S-l?0403 , I *I‘kfSC 7?0? Ci’c_’ tfrr:,’oflkfcnac ~iO~c??*r\h~ e \‘; ..- _.,.- ---- .-._ I.--l--oarr i lllllllllllllllllllllllllllll LM095513 Attention: Assistant Secretary of Defense (Comptroller) Iknr Xr. Secretary: The Ckneral Accounting Office has retieucd tbc use of tbr "turn-key" procure~~n~,~p~ctmd bv thcJ&z~cnt -~..~nr~,,,z-..--,-n.cP-i,r; of Ikfcnsn (Ix+j~)-~~o~ZGcZ~~& _ is.i.?._,-‘- , .._ -:., ,. ** cGstruXbn 0.f. fcimily: l__l" _LI.,..,_L.,. :.q.+*.zm ,.,,,-.c..z>l-&ou~$.pg. cu We cxmiined into the initial DOD teat I of this method, which was made at three locations: tbe U. S. naval B.w.c, Philadelphia, Pennsylvania; Ent Air Force Eiase, Colorado Spiaga, Golo- mdo; and Oak Knoll Naval Aospital, Oakland, California. Competitive negotiated procurement was used, with the contracts awarded to the con- tractor subtitting the proposal determined to have the beet overall co&inatinn of price and quality. Our observations are summarized below. We found it cost less to build houses under the -turn-key method than it would have had they been conventionally built. The estimated savings were being realized without significant loss of quality or features nor- mally found in conventional housing. In fact, at two of the locations-- Oak Knoll and Philadelphia--the turn-key projects generally provided more living space. At Philadelphia, garages and basements were protided. These I'eaturea are not usually offered under conventional procurement. . i . , .. . .. . At the Oak Knoll and Philsxielphia projects, sites selected prescctcd special. problems. The one selected at Gak Knoll was the si"ti of a former hospital, located on a hill. Several concrete footinga, wh.ich had sup- ported the former hospital, were still buried In the ground and complicated gmding. This discouraged some potential bidders from submitting proposals becnusc of the uncertain terrain. The site selected for the Philadelphia project requA.red up to '(O-foot TllinGs to support the weight of the housing uxitc. As in the case of O&k E~oll, site problem appear to have been a deterrent to som potential bidders. Tn turn-key construction, the contractor is expected to complete the project with tininum participation from agency personnel. Unusual or particularly difficult terrain problem are likely to not only delay con-: struction but also, understandably, to increase agency concern over the contractor's effective resolution of the problems. This, in turn, can lead to greater involvement on the part of agency representatives. BID criteria for turn-key construction provide no specific guidance on this Latter. We suggest that you consider mending the criteria to point out the desirability, when using this procurement rriethod, of selecting sites that do not require unusual or extensive work on the part of the hollie builder. Identification of evaluation BEST DQCUMEN-~ A~A~~i4~~E fat tors T'i-13DOD criteria state that "numerical weights (a6Signed technical evaluations) and x&hod of relating cost to technical points, shall not be included in the Request for Proposal (RPP)." The technicaL, or quality faCtOr6, cwer such thintp 6~ ln&ntity of design and matetials to be uocd w-d are employed by local. evhluntian'bcmtio to oeleck thb hat overall propssal~ In this connection, som local residential builders who hnd bren fur- rz shed the RF? for the Oak lQ-1011 project did not subrzit a proposal. Some ~CZCLSOAS given were lack of knotrledge and uncetiainty over factors to be considered in evaluating proposals. They felt that the probability of +?. ,,,cir bein,- ,-1 sclccted under such c~rcwn.;i~n~~s did not jil~tif;[ the cost of . , -~* F:t.;?Q*-Lng 4-i pro,?osnl. WC bciSevc -Lhat r.ucil cor~ccrn is Uij~l$l.StAll~i~.b3.C 0 "Conceding that t'ne solicitation adequately ident-lficd the evaluation criteria, it in nevertheless obvious that no indication is given in the RF? as to ChF relative inport- ancc of each factor. We have, as you know, repeatedly stressed the need for such identification. E.g., 49 Comp. Gen. 229 (1969); 47 id. 252 (1967); cf. 50 id. 59 (1970). Koreover, we believethat in this co?