SSB 1213 (LSB 1510XC (4) 88)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON SMITH)

A BILL FOR

An Act relating to alternative project delivery contract methods for government entities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  26.17  Alternative project delivery contracts.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Alternative project delivery contract” means either a design-build or construction manager-at-risk contract.
   b.  “Construction manager-at-risk” means a sole proprietorship, partnership, corporation, or other legal entity that acts as a consultant to the government entity in the development and design phases and then assumes the risk for the construction, rehabilitation, alteration, or repair of a project at the contracted fixed or guaranteed maximum price, similar to a general contractor during the construction phase. A project using a construction manager-at-risk does not include the construction, reconstruction, or improvement of a highway, bridge, or culvert.
   c.  “Design-build” means a project delivery method subject to a two or three-phase selection process for which the design and construction services are furnished under one contract.
   d.  “Design-build contract” means a contract between a government entity and a design-builder to furnish the architecture, engineering, and related services as required for a given public project, and to furnish the labor, materials, and other construction services for the same public project. A design-build contract may be conditioned upon subsequent refinements in scope and price, and may permit the government entity to make changes in the scope of the project without invalidating the design-build contract.
   e.  “Design-build project” means the design, construction, alteration, addition, remodeling, or improvement of any buildings, infrastructure, or facilities under contract with a government entity. “Design-build project” does not include a project for the construction, reconstruction, or improvement of a highway, bridge, or culvert.
   f.  “Design-builder” means any individual, partnership, joint venture, or corporation subject to a best-value or qualification-based selection that offers to provide or provides design services and general contracting services through a design-build contract in which services within the scope of the practice of professional architecture or engineering are performed respectively by a licensed architect or licensed engineer and in which services within the scope of general contracting are performed by a general contractor or other legal entity that furnishes architecture or engineering services and construction services either directly or through subcontracts or joint ventures.
   g.  “Design criteria consultant” means a person, corporation, partnership, or other legal entity that meets any of the following requirements:
   (1)  Is duly licensed and authorized to practice architecture within the state of Iowa.
   (2)  Has a design-build professional certification or equal training to be a design criteria consultant.
   (3)  In the case of an engineered project, is duly licensed as a professional engineer within the state of Iowa within the discipline of the specific design-build project, and is employed by or contracted by the government entity to assist the government entity in the development of project design criteria, requests for proposals, and any additional services requested by the government entity to represent its interests in relation to a project.
   h.  “Design criteria package” means the performance-oriented program, scope, and specifications for the design-build project sufficient to permit a design-builder to prepare a response to a government entity’s request for proposals for a design-build project, which may include capacity, durability, standards, ingress and egress requirements, performance requirements, description of the site, surveys, soil and environmental information concerning the site, interior space requirements, material quality standards, design and construction schedules, site development requirements, provisions for utilities, storm water retention and disposal, parking requirements, applicable governmental code requirements, preliminary designs for the project or portions thereof, and other criteria for the intended use of the project.
   i.  “Government entity” means the same as “governmental entity” defined in section 26.2 including, for the purpose of this section, the state board of regents.
   j.  “Proposal” means an offer by a design-builder in response to a request for proposals to enter into a design-build contract.
   k.  “Request for proposals” means the document by which a government entity solicits proposals for a design-build contract.
   l.  “Stipend” means a payment to a design-builder who did not score the highest number of points at the conclusion of phase three of the best-value selection process to defray the cost of participating in phase two of the selection process, and for the use of any intellectual properties obtained.
   2.  Notwithstanding any other law to the contrary, a government entity shall be authorized to enter into an alternative project delivery contract.
