State and local agencies receiving funds from the $790-billion economic stimulus plan can begin their construction renovation and retrofit projects quicker and easier by using the construction contract method known as job order contracting (JOC).
A study by Northern Arizona University of facility owners and managers revealed that 74.5 percent of the respondents stated JOC requires less time to start a project than other commonly used methods, including design-bid-build, design-build, and CM at risk.
JOC is an indefinite quantity, indefinitely delivery procurement method. A state agency, such as a school district, enters into a competitively bid contract with a JOC contractor for an amount it could potentially spend over a certain time period; however, it is not required to complete any work. By establishing a JOC contract, agencies such as school districts and municipalities have the flexibility to begin construction projects in weeks rather than months.
"This method is ideal for school construction, because they often have short windows of time that the work can be completed in," explains Mark Bailey, president of Centennial Contractors Enterprises, a national job order contractor. "Under a job order contract, a school district can assign project work orders without bidding each project out because they’ve already gone through the procurement process to put the JOC program in place."
Additionally, JOC stimulates local economies because the contractor hires local minority and small subcontractors to do the actual construction work. These small businesses might not otherwise have access to these large projects because they cannot come in as the lowest bidder via typical methods. Nonetheless, they rely on a steady stream of projects to maintain their staffs in this economy.
"JOC is performance-based, which means it is focused on generating the best quality solution for the budget and time demands of the client," Bailey added. "As such, JOC contractors have to work hard to exceed the clients’ expectations to earn the right to do more work in the future. A JOC program also allows for sustainable and green practices and solutions to be included as part of the solution."
The study was conducted in 2005 and 2006 for the Center for JOC Excellence. The results can be found at www.jocexcellence.org along with information on starting or utilizing a JOC program.
"Having the dollars available but no way to execute the work in a rapid and responsible fashion can be frustrating," said David Carrithers, 2008 industry chairman of The Center For JOC Excellence and vice president at Centennial. "A job order contracting program is allowed under both the FARS (Federal Acquisition Regulations System) and also states’ public construction purchasing regulations."
"This competitively bid method allows for one-time, upfront bidding on pricing and meets the requirements of public procurement of publicly funded construction. This allows organizations, schools or military bases to execute as many projects as possible, as quickly as possible," he explained. "With a JOC program, there is no guarantee of the volume of work to the JOC contractor – if they don’t perform, they do not earn the right for more work."
Job order contracting programs are designed to get more of the dollars to the work projects, not to procurement and re-procurement costs. A professionally developed and managed JOC program saves from 8 percent to 15 percent in time, design and procurement costs.
Carrithers concludes, "America’s schools, universities and municipalities need not only the funds, but a fast, transparent way to use stimulus dollars today – not two years from now. While JOC is not the answer to every construction need, it is a key tool in the tool box of solutions. With a job order contracting program in place, work could start in less than 90 days. That’s 90 days sooner we start to turn the economy around by putting the stimulus dollars to work in local communities today."
See a comparison timeline of JOC versus standard bid at JOC timeline.