Overview
FAR Subpart 36.2 establishes the specialized regulatory framework for the procurement of construction services, distinguishing it from general supplies and services. It focuses on the preparation of detailed government estimates, strict confidentiality regarding project budgets, mandatory site inspections, and specific pricing structures (lump-sum vs. unit-price) unique to the construction industry.
Key Rules
- Independent Government Estimate (IGE): An IGE must be prepared for every contract and modification expected to exceed the Simplified Acquisition Threshold (SAT). It must be kept confidential and only disclosed to personnel with a "need to know."
- Disclosure of Magnitude: Solicitations must never disclose the exact IGE. Instead, the "magnitude" of the project must be expressed using specific price ranges (e.g., "Between $500,000 and $1,000,000").
- Pricing Preferences: Firm-Fixed-Price (FFP) is the preferred contract type. Within FFP, lump-sum pricing is preferred over unit pricing, unless the work involve variables that cannot be estimated with confidence (like excavation or grading).
- Organizational Conflict of Interest: A firm that designed a project (Architect-Engineer) cannot be awarded the construction contract for that same project without high-level approval (Head of Agency).
- Statutory Cost Limitations: Contracts cannot be awarded if they exceed statutory budget caps. Bids that are "materially unbalanced" (significantly low for some work and high for others) must be rejected.
- Concurrent Performance: To prevent labor and administrative conflicts, agencies generally cannot have cost-reimbursement and fixed-price contracts running at the same site simultaneously without HCA approval.
- Change Order Transparency: For small business construction contracts, agencies must disclose their historical data on how long it takes them to definitize (finalize) equitable adjustments for change orders.
Responsibilities
- Contracting Officers (CO):
- Ensures IGEs are prepared and kept secure.
- Determines the magnitude range for public notices.
- Evaluates the need for liquidated damages.
- Arranges site visits and maintains a record of attendees.
- Conducts preconstruction orientations/conferences.
- Compares offeror prices against the IGE to identify errors or unreasonableness.
- Government Estimators: Responsible for preparing a detailed cost estimate as if the government were a private competitor.
- Head of Contracting Activity (HCA) / Agency Head: Responsible for approving exceptions to the design-build conflict of interest and the use of concurrent cost-type/fixed-price contracts at one site.
- Offerors/Contractors: Responsible for inspecting the site, examining government data (like boring logs), and providing cost breakdowns when proposed prices deviate significantly from the IGE.
Practical Implications
- The "Secret" Budget: Contractors must rely on the provided "magnitude range" to decide if a project is within their bonding capacity and interest. Because the exact IGE is protected, a significant deviation between a bid and the IGE often triggers a "sanity check" where the CO must ensure both parties understand the scope of work.
- Risk Allocation via Site Visits: By providing boring samples and site access, the government attempts to mitigate the risk of "differing site conditions" claims. If a contractor fails to inspect the site when offered, they may lose leverage in future disputes regarding site obstacles.
- Administrative Speed: The requirement to post "time to definitize" data at the GPE forces agencies to be transparent about their administrative efficiency. This allows contractors to gauge the financial risk of carrying costs for change orders when working for specific agencies.
- Design-Build Separation: In most traditional "Design-Bid-Build" scenarios, the firm that creates the blueprints is barred from the construction phase. This ensures an independent check on the quality and necessity of the design specifications.