   3.  Construction manager-at-risk contracts.
   a.  A government entity shall publicly disclose its intent to use the construction manager-at-risk method and its selection criteria at least one week prior to publishing the request for proposals and request for statements of qualifications. The government entity shall publish its request for proposals and statements of qualifications. Before or concurrently with selecting a construction manager-at-risk, the government entity shall select or designate an engineer or architect who shall prepare the construction documents for the project and who shall comply with all state laws, as applicable. If the engineer or architect is not a full-time employee of the government entity, the government entity shall select the engineer or architect on a basis of demonstrated competence and qualifications. The government entity’s engineer or architect for a project may not serve, alone or in combination with another, as the construction manager-at-risk. This paragraph does not prohibit a government entity’s engineer or architect from providing customary construction-phase services under the engineer’s or architect’s original professional service agreement in accordance with applicable licensing laws.
   b.  The government entity may provide or contract for, independently of the construction manager-at-risk, inspection services, testing of construction materials, engineering, and verification of testing services necessary for acceptance of the project by the government entity.
   c.  The government entity shall select the construction manager-at-risk in a two-phase process.
   (1)  Phase one. The government entity shall prepare a request for statements of qualifications for the first phase. The request shall include general information on the project site, project scope, schedule, selection criteria, the time and place for receipt of statements of qualifications, and other information that may assist the government entity in its selection of a construction manager-at-risk. The selection criteria may include the construction manager-at-risk’s experience, past performance, safety record, proposed personnel and methodology, and other appropriate factors that demonstrate the capability of the construction manager-at-risk. The government entity shall not request fees or prices in phase one.
   (2)  Phase two. In phase two, the government entity shall issue a request for proposals. The government entity may request that no more than five nor fewer than two construction managers-at-risk, selected solely on the basis of qualifications, provide additional information, including the construction manager-at-risk’s project proposal, proposed fee, and its price for fulfilling the general conditions. Qualifications shall account for a minimum of forty percent of the evaluation. Cost shall account for a maximum of sixty percent of the evaluation.
   d.  For each phase, the government entity shall receive, publicly open, and read aloud the names of the construction managers submitting proposals or statements of qualifications, respectively. Within forty-five days after the date of opening the proposals or statements of qualification submissions, the government entity or its representative shall evaluate and rank each proposal or statement of qualifications submission in relation to the criteria set forth in the applicable request.
   e.  The government entity or its representative shall select the construction manager-at-risk that submits the proposal that offers the best value for the government entity based on the published selection criteria and on its ranking evaluation. The government entity or its representative shall first attempt to negotiate a contract with the selected construction manager-at-risk. If the government entity or its representative is unable to negotiate a satisfactory contract with the selected construction manager-at-risk, the government entity or its representative shall, formally and in writing, end negotiations with that construction manager-at-risk and proceed to negotiate with the next construction manager-at-risk in the order of the selection ranking until a contract is reached or negotiations with all ranked construction managers-at-risk end.
   f.  The selected construction manager-at-risk shall publicly advertise and receive bids or proposals from trade contractors or subcontractors for the performance of all major elements of the work other than the minor work that may be included in the general conditions. A construction manager-at-risk submits its sealed bid or sealed proposal in the same manner as all other trade contractors or subcontractors. All sealed bids or proposals shall be submitted at the time and location as specified in the advertisement for bids or proposals and shall be publicly opened and the identity of each bidder and their bid amount shall be read aloud.
   g.  The construction manager-at-risk and the government entity or its representative shall review all trade contractor, subcontractor, or construction manager-at-risk bids or proposals in a manner that does not disclose the contents of the bid or proposal during the selection process to a person not employed by the construction manager-at-risk, engineer, architect, or government entity involved with the project. If the construction manager-at-risk submitted bids or proposals, the government entity shall determine if the construction manager-at-risk’s bid or proposal offers the best value for the government entity. After all proposals have been evaluated and clarified, the award of all contracts shall be made public.
   h.  If the construction manager-at-risk reviews, evaluates, and recommends to the government entity a bid or proposal from a trade contractor or subcontractor but the government entity requires another bid or proposal to be accepted, the government entity shall compensate the construction manager-at-risk by a change in price, time, or guaranteed maximum cost for any additional cost and risk that the construction manager-at-risk may incur because of the government entity’s requirement that another bid or proposal be accepted.
   i.  If a selected trade contractor materially defaults in the performance of its work or fails to execute a contract with a construction manager-at-risk after being selected in accordance with this subsection, the construction manager-at-risk may itself, without advertising, fulfill the contract requirements or select a replacement trade contractor to fulfill the contract requirements.
