouraging use of the two-step process for 
design and construction services will reduce the costs of 
competing in the government marketplace for small businesses 
and reduce the time contracting officers must spend reviewing 
numerous complicated design proposals in the one-step process.

Prohibiting the use of reverse auctions for design and construction 
        services

    Currently, U.S. code does not define the term ``reverse 
auction.'' However, the Office of Management and Budget (OMB) 
released guidance in 2015 on the effective use of reverse 
auctions.\11\ Reverse auctions provide a contracting 
methodology to bid down prices and is a particularly useful 
tool for the purchase of commodity goods and services. The 2015 
OMB Guidance directs agencies to consider a number of issues in 
considering the appropriate use of reverse auctions and 
describes typical circumstances where reverse auctions would be 
useful, including ``acquisitions for commercial items and 
simple services that often fall under the [simplified 
acquisition threshold].''\12\ However, the reverse auction 
tool, in which the emphasis is on price over quality, may not 
be appropriate for the procurement of non-commodity goods, like 
complicated design and construction services.
---------------------------------------------------------------------------
    \11\OMB Memorandum on Effective Use of Reverse Auctions from Office 
of Federal Procurement Administrator Anne E. Rung Memorandum for Chief 
Acquisition Officers and Senior Procurement Executives (June 1, 2015).
    \12\Id. at 2.
---------------------------------------------------------------------------
    The USACE conducted a study of reverse auctions for 
construction services and found the reverse auction process did 
not deliver the promised savings in construction contracts. 
Specifically, the USACE found that using reverse auctions for 
construction projects did not provide ``significant or marginal 
savings''' and construction services, unlike commodities, are 
variable and complex services.\13\
---------------------------------------------------------------------------
    \13\USACE, Final Report Regarding the USACE Pilot Program on 
Reverse Auctioning 11-12 (2004).
---------------------------------------------------------------------------
    This bill prohibits the use of reverse auctions for 
substantial construction and design services.

                          LEGISLATIVE HISTORY

    On January 24, 2017, Representative Mark Meadows (R-NC) 
introduced H.R. 679, the Construction Consensus Procurement 
Improvement Act of 2017, with Representatives Sam Graves (R-
MO), Steve Russell (R-OK), Blake Farenthold (R-TX), and Stephen 
Lynch (D-MA). On February 2, 2017, the Committee on Oversight 
and Government Reform ordered H.R. 679 reported favorably, as 
amended, by voice vote.
    In the 114th Congress, the House and Senate consider bills 
similar to H.R. 679. On May 17, 2016, the House Committee on 
Oversight and Government Reform considered and reported 
favorably, as amended, H.R. 5199. On February 10, 2016, the 
Senate Committee on Homeland Security and Governmental Affairs 
considered S. 1526, the Construction Consensus Procurement 
Improvement Act of 2015 and ordered it favorably reported with 
an amendment in the nature of a substitute. In 2015, two other 
related bills were introduced, H.R. 1666, the Design-Build 
Efficiency and Jobs Act of 2015, and H.R. 838, the Security in 
Bonding Act of 2015.
    In the 113th Congress, the House Committee on Oversight and 
Government Reform reported H.R. 2750, the Design-Build 
Efficiency and Jobs Act of 2014. This bill similarly required a 
two-phase selection process for the award of design and 
construction contracts valued greater than $1.5 million, but 
this bill did not include a prohibition on reverse auctions.

                           Section-by-Section

Section 1. Short title

    This section designates the bill as the ``Construction 
Consensus Procurement Improvement Act of 2017.''

Section 2. Congressional findings

    This section makes six findings: (1) acquisition procedures 
that are often used effectively to procure products and other 
forms of services are not always appropriate for procurement of 
design and construction services; (2) federal procurement 
officials often adopt contracting techniques from the private 
sector and have used those techniques effectively to procure 
products and services; (3) design-build is a procurement 
technique federal officials have adopted from the private 
sector that has worked well for procurement of design and 
construction services; (4) the current statutory framework for 
design-build could benefit from legislative refinement; (5) 
reverse auctions are another procurement technique federal 
officials have adopted from the private sector and used 
successfully to award contracts for the purchase of products 
that are commercially equivalent to commodities; and (6) 
despite their success in other contexts, reverse auctions are 
generally inappropriate for procurement of design and 
construction services, given the unique nature of each such 
project.

