Procurement of Goods and Services

Contract Compliance and Risk Mitigation

The procurement of goods and services necessary to complete Major Capital Projects is governed by various laws, regulations, and statutes, many of which are outlined in the U.T. System Risk Mitigation and Monitoring Plan for Major Capital Projects.  Additionally, all UT System institutions are required by the Texas Education Code to develop and maintain a Contract Management Handbook that provides consistent contracting policies and procedures for their institution.

Per BOR Rules and Regulations, construction contracts and contracts with architects, engineers and technical service providers shall comply with guidelines issued by the U. T. System Administration’s Office of General Counsel (OGC) and shall be written on a standard form approved by the Office of General Counsel.  Payment and performance bonds, when required by law for contracts, shall be on a standard form approved by OGC.

Inquiries regarding standard contracts and procedures for procuring construction, architectural, and engineering services should be directed to the appropriate resources listed below:

OCP Managed Projects

• Contract Administrator at the UT System Contracts and Procurement Office

Institutionally Managed Projects

• U. T. System Office of General Counsel Construction Law
• U. T. System Office of General Counsel Contracts and Contracting Resources
• The institution’s contracting and procurement office

Construction Contract Delivery Methods (Back to Top)

Subchapter T of the Texas Education Code authorizes institutions to select from several alternate contracting methods for procuring construction services.  To help determine which method provides the best value for the institution, the following sections offer general descriptions, uses, and advantages of the three delivery methods most commonly used for U. T. System Major Capital Projects.

Construction Manager at Risk (CM-R) (Back to Top)

The CM-R delivery method is the most widely utilized for UT System projects to date.  In this method, the Owner holds both the Project Architect/Engineer and construction contractor prime agreements, and the procurement of the construction contractor (Construction Manager at Risk) occurs during the design phase when pre-construction services from the CM-R add tangible benefit to the designers.  This method supports multiple design and construction stages as the overall project design is coordinated.  This allows the project to be separated into sequential work packages that support engaging the subcontractor market earlier in the overall delivery of the project.

The initial contract with the CM-R establishes the lump sum Pre-Construction Phase fee, defines percentage values for General Conditions and Construction Phase Fee and a not-to-exceed value for Owner’s Construction Contingency and Construction Manager at Risk’s contingency.  General Conditions, CM-R fee, and CM-R contingency are further defined and contracted along with values for Cost of Work in the Guaranteed Maximum Price proposal (GMP). The CM-R contingency is available to the contractor to address fluctuations in the subcontractor market for material and labor cost increases (escalation) and to address refinements in the design that occur after execution and Owner’s acceptance of the GMP.  The CM-R’s use of Owner’s and Construction contingency shall be approved by the Owner via Change Order. After buy-out, savings and funds remaining in the GMP revert to the Owner.

Pre-Construction Phase Fee covers costs for CM-R participation during the design phase to review constructability and develop cost and schedule alternatives.

The CM-R Guaranteed Maximum Price proposal (GMP) is typically submitted at the end of Design Development or early in the Construction Document phase and establishes the overall not-to-exceed value for the work as defined by a specific set of documents provided by the Project Architect/Engineer.  The GMP includes detailed information on project scope, estimated costs, and construction schedule.  The GMP will also include a defined amount for Owner’s Construction Contingency, and these monies are reserved to address costs for unforeseen conditions that are encountered during construction and to address Errors & Omissions (E&O) in the design and construction documents.
As stated, the Owner manages the contract with the Project Architect/Engineer and architectural and engineering fees are included by the Owner in the budget for Associated Building Costs.

Design-Build (D-B) (Back to Top)

Section 51.780 of the Texas Education Code defines Design-Build (D-B) as a project delivery method in which the detailed design and subsequent construction is provided through a single contract with a Design-Build firm; a team, partnership, or legal entity that includes design professionals and a builder.

The Design-Build delivery method is used for projects that have accelerated schedule requirements, and this method is typically used for delivery of projects that are well-defined in the commercial construction market – housing, parking, utility production facilities, etc.  Nonetheless, this method can be used for any project type and has been used for delivery of research and clinical space.  This delivery method more fully relies on expertise from the commercial construction sector and should have the least amount of direct Owner participation in design refinements and changes.

In this delivery, the D-B team is procured based on a scope of work defined by the Owner, and the D-B contractor proposes a Pre-Construction Phase Fee that includes architectural and engineering fees in the overall proposal.  Although the initial scope statement is defined by the Owner, the D-B contractor is responsible for completion of design and creation of the construction documents, and the Owner manages a single prime agreement.  Any Owner requested changes are contracted to the Project Architect/Engineer through the D-B contactor.

