House Study Bill 616 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON RIZER) A BILL FOR An Act relating to alternative project delivery contract 1 methods for government entities. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5420YC (8) 87 js/rn
H.F. _____ Section 1. NEW SECTION . 26.17 Alternative project delivery 1 contracts. 2 1. As used in this section, unless the context otherwise 3 requires: 4 a. “Alternative project delivery contract” means either a 5 design-build or construction manager-at-risk contract. 6 b. “Construction manager-at-risk” means a sole 7 proprietorship, partnership, corporation, or other legal entity 8 that acts as a consultant to the government entity in the 9 development and design phases and then assumes the risk for 10 the construction, rehabilitation, alteration, or repair of a 11 project at the contracted fixed or guaranteed maximum price, 12 similar to a general contractor during the construction phase. 13 c. “Design-build” means a project delivery method subject to 14 a two or three-phase selection process for which the design and 15 construction services are furnished under one contract. 16 d. “Design-build contract” means a contract between 17 a government entity and a design-builder to furnish the 18 architecture, engineering, and related services as required for 19 a given public project, and to furnish the labor, materials, 20 and other construction services for the same public project. 21 A design-build contract may be conditioned upon subsequent 22 refinements in scope and price, and may permit the government 23 entity to make changes in the scope of the project without 24 invalidating the design-build contract. 25 e. “Design-build project” means the design, construction, 26 alteration, addition, remodeling, or improvement of any 27 buildings, infrastructure, or facilities under contract with a 28 government entity. 29 f. “Design-builder” means any individual, partnership, 30 joint venture, or corporation subject to a best-value or 31 qualification-based selection that offers to provide or 32 provides design services and general contracting services 33 through a design-build contract in which services within 34 the scope of the practice of professional architecture or 35 -1- LSB 5420YC (8) 87 js/rn 1/ 15
H.F. _____ engineering are performed respectively by a licensed architect 1 or licensed engineer and in which services within the scope of 2 general contracting are performed by a general contractor or 3 other legal entity that furnishes architecture or engineering 4 services and construction services either directly or through 5 subcontracts or joint ventures. 6 g. “Design criteria consultant” means a person, corporation, 7 partnership, or other legal entity that meets any of the 8 following requirements: 9 (1) Is duly licensed and authorized to practice 10 architecture within the state of Iowa. 11 (2) Has a design-build professional certification or equal 12 training to be a design criteria consultant. 13 (3) In the case of an engineered project, is duly licensed 14 as a professional engineer within the state of Iowa within 15 the discipline of the specific design-build project, and is 16 employed by or contracted by the government entity to assist 17 the government entity in the development of project design 18 criteria, requests for proposals, and any additional services 19 requested by the government entity to represent its interests 20 in relation to a project. 21 h. “Design criteria package” means the performance-oriented 22 program, scope, and specifications for the design-build project 23 sufficient to permit a design-builder to prepare a response to 24 a government entity’s request for proposals for a design-build 25 project, which may include capacity, durability, standards, 26 ingress and egress requirements, performance requirements, 27 description of the site, surveys, soil and environmental 28 information concerning the site, interior space requirements, 29 material quality standards, design and construction schedules, 30 site development requirements, provisions for utilities, 31 storm water retention and disposal, parking requirements, 32 applicable governmental code requirements, preliminary designs 33 for the project or portions thereof, and other criteria for the 34 intended use of the project. 35 -2- LSB 5420YC (8) 87 js/rn 2/ 15
