Job Order Contracting Proponents Seek Market Growth
The use of performance-based contracts has blossomed in recent years with delivery methods such as design-build and construction manager-at-risk, particularly for large jobs. But another method, job order contracting (JOC), has been around for almost 30 years. As the industry looks increasingly toward maintenance of aging infrastructure, the South Carolina firm that claims the origins of JOC hopes its big time has arrived.
"JOC occupies a nice niche, but a small niche within the overall construction industry," says William Pollak, the new chief executive officer of the Gordian Group, Mauldin, S.C., which supports agencies in implementing and administering job order contracts. "We feel it could be bigger if we just went out and sold it. I see great opportunities. On the government side, we live in a world of cash constraints. Here is a fairly straightforward way of doing things more efficiently."
Development of the JOC concept is credited to Harry Mellon, a U.S. Army lieutenant-colonel who served as chief engineer for the Supreme Headquarters Allied Powers Europe in Belgium in 1982. Because competitively bid contracts, even for modest-sized tasks, took months to complete, Mellon came up with an idea for on-call contracting.
"He was having trouble getting European contractors to respond to the military's needs, especially when working for so many different national leaders," says president Robert Coffey, who helped Mellon found the Gordian Group in 1990. "Harry met with some key people and brainstormed how to get contractors to respond: 'What if we listed all the tasks and prices we were willing to pay and have contractors bid against that? We would only keep giving contractors work if they continued to perform.'"
For example, an owner would set a price it was willing to pay to install one square yard of carpeting. That price would include direct cost of materials, equipment and labor. The owner would not include any profit or overhead in the price. Then firms like the Gordian Group can provide a customized-task catalog of unit prices, including labor, equipment and materials costs, with which the on-call contractor and owner work. Proponents say this eliminates contract quibbles and maintains transparency. "Imagine bidding out every repair and alteration job—it's an administrative burden on both sides," says Coffey. "All that goes away with JOC. The contractor does not have to prepare bids for each and every job."
Mellon brought the concept back to the United States with support from the Army Corps of Engineers, although politics and contractor resistance stymied its initial growth. However, Mellon acquired clients like the Miami-Dade County Schools and the Chicago Dept. of Transportation—which remain among Gordian Group's JOC clients to this day.
"It was a slow start," says Coffey. "But we've been very fortunate to grow methodically over the last 22 years. Now we have staff around the country feeding that data. The staffers support clients daily and do research on local costs."
The pricing catalogs are updated constantly. "A few years ago, because of China, steel prices went up 100% overnight," recalls Coffey. "There was a lot of angst among facilities folks. When there's a hurricane, that affects plywood prices."
Scott Forshey, senior project manager for the Lusk Group, Columbus, Ohio, notes that there are other construction cost catalog suppliers, such as RSMeans. With the caveat that his firm has worked with the Gordian Group since 2002, he says that when doing JOC in the 1990s, "RSMeans was not as detailed for building a cost proposal as a Gordian Group book."
Charles Bowers, Arizona business development manager for Centennial Contractors, a member of the Bilfinger SE Engineering and Services Group, says JOC requires a contractor to have integrity and a focus on customer service as core values—and to be flexible and responsive. "Generally the projects are high profile and critical to meet infrastructure needs," he says. "The owner wants it done safely, quickly and by a contractor it can count on. Generally there are lots of small projects going on at one time; you need a sense of urgency, skilled professionals and proven processes. There's not much reaction time in the execution of these jobs. A lot of pre-planning is required because that often lasts longer than the job itself."
For example, Centennial contracted to replace a school's transformer just a couple of days before the school was to open, he says. "We have people who are experts in various fields, who know where to go to get what is needed." Within four hours, a truck was on its way from Los Angeles to Phoenix with the transformer.
The New York State Dept. of Transportation has worked with the Gordian Group for a decade, says Peter Weykamp, NYSDOT chief bridge maintenance engineer. In late 2007, the Federal Highway Administration (FHWA) approved federal funding for a three-year NYSDOT pilot program using JOC for basic bridge maintenance.