Section 3. Design-build construction process improvement

    For civilian contracts for design and construction of a 
public building, facility, or work, the bill requires two-phase 
selection procedures be used for contracts with a value of $3 
million or greater.
    For such contracts valued at less than $3 million, the bill 
requires the contracting officer to make a determination on 
whether to use two-phase selection procedures based on 
consideration of several factors. The contracting officer is 
required to consider the following factors: (1) whether the 
contracting officer anticipates three or more offers will be 
received; (2) whether design work must be performed before an 
offeror can develop a price or cost proposal; (3) whether the 
offeror will incur a substantial amount of expense in preparing 
the offer; and (4) other information, including the (i) extent 
to which the project requirements have been adequately defined; 
(ii) time constraints for delivery of the project; (iii) 
capability and experience of potential customers; (iv) 
suitability of the project for use of the two-phase selection 
procedures; (v) capability of the agency to manage the two-
phase selection process; and (vi) other agency established 
criteria.
    This section requires agencies to compile and submit to the 
Office of Management and Budget (OMB) annual reports for five 
years on each instance in which the agency awarded a design-
build contract where more than five finalists were selected for 
phase-two requests for proposals or the contract was awarded 
without using two-phase selection procedures. The OMB is 
required to submit these reports to the Government 
Accountability Office (GAO) for further analysis and make the 
agency reports publicly available.

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 amend the Federal Acquisition Regulation to prohibit 
the use of reverse auctions as part of the two-phase selection 
procedure for awarding contracts for substantial construction 
and design services.
    This section defines ``design and construction services'' 
as site planning and landscape design; architectural and 
engineering services; interior design; performance of 
substantial construction work for facility, infrastructure, and 
environmental restoration projects; delivery and supply of 
construction materials to construction sites; or construction 
or substantial alteration of public buildings or public works.
    This section defines ``reverse auction'' as a real-time 
auction conducted through an electronic medium among two or 
more offerors that compete by submitting bids for a supply or 
service contract with the ability to submit revised lower bids 
at any time before the closing of the auction; and the award of 
the contract, delivery order, task order, or purchase order to 
the offeror in whole or in part, based on the price obtained 
through the auction process.

                       Explanation of Amendments

    One amendment was offered by Representative Mark Meadows 
(R-NC). The amendment clarified a reporting requirement to OMB 
and GAO on agencies' use of the two-phase selection process for 
design-build construction contracts. The amendment was agreed 
to by voice vote during the Committee business meeting.

     AMENDMENT TO H.R. 679 OFFERED BY MR. MEADOWS OF NORTH CAROLINA

  Page 5, line 3, after ``shall compile'', insert the 
following: ``and submit to the Director of the Office of 
Management and Budget''.
  Page 5, insert after line 19 the following new subparagraph:
                  (C) Submission to gao.--Not later than 30 
                days after the deadline described under 
                subparagraph (A), the Director of the Office of 
                Management and Budget shall compile and submit 
                the reports submitted to the Director under 
                such subparagraph to the Comptroller General.
  Page 5, line 21, strike ``for each annual report''.
  Page 5, beginning on line 23, strike ``the compliance of each 
executive agency'' and insert the following: ``the reports 
submitted under subsection (a)(2)(C) and agency compliance''.

                        Committee Consideration

    On February 2, 2017, the Committee met in open session and 
ordered reported favorably the bill, H.R. 679, as amended, by 
voice vote, a quorum being present.

                            Roll Call Votes

    There were no recorded votes during consideration of H.R. 
679.

                             Correspondence

    On January 30, 2017, the following associations signed a 
letter in support of H.R. 679: (1) American Council of 
Engineering Companies; (2) American Institute of Architects; 
(3) American Society of Civil Engineers; (4) American 
Subcontractors Association; (5) Associated General Contractors; 
(6) Construction Management Association of America; (7) Council 
on Federal Procurement of Architectural and Engineering 
Services; (8) Independent Electrical Contractors; (9) MAPPS; 
(10) National Association of Surety Bond Producers; (11) 
National Electrical Contractors Association; (12) National 
Society of Professional Surveyors; (13) Sheet Metal & Air 
Conditioning Contractors National Association; and (14) Surety 
& Fidelity Association of America.

                                                  January 30, 2017.
Re Support Construction Consensus Procurement Improvement Act, H.R. 
        679.