H.F. _____ i. “Government entity” means the same as “governmental 1 entity” defined in section 26.2 including, for the purpose of 2 this section, the state board of regents. 3 j. “Proposal” means an offer by a design-builder in response 4 to a request for proposals to enter into a design-build 5 contract. 6 k. “Request for proposals” means the document by which 7 a government entity solicits proposals for a design-build 8 contract. 9 l. “Stipend” means a payment to a design-builder who did not 10 score the highest number of points at the conclusion of phase 11 three of the best-value selection process to defray the cost of 12 participating in phase two of the selection process, and for 13 the use of any intellectual properties obtained. 14 2. Notwithstanding any other law to the contrary, a 15 government entity shall be authorized to enter into an 16 alternative project delivery contract. 17 3. Construction manager-at-risk contracts. 18 a. A government entity shall publicly disclose its intent to 19 use the construction manager-at-risk method and its selection 20 criteria at least one week prior to publishing the request 21 for proposals and request for statements of qualifications. 22 The government entity shall publish its request for proposals 23 and statements of qualifications. Before or concurrently 24 with selecting a construction manager-at-risk, the government 25 entity shall select or designate an engineer or architect 26 who shall prepare the construction documents for the project 27 and who shall comply with all state laws, as applicable. If 28 the engineer or architect is not a full-time employee of the 29 government entity, the government entity shall select the 30 engineer or architect on a basis of demonstrated competence and 31 qualifications. The government entity’s engineer or architect 32 for a project may not serve, alone or in combination with 33 another, as the construction manager-at-risk. This paragraph 34 does not prohibit a government entity’s engineer or architect 35 -3- LSB 5420YC (8) 87 js/rn 3/ 15
H.F. _____ from providing customary construction-phase services under 1 the engineer’s or architect’s original professional service 2 agreement in accordance with applicable licensing laws. 3 b. The government entity may provide or contract for, 4 independently of the construction manager-at-risk, inspection 5 services, testing of construction materials, engineering, and 6 verification of testing services necessary for acceptance of 7 the project by the government entity. 8 c. The government entity shall select the construction 9 manager-at-risk in a two-phase process. 10 (1) Phase one. The government entity shall prepare a 11 request for statements of qualifications for the first phase. 12 The request shall include general information on the project 13 site, project scope, schedule, selection criteria, the time 14 and place for receipt of statements of qualifications, and 15 other information that may assist the government entity in its 16 selection of a construction manager-at-risk. The selection 17 criteria may include the construction manager-at-risk’s 18 experience, past performance, safety record, proposed personnel 19 and methodology, and other appropriate factors that demonstrate 20 the capability of the construction manager-at-risk. The 21 government entity shall not request fees or prices in phase 22 one. 23 (2) Phase two. In phase two, the government entity 24 shall issue a request for proposals. The government entity 25 may request that no more than five nor fewer than two 26 construction managers-at-risk, selected solely on the basis 27 of qualifications, provide additional information, including 28 the construction manager-at-risk’s project proposal, proposed 29 fee, and its price for fulfilling the general conditions. 30 Qualifications shall account for a minimum of forty percent 31 of the evaluation. Cost shall account for a maximum of sixty 32 percent of the evaluation. 33 d. For each phase, the government entity shall receive, 34 publicly open, and read aloud the names of the construction 35 -4- LSB 5420YC (8) 87 js/rn 4/ 15
H.F. _____ managers submitting proposals. Within forty-five days 1 after the date of opening the proposals or statements of 2 qualification submissions, the government entity or its 3 representative shall evaluate and rank each proposal or 4 statement of qualifications submission in relation to the 5 criteria set forth in the applicable request. 6 e. The government entity or its representative shall 7 select the construction manager-at-risk that submits the 8 proposal that offers the best value for the government entity 9 based on the published selection criteria and on its ranking 10 evaluation. The government entity or its representative 11 shall first attempt to negotiate a contract with the selected 12 construction manager-at-risk. If the government entity or its 13 representative is unable to negotiate a satisfactory contract 14 with the selected construction manager-at-risk, the government 15 entity or its representative shall, formally and in writing, 16 end negotiations with that construction manager-at-risk and 17 proceed to negotiate with the next construction manager-at-risk 18 in the order of the selection ranking until a contract 19 is reached or negotiations with all ranked construction 20 managers-at-risk end. 21 f. The selected construction manager-at-risk shall publicly 22 advertise and receive bids or proposals from trade contractors 23 or subcontractors for the performance of all major elements 24 of the work other than the minor work that may be included 25 in the general conditions. A construction manager-at-risk 26 submits its sealed bid or sealed proposal for those portions 27 of the work in the same manner as all other trade contractors 28 or subcontractors. All sealed bids or proposals shall 29 be submitted at the time and location as specified in the 30 advertisement for bids or proposals and shall be publicly 31 opened and the identity of each bidder and their bid amount 32 shall be read aloud. 33 g. The construction manager-at-risk and the government 34 entity or its representative shall review all trade contractor, 35 -5- LSB 5420YC (8) 87 js/rn 5/ 15
