State departments of transportation have relied predominately on the low bid-approach to award highway and transit construction contracts. This procurement process involves using detailed plans from the design phase, providing specifications and estimates for the work involved, soliciting of bids through public advertisement, and awarding the contract to the lowest responsible responsive bidder.[138]
Although the main intent of the low-bid approach is to save costs and protect the public interest, contractors also benefit since this approach eliminates most unknown conditions by defining all requirements of the project in the request for proposal.[139] Any errors and omissions in the plans or unforeseen work are the responsibility of the State.[140] Quality is controlled through prescriptive plans and specifications coupled with construction oversight and inspection by the State department of transportation.[141] Competitive bidding among contractors controls cost by awarding the contract to the lowest responsive bidder.[142] This traditional system is used throughout the country. Because of its predominant use, most contractors are comfortable with the procedure and understand its risks and rewards and consider it equitable.[143]
While most contractors are comfortable with the traditional procurement system, it is not conducive to the use of public-private partnerships. The system is slow and does not favor a life-cycle cost approach to projects.[144] Innovation is stifled because prescriptive specifications and low-bid pricing result in little reward for design and construction innovations.[145] However, some States increasingly are using value engineering to allow for some innovation in the process. Under traditional procurement, value engineering is used during both the design and construction phases to allow the owner to take advantage of creative ideas that may arise later in the process. Even with value engineering, the traditional system is relatively inflexible. Additionally, since the design and construction are done by two different entities, there is little, if any, opportunity for contractor input into design.[146]
Current State procurement laws restrict the flexibility of the public sector in selecting contractors and equipment suppliers, imposing rules that ensure that the State acquires services and supplies fairly and at the lowest price.[147] These rules are based on projects for which the State bears all financial responsibilities and seeks fair competition. Elaborate steps safeguard public funds against waste and fraud by contractors whose primary interest is securing a one-time contract.[148] In projects where the private company is bearing risk, if the State's procurement process is modified, the private risk bearer would be offered the flexibility to hold down costs and share risks among its subcontractors.[149]