PEPS DIVISION Quarterly Update - APRIL 2019

CONFIDENTIAL DRAFT

Professional Engineering Procurement Services

represents the consolidated procurement

organization supporting engineering, architectural

and surveying contracts

Mission Work with our TxDOT customers and

external partners to procure the most

qualified consultants to deliver

effective solutions for Texas

Goals Deliver the right projects

Focus on the Customer

Foster Stewardship

Optimize System Performance

Preserve our Assets

Promote Safety

Value our Employees

Values People, Accountability, Trust,

Honesty

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PEPS Mission – Goals - Values

PEPS - Then and Now

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The primary reason PEPS was

created was to provide…

CUSTOMER SERVICE

PEPS Organization

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Austin SCM

Charles Davidson, PE

512-832-7315

San Antonio SCM

Larry Wenger, PE

210-615-5971

Houston SCM

Gail Morea, PE

713-802-5795

PEPS Division Director

Martin Rodin, PE

512-416-2038

Business Operations

Roy Gonzales

512-416-2034

Urban District SCM

Jaime Vela, PE

512-416-2007

Dallas SCM

Joe Jancuska, PE

214-320-6187

Ft. Worth SCM

Norma Glasscock, PE

817-370-3675

Center of Excellence

Dan Neal, PE

512-416-2667

Deputy Director

Lucio Vasquez, PE

512-416-2039

El Paso SCM

Jaime Perales, PE

915-790-4313

FTE Allocation: 122

Executive Assistant

Kristina Kottke

512-416-2037

SCM for Divisions

Kori Rodriguez, PE

512-416-2268

Invoice Center

Tira Dobrozensky

512-317-8511

Rural District SCM

Lynn Daniel

940-937-7281

Controls Center

Dione Albert

512-416-2003

PEPS Service Centers

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Austin SC – Charles Davidson

Dallas SC – Joe Jancuska

El Paso SC – Jaime Perales

Fort Worth SC – Norma Glasscock

Houston SC – Gail Morea

San Antonio SC – Larry Wenger

SC for Divisions – Kori Rodriguez

Rural Districts SC – Lynn Daniel

Urban Districts SC – Jaime Vela

PEPS - Then and Now

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THEN – 2015

No. of PEPS Employees 69 FTE

TxDOT Annual Letting $3-$4 Billion

Procurement Amount $795 M

No. of Contracts 200 EA

No. of Work Authorizations 700 EA

No. of Late WA 139 EA

No. of Invoices 4,000 EA

% of Invoices Paid On Time 86%

NOW – 2019

No. of PEPS Employees 122 FTE

TxDOT Annual Letting $8-$10 Billion

Procurement Amount $1.6 Billion

No. of Contracts 350 EA

No. of Work Authorizations 1,700 EA

Number of Late WA 63 EA

No. of Invoices 13,000 EA

% of Invoices Paid On Time 94%

TxDOT Annual Letting

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-

1

2

3

4

5

6

7

8

12 13 14 15 16 17 18 19 20 21 22 23 24 25

Billio

ns

Baseline Additional MAP-21 Proposition 7

Prop 7 significantly increases TxDOT Letting Volume

$4.3 Billion Average Letting (FY 2012 – 2016)

$6.5 Billion Average Letting (FY 2017 – 2025)

PEPS Annual Procurement

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$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

FY2019 Procurement Year

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How do I get started?

Be registered as a business with the State of Texas

http://comptroller.texas.gov

Be registered as engineering firm with the Texas PE Board http://engineers.texas.gov

Obtain precertification with TxDOT

http://www.txdot.gov/business/consultants/architectural-engineering-surveying/getting-

started/precertification.html

Become administratively qualified with TxDOT

http://www.txdot.gov/business/consultants/architectural-engineering-surveying/getting-

started/administrative-qualification.html

Check the TxDOT webpage for listing of projected

contracts and pre-RFQ meetings

http://ftp.dot.state.tx.us/pub/txdot-info/des/cco/professional_services/projected_contracts.pdf

Submit your qualifications

Getting Started

Procurement Tips

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Don’t Get

Disqualified

Submit on time

Check your

forms and

QA/QC your

work

Keep alert to

amendments

Use your best

examples

Ask questions Showcase your

PM and TL

Focus on

challenges and

solutions

Be clear, concise,

and technical Don’t use the space

for marketing

Ask for a debrief

Negotiations

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Consultants fill out

initial rate card

Indicate if similar

rates negotiated

Expanded range of

the Rate Tool

Proceeding to live

after two rounds

No more 24-hour

gauntlets

Added an appeal

procedure

Service Center

manager review and

approval

Salary Survey data

being collected

Discussing annual

rate negotiations

Providing more DBE

and HUB

opportunities

Procuring more

Federal contracts

PEPS Division – Four Proposed Rule Changes

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TAC 9.34 - Proposed Revisions