H.F. _____ subcontractor, or construction manager-at-risk bids or 1 proposals in a manner that does not disclose the contents of 2 the bid or proposal during the selection process to a person 3 not employed by the construction manager-at-risk, engineer, 4 architect, or government entity involved with the project. If 5 the construction manager-at-risk submitted bids or proposals, 6 the government entity shall determine if the construction 7 manager-at-risk’s bid or proposal offers the best value for the 8 government entity. After all proposals have been evaluated and 9 clarified, the award of all contracts shall be made public. 10 h. If the construction manager-at-risk reviews, evaluates, 11 and recommends to the government entity a bid or proposal from 12 a trade contractor or subcontractor but the government entity 13 requires another bid or proposal to be accepted, the government 14 entity shall compensate the construction manager-at-risk by 15 a change in price, time, or guaranteed maximum cost for any 16 additional cost and risk that the construction manager-at-risk 17 may incur because of the government entity’s requirement that 18 another bid or proposal be accepted. 19 i. If a selected trade contractor materially defaults in the 20 performance of its work or fails to execute a contract with a 21 construction manager-at-risk after being selected in accordance 22 with this subsection, the construction manager-at-risk may 23 itself, without advertising, fulfill the contract requirements 24 or select a replacement trade contractor to fulfill the 25 contract requirements. 26 4. In soliciting proposals for a design-build contract, 27 a government entity shall determine the scope and level of 28 detail required to permit design-builders to submit proposals 29 in accordance with the request for proposals given the nature 30 of the project. 31 5. In soliciting proposals for a design-build contract, a 32 design criteria consultant shall be employed or retained by 33 the government entity to assist in preparation of the design 34 criteria package and request for proposals and perform any 35 -6- LSB 5420YC (8) 87 js/rn 6/ 15
H.F. _____ other additional service necessary to the project. The design 1 criteria consultant may also evaluate construction regarding 2 adherence of the design criteria. The design criteria 3 consultant may not submit a proposal or furnish design or 4 construction services for the design-build contract for which 5 its services were sought. 6 6. A government entity shall publicly disclose its intent to 7 solicit proposals for a design-build contract and its project 8 design criteria package in the same manner that it would post 9 notice for the competitive bidding process in section 26.3. 10 7. In soliciting proposals for a design-build contract, a 11 government entity shall establish in the request for proposals 12 a time, place, and other specific instructions for the receipt 13 of proposals. Proposals not submitted in strict accordance 14 with the instructions may be subject to rejection. Minor 15 irregularities may be waived by the government entity. 16 8. A request for proposals shall be prepared for each 17 design-build contract and shall contain, at minimum, the 18 following elements: 19 a. The procedures to be followed for submitting proposals, 20 the criteria for evaluating proposals and their relative 21 weight, and the procedure for making awards. 22 b. The proposed terms and conditions for the design-build 23 contract, if available. 24 c. The design criteria package. 25 d. A description of the drawings, specifications, or other 26 information to be submitted with the proposal, with guidance 27 as to the form and level of completeness of the drawings, 28 specifications, or other information that will be acceptable. 29 e. A schedule for planned commencement and completion of the 30 design-build contract, if available. 31 f. Budget limits for the design-build contract, if any. 32 g. Requirements including any available ratings for 33 performance bonds, payment bonds, and insurance, if any. 34 h. The amount of the stipend, if any, which will be 35 -7- LSB 5420YC (8) 87 js/rn 7/ 15
