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  • Question

    Design within Funding Limitations (clause 52.236-22) is not in our construction contract. The prescription for adding that clause specifies that it shall be included in fixed-price architect-engineer contracts. However, since our construction IDIQ contract includes design-build services, can this clause be added at the task order level to cover the "design" portion of the work, even though this is not an A-E contract? Can contractors be held to designing within funding limitations under a construction contract, or does that only fall within the statutes applicable to A-E contracts? If not, is there some other way of informing the design-build contractor of, and hold them to, designing and building to budget limits?


    Answer

    By definition at FAR 36.102 “Design-build” means combining design and construction in a single contract with one contractor.  The contract is usually written as firm-fixed price (FFP) or a guaranteed maximum price (GMP) construction contract. The design-build contractor is obligated to meet the design criteria and performance requirements specified in the bidding documents.  The contractor is responsible for the risk of design in their contractual relationship with the owner and designing and building within these limits is controlled by designer and construction contractor based on the awarded value of the FFP or GMP contract. If the contractor’s design and construction would exceed the FFP or GMP, then by contract design the excess cost would fall on the contractor and not the government. This is what controls the contractors to design within the funds limitation on a design-build contract.

    Based on the above, there is no need for FAR 52.236-22 in a design-build construction contract or task order nor does the prescription of the clause at FAR 36.609-(1)(c) instruct one to use it in construction contracts.

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