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04/05/2011

Massive changes in public works construction law included in Kasich budget proposal

Multiple-prime law would be optional

Massive changes in Ohio law governing the design and construction of public works projects are included in the 3,224-page state budget bill proposed by Governor John Kasich last week.

Surely the most contentious of Kasich's proposals is the essential elimination of Ohio's "multi-prime" construction law, which mandates that government agencies enter into multiple prime construction contracts on public works projects.

Instead, Kasich has proposed that "public authorities" (meaning virtually all state agencies, institutions of higher education and all political subdivisions) would have several new project delivery options available to them, including:

General contracting – A public authority could enter into a single construction contract with a general contractor, however, the public authority would have the right to reject any subcontract awarded by the general contractor if it "determines that the bidder is not responsible."

Design/build – A public authority could enter into a contract with a single entity "for both the design, construction, demolition, alteration, repair, or reconstruction of a public improvement."

The public authority would be required to evaluate the qualifications of competing design/build firms and rank them on this basis, then open contract negotiations with the highest-ranked firm.  The selected firm would submit a price proposal for both design and construction which would serve as the starting point for the negotiation of the design/build fee.

A public authority intending to enter into a design/build contract would be required to retain the services of a "criteria architect or engineer" to assist in the development of the project scope and the evaluation of competing design/build firms.  The criteria architect or engineer also could serve as the public authority's representative throughout the project.

Construction manager at-risk (CMAR) – A public authority could enter into a contract with a CMAR, who would be required to provide the public authority with a guaranteed maximum price for the project, utilizing an "open book pricing method," whereby the CMAR makes available to the public authority "all books, records, documents and other data in its possession pertaining to the bidding, pricing, or performance" of the contract.

These new contracting methods were among two-dozen changes in public works construction laws and procedures recommended by the Ohio Construction Reform Panel two years ago.  Republicans in the Ohio General Assembly attempted to amend the recommendations into a budget correction bill last year but were thwarted by Democrats, at the behest of construction trade unions, who staunchly support the multiple-contracting law.

Ohio is the only state that still has a multiple-prime contracting law, that having been enacted more than 100 years ago. Kasich's proposal to essentially eliminate the law is sure to provoke stiff opposition from both unions and subcontractor organizations, who argue that general contractors will "bid-shop" subs in order to drive down prices.

In the coming weeks, ACEC Ohio will be scrutinizing the changes proposed by the Kasich Administration in the budget bill (HB 153) and lobbying to modify them as needed.

Council members are encouraged to review the portions of the budget bill dealing with state construction law changes and the Legislative Service Commission analysis of those changes.

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