H.F. 564 Section 1. Section 26.9, Code 2025, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 3. A governmental entity may reject the 3 lowest responsive bidder based on the bidder’s experience, 4 number of employees, and ability to finance the cost of the 5 public improvement. When rejecting the lowest responsive 6 bidder, a governmental entity shall state with specificity 7 the basis of the rejection. The lowest responsive bidder 8 shall have standing to maintain an action for an injunction, 9 mandamus, or declaratory relief challenging the governmental 10 entity’s actions as fraudulent, arbitrary, in bad faith, or an 11 abuse of discretion. 12 Sec. 2. Section 26A.2, Code 2025, is amended to read as 13 follows: 14 26A.2 Authorization. 15 Notwithstanding any other law to the contrary, a 16 governmental entity shall be authorized to enter into a 17 guaranteed maximum price contract for the construction of a 18 public improvement pursuant to this chapter if the estimated 19 cost of the project exceeds one hundred fifty million dollars . 20 Sec. 3. Section 26A.3, subsection 4, paragraphs a and c, 21 Code 2025, are amended to read as follows: 22 a. After considering the statements of qualifications, the 23 governmental entity shall issue a request for proposals to each 24 contractor who meets the qualifications , which shall include 25 selection and evaluation criteria. Each contractor issued a 26 request for proposals shall be permitted to submit a proposal 27 and each proposal submitted shall include the construction 28 manager-at-risk’s proposed fees and costs, including the 29 proposed costs for general conditions. The construction 30 manager-at-risk’s proposed fees and costs shall not contain 31 any form of contingency . The request for proposals shall be 32 subject to the requirements of section 73A.28 and the same 33 limitations applied to selection criteria for the request for 34 statements of qualifications in this chapter . 35 -1- LSB 2714YH (3) 91 sc/js 1/ 5

H.F. 564 c. The governmental entity or its representative shall 1 select the construction manager-at-risk that submits the 2 proposal that offers the best value lowest cost for the 3 governmental entity based on the published selection criteria 4 and on its ranking evaluation. The governmental entity 5 shall first attempt to negotiate a contract with the selected 6 construction manager-at-risk. If the governmental entity 7 is unable to negotiate a satisfactory contract with the 8 selected construction manager-at-risk, the governmental entity 9 shall, formally and in writing, end negotiations with that 10 construction manager-at-risk and proceed to negotiate with the 11 next construction manager-at-risk in the order of the selection 12 ranking until a contract is reached or negotiations with all 13 ranked construction managers-at-risk end. A governmental 14 entity may reject the lowest cost construction manager-at-risk 15 based on the construction manager-at-risk’s experience, number 16 of employees, and ability to finance the cost of the public 17 improvement. When rejecting the lowest cost construction 18 manager-at-risk, a governmental entity shall state with 19 specificity the basis of the rejection. The lowest cost 20 construction manager-at-risk shall have standing to maintain 21 an action for an injunction, mandamus, or declaratory relief 22 challenging the governmental entity’s actions as fraudulent, 23 arbitrary, in bad faith, or an abuse of discretion. 24 Sec. 4. Section 26A.3, subsection 5, paragraph a, 25 unnumbered paragraph 1, Code 2025, is amended to read as 26 follows: 27 If the estimated total cost of trade contract work and 28 materials packages is in excess of the adjusted competitive 29 bid threshold established in section 314.1B , the construction 30 manager-at-risk shall direct the designated licensed 31 engineer, architect, or landscape architect to prepare plans 32 and specifications and make the plans and specifications 33 available. The construction manager-at-risk shall advertise 34 for competitive bids, receive bids, prepare bid analyses, and 35 -2- LSB 2714YH (3) 91 sc/js 2/ 5