&xt iTis particu- larly critical that offerors be apprised of the evaluation f0m.a." As you know from your revjew of the Acting Comptroller General’s letter of Au:,-ust 26, 1971, (B-170220, B-170731, B-171015) requesting your comments on the necessity of disclosing the scoring scheme, this matter is of par- ticular in&&rest to us. We note, however, in response to the August 26 letter by Kr. Glenn V. Gibson, Deputy Assistant Secretary of Defense, that \ DOD does not deem it necessary to identify for proposers the actual uei@ts assigned the evaluation factors. For the reasons discussed above and after consideration of the reasons offered in support of the DOD position, we still believe that it is import- ant to disclose the relative importance of the evaluation factors so that offerors zxight better understand how their proposal will be judged. Pdrthermore, we believe that appropriate revisions to the DOD criteria would tend to t;;inimize misgivings some potential ahd actual bidders may have re- garding fair tZCeatmc?zht in this ITSget. . \ . I , T%cx-eT-0r-c , the provisions of section 236 of the Legislative Reorganization Act of 1370 apply. We shall apprecidx receiving copies of t'xae statemnta that you furnish to the specified comdttees in accordance with these provisions. Director BESTDOCUMENT AVAILABLE , . . . . 1 : L?ozp.r* sons for the Philadclphin and C;ak Knoll pro;ccts eaccnliaily are those prepared by Naval Facilities Engineering Command fl.eld personnel. The cm at Ent k‘as made by housing personnel obp Air Force headquarters. wt? made some changes to the computations to make them more comparable. For instance, at Ga.k Knoll and Philadelphia, we added a factor for cost escalation between the time of contract award for the turn-key project and the earlier award for the conventional one--the Air Force included such R factor in its comparison. i At Philadelphia, we compared the cost and features of the NC-unit turn-key project with those for a 400-unit Capehart housing project built adjacent to the ru'aval Shipyard during 1962-1$4. We adjusted the Capehart costs to reflect 1969 construction prices prevailing at the time the con- tract for the turn-key project was awarded. At Ent, a comparison was made between the estimated costs for the 401un!t project which went out for bid initially In April 1967 under the at t:ic tAri. k'e applied COG%escnlation I"nctors to the conventionally-built pro:ectc, wince the contrncts were nwnrdcd prior ta the turn-key miard. . i .F , . igo' - 1964 Costs Average per house Total $1, egG, 000 N/A X/A 100 10,000 1,021 102,100 Square feet per unit Square feet per unit (60 units): 1,042 (40 units) 1,100 1,061 1,250 1,265 L2.50 1,188 2,106 1,452 2,106 (iru 11n1ts) Convcntj m-is1 Construction costs @,010,484 -- QUtX-b2 X-G WI Sub-total $1,010, b84 8,800 3%775 30,775 Total $4197,252 $,~5~,059 Per Unit $ 29,932 $ 26,251. Conventional per unit cost -n-key per unit cost Estimated Savings a/ April lc$7 bid amount. b/ Cost escalation from April 1967 to January 1969. c/ Eat included in 1967 bid. OrigUally planned a6 Colonel'6 quarters. d/ April 1967 cost - does not reflect; any cost escalation. Eyi ‘61 gi4 ’61s ___._.-__-- __- .--- _.__ -.-- _--- --- -I_- -. -- -.- qu’z ‘gr $ -O- mz’8r $ F== -r’ __=___.. -.-- --- zzZ-- -_--- --- --- ---.-I rtt”ar $ 044 $ 18.ia’LX $ LIZ __._ -._ ___.--.- ( . -;- --. -- ----- ---- -_-- -F”.t, - -._L[)‘1$ _-4 zct 1-1 ‘f$ --QOfl z:,cJ‘31 6Lr 00-I 001 w t19E 00-C OOE S%VJfl 30 ‘O:J
Use of the "Turn-Key" Procurement Method by the Department of Defense in Contracting for Construction of Family Housing
Published by the Government Accountability Office on 1971-09-24.
Below is a raw (and likely hideous) rendition of the original report. (PDF)