Chairman Jason Chaffetz,
Oversight & Government Reform Committee,
House of Representatives, Washington, DC.
Ranking Member Elijah Cummings,
Oversight & Government Reform Committee,
House of Representatives, Washington, DC.
    Dear Chairman Chaffetz and Ranking Member Cummings: We, the 
undersigned 14 construction industry trade and professional 
organizations representing tens of thousands of firms and 
individuals engaged in architecture, engineering, surveying and 
mapping, prime contracting, subcontracting, specialty trade 
contracting, supplying, and surety bond producing, urge you to 
support the Construction Consensus Procurement Improvement Act, 
H.R. 679, on design-build and reverse auction procurement 
reform at the House Oversight and Government Reform Committee 
markup on January 31, 2017.
    H.R. 679 would encourage more efficient and competitive 
utilization of design-build acquisition for design and 
construction services by reasonably limiting use of the one-
step design-build procurement process. In addition, the bill 
would help provide reasonable limitations on federal use of 
reverse auction procurement for construction services. These 
reforms will help increase competition and federal contract 
award opportunities for all construction industry businesses, 
especially small businesses.
    Again, we urge you to support H.R. 679 on design-build and 
reverse auction procurement reform. Thank you for your 
consideration of the construction industry.
            Sincerely,
    The Below Signed Associations:

American Council of Engineering Companies
American Institute of Architects
American Society of Civil Engineers
American Subcontractors Association
Associated General Contractors
Construction Management Association of America
Council on Federal Procurement of Architectural and Engineering 
        Services
Independent Electrical Contractors
MAPPS
National Association of Surety Bond Producers
National Electrical Contractors Association
National Society of Professional Surveyors
Sheet Metal & Air Conditioning Contractors National Association
Surety & Fidelity Association of America

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill encourages competition and reduces costs associated 
with participation in federal design-build construction 
contract competitions, particularly for small businesses. As 
such this bill does not relate to employment or access to 
public services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goal or objective of this bill is to amend title 41, United 
States Code, to improve the manner in which Federal contracts 
for design and construction services are awarded, to prohibit 
the use of reverse auctions for substantial design and 
construction services procurements, and for other purposes.

                    Duplication of Federal Programs

    No provision of this bill establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting this bill does not 
direct the completion of any specific rule makings within the 
meaning of section 551 or title 5, United States Code.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of Section 5(b) of the appendix to title 5, 
United States Code.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    This bill does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of Rule XXI.

                           Committee Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
this bill. However, clause 3(d)(2)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974, which the Committee has included below.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for this bill from the Director of 
Congressional Budget Office:

                                                 February 16, 2017.
Hon. Jason Chaffetz, Chairman,
Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 679, the 
Construction Consensus Procurement Improvement Act of 2017.
    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.

H.R. 679--Construction Consensus Procurement Improvement Act of 2017

    H.R. 679 would modify the federal government's procedures 
for awarding design and construction contracts for federal 
facilities and would prohibit the use of reverse auctions for 
such awards. Specifically, the legislation would require the 
selection process for designing and constructing any federal 
facility with a cost of more than $3 million to use two phases. 
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 (GSA), two agencies 
that oversee construction of many federal facilities. Those 
agencies often use a two-phase process to select firms for 
construction projects but can also use other acquisition 
strategies to award contracts. On the basis of information from 
those agencies, CBO estimates that implementing H.R. 679 would 
cost about $600,000 a year and $3 million over the 2018-2022 
period, primarily for the Corps, because those agencies 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. 
On that basis, CBO estimates that implementing H.R. 679 would 
not result in a significant change in the government's bidding 
practices 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 H.R. 679 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 679 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.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