H.F. _____ available. 1 i. Any other information that the government entity in 2 its discretion chooses to request including but not limited 3 to surveys, soil reports, drawings of existing structures, 4 environmental studies, photographs, references to public 5 records, or affirmative action and minority business enterprise 6 requirements consistent with state and federal law. 7 9. A government entity shall solicit design-build proposals 8 either by using a three-phase, best-value process or a 9 two-phase, qualifications-based process. 10 a. A three-phase, best-value selection process shall be 11 conducted as follows: 12 (1) Phase one. Request for statements of qualifications of 13 design-builders. 14 (a) The government entity shall review submitted statements 15 of the qualifications and assign points to each in accordance 16 with this section and as set out in the instructions of the 17 request for qualifications. 18 (b) All design-builders shall submit a statement of 19 qualifications that shall include but not be limited to: 20 (i) Demonstrated ability to perform projects comparable in 21 design, scope, and complexity. 22 (ii) References of owners for whom design-build projects, 23 construction projects, or design projects have been performed. 24 (iii) Qualifications of personnel who will manage the 25 design and construction aspects of the project. 26 (iv) The names and qualifications of the primary design 27 consultants and the primary trade contractors with whom the 28 design-builder proposes to subcontract or joint venture. The 29 design-builder may not replace an identified contractor, 30 subcontractor, design consultant, or subconsultant without the 31 written approval of the government entity. 32 (c) The government entity shall evaluate the qualifications 33 of all the design-builders who submitted statements of 34 qualifications in accordance with the instructions of the 35 -8- LSB 5420YC (8) 87 js/rn 8/ 15
H.F. _____ request for qualifications. Qualified design-builders 1 selected by the government entity may proceed to phase two 2 of the selection process. The evaluation shall narrow the 3 number of qualified design-builders submitting statements of 4 qualifications to not fewer than two nor more than five. Under 5 no circumstances shall price or fees be a part of the request 6 for statements of qualifications criteria. Design-builders may 7 be interviewed in either phase one or phase two of the process. 8 Points assigned in phase one of the evaluation process shall 9 not carry forward to phase two or phase three of the process. 10 All qualified design-builders shall be ranked on points given 11 in phases two and three only. 12 (d) Once no fewer than two and no more than five qualified 13 design-builders have been selected, the government entity shall 14 issue its request for proposals and provide the design-builders 15 a specified amount of time in which to concurrently assemble 16 phase two and phase three proposals. 17 (2) Phase two. Solicitation of technical proposals, 18 including conceptual design for the project. 19 (a) A design-builder shall submit its design for the project 20 to the level of detail required for the proposal along with 21 such other information the government entity requests, which 22 may include a schedule, qualifications, and experience. 23 (b) The ability of the design-builder to meet the schedule 24 for completing a project as specified by the government entity 25 may be considered as an element of evaluation in phase two. 26 (c) Under no circumstances shall the design proposal 27 contain any reference to the cost of the proposal. 28 (d) The submitted designs shall be evaluated and assigned 29 points in accordance with the requirements of the request for 30 proposals. Phase two shall account for not less than forty 31 percent and no more than sixty percent of the total point score 32 as specified in the request for proposals. 33 (3) Phase three. Proposal of construction costs. 34 (a) The government entity shall invite the selected 35 -9- LSB 5420YC (8) 87 js/rn 9/ 15
H.F. _____ design-builders to participate in phase three. The 1 design-builders shall provide a fixed cost of design and 2 construction. The proposal shall be accompanied by bid 3 security and any other items, such as statements of minority 4 participation, as required by the request for proposals. 5 (b) Cost proposals shall be submitted in accordance with 6 the instructions in the request for proposals. The government 7 entity shall reject any proposal that is not submitted within 8 the required time frame. Phase three shall account for not 9 less than forty percent and no more than sixty percent of the 10 total point score as specified in the request for proposals. 11 (c) Proposals for phase two and phase three shall be 12 submitted concurrently at the time and place specified in the 13 request for proposals, but in separate envelopes or other means 14 of submission. The phase three cost proposals shall be opened 15 and read aloud only after phase two design proposals have been 16 evaluated and assigned points, ranked in order, and posted. 