Discussion on various components of the Design & Construction of a New Hidalgo County Courthouse, including, but not limited to:

Judge Garcia requested to proceed to Item. 2.B.

A.  Recommendation/Options on the method/type of insurance programs required/recommended:

   1.  Hon. John Hawkins recommended consideration of: Global Insurance and Bond Program, aka, OCIP-Owner Controlled Insurance Policy to include - Commercial General Liability/Workers Compensation; also discuss Builders Risk and Professional Liability Coverage;

    2.  Hon. John Hawkins identified a construction insurance broker who might be able to assist HC in determining all aspects of an OCIP, such as:  drafting specifications/requirements for the procurement of the OCIP, as well as other insurance issues related to other policies needed;

   3.  HC staff on options on how to procure the consulting services of an insurance expert to assist in the aforementioned insurance matters; possibilities:

          a.  Exemption of a professional insurance broker with experience in this field and precluded from participation in the procurement process;

          b.  Drafting and development of a RFP for a consultant to assist HC in the aforementioned insurance matters;

B.  Status of the current draft RFQ drafted and developed by Hon. John Hawkins, Porter Hedges, LLP for the procurement of Program Management Services to assist in the New Courthouse Project and as sent to Hon. Steve Crain, Atlas & Hall for review and comment as to form [as requested through Hon. Ramon Garcia, HC Judge]:

Mrs. Martha Salazar informed the court that as early as this morning they received the RFQ draft. She stated that currently at this point they are looking into finalizing the RFQ for the Program Management Service Provider. Due to this specification they saw the need to draft a more general customized "Exhibit C".

Commissioner Cantu stated that at the moment he does not see the rush to get into the insurance phase. He voiced that the most important part right now is obtaining a program manager. 

Judge Garcia noted that he did not see a problem discussing insurance matters, if this is a new type of policy that has not been discussed. 

Mrs. Salazar notified that this is called Owners Control Insurance Policy.

In regards, Commissioner Cantu ensured his interest in the policy and willingness to understand what it is. However, stated he doesn't want this to delay the selection of the project manager. As he understood that these two things have to be done simultaneously. 

Mrs. Salazar informed the members that they first have to create the normal "Exhibit C", as it goes out for every contract that goes out for the construction of this project. This is to include language that will notify as to what type of insurance is expected at the time of negotiating the contract, this also includes the program manager. 

Commissioner Cantu questioned Mrs. Salazar as to whether or not the OCIP will include the project manager. In regards, Mrs. Salazar stated that it will be for every contract. 

Hon. John Hawkins clarified the RFQ insurance, he notified that in recent years the insurance experts state that a $100 million project is a tipping point were owner control insurance programs become a better deal or cost effective. Providing control to make sure that everyone has adequate insurance. Mr. Hawkins advised of three different insurance requirements for the program manager. First policy is the Builders Risk Policy, it is property insurance that insures the cost of the materials and labor being put out for the project. The second policy is the Commercial General Insurance Liability, it is a typical insurance for subcontractor and contractors, or in this case for the construction manager at risk. Workers compensation is also combined with this same insurance, that's what a wrapped around policy generally consist of. Once again, Mr. Hawkins stated that this is for the CMAR or for contractors, typically if they wish to work on the project they are required to be a subscriber and are often required to pay part of it. Third type policy is the Professional Liability Insurance, this is for the architects, engineers and program managers. Commercial Liability Insurance is a typical insurance that any contractor would have.

Going back to the "Exhibit C" for the program manger, the exhibit for insurance has some requirements that a program manger firm is expected to have for all these insurances. For professional liability he put $10 million however, others may suggest more or less. Base on this suggestion, Commissioner Cantu questioned Mr. Hawkins about the insurance  industry standards. In regards, Mr. Hawkins made clear that he does not believe there's an industry standard. In any case, a broker insurance would be better at letting them know what the standards are in terms of cost. Mr. Hawkins stated that base on his experience, architects in Houston who do very large projects will often have $3 to $5 million dollars in professional liability for projects of this magnitude. According to Mr. Hawkins, $5 million dollars is consider to be a large policy, and $10 million dollars is consider a very large policy. He restated that $10 million is a big number, he assured that insurance brokers know about insurance programs and policies that are in the market and that can be bought. 

In relation to the RFQ insurance requirements, the $10 million for professional liability requirement is most important for the program manager. As per Mr. Hawkins, the court may want to reconsider owner controlled insurance program policy for professional services. The reasons to reconsider when talking to a broker is to find out costs and having the OCIP for the contractors, when it comes to the professional liability part it's more complicated. Informing that most professional liability insurances are called practice policies, policies that architects and engineers have for every day projects. He further stated that they could obtained a group project specific professional liability policy. However, he suggested that it would best not to have a project policy for professional liability. He restated that this is something the court needs to consult with a professional.

