Report Title:

Procurement; Design-Build Proposals


Authorizes public agencies to utilize a design-build process when procuring construction projects; requires a two-step process for design-build proposals greater than $5,000,000, and requires payment to unsuccessful offerors when the two-step design-build process is used for large projects.


S.B. NO.









relating to utilization of design-build procurement proposals.



SECTION 1. The legislature finds that design-build proposals can be beneficial for highly specialized projects that require a high degree of creativity and cooperation between the designer and the construction agent.

The legislature also recognizes that the time, effort, and resources necessary to develop a proper design-build proposal is significantly higher than in most bid processes, and that unsuccessful offerors should be compensated for submitting a responsive proposal. In return for the proposed compensation formula, the purchasing agency shall have proprietary rights over each proposal, and can cull the useful portions of each when crafting the final design. The compensation formula will also ensure over the long term that competing offers will be submitted in response to requests for proposals.

The purpose of this Act is to amend the procurement code to authorize public agencies to utilize two-step design-build proposals when procuring construction, and to require payment to unsuccessful offerors when a design-build process is used.

SECTION 2. Section 103D-303, Hawaii Revised Statutes, is amended to read as follows:

"103D-303 Competitive sealed proposals. (a) Competitive sealed proposals may be utilized to procure goods, services, or construction designated in rules adopted by the procurement policy board as goods, services, or construction which are either not practicable or not advantageous to the State to procure by competitive sealed bidding. Competitive sealed proposals may also be utilized when the head of a purchasing agency determines in writing that the use of competitive sealed bidding is either not practicable or not advantageous to the State. Construction may be procured using a design-build process to combine design professional and construction contracting services into a single contract when the head of a purchasing agency determines in writing that technical or construction innovation will yield enhanced results or there is a reduced likelihood of receiving competitive sealed bids due to unique project conditions or geographic location.

(b) Proposals shall be solicited through a request for proposals.

(c) Notice of the request for proposals shall be given in the same manner as provided in section 103D-302(c). For design-build proposals with construction estimates greater than $5,000,000, a two-step process shall be used. The first step shall be a request for qualifications to develop a short list of a minimum of three and a maximum of five offerors. The short list criteria, in descending order of importance, shall be:

(1) Experience in the project type and professional qualifications of the staff to be assigned to the project;

(2) Past performance on projects of similar scope for public agencies and private industry; and

(3) Capacity to complete the work in the required time.

The second step of the process shall be a proposal from each offeror on the short list.

(d) Proposals shall be opened so as to avoid disclosure of contents to competing offerors during the process of negotiation. A register of proposals shall be prepared in accordance with rules adopted by the policy board and shall be open for public inspection after contract award.

(e) The request for proposals shall state the relative importance of price and other evaluation factors.

(f) Discussions may be conducted with responsible offerors who submit proposals determined to be reasonably susceptible of being selected for award for the purpose of clarification to assure full understanding of, and responsiveness to, the solicitation requirements. Offerors shall be accorded fair and equal treatment with respect to any opportunity for discussion and revision of proposals, and revisions may be permitted after submissions and prior to award for the purpose of obtaining best and final offers. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing offerors.

(g) Award shall be made to the responsible offeror whose proposal is determined in writing to be the most advantageous taking into consideration price and the evaluation factors set forth in the request for proposals. No other factors or criteria shall be used in the evaluation. The contract file shall contain the basis on which the award is made.

(h) For two-step design-build proposals procured under subsection (c), the purchasing agency shall pay to each unsuccessful offeror who submits a technically responsive proposal a sum equal to one per cent of the project construction cost as established by the agency, up to a maximum payment of $1,000,000 to each offeror. As a condition of receiving this payment, an unsuccessful offeror shall allow the agency to use portions of submitted designs, not otherwise encumbered by patents or similar encumbrances, created for the project."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2004.