H.F. 564 award contracts to qualified firms on trade contract work and 1 materials packages in accordance with all of the following: 2 Sec. 5. Section 26A.3, subsection 5, paragraph a, 3 subparagraphs (3) and (4), Code 2025, are amended to read as 4 follows: 5 (3) The governmental entity and the construction 6 manager-at-risk shall participate in the bid review and 7 evaluation process. The governmental entity and the 8 construction manager-at-risk shall open, announce the name 9 of the contractor submitting a bid, and file all proposals 10 received, at the time and place specified in the notice to 11 bidders. All bids containing contingent amounts shall be 12 rejected. After the bids have been opened, reviewed, and 13 tabulated, the contracts shall be awarded to the lowest 14 responsive, responsible bidder. All awards and bids shall be 15 made available to the public. 16 (4) Notwithstanding any other provisions of this paragraph 17 to the contrary, the construction manager-at-risk may 18 self-perform work for a trade package that is below the 19 adjusted competitive bid threshold established in section 20 314.1B . If a trade package is in excess of the adjusted 21 competitive bid threshold established in section 314.1B , the 22 construction manager-at-risk shall notify the governmental 23 entity in writing of its intent to submit a bid proposal for 24 a trade package. In submission of a bid, the construction 25 manager-at-risk shall comply with the requirements of this 26 paragraph. The governmental entity shall receive the bids, 27 participate in, and provide oversight of all bid analyses 28 pertinent to the award of subcontracts or rejection of bids on 29 any trade package for which the construction manager-at-risk 30 submits a bid to self-perform. Where the construction 31 manager-at-risk is not the apparent low bidder, the government 32 shall be responsible for determining whether a recommendation 33 of award to the construction manager-at-risk is in the best 34 interests of the project. A construction manager-at-risk shall 35 -3- LSB 2714YH (3) 91 sc/js 3/ 5

H.F. 564 not be required to comply with bidding requirements for general 1 conditions as provided in the contract with the governmental 2 entity. If the construction manager-at-risk self-performs 3 the construction work, it shall adhere to any agreement it 4 may have with one or more labor organizations. However, the 5 construction manager-at-risk shall not be obligated to adhere 6 to any terms and conditions of any labor agreement with one or 7 more labor organizations for those trade contracts that are 8 not self-performed by the construction manager-at-risk for the 9 public improvement, and such terms shall be deemed void and 10 unenforceable. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill relates to contracts for the construction of a 15 public improvement. 16 The bill allows a governmental entity to reject the lowest 17 responsive bidder for the construction of a public improvement 18 under Code chapter 26 or the lowest cost construction 19 manager-at-risk for a guaranteed maximum price contract 20 under Code chapter 26A due to the bidder’s or construction 21 manager-at-risk’s experience, number of employees, or ability 22 to finance the cost of the public improvement. A rejected 23 bidder or construction manager-at-risk may maintain an action 24 against the governmental entity, challenging the governmental 25 entity’s action as fraudulent, arbitrary, in bad faith, or an 26 abuse of discretion. 27 Under current law, a governmental entity is authorized 28 to enter into a guaranteed maximum price contract for the 29 construction of a public improvement. The bill allows a 30 governmental entity to enter into such a contract only if the 31 estimated cost of the project exceeds $150 million. 32 The bill requires each proposal submitted by a construction 33 manager-at-risk to include the proposed costs for general 34 conditions. The proposed fees and costs may not contain a 35 -4- LSB 2714YH (3) 91 sc/js 4/ 5

H.F. 564 contingency. A bid containing a contingent amount must be 1 rejected. 2 The bill provides that a governmental entity or 3 representative must select the construction manager-at-risk 4 that submits the lowest cost proposal, based on the published 5 selection criteria and its ranking evaluation, rather than 6 the proposal that offers the best value. The bill strikes 7 a requirement that the governmental entity consider whether 8 awarding a contract to the construction manager-at-risk who was 9 not the apparent lowest bidder is in the best interest of the 10 project. 11 If the estimated cost of trade contract work and materials 12 packages exceeds the adjusted competitive bid threshold, the 13 bill requires the construction manager-at-risk to direct the 14 designated licensed engineer, architect, or landscape architect 15 to prepare and make available plans and specifications for the 16 public improvement project. 17 -5- LSB 2714YH (3) 91 sc/js 5/ 5