Commissioner Cantu questioned if they were to get a policy, will the project manager be under that same policy. In regards, Mr. Hawkins explained that there might be some miscommunication in regards to the term, because some people call it construction manager and he rather use the term program manager. Informing that he uses the term owner control insurance program, this program may serve different types of insurances. One of those insurances being the wrap-around around insurance, because it wraps around a lot of different things. The typical owner control insurance policy is for the construction side. This program may or may not chose to have professional liability, however this could be an option to consider. Regarding the statement, Commissioner Cantu expressed that he thought the architect would be under the owner control insurance program, and the program manager be outside of it because they would be a direct representative. Mr. Hawkins notified that the architect, the geotechnical engineer and program manager would all be in or out. He advised that there must be separation between the contractors from the license professionals. The professionals should go under professional liability insurance and the contractors under commercial general liability insurance. The CGL policy states that it won't cover any professional liability. 

In regards to the owner control insurance policy for contractors, Mr. Hawkins stated that for projects of this scale it's often cheaper than relying on the various contractors to provide their own cost insurance. Informing that subcontractors and construction manager at risk will have their own insurances. Accordingly, the owner control insurance policy would supplement that insurance and be the primarily insurance that the owner could control its limits. 

Referring back to the RFQ, Mr. Hawkins stated that he sent out two different documents, one not showing the changes made and the second one pin pointing the changes in red and blue for the construction manager. 

Regarding the firm's qualifications enclosed in the package, Mrs. Salazar stated that it was in regards to the standard of federal requirements, even if there's no federal money involved. As per Mrs. Salazar, this shows willingness and encouraging participation by all those types of things. Commissioner Cantu questioned if perhaps this should only be a dbe. Mrs. Salazar stated that this was not limiting to mwb's only. The commissioner suggested limiting only to dbe.

Commissioner Cantu advised that he wouldn't want to have the program manger be part of the design team. In regards to the role of the program manager, the judge questioned Mr. Hawkins as to what would be the appropriate responsibility. To clarify, Mr. Hawkins defined that the program manager would be involved in the design as an advisor. Once they enter the construction phase, under architects and engineers they would make periodic site visits to inspect the work. Typically with the program manager, this will provide a full time person onsite to watch the quality of the construction. Commissioner Cantu raised concerns over the input the construction manager would have over the design. On that regard, Mr. Crain stated to the commissioner that the program manager should not interfere with the design and limits the involvement.

Judge Garcia questioned the standard of care that the program manger would have. Mr. Hawkins stated that the standard of care would be for the program manager to go out and look at the project without telling the contractor how to fix something, but rather telling the contractor to fix what's wrong. The program manger would be diligent on going out to find any problems and getting them fix. In relation, Mr. Crain informed the judge that during the negotiation process they can raise the standards. Mr. Hawkins advised that if they consider raising the standards of care, they should also consider if whether or not it's an insurable standard for care. Commissioner Cantu questioned if any of this matter would change if the construction manager at risk brings their own designer. Mr. Hawkins affirmed that nothing changes, as they are only there to administer. He further made clear that if at the end of the project they find something wrong, the architect would be call into question, the contractor may be call into question if something was built wrong, and the program manger would be call because it should of been caught. The judge made clear that the program manager owes no duty or obligation to the construction manager at risk, only to the court.

Commissioner Cantu inquired about the notation stipulating that the project manager would be involved in 50% of the technical development. Mr. Hawkins explained that the project manager would only be involved in the technical aspect of what the project manager does. Judge Garcia questioned Mr. Hawkins as to the possibility that the program manger would have additional staff to oversee the work and that could consult with him. He stated that most often then not, project managers are usually architects and engineers, and this is another type of work that they do. 

