Over the past decade, both the public and private sector have increasingly looked to design-build as the preferred project-delivery methodology because of its benefits of faster project delivery and reduced costs.[456] In recognition of this preference, the Transportation Equity Act for the 21st Century (TEA-21) authorized the use of design-build contracting for projects whose total project costs exceed $50 million ($5 million for Intelligent Transportation System (ITS) projects). TEA-21 also required the Secretary of Transportation to issue design-build regulations for the Federal-aid highway program.[457] Accordingly, the FHWA issued the design-build final rule on December 10, 2002, which took effect on January 9, 2003.[458]
Two major concerns were raised with the design-build regulation during the notice of proposed rulemaking stage.[459] These two concerns focused on restrictions on the procurement process and provisions related to the National Environmental Protection Act (NEPA).[460]
The design-build regulation requires that the State's request for proposals (RFP) must specify whether all evaluation factors other than cost or price, when combined, are: (1) significantly more important than cost or price; (2) approximately equal to cost or price; or (3) significantly less important than cost or price.[461] During the comment period for the notice of proposed rulemaking, some commenters stated that the underlying statute intended to permit States to use any procurement process authorized under State law. However, the FHWA disagreed with this position stating that section 1307(c)(2) of TEA-21 required the design-build regulations to identify the criteria to be used by the Secretary in approving the use by a State department of transportation or local transportation agency of design-build contracting, and to establish the procedures to be followed by a State or local transportation agency for obtaining the Secretary's approval of the use of design-build contracting by the department or agency. In others words, the statute required the FHWA to establish the procedures that States must use in obtaining Federal approval for a design-build project.
Although the design-build regulation represents a significant step in facilitating public-private partnerships, it also contains a provision that has been cited as an impediment to public-private partnerships. The design-build regulation prohibits a State from issuing a "request for proposals" (RFP) until the NEPA process is complete in accordance with 23 U.S.C. 112(b)(3)(B), which states that design-build projects "shall not commence before compliance with section 102 of the National Environmental Policy Act of 1969 (42 U.S.C. 4332).[462] States have criticized this provision as being a cumbersome restriction that discourages innovation and causes delays. Some States also believe that the NEPA process will be enhanced by having the private developer supply engineering studies, technical information, and other support to the transportation agency during the NEPA process. Because the NEPA analysis is typically accomplished as part of preliminary design, when many key, large scale design decisions are made by someone other than the design-build contractor, this process can discourage or prevent the use of innovative ideas and solutions proposed by the design-build contractor.
There are examples of the NEPA requirement of the design-build regulation causing delays. The Texas Department of Transportation (TxDOT) noted that the SH 130 Project in the Austin area was delayed because of TxDOT's inability to get special approval to issue the RFP prior to issuance of the record of decision. For programs, such as the Trans-Texas Corridor, that rely on the private developer to support the NEPA process, this requirement creates a major obstacle to implementation. The NEPA requirement also was a potential impediment to the I-81 project in Virginia. In particular, Virginia's process required the solicitation of proposals for the design and construction of the facility before it could select a private partner for the project. In order to address this situation, and to test the process's benefits in encouraging private investments and advancing transportation projects, Virginia and Texas are proceeding under the FHWA's SEP-14 program, rather than the design-build authority. The FHWA is reviewing its design-build regulation to see how these concerns could be addressed, particularly the practices that have been evaluated under the SEP-14 program.