Job order contracting

Job order contracting

Job Order Contracting (JOC) is a way for organizations to get numerous, commonly encountered construction projects done quickly and easily through multi-year contracts. JOC reduces unnecessary levels of engineering, design, and contract procurement time along with construction project procurement costs by awarding long-term contracts for a wide variety of renovation, repair and construction projects.

With an emphasis on partnering and team work between owners and contractors, JOC provides the methodology to execute a wide variety of indefinite delivery, indefinite quantity, fixed price, multiple simultaneous orders for renovation, rehabilitation and repair work for large facilities and infrastructures.

JOC contractors are selected on qualifications and performance at a best value or low price or low bid depending on local, state or federal statutes. JOC is about performance, reliability, dependability and quality. At the same time, JOC is about results and working within budget and time constraints. The JOC contractor provides “on call” construction services from concept to close-out.

JOC today has more than a 25-year record of implementation within the Defense Department. Currently, there are hundreds of successful contracts going by the JOC name or by its counterparts of Delivery Order Contracting (DOC), Task Order Contracting (TOC) and Simplified Acquisition of Base Engineering Requirements (SABER).

JOC deployment hasn’t remained solely federal. The JOC concept and principles have been further embraced in all areas of publicly funded state facilities, universities, housing authorities, transportation agencies, and school systems. Not only public but also private sector facility owners are expanding the use and implementation of the JOC procurement system.

Basic Principles of Job Order Contracting

A major element of the JOC contracting process is the use of a unit price book (UPB) which provides pre-defined costs for specific construction jobs and material line items. The unit price book covers nearly every construction, repair or maintenance task, whether it’s replacing air filters, installing carpeting, repairing windows or doors, or even painting. If an item is not in the UPB, it can be negotiated, priced and added at any time to the book.

A contractor responding to a JOC contract proposal submits a contract price using a coefficient (a multiplier) that factors in not only the contractor’s overhead and profit, but also any adjustment that may be needed between the UPB prices and the actual prices being charged in the local area of the project (which are functions of labor costs, subcontractor base, market conditions and client-specific conditions).

The “partnership” aspect of the JOC contracting process is exemplified by the JOC contractor usually establishing a permanent office near the facility’s management staff. This way, the JOC contractor’s project manager can become an essential, hands-on advisor to the owner’s facilities management team.

JOC contracts don’t define actual, individual jobs but normally award a potential maximum amount of work over a year. For example, a contract may have an annual maximum of $5 million or more but only a minimum guaranteed amount such as $35,000. As a result, the JOC contractor is not guaranteed any level of revenue—driving it to generate the best performance possible.

This relationship carries with it a strong motivation for the JOC contractor to provide outstanding service and quality work in order to receive additional work orders, because the amount of work being assigned by the facility owner or manager is based on the JOC contractor’s performance. The agreement should also foster increased communication between the contractor and owner to enhance the partnership aspect of the JOC contract.

Key Elements of a JOC Contract

A JOC contract follows certain procedures leading to an agreement focusing on achieving good work performance and reasonable costs. Among the procedures leading to the formalization of a JOC contract are the following items and provisions:

* Standard specifications established in a master contract with a summary of work, also including any specific or client-driven conditions.
* Construction item costs specified in a Unit Price Book.
* Facility owner issues a Request for Qualifications (RFQ), evaluating firms using best-value, performance-based criteria, or an Invitation to Bid awarding to the lowest responsive and responsible bidder.
* A guarantee of minimum amount of work for the contractor. This is usually a small amount for consideration – a requirement in most states for contracts.
* Issuance of contractor’s work orders based on owner’s requirements.
* Costs for work orders based on standard specifications, unit costs and the contractor’s coefficient.
* Open communication between facilities team and JOC contracting team, including a kick-off partnering session between everyone utilizing the contract.

Advantages of Using a JOC Program

The major advantages of Job Order Contracting include:

# Fast and timely delivery of projects.
# Low overhead cost of construction procurement and delivery.
# Development of a partner relationship based on work performance.
# Reduced legal fees.
# Elimination of change orders.
# Standard pricing and specification utilizing a published unit price book (UPB), resulting in efficient and effective estimating, design, and fixed price construction.

Top performing JOC contractors achieve a high percentage rate for completion of projects on time and on budget. Also, the JOC process provides for a single contract to be used for the delivery of multiple or repeated work orders without having to re-bid the same work as required in other commonly used delivery systems. It allows for back and forth communication and development efforts throughout a project. This differs greatly from the one way efforts of Design-Bid-Build. JOC provides the greatest advantage in situations involving recurring work when delivery times, type of work and quantity of work are indefinite. While JOC is not used for major new construction, it is best for minor construction, adjustments, renovation, repair and maintenance of facilities.

Other advantages include:

* Partnering and performance incentives result in high-quality construction and service and enhanced quality control. Quality JOC contractors have reduced and even eliminated punch lists.
* Simplified design documents and acquisition processes negate the need for complicated and repetitive contract documents and reduce contract administrative costs.
* The speed of JOC contracting ranges from 10 days to 21 days from request to construction start, since JOC projects don’t demand soliciting and acquiring a contract along with detailed plans and specifications.
* Facility owners do not have to provide a complete design, but rather rely on the JOC contractor to produce any essential drawings for the design.
* Employment of smaller subcontractors in the area to perform the work, allowing for the majority of the project funds to be spent locally.
* Minimal risk for the owner in the event of problems with the contractor because the owner can stop using the contract at any time. If a performance-based system is also used, the JOC contractor can be terminated for lack of performance.
* A win-win attitude or motivation for both the contractor and the facility owner produced by and through the long-term relationship.

Potential Problem Areas

The practice of awarding more than one JOC contract for one location and then bidding the contractors against each other on each job order. Owners have the idea that if two contractors compete against one another, they will get a better price. The way to avoid the problem of only having one JOC contractor is to award multiple JOC's each having their own defined geographical boundaries. The work in a particular boundary will always go to the JOC contractor awarded that geographical area unless that contractor is failing to perform or is over committed. In that case the work could be given to another JOC contractor in an adjacent region. The goal is to never compete two JOC contractors on an individual project.

Attempting to compete multiple contractors on a JOC project is motivated by the following reasons:
* The owner mistrusts the contractor.
* The owner perceives that JOC can be a "win-lose" proposition (win for the owner and lose for the contractors).
* The owner does not understand the differences in performance by the contractors.
* The owner does not understand construction, construction management or facility systems.
* Someone within the owner’s management organization will receive recognition for reducing the short-term cost of JOC construction by forcing contractors to provide services with minimal or no profit.

Articles

* [http://www.nywea.org/Clearwaters/pre02fall/312020.html Job Order Contracting, Michael P. Quinn, PE and Paul Schreyer]
* [http://cpr.ca.gov/report/cprrpt/issrec/inf/inf01.htm Use of Few Models for Project Delivery Results in Missed Opportunities for Lowering Cost and Speeding Delivery, California Performance Review]

External links

* [http://www.cce-inc.com/content/view/54/52/ Additional Job Order Contracting Articles and White Papers]
* [http://www.JOCexcellence.org Center for Job Order Contracting Excellence]
* [http://www.JOCalliance.org JOC Alliance Of Texas]
* [http://stinet.dtic.mil/oai/oai?&verb=getRecord&metadataPrefix=html&identifier=ADA194987 A Procurement Success Story - Defense Technical Information Center]
* [http://www.joc.info Job Order Contracting Information]
* [http://www.ic.usu.edu/ic_over/job_order/job_order_over.php?heading=5 Innovative Contracting - Utah State University]


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