JOCs cut the cost of contracting

Public officials are turning increasingly to job-order contracting (JOC), a construction method frequently used by the military, to help get more mileage from construction, maintenance, repair and renovation dollars.

The JOC method combines hundreds of small con, tracts into one competitively bid contract, making it a more efficient way for municipalities to complete construction jobs on public buildings, schools, hospitals and jails. In many communities where budget cuts are the order of the day, public agencies have been forced to delay essential construction. In these situations, hundreds of job orders can be accomplished under one JOC, saving substantial amounts of revenue and time since the traditional bid process can take several months.

JOCS are competitively bid, indefinite quantity, indefinite delivery, fixed-price construction contracts administered by one project team. A general contractor negotiates once on a unit pricing basis developed by the owner, and when he takes over, he is asked to complete many small, to medium-sized construction projects over the term of a contract.

For example, one job order for a school district might involve the replacement of 16 roofs, the demolition of a cafeteria wing, a work shop and a playground and remodeling of 35 classrooms. The work, subcontracted to numerous firms, is directed by the job order contractor and performed at fixed prices.

The municipal agency develops a set of construction specifications that provides precise performance standards for various types of work. Unit pricing, including the cost of labor, equipment and materials, is used to match each item in the specifications. The owner then issues a request for proposal.’

The job order contractor is paid only for the work performed with no monthly management or service handling fees. The contract typically specifies a minimum and maximum individual job order and total contract value dollar amount.

JOCs differ from traditional contracts in several ways. First, they cover all types of construction, maintenance, repair and renovation under a single contract. The traditional approach requires contracts to go through the bid-award cycle, with detailed drawings and specifications prepared prior to bidding.

Traditionally, in-house staff has managed construction, administered contracts and performed tasks such as invoicing and checking materials. Owners usually provide on-site supervision and inspection and investigate change orders and claims. The process can strain the resources of understaffed internal organizations.

Under the JOC approach, the contractor acts as an extension of an owner’s staff. The contractor’s project manager administers the work from completion of design through final inspection, and the contractor gets paid only when work is completed and accepted.

The project manager administers all job orders supervising and monitoring, and ensures compliance with requirements for labor utilization, payroll, affirmative action and minority participation.

The chief advantage of using JOCs is a reduction of costs because the contractor’s coefficient and the unit prices are constant for the contract duration. Change orders are also nearly nonexistent.

Contractors benefit as well from reduction of front-end administrative costs. Instead of bidding on 300 jobs, only one bid is made. Monetary returns are maximized if the job is performed well, since there is a minimum and a maximum dollar amount in the contract. JOCs also provide a steady flow of work to personnel who might otherwise have to be furloughed.

JOCs increase opportunities for minority businesses, generally an affirmative action requirement in many cities. Firms that cannot compete for large construction contracts can provide the services or supplies required by individual job orders. Contractors can sub out up to 90 percent of the work.

Given these benefits, public officials are finding JOCs to be a suitable alternative to traditional contracting when a multitude of projects need to be completed.