   4.  In soliciting proposals for a design-build contract, a government entity shall determine the scope and level of detail required to permit design-builders to submit proposals in accordance with the request for proposals given the nature of the project.
   5.  In soliciting proposals for a design-build contract, a design criteria consultant shall be employed or retained by the government entity to assist in preparation of the design criteria package and request for proposals and perform any other additional service necessary to the project. The design criteria consultant may also evaluate construction regarding adherence of the design criteria. The design criteria consultant may not submit a proposal or furnish design or construction services for the design-build contract for which its services were sought.
   6.  A government entity shall publicly disclose its intent to solicit proposals for a design-build contract and its project design criteria package in the same manner that it would post notice for the competitive bidding process in section 26.3.
   7.  In soliciting proposals for a design-build contract, a government entity shall establish in the request for proposals a time, place, and other specific instructions for the receipt of proposals. Proposals not submitted in strict accordance with the instructions may be subject to rejection. Minor irregularities may be waived by the government entity.
   8.  A request for proposals shall be prepared for each design-build contract and shall contain, at minimum, the following elements:
   a.  The procedures to be followed for submitting proposals, the criteria for evaluating proposals and their relative weight, and the procedure for making awards.
   b.  The proposed terms and conditions for the design-build contract, if available.
   c.  The design criteria package.
   d.  A description of the drawings, specifications, or other information to be submitted with the proposal, with guidance as to the form and level of completeness of the drawings, specifications, or other information that will be acceptable.
   e.  A schedule for planned commencement and completion of the design-build contract, if available.
   f.  Budget limits for the design-build contract, if any.
   g.  Requirements including any available ratings for performance bonds, payment bonds, and insurance, if any.
   h.  The amount of the stipend, if any, that will be available.
   i.  Any other information that the government entity in its discretion chooses to request including but not limited to surveys, soil reports, drawings of existing structures, environmental studies, photographs, references to public records, or affirmative action and minority business enterprise requirements consistent with state and federal law.
   9.  A government entity seeking to enter a design-build contract shall solicit design-build proposals either by using a three-phase, best-value process or a two-phase, qualifications-based process.
   a.  A three-phase, best-value selection process shall be conducted as follows:
   (1)  Phase one. Request for statements of qualifications of design-builders.
   (a)  The government entity shall review submitted statements of the qualifications and assign points to each in accordance with this section and as set out in the instructions of the request for qualifications.
   (b)  All design-builders shall submit a statement of qualifications that shall include but not be limited to:
   (i)  Demonstrated ability to perform projects comparable in design, scope, and complexity.
   (ii)  References of owners for whom design-build projects, construction projects, or design projects have been performed.
   (iii)  Qualifications of personnel who will manage the design and construction aspects of the project.
   (iv)  The names and qualifications of the primary design consultants and the primary trade contractors with whom the design-builder proposes to subcontract or joint venture. The design-builder may not replace an identified contractor, subcontractor, design consultant, or subconsultant without the written approval of the government entity.
   (c)  The government entity shall evaluate the qualifications of all the design-builders who submitted statements of qualifications in accordance with the instructions of the request for qualifications. Qualified design-builders selected by the government entity may proceed to phase two of the selection process. The evaluation shall narrow the number of qualified design-builders submitting statements of qualifications to not fewer than two nor more than five. Under no circumstances shall price or fees be a part of the request for statements of qualifications criteria. Design-builders may be interviewed in either phase one or phase two of the process. Points assigned in phase one of the evaluation process shall not carry forward to phase two or phase three of the process. All qualified design-builders shall be ranked on points given in phases two and three only.
   (d)  Once no fewer than two and no more than five qualified design-builders have been selected, the government entity shall issue its request for proposals and provide the design-builders a specified amount of time in which to concurrently assemble phase two and phase three proposals.