With reference to the requirements of at least 5 different types of projects and 85% to 100% involvement on the technical developmental projects for the program manager. The attorney stated that the number could be argued, as that number could have come from the RFQ or from him. The different type of projects that could be consider are, airports, hospitals and courthouses. With respect to the percentage of local hires, Mr. Hawkins referred this inquiry to be answered by legal counsel and those involved. Commissioner Cantu stated his preference to award to locals who can do the job. As regards to this subject, Mrs. Salazar commented to the commissioner that she could part with Mr. Hawkins and with Mr. Crain and get it out of the list server on other jurisdictions on the general language used. She justified that they could encourage local preference, but this would limit the standard of how much the local preference can be. In dealing with the same question, Judge Garcia questioned Mr. Crain as to his previous comment that the court could not dictate that they hire local people. Mr. Crain explained to the judge that right now they are actually looking into the evaluation criteria to evaluate and score the various proposals that are coming in. Local preference is used for every day projects however, $100 million to $200 million dollar project is not an everyday project. Therefore, he suggested to look at the qualifications of each proposal. If they wish to give points to the locals then they would have to reallocate the point system and would recommend minimum points for locals to make sure that the major points of the evaluation scale is a proposer that has the qualifications the court is looking for on $200 million dollar project. They can always put out some minor points for the locals, but that would be a decision the court would have to make. Mr. Crain advised not diminishing outsiders, but rather consider the quality and experience. Commissioner Cantu assured that they have consider this system under the architect selection, as they accepted someone who has courthouse experience and works from here. Notwithstanding, Mr. Crain advised that they need to consider the program manager as the eyes and ears of the project, therefore being someone who is completely loyal and experienced with design and construction. As a suggestion, Mr. Salazar recommended a determining factor to be from Hidalgo County and make it .5

Consequently, Mrs. Salazar asked if they desired to establish a 105 point criteria and 5 points be for local preference. Judge Garcia commented that this suggestion would be appropriate and would inform the bidder as to their interest for locals. Mrs. Salazar informed that Mr. Hawkins will be in charge of finalizing the scoring sheet. She further advised that TxDOT has language as to local preference, if allowed by Mr. Hawkins and Mr. Crain they could also use that. 

Regarding the project manager commissioning, Mrs. Salazar informed that this was not included in this specific draft however, it is an expensive option. Mr. Hawkins informed that the project manager commission is not included expressly a lot of the requirements included in "Exhibit A" cross over into other things. Full commissioning is higher level of involvement, therefore costing more. As an example, if they chose lead gold there's a criteria establish in the design that is given a point system providing a lead design. Mr. Hawkins indicated that they returned until a year after the building has been running to make sure everything is running as to the expectations. The commissioning expert will monitor to make sure that the design team is incorporating things into the design that will help get the lead points. The commissioning will stay longer to make sure that the people are trained to run the systems correctly. Regarding the cost, he commented that this would depend on who's doing it. 

In dealing with the commissioning, Mrs. Salazar questioned the court if they wish to have it written as an option for the program manager respondent to know that this may be something that Hidalgo County might consider during the negotiation time, and may be something that can be discuss. Commissioner Cantu agreed as to imputing it in the option.

Commissioner Cantu questioned the recommendation for a construction manager at risk as to a conventional or design built. Mr. Hawkins mentioned that the CMAR provides a better opportunity to succeed at meeting the goals. Another feature of CMAR is called the cost plus with guarantee maximum price. This means that the county pays for everything including the labor, materials and equipment that goes into the project, plus overhead and profit from the CMAR. This also guarantees a profit maximum price, when taking the partial plans and putting them out, the CMAR will come back and state the grantee maximum price and if the project goes over that price it comes out of their pocket. The commissioner questioned the fastest way that a contractor can provide a general program manager. Mr. Hawkins stated that this is a balancing act, and they would want the drawings to have enough information that they can obtain accurate pricing. The general program manger will more likely be placed at the end of the design development phase for construction documents.

HDR representative stated that they use the design development further into the process therefore providing a good understanding as to what the building will look like. Informing that as of now, they're about 15% to 20% of the percentage complete. Commissioner Cantu questioned as to when they'll be able to have a general program manager. The HDR representative restated that the best time is towards the end of the design development. Mr. Hawkins assured that the most important factor during the design process, that can guarantee the maximum price would be during when plans are complete enough to get accurate price. Judge Garcia commented that it was his understanding when hiring the CMAR they'll hire the architect, and during the design build they bring their own architect. Mrs. Salazar informed that under the CMAR the statute does not permitted. Explaining that the construction manager at risk can not become the lead architect within the CMAR. The statute explains that before the CMAR is hired the county is require to select the architect.

Judge Garcia requested moving back to Item.2.A.

Mrs. Salazar commented that this item will be place on tomorrow's agenda and due to some minor adjustments would be best to have the completed document with the review.

Mr. Crain suggested moving to "Exhibit C"
    
   1.  Draft of customized "Exhibit C" - by Hon. Hawkins insert in RFQ-Program Manager Services so as to permit the continuation of procurement process while Insurance issues finalized on a parallel track;

Regarding the information discussed over the insurance Mr. Crain advised that there's both pros and cons to the traditional method and the OCIP. He recounted a situation with a client who's a contractor, the client was seven months into the project before they found that the OCIP did not have complete operation insurance. Mr. Crain restated the importance of insurance for a $200 million dollar project. 