Similar to the CM-R delivery, the initial contract with the D-B establishes the lump sum Pre-Construction Phase fee which includes all design phase costs, percentage values for General Conditions and Construction Phase Fee and a not-to-exceed value for Owner’s Construction Contingency.  General Conditions, D-B fee, and D-B contingency are further defined and contracted along with values for Cost of Work in the Guaranteed Maximum Price Proposal (GMP). The D-B contingency is available to the contractor to address fluctuations in the subcontractor market for material and labor cost increases (escalation) and to address refinements in the design that occur after execution and Owner’s acceptance of the GMP.  An amount of Owner’s Construction Contingency is typically included to address costs for unforeseen conditions. The D-B’s use of Owner’s and Construction contingency shall be approved by the Owner via Change Order.  E&O costs are the responsibility of the D-B contractor.  After buy-out, savings and funds remaining in the GMP revert to the Owner.

Competitive Sealed Proposal (CSP) (Back to Top)

The Competitive Sealed Proposal (CSP) delivery method most closely compares to the traditional design-bid-build delivery in that lump sum proposals based on a completed set of construction documents are submitted to the Owner by General Contractors interested in procuring the work.  The Owner’s best value determination does consider qualifications in conjunction with price, and the selection of a contractor is not based on lowest price alone.  Contingency is held by the Owner outside of the contractor’s CSP Agreement..

Systemwide Contracts (Back to Top)

OCP and ORM manage competitively procured contracts for use by all UT System institutions for the provision of miscellaneous and technical support services.  For institutionally managed projects, the institutions will manage work orders and payments against these contracts locally after the proposal is reviewed and approved for compliance to the Master Agreement.

Inquiries regarding the use of Systemwide contracts should be directed to the appropriate contact for the services available below

OCP Managed Contracts – Contact the Contract Administrator

• Building Envelope Review/Testing
• Code Compliance Review Services
• Miscellaneous Technical Commissioning Services
• Construction Audit and Miscellaneous Audit Services
• Miscellaneous Forensic Engineering Services
• Miscellaneous Geotechnical Engineering and Materials Testing Services
• Construction Inspection Services
• Structural, Civil, Mechanical, Electrical, and Plumbing Engineering Review Services
• Tower Crane Inspection Services
• Miscellaneous Project Management and Construction Support Services
• Professional Surveying Services
• Testing, Adjusting, and Air Balance Services

ORM Managed Contracts – Contact the Associate Director, Risk Control

• Construction Photo Documentation Services
• Hazardous Waste and Environmental Services

Information on additional Systemwide Contracts can be found on OGC’s Systemwide Contracts Web Page.

Systemwide Insurance Programs (Back to Top)

The Office of Risk Management (ORM) manages a variety of construction related Systemwide Insurance Programs, which provide robust coverage and achieve economies of scale by pooling resources and expertise from across the UT System.  Participation in these programs requires the managing authority to use particular contract language and Specification documents and to complete certain tasks and deliverables throughout the project duration.  Contacts and further guidance on the programs listed below can be found on the ORM  Systemwide Insurance Programs web site and in the ROCIP and Builder’s Risk Project Insurance Guidance Document for UT System Project Managers.

Builder's Risk Insurance Program

The Master Builder’s Risk Insurance Program provides coverage for physical loss or damage to buildings or other structures while under construction or renovation at the University of Texas System.  The program covers the work being completed, contractor or owner furnished equipment, and damage to existing property for designated construction projects. Benefits of the program include consistency of coverage terms and conditions, cost savings, and additional coverage such as soft costs and delay in completion.

Comprehensive Property Protection Plan (CPPP)

The Comprehensive Property Protection Plan (CPPP) finances catastrophic property losses for The University of Texas System (the UT System) and its Institutions. The CPPP consists of two programs:

• Fire and All Other Perils Program – Insures against risks of direct physical loss or damage to UT System property. A funded reserve is in place to cover the policy deductible.
• Named Windstorm and Flood Program (Wind & Flood) – Insures against risks of direct physical loss or damage to UT System property caused by named windstorm and or storm surge flood events. The Wind and Flood deductible is supported by a funded reserve and a mechanism to issue debt.

Rolling Owner Controlled Insurance Program (ROCIP)

The Rolling Owner Controlled Insurance Program (ROCIP) program provides workers' compensation, general liability and excess liability insurance coverage for all contractors working on designated construction projects for The University of Texas System. Benefits of the program include lower insurance premiums due to bulk purchasing, consistency of insurance provided on each project, enhanced safety and loss control, and cost savings.