17 Cost proposals shall be opened and read aloud at the time and 18 place specified in the request for proposals. At the same time 19 and place, the evaluation team shall make public its scoring 20 of phase two. Cost proposals shall be evaluated in accordance 21 with the requirements of the request for proposals. 22 (d) If the government entity determines that it is not in 23 the best interest of the government entity to proceed with the 24 project pursuant to the proposal offered by the design-builder 25 with the highest total number of points, the government entity 26 shall reject all proposals. In this event, all design-builders 27 with lower point totals in phases two and three shall receive 28 a stipend and the responsive design-builder with the highest 29 point total shall receive an amount equal to two times the 30 stipend. If the government entity decides to award the 31 project, the responsive design-builder with the highest point 32 total shall be awarded the contract. 33 (e) As an inducement to qualified design-builders, the 34 government entity shall pay a stipend, the amount of which 35 -10- LSB 5420YC (8) 87 js/rn 10/ 15
H.F. _____ shall be established in the request for proposals, to each 1 design-builder who submitted a proposal but was not accepted. 2 Such stipend shall be no less than one-half of one percent 3 of the total project budget. Upon payment of the stipend to 4 such a design-builder, the government entity shall acquire 5 a nonexclusive right to use the design submitted by the 6 design-builder, and the design-builder shall have no further 7 liability for the use of the design by the government entity in 8 any manner. If the design-builder desires to retain all rights 9 and interests in the design proposed, the design-builder shall 10 forfeit the stipend. 11 b. A two-phase, qualifications-based selection process shall 12 be conducted as follows: 13 (1) Phase one. Request for statements of qualifications of 14 design-builders. 15 (a) The government entity must prepare a request for 16 statements of qualifications. The request shall include 17 general information on the project site, project scope, 18 schedule, selection criteria, the time and place for receipt 19 of statements of qualifications, and other information 20 that may assist the government entity in its selection of a 21 design-builder. 22 (b) The government entity shall state the selection 23 criteria in the request for statements of qualifications. The 24 selection criteria may include the design-builder’s experience, 25 past performance, safety record, proposed personnel and 26 methodology, and other appropriate factors that demonstrate the 27 capability of the design-builder. 28 (c) Selection criteria will be ranked and assigned points 29 for each category. Point assignments shall be included as a 30 part of the request for statements of qualifications. 31 (d) The government entity shall not request fees or prices 32 in phase one. Any submissions with disclosed fees or prices 33 will be disqualified and removed from consideration. 34 (2) Phase two. Negotiations. 35 -11- LSB 5420YC (8) 87 js/rn 11/ 15
H.F. _____ (a) Negotiations shall be conducted, beginning with the 1 design-builder ranked first. If a contract satisfactory 2 and advantageous to the government entity can be negotiated 3 at a price considered fair and reasonable and pursuant to 4 contractual terms and conditions acceptable to the government 5 entity, the award shall be made to that design-builder. 6 (b) In the event that a contract cannot be negotiated 7 with the design-builder ranked first, negotiations with that 8 design-builder shall be formally terminated. The government 9 entity shall conduct negotiations with the next-highest-ranked 10 design-builder and continue this process until a contract can 11 be negotiated that meets the terms of subparagraph division (a) 12 of this subparagraph. 13 Sec. 2. Section 262.34, subsection 1, Code 2018, is amended 14 to read as follows: 15 1. a. When the estimated cost of construction, repairs, 16 or improvement of buildings or grounds under charge of the 17 state board of regents exceeds one hundred thousand dollars, 18 the board shall advertise for bids for the contemplated 19 improvement or construction and shall let the work to the 20 lowest responsible bidder. However, if in the judgment of 21 the board bids received are not acceptable, the board may 22 reject all bids and proceed with the construction, repair, or 23 improvement by a method as the board may determine. All plans 24 and specifications for repairs or construction, together with 25 bids on the plans or specifications, shall be filed by the 26 board and be open for public inspection. All bids submitted 27 under this section shall be accompanied by a deposit of money, 28 a certified check, or a credit union certified share draft in 29 an amount as the board may prescribe. 30 b. The state board of regents may proceed with a 31 construction, repair, or improvement by using an alternative 32 project delivery contract in accordance with the provisions of 33 section 26.17. 34 EXPLANATION 35 -12- LSB 5420YC (8) 87 js/rn 12/ 15