   (2)  Phase two. Solicitation of technical proposals, including conceptual design for the project.
   (a)  A design-builder shall submit its design for the project to the level of detail required for the proposal along with such other information the government entity requests, which may include a schedule, qualifications, and experience.
   (b)  The ability of the design-builder to meet the schedule for completing a project as specified by the government entity may be considered as an element of evaluation in phase two.
   (c)  Under no circumstances shall the design proposal contain any reference to the cost of the proposal.
   (d)  The submitted designs shall be evaluated and assigned points in accordance with the requirements of the request for proposals. Phase two shall account for not less than forty percent and no more than sixty percent of the total point score as specified in the request for proposals.
   (3)  Phase three. Proposal of construction costs.
   (a)  The government entity shall invite the selected design-builders to participate in phase three. The design-builders shall provide a fixed cost of design and construction. The proposal shall be accompanied by bid security and any other items, such as statements of minority participation, as required by the request for proposals.
   (b)  Cost proposals shall be submitted in accordance with the instructions in the request for proposals. The government entity shall reject any proposal that is not submitted within the required time frame. Phase three shall account for not less than forty percent and no more than sixty percent of the total point score as specified in the request for proposals.
   (c)  Proposals for phase two and phase three shall be submitted concurrently at the time and place specified in the request for proposals, but in separate envelopes or other means of submission. The phase three cost proposals shall be opened and read aloud only after phase two design proposals have been evaluated and assigned points, ranked in order, and posted. Cost proposals shall be opened and read aloud at the time and place specified in the request for proposals. At the same time and place, the evaluation team shall make public its scoring of phase two. Cost proposals shall be evaluated in accordance with the requirements of the request for proposals.
   (d)  If the government entity determines that it is not in the best interest of the government entity to proceed with the project pursuant to the proposal offered by the design-builder with the highest total number of points, the government entity shall reject all proposals. In this event, all design-builders with lower point totals in phases two and three shall receive a stipend and the responsive design-builder with the highest point total shall receive an amount equal to two times the stipend. If the government entity decides to award the project, the responsive design-builder with the highest point total shall be awarded the contract.
   (e)  As an inducement to qualified design-builders, the government entity shall pay a stipend, the amount of which shall be established in the request for proposals, to each design-builder who submitted a proposal but was not accepted. Such stipend shall be no less than one-half of one percent of the total project budget. Upon payment of the stipend to such a design-builder, the government entity shall acquire a nonexclusive right to use the design submitted by the design-builder, and the design-builder shall have no further liability for the use of the design by the government entity in any manner. If the design-builder desires to retain all rights and interests in the design proposed, the design-builder shall forfeit the stipend.
   b.  A two-phase, qualifications-based selection process shall be conducted as follows:
   (1)  Phase one. Request for statements of qualifications of design-builders.
   (a)  The government entity must prepare a request for statements of qualifications. The request shall include general information on the project site, project scope, schedule, selection criteria, the time and place for receipt of statements of qualifications, and other information that may assist the government entity in its selection of a design-builder.
   (b)  The government entity shall state the selection criteria in the request for statements of qualifications. The selection criteria may include the design-builder’s experience, past performance, safety record, proposed personnel and methodology, and other appropriate factors that demonstrate the capability of the design-builder.
   (c)  Selection criteria will be ranked and assigned points for each category. Point assignments shall be included as a part of the request for statements of qualifications.
   (d)  The government entity shall not request fees or prices in phase one. Any submissions with disclosed fees or prices will be disqualified and removed from consideration.
   (2)  Phase two. Negotiations. 
   (a)  Negotiations shall be conducted, beginning with the design-builder ranked first. If a contract satisfactory and advantageous to the government entity can be negotiated at a price considered fair and reasonable and pursuant to contractual terms and conditions acceptable to the government entity, the award shall be made to that design-builder.
