Construction is Not a 'Commodity'

Background:

• Construction must be addressed as a service because of the site-specific and design specific distinctions for each construction project, unlike manufacturing which is a repetitive, rarely changing process.

AGC Message:

• AGC Strongly Opposes Legislative and Regulatory Action that Subjects Major Federal Construction Projects to the Same Management Oversight as Commodities. Acquisition reform and product liability legislation often attempt to define construction as a product. As new legislation is being considered, stipulations must be made regarding the treatment of construction ensuring that liability accurately reflects the nature of a construction project as a combination of design, engineering, construction services, and maintenance of the facility by the owner.
• Constructing a Building or a Road is not the Same as Producing a Commercial Commodity. The regulation of construction does not fit well into an environment designed to regulate the purchase of goods manufactured on an assembly line. As procurement reform continues, construction must be addressed as a service. There are site-specific and design-specific distinctions for each construction project, unlike manufacturing which is a repetitive, rarely changing process.
• Procuring Construction as a Commodity is not in the Best Interest of the Government. Construction is a contractual agreement between two or more parties to build, modernize, or rehabilitate a facility or road. Accordingly, there are unique design specifications and site requirements for each construction project. Applying commercial regulations to construction runs counter to prevailing private sector practices. It would exclude the most essential protections available to the government and to contractors, including the site conditions clause, suspension of work clause and changes clause. Omitting these key clauses would radically alter customary risk allocations in federal construction contracting. Regulators established these specific contractual clauses recognizing the singularly unique nature of construction.
• Federal Regulations Treat Construction as a Distinct and Unique Service. The Federal Acquisition Regulation (FAR) allows federal construction contracting to be procured in virtually the same way as the private marketplace. That is due to the strong protections offered to both private contractors and the federal government. This critical regulation clearly recognizes the unique blending of services construction contracting offers. As federal procurement professionals continue to maintain a level of objectivity to protect taxpayer interests, they must also recognize there is a clear distinction between construction’s unique blending of services and the repetitive manufacturing processes.