State building contracting and construction procedures and granting rule-making authority

With certain exceptions, if bids are required to be solicited and the estimated cost of a project exceeds $185,000, the Department of Administration (DOA) must solicit single and separate bids on each portion of the work that DOA designates. DOA must attempt to ensure that 5 percent of the total amount expended for construction work in each fiscal year is awarded to minority-owned businesses. Contractors must be granted certain progress payments while a project is underway. With certain exceptions, if the estimated cost of a project exceeds $185,000, the project is subject to approval of the Building Commission.

The bill permits DOA either to: 1) solicit both single and separate bids on any division of the work it designates; or 2) solicit only single bids on all divisions of the work that DOA designates. The bill also permits DOA to utilize another contracting procedure to construct any project called "construction-manager-at-risk contracting." Under the construction-manager-at-risk contracting procedure, DOA hires a construction manager to provide preconstruction services and to manage the construction process. The construction manager must solicit bids for all work on a project unless the manager submits a bid for a portion of the work. The bill also requires the construction manager to award all contracts to the lowest qualified responsible bidder unless the construction manager and DOA agree that it is in the best interest of the state to contract with a subcontractor other than the lowest bidder. In addition, the bill requires the construction manager to submit progress payment requests to DOA, to pay each subcontractor the amount to which the subcontractor is entitled within seven days after the prime contractor receives payment for work performed, and to limit the amount of any retainage to the proportionate share of the retainage that is attributable to the subcontractor's division of the work. The bill also permits DOA to prescribe, by rule, additional contracting procedures not specified in current law or in the bill that DOA may utilize for any project.

The bill provides the following when DOA uses a contracting procedure in which it solicits only single bids on all divisions of the work on a project (single prime contracting): 1) the prime contractor must submit to DOA the names of the subcontractors that are proposed to be retained; 2) DOA must require the prime contractor to solicit bids from subcontractors who will perform any division of the work on the project designated by DOA and to award each subcontract to the lowest qualified responsible bidder; 3) the prime contractor must submit progress payment requests to DOA and must pay the subcontractors for their proportionate share of the work within seven days after a payment is received from DOA; and 4) retainages from subcontractors must be limited to their proportionate share of the work. In addition, the bill provides that when DOA uses the single prime contracting procedure to construct a project, DOA must ensure that each subcontractor has access to the elements of the project information available to the prime contractor that are required for the subcontractor to effectively participate in the project.

Under all of the proposed new contracting procedures, as well as any other procedures prescribed by DOA, DOA must advertise for and solicit bids on all or any portion of the work it designates and comply with all other laws governing construction procedures, except that DOA may provide, by rule, that any of these laws do not apply to a specific project that is constructed using the construction-manager-at-risk procedure, and except that, as currently provided, the Building Commission may waive compliance with any of these laws for construction of a specific project.

Currently, with certain exceptions, a bidder on a contract for a state project need not submit with its bid a list of the subcontractors to be used on the project, but DOA may require a list of the subcontractors to be submitted before the contract is awarded. This bill permits DOA to require each bidder on a state project to submit with its bid a list of its subcontractors to be used on the project. The bill also directs DOA to require each bidder to solicit bids from subcontractors who will perform any division of the work on a project designated by DOA and to award each subcontract to the lowest qualified responsible bidder.