H.F. _____ The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 Currently, a government entity must use a competitive 3 bidding process for a construction project when that project 4 is estimated to cost at least as much as a threshold defined 5 in Code section 26.3. This bill allows a government entity to 6 use an alternative project delivery contract in circumstances 7 that normally require the government entity to use competitive 8 bidding procedures. The bill defines a government entity to 9 include the state board of regents. 10 The bill creates two types of alternative project delivery 11 contracts, each with specified requirements. The first 12 alternative is the design-build contract, which can select 13 design-builders in either a three-phase or two-phase process. 14 In the three-phase process, the government entity shall first 15 request statements of qualifications from design-builders. 16 The government entity shall select at least two but no more 17 than five qualified design-builders to move on to phases two 18 and three. In the second phase, the government entity shall 19 solicit technical proposals and conceptual designs from the 20 remaining design-builders. The government entity shall pay a 21 stipend to any design-builder that participates in phase two 22 but whose contract the entity does not select. The third phase 23 involves the design-builders submitting construction costs. 24 The government entity shall award points for each proposal. If 25 the government entity chooses to award a contract, it shall 26 award the contract to the design-builder with the highest point 27 total. 28 If the government entity uses the two-phase process, the 29 government entity will request qualifications and include 30 its selection criteria. The government entity will rank the 31 qualifications of a design-builder. In the second phase, the 32 government entity shall negotiate with the highest-ranked 33 design-builder. If the two parties cannot agree to a contract 34 with terms and conditions acceptable to the government 35 -13- LSB 5420YC (8) 87 js/rn 13/ 15
H.F. _____ entity, those negotiations shall be formally terminated 1 and the government entity shall negotiate with the next 2 highest-ranked design-builder. That process shall continue 3 until the government entity can negotiate a contract with a 4 design-builder with terms and conditions acceptable to the 5 government entity. 6 The second type of alternative project delivery method is 7 the construction manager-at-risk contract. If a government 8 entity opts to use a construction manager-at-risk contract, 9 the government entity shall select an engineer or architect 10 to prepare the construction documents for the project. That 11 engineer or architect cannot serve as the construction 12 manager-at-risk. The government entity shall use a two-phase 13 process in selecting the construction manager-at-risk. The 14 first phase shall include a request for qualifications and 15 the government entity’s selection criteria. The government 16 entity may select and interview at least two but no more 17 than five of the construction managers-at-risk who submitted 18 qualifications to participate in the second phase, based solely 19 on the qualifications of those construction managers-at-risk. 20 In phase two, the construction managers-at-risk that the 21 government entity selects to interview will provide additional 22 information, including the project proposal, costs, and 23 fees. The government entity shall rank the construction 24 managers-at-risk in a manner in which qualifications account 25 for at least 40 percent of the evaluation and cost accounts 26 for no more than 60 percent of the evaluation. The government 27 entity shall select the construction manager-at-risk that 28 offers the best value based on the evaluation criteria. If 29 the two parties do not reach an agreement, the government 30 entity shall proceed with the next highest-ranked construction 31 manager-at-risk and follow this process until the government 32 entity reaches a contract with a construction manager-at-risk. 33 The selected construction manager-at-risk shall advertise for 34 and receive sealed bids for proposals from trade contractors 35 -14- LSB 5420YC (8) 87 js/rn 14/ 15
H.F. _____ or subcontractors and publicly review those bids with the 1 government entity in a manner that does not disclose the 2 contents of the bid or proposal during the selection process 3 to a person not employed by the construction manager-at-risk, 4 engineer, architect, or government entity involved with the 5 project. The construction manager-at-risk will select a bid in 6 consultation with the government entity. 7 -15- LSB 5420YC (8) 87 js/rn 15/ 15