Job Order Contracting
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What Is JOC Why Use JOC How It Works What Is Required Who Uses JOC Recognition Where Can I Get Help

Why Use JOC?

Increased Responsiveness

In JOC, work can start between 75-85% faster than traditional contracting methods. Since the contractor is already under contract and on-call, you avoid the entire traditional procurement time. Studies have shown that for small projects (less than $20,000) the average procurement time using the traditional system was as much as 233 days compared to 42 days for JOC, for a savings of 82%. For medium sized projects the time required in the traditional system was 193 days, while in JOC the average was 52 days, a savings of 75%.

Lower Costs

Cost Savings is one of the cornerstones of Job Order Contracting solutions. Independent studies estimate the total cost savings from 8% to 15%. Savings are realized from increased efficiencies in four areas: Procurement, Design, Construction, and Post Construction.

  1. Design Costs
    Most projects that are suitable for JOC but bid through the traditional design-bid-build process require A/E services for the sole purpose of preparing a set of bid documents. Generally JOC work is straightforward, simple, and many times involves replacements in kind. The cost of assembling a traditional bid package is 6% to 8% of the cost of construction. These costs can be substantially reduced or eliminated in JOC because all that is required is a Detailed Scope of Work, which is always substantially less than a full set of bid documents. The Technical Specifications are already prepared. And even though some projects require architectural or engineering involvement, documenting the design in JOC is less formal and much less costly. Savings of 3-5%.

  2. Procurement & Overhead Costs
    Each project bid through the traditional bid process usually follows these steps: (1) once prepared, the bid documents are approved by procurement and/or legal; (2) bid documents are copied and readied for distribution; (3) the advertisement is written, approved and submitted to one or more publications; (4) pre-bid meetings are held; (5) written questions are received from potential bidders and analyzed; (6) addenda are prepared, approved, and distributed to the potential bidders; (7) bids are collected and publicly opened; (8) the apparent winner is determined; (9) bonds, insurance and other documents are received from the apparent winner and reviewed by various departments; (10) the contract is distributed for signature; (11) sent for registration; and (12) a notice to proceed is issued. In JOC, only the master JOC contract follows this process. Thereafter, hundreds of Job Orders can be issued from the master JOC contract. The lengthy bid process is streamlined significantly.

    In addition, the JOC contractor doesn’t have to compete for each JOC project. It doesn’t have to spend time and money preparing bids for projects that it may not win. These savings will be passed on to the owner in the form of a lower bid. The contractor can also spread its overhead over more projects. Combined savings of 1-2%.

  3. Direct Cost of Construction (3-6% less in JOC)
    • Volume Discount. Job Order Contracting combines many small projects into one master contract. Contractors offer volume discounts because they are bidding on a high volume master contract ($2 million to $5 million) rather than one small project.
    • Reduced Scope. JOC projects can be started quickly. For projects involving worsening conditions, such as a leaking roof or a failed drainage structure, starting work fast can substantially reduce the scope of work. Less work means less cost.
    • No Contingencies. The intent in JOC is to pay the contractors for the work they perform. Risks are reduced in the way the Detailed Scopes of Work are written and because the contractor actively participates in the Joint Scope Meeting where the site is inspected, and questions about the work can be obtained. As a result, contractors do not include contingencies in their bids.

  4. Post Award Claims
    There are less change orders and virtually no claims in JOC. The contractor actively participates in the Joint Scope Meeting and in developing the Detailed Scope of Work. Any issues or problems are discussed openly and resolved. And by taking responsibility for errors and omissions in the Proposal, the contractor automatically has an incentive to reduce them. This non-adversarial relationship eliminates the underlying cause of most claims and changes. Since JOC is a series of individual job orders, it is against the contractors’ best interest to submit claims. Savings from reduced post award claims is 1-2%.

JOC produces higher quality construction

Since the structure of JOC is a series of individual Job Orders, the contractor has an ongoing financial incentive to provide a quality project. If the contractor fails to maintain the desired level of service and quality, the owner can elect to give future projects to other JOC contractors or to complete the projects using traditional contracts.

The “contractual motivation” under JOC is the complete reverse of the traditional system where the contractor has been awarded a one time, fixed priced contract. With the traditional system the contractor is motivated to make as much money as possible off that one opportunity. The contractor typically does so by cutting corners and submitting frivolous requests for claims and change orders. This sort of behavior doesn’t happen in JOC since it would convince the facility owner not to give the contractor future Job Orders.

Enhanced opportunities for minority businesses

JOC has been designed to enhance the participation of local, minority and female businesses. Since no commitment is made to the JOC contractor regarding specific projects or the exact types of work that will be required, the contractor cannot develop an in-house work force to do all the work and is forced to maximize the use of subcontractors. This increases the opportunities for the contractor to use local, minority and female businesses. Over the past 5 years, 40% of all JOC work has been subcontracted to businesses in these categories.

In addition, minority businesses strongly support JOC because they are able to receive large amounts of work without the official red tape normally associated with bidding. They also support JOC because it does not tie up their bonding capacity. They get the work fast and get paid fast. JOC has enabled many minority firms to do government work for the first time.

Incorporate multiple funding sources

Under JOC, the obligation document is the individual Job Order and not the basic contract. Therefore, individual Job Orders can be paid from different funding sources. This capability is not available with any other form of competitively bid, firm fixed priced construction contract.

JOC provides the facility owner with a single, highly flexible and responsive tool for accomplishing a majority of its annual construction and repair projects regardless of the source of the funds.

What Is JOC Why Use JOC How It Works What Is Required Who Uses JOC Recognition Where Can I Get Help