   (b)  In the event that a contract cannot be negotiated with the design-builder ranked first, negotiations with that design-builder shall be formally terminated. The government entity shall conduct negotiations with the next-highest-ranked design-builder and continue this process until a contract can be negotiated that meets the terms of subparagraph division (a) of this subparagraph.
    Sec. 2.  Section 262.34, subsection 1, Code 2019, is amended to read as follows:
   1.  a.  When the estimated cost of construction, repairs, or improvement of buildings or grounds under charge of the state board of regents, including construction, renovation, or repairs by a private party of a property to be lease-purchased by the board, exceeds one hundred thousand dollars, the board shall advertise for bids for the contemplated improvement or construction and shall let the work to the lowest responsible bidder. However, if in the judgment of the board bids received are not acceptable, the board may reject all bids and proceed with the construction, repair, or improvement by a method as the board may determine. All plans and specifications for repairs or construction, together with bids on the plans or specifications, shall be filed by the board and be open for public inspection. All bids submitted under this section shall be accompanied by a deposit of money, a certified check, or a credit union certified share draft in an amount as the board may prescribe.
   b.  The state board of regents may proceed with a construction, repair, or improvement by using an alternative project delivery contract in accordance with the provisions of section 26.17.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   Currently, most government entities must use a competitive bidding process for a construction project when that project is estimated to cost at least as much as a threshold defined in Code section 26.3. This bill allows a government entity to use an alternative project delivery contract in circumstances that normally require the government entity to use competitive bidding procedures. The bill defines a government entity to include the state board of regents.
   The bill creates two types of alternative project delivery contracts, each with specified requirements. The first alternative is the construction manager-at-risk contract. If a government entity opts to use a construction manager-at-risk contract, the government entity shall select an engineer or architect to prepare the construction documents for the project. That engineer or architect cannot serve as the construction manager-at-risk. The government entity shall use a two-phase process in selecting the construction manager-at-risk. The first phase shall include a request for qualifications and the government entity’s selection criteria. The government entity may select at least two but no more than five of the construction managers-at-risk who submitted qualifications to participate in the second phase, based solely on the qualifications of those construction managers-at-risk. In phase two, the construction managers-at-risk that the government entity selects will provide additional information, including the project proposal, costs, and fees. The government entity shall rank the construction managers-at-risk in a manner in which qualifications account for at least 40 percent of the evaluation and cost accounts for no more than 60 percent of the evaluation. The government entity shall select the construction manager-at-risk that offers the best value based on the evaluation criteria. If the two parties do not reach an agreement, the government entity shall proceed with the next highest-ranked construction manager-at-risk and follow this process until the government entity reaches a contract with a construction manager-at-risk. The selected construction manager-at-risk shall advertise for and receive sealed bids for proposals from trade contractors or subcontractors and publicly review those bids with the government entity in a manner that does not disclose the contents of the bid or proposal during the selection process to a person not employed by the construction manager-at-risk, engineer, architect, or government entity involved with the project. The construction manager-at-risk will select a bid in consultation with the government entity.
   The second type of alternative project delivery method is the design-build contract, which can select design-builders in either a three-phase or two-phase process. In the three-phase process, the government entity shall first request statements of qualifications from design-builders. The government entity shall select at least two but no more than five qualified design-builders to move on to phases two and three. In the second phase, the government entity shall solicit technical proposals and conceptual designs from the remaining design-builders. The government entity shall pay a stipend to any design-builder that participates in phase two but whose contract the entity does not select. The third phase involves the design-builders submitting construction costs. The government entity shall award points for each proposal. If the government entity chooses to award a contract, it shall award the contract to the design-builder with the highest point total.
   If the government entity uses the two-phase process, the government entity will request qualifications and include its selection criteria. The government entity will rank the qualifications of a design-builder. In the second phase, the government entity shall negotiate with the highest-ranked design-builder. If the two parties cannot agree to a contract with terms and conditions acceptable to the government entity, those negotiations shall be formally terminated and the government entity shall negotiate with the next highest-ranked design-builder. That process shall continue until the government entity can negotiate a contract with a design-builder with terms and conditions acceptable to the government entity.