TITLE 41, UNITED STATES CODE

           *       *       *       *       *       *       *

SUBTITLE I--FEDERAL PROCUREMENT POLICY

           *       *       *       *       *       *       *

CHAPTER 33--PLANNING AND SOLICITATION

           *       *       *       *       *       *       *

Sec. 3309. Design-build selection procedures

  (a) Authorization.--Unless the traditional acquisition 
approach of design-bid-build established under sections 1101 to 
1104 of title 40 or another acquisition procedure authorized by 
law is used, the head of an executive agency shall use the two-
phase selection procedures authorized in this section for 
entering into a contract for the design and construction of a 
public building, facility, or work when a determination is made 
under subsection (b) that the procedures are appropriate for 
use.
  [(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--
          [(1) the contracting officer anticipates that 3 or 
        more offers will be received for the contract;
          [(2) design work must be performed before an offeror 
        can develop a price or cost proposal for the contract;
          [(3) the offeror will incur a substantial amount of 
        expense in preparing the offer; and
          [(4) the contracting officer has considered 
        information such as the following:
                  [(A) The extent to which the project 
                requirements have been adequately defined.
                  [(B) The time constraints for delivery of the 
                project.
                  [(C) The capability and experience of 
                potential contractors.
                  [(D) The suitability of the project for use 
                of the two-phase selection procedures.
                  [(E) The capability of the agency to manage 
                the two-phase selection process.
                  [(F) Other criteria established by the 
                agency.]
  (b) Criteria for Use.--
          (1) Contracts with a value of at least $3,000,000.--
        Two-phase selection procedures shall be used for 
        entering into a contract for the design and 
        construction of a public building, facility, or work if 
        a contracting officer determines that the project has a 
        value of $3,000,000 or greater.
          (2) Contracts with a value less than $3,000,000.--For 
        any project that a contracting officer determines has a 
        value of less than $3,000,000, the contracting officer 
        shall make a determination on 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 
        if--
                  (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 process; 
                        and
                          (vi) other criteria established by 
                        the agency.
  (c) Procedures Described.--Two-phase selection procedures 
consist of the following:
          (1) Development of scope of work statement.--The 
        agency develops, either in-house or by contract, a 
        scope of work statement for inclusion in the 
        solicitation that defines the project and provides 
        prospective offerors with sufficient information 
        regarding the Federal Government's requirements (which 
        may include criteria and preliminary design, budget 
        parameters, and schedule or delivery requirements) to 
        enable the offerors to submit proposals that meet the 
        Federal Government's needs. If the agency contracts for 
        development of the scope of work statement, the agency 
        shall contract for architectural and engineering 
        services as defined by and in accordance with sections 
        1101 to 1104 of title 40.
          (2) Solicitation of phase-one proposals.--The 
        contracting officer solicits phase-one proposals that--
                  (A) include information on the offeror's--
                          (i) technical approach; and
                          (ii) technical qualifications; and
                  (B) do not include--
                          (i) detailed design information; or
                          (ii) cost or price information.
          (3) Evaluation factors.--The evaluation factors to be 
        used in evaluating phase-one proposals are stated in 
        the solicitation and include specialized experience and 
        technical competence, capability to perform, past 
        performance of the offeror's team (including the 
        architect-engineer and construction members of the 
        team), and other appropriate factors, except that cost-
        related or price-related evaluation factors are not 
        permitted. Each solicitation establishes the relative 
        importance assigned to the evaluation factors and 
        subfactors that must be considered in the evaluation of 
        phase-one proposals. The agency evaluates phase-one 
        proposals on the basis of the phase-one evaluation 
        factors set forth in the solicitation.
          (4) Selection by contracting officer.--
                  (A) Number of offerors selected and what is 
                to be evaluated.--
                          (i) the technical submission for the 
                        proposal, including design concepts or 
                        proposed solutions to requirements 
                        addressed within the scope of work, or 
                        both; and
                          (ii) the evaluation factors and 
                        subfactors, including cost or price, 
                        that must be considered in the 
                        evaluations of proposals in accordance 
                        with subsections (b) to (d) of section 
                        3306 of this title.
                  (B) Separate evaluations.--The contracting 
                officer separately evaluates the submissions 
                described in clauses (i) and (ii) of 
                subparagraph (A).
          (5) Awarding of contract.--The agency awards the 
        contract in accordance with chapter 37 of this title.
  (d) Solicitation To State Number of Offerors To Be Selected 
for Phase-Two Requests for Competitive Proposals.--A 
solicitation issued pursuant to the procedures described in 
subsection (c) shall state the maximum number of offerors that 
are to be selected to submit competitive proposals pursuant to 
subsection (c)(4). The maximum number specified in the 
solicitation shall not exceed 5 unless the agency determines 
with respect to an individual solicitation that a specified 
number greater than 5 is in the Federal Government's interest 
and is consistent with the purposes and objectives of the two-
phase selection process.
  (e) Requirement for Guidance and Regulations.--The Federal 
Acquisition Regulation shall include guidance--
          (1) regarding the factors that may be considered in 
        determining whether the two-phase contracting 
        procedures authorized by subsection (a) are appropriate 
        for use in individual contracting situations;
          (2) regarding the factors that may be used in 
        selecting contractors; and
          (3) providing for a uniform approach to be used 
        Government-wide.

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