90 Day Extension of Administrative Qualifications (AQ) Rate

Negotiation of Annual Labor Rates

Approved Overhead Rate Implemented at Time of Negotiations

Bonus Policy Requirements

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What: 90 day extension of Administrative Qualifications (firm overhead) rate

Why: PEPS Division audits over 300 firm overhead rates annually

Over 200 reports come in for review on or around June 30th annually

Firms are disqualified if their overhead rate is not audited and renewed

Provides streamlining and more flexibility in executing contracts during the

annual renewal period

Promotes increased consistency and efficiency in PEPS operations

Improves competition by not disqualifying firms during the next wave

How: • Allow an extension of overhead rate up to 90 days with PEPS approval

• Must have a approved overhead rate currently in place

• Must have an overhead audit renewal report already submitted for review

PEPS Division – Four Proposed Rule Changes

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What: Approved overhead rate implemented at time of negotiations

Why: Confusion exists currently on which overhead rate is used during labor rate

negotiations

Federal rules require using approved overhead rate in place at start of

negotiations

Provides clarity to PEPS policy

How: Issuance of the pre-negotiations report by PEPS is the trigger for the firm

overhead rate to be used

That overhead rate will then apply and be used throughout all contract

negotiations

PEPS Division – Four Proposed Rule Changes

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What: Negotiation of Annual Labor Rates

Why: In FY18, PEPS executed 304 contracts but negotiated 2,006 times

Negotiations may take up to 110 hours per contract (14 days)

Annual negotiations could be done in 24 to 40 hours (3 to 5 days)

Annual negotiations could provide a time savings of 50% or more

Annual negotiations could provide cost savings of $1.36 million yearly

Provides streamlining, increased consistency and efficiency in operations

How: Ask firms to submit rates annually to establish the industry norms

Protect the confidentiality of the annual employee rate information

Establish a single Negotiations group within PEPS for consistency

Work with industry to define processes for rollout in FY2020

Allow for rate negotiations on case by case basis during implementation

PEPS Division – Four Proposed Rule Changes

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What: Defining bonus policy requirements

Why: Bonus compensation is an allowable cost to be used in the annual overhead

audit allowed by Federal Acquisition Regulations (FAR)

Considerations for allowing bonuses are also contained in the AASHTO Audit

Guide

Current TxDOT policy is not clear concerning bonus conformance

Provides clarity to PEPS policy

How: Require that written bonus plan be in place and follow AASHTO Audit Guide

Clarify that bonuses are allowable, provided a written bonus plan or

documented performance review is followed

PEPS Division – Four Proposed Rule Changes

Proposed Specific Discipline Engineering Contracts

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PEPS Division will procure seven ID contract disciplines that have traditionally been procured as

elements in PS&E contracts. This provides:

(1) flexibility to Districts needing discrete elements of work to be outsourced on an in-

house designed project

(2) more discipline specific procurement opportunities

PEPS Division will procure the following ID discipline specific contracts starting in FY 2019

Waves 2, 3 and 4:

Bridge Design

Roadway Design

Complex Geotechnical

Pavement Design

Complex Traffic Control

Drainage

Signing, Pavement Markings and Signalization

More Federal Contracts

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Starting with FY 2019 Wave 2, PEPS Division will encourage District and

Division customers to use Federal Procurement Process for all

SCH/ENV, PS&E and CEI going forward.

New Federal Process requires consultant proposal for review rather than

statement of qualifications

New Federal Process has with interview and without interview options

Even though we procure using Federal Process, this does not mean that all

contracts will have Federal funds associated with them

Routine procurements for contracts such as Survey, SUE, Geotechnical and

Materials Testing can still be State Procurement Process

District or Division customers can always request exception to Federal

Process procurement for individual contracts

CONFIDENTIAL DRAFT

Work Authorizations and Expenditures

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Be enablers of DE/DD in executing project portfolios

New WA metric of 50 days total – 13th Month!

Weekly staff meetings

Monthly work authorization report

Shared review/checklist with CSD

Reduced holdout for contingencies

Sharing contracts across boundaries

And Now for the Third Time Ever!

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Third Annual PEPS Conference

November 20th and 21st

Embassy Suites Conference Center

San Marcos, Texas

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