Owners often question between traditional and OCIP base on the amount of insurance needed, and other technical aspects versus the traditional method and the OCIP. In regards to all those technicalities, Mr. Crain explained that what they are looking for is a consultant with respect to insurance to these type of projects. Disclosing that the limiting fact that they're looking for in a consultant, is that they qualify under the exemption under local government code that the individual does not sell these products. Second, a person who can be contracted under personal services having experience and qualifications. Mr. Crain stated that there's a possibility that two or three individuals qualify under these exemptions in the State of Texas. He emphasized that this is a critical point as to which way they'll be going with the insurance. Additionally, the qualifications from the expert must be to advise the county as to which should be the best insurance approach. 

Commissioner Cantu questioned Mr. Crain if they'll be moving forward with the project manager or wait on the insurance. Mr. Crain stated that they are looking into modifying "Exhibit C" to advice the program manager that as of this point in time the county has not chosen a method. The only problem with "Exhibit C" if they chose to go with the traditional method, is that each individual dollar amount should be the correct amount that the court should use. This would be a risk analysis of the correct dollar amount of insurance require if they chose the traditional method. Under the OCIP method, Mr. Crain assured that there're pros and cons as well, for that they'll be looking for an experienced individual that can explain both statistics and which method would be best for the county. Commissioner Cantu deduced that this could imply the possibility to have OCIP insurance for professionals, and project manager; the commissioner stated his disagreement to the possibility. Mr. Crain declared that this was a possibility that he could not answer, a professional would have to respond. Mr. Crain reported that this does not mean that they''ll be delaying hiring the project manager, if they could get a consultant to review the exact dollar amount for the project and look at the insurance, and if the consultant is contracted by the next commissioners court meeting, he could provide answers within the next 10 days. Judge Garcia questioned if this was a type of service that could be exempt. Mr. Crain responded that if they find a consultant that can be contracted individually, then they could exempt them from the government code. 

Moreover, Commissioner Cantu commented that in any case of a lawsuit, he visions both the architect and the program manger under the same policy. Mr. Crain reminded the commissioner that the program manger will be working with the design professional. Regarding the same subject Mr. Hawkins stated that this is hard to generalized, but if it came down to it the county could sue all three. He reiterate that professional policy is separate from the OCIP under the contract. One policy will cover everybody, but in a lawsuit one insurance covers all. Judge Garcia questioned the amount of policy the county should require for this project. Mr. Hawkins commented that this question is best left to an insurance professional who can find the right balance between cost and risk. Judge Garcia stated that they might be better off requiring individual policies. The judge proposed putting together and stock up more coverage if they require the policy to not be depleted and be project specific, then with that policy they can come in to cover only the county and the construction of the courthouse. Judge commented on lawsuit against a contract for a $28 million dollar school, the contractor had a $25 million dollar policy, the architect had a $5 million policy, the engineer had a $5 or $1 million, roughly about $30 million dollars , the contractor joined several of the subcontractors adding several hundreds, this was much easier because there was more than one adjuster in the table and provided an easier figure.

Mr. Hawkins explained that the county could not be named as an additionally insurer for both professional liability insurances. He notified that all the defense money comes from the limit, but if they have another claim and another lawsuit, it will reduce the limits. Whereas project specific covers only that one project. He further commented on the two architectural firms HDR and HOK, he noted that he represents HOK in other matters but does not know anything about their insurance coverage. However, he assumed that both firms can carry substantial insurance. The judge concluded that this would be best discussing with an insurance broker. He then questioned the process to hire an insurance broker. Mr. Crain clarified that they are not recommending a broker, but someone who is in the industry as a consultant that does not sell the product. Once they find someone, they'll recommend looking at their qualifications and then claim the exemption for professional service, and contract with the individual. 

Mrs. Salazar clarified with the court that the general "Exhibit C" will not be applicable as of now, to complete the RFQ and wait to have it ready once they are under contract with the exemption consultant. Then they'll finalize, present and send to advertise. 

Mr. Crain stated that in order to put out the RFP they'll need the exhibits to be included. The consultant is the one they are recommending to contract first to develop "Exhibit C"

Commissioner Cantu commented that they can still have OCIP for the contractor and an OCIP for the professionals, as well as for the program manger with its own insurance. In regards to the commissioners comment, Mr. Crain stated that this could be done however, does not count with the expertise to advise on whether that is the best way to go, therefore is recommending the consultant.

Court took no action on this item.

    2.  Completion of the Evaluation/Scoring Sheets subject to the finalization of the RFQ packet evaluation criteria with acceptance and approval of all components including the legal review by Hon. S. Crain.