Senate File 2364 - Reprinted SENATE FILE 2364 BY COMMITTEE ON STATE GOVERNMENT (SUCCESSOR TO SSB 3153) (As Amended and Passed by the Senate June 4, 2020 ) A BILL FOR An Act relating to a construction manager-at-risk commercial 1 construction alternative delivery method and prohibiting 2 certain other alternative delivery methods in the public 3 sector and including effective date and applicability 4 provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 SF 2364 (2) 88 ec/rn

S.F. 2364 DIVISION I 1 PUBLIC CONSTRUCTION BIDDING REQUIREMENTS 2 Section 1. Section 26.2, subsection 3, paragraph b, 3 subparagraph (5), Code 2020, is amended to read as follows: 4 (5) Construction or repair or maintenance work performed 5 for a city utility under chapter 388 when such work is 6 performed by its employees or performed for a rural water 7 district under chapter 357A by its employees when such work 8 relates to existing utility infrastructure or establishing 9 connections to existing utility infrastructure. For purposes 10 of this subparagraph, “utility infrastructure” includes 11 facilities used for the storage, collection, disposal, 12 treatment, generation, transmission, or distribution of water, 13 sewage, waste, electricity, gas, or telecommunications service . 14 Sec. 2. Section 26.2, subsection 3, paragraph b, Code 2020, 15 is amended by adding the following new subparagraph: 16 NEW SUBPARAGRAPH . (6) Construction or repair or 17 maintenance work performed for a rural water district under 18 chapter 357A by its employees. 19 Sec. 3. Section 26.4, Code 2020, is amended to read as 20 follows: 21 26.4 Exemptions from competitive bids and quotations 22 Architectural and engineering services —— exemptions —— 23 prohibitions . 24 1. Architectural, landscape architectural, or engineering 25 design services procured for a public improvement are not 26 subject to sections 26.3 and 26.14 . 27 2. Fee-based selection of an architect, landscape 28 architect, or engineer for a public improvement shall be 29 prohibited. 30 Sec. 4. Section 262.34, Code 2020, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 6. Notwithstanding any provision of this 33 chapter to the contrary, the state board of regents shall 34 not be authorized to enter into a design-build contract to 35 -1- SF 2364 (2) 88 ec/rn 1/ 9

S.F. 2364 construct, repair, or improve buildings or grounds. For 1 purposes of this subsection, “design-build contract” means 2 a single contract providing for both design services and 3 construction services that may include maintenance, operations, 4 preconstruction, and other related services. 5 Sec. 5. EFFECTIVE DATE. The following, being deemed of 6 immediate importance, takes effect upon enactment: 7 The section of this division of this Act amending section 8 262.34. 9 Sec. 6. APPLICABILITY. The section of this division of 10 this Act amending section 262.34 does not apply to projects 11 using design-build if an architect has entered into a contract 12 to work with the state board of regents on a project using 13 design-build prior to the effective date of the section of this 14 division of this Act amending section 262.34. 15 DIVISION II 16 GUARANTEED MAXIMUM PRICE CONTRACTS 17 Sec. 7. NEW SECTION . 26A.1 Definitions. 18 As used in this chapter, unless the context clearly 19 indicates otherwise: 20 1. “Construction manager-at-risk” means a sole 21 proprietorship, partnership, corporation, or other legal entity 22 that assumes the risk for the construction, rehabilitation, 23 alteration, or repair of a project and provides consultant 24 services to the government entity in the development and design 25 phases, working collaboratively with the design professionals 26 involved. 27 2. “General conditions” means work which will not be 28 incorporated into the completed project. This work includes 29 but is not limited to job site cleaning and temporary 30 structures. 31 3. “ Governmental entity” means the state, political 32 subdivisions of the state, public school corporations, and all 33 officers, boards, or commissions empowered by law to enter 34 into contracts for the construction of public improvements, 35 -2- SF 2364 (2) 88 ec/rn 2/ 9

S.F. 2364 including the state board of regents. 1 4. “Guaranteed maximum price contract” means the agreed 2 to fixed or guaranteed maximum price pursuant to a contract 3 entered into by the construction manager-at-risk and the 4 governmental entity. 5 5. “Public improvement” means as defined in section 26.2. 6 6. “Repair or maintenance work” means as defined in section 7 26.2. 8 7. “Self-perform” means work that is executed by 9 the construction manager-at-risk without the use of a 10 subcontractor. Electrical, mechanical, fire suppression, and 11 plumbing work may not be self-performed. 12 Sec. 8. NEW SECTION . 26A.2 Authorization. 13 Notwithstanding any other law to the contrary, a 14 governmental entity shall be authorized to enter into a 15 guaranteed maximum price contract for the construction of a 16 public improvement pursuant to this chapter. 17 Sec. 9. NEW SECTION . 26A.3 Guaranteed maximum price 18 contract —— process. 19 1. A governmental entity shall publicly disclose the 20 governmental entity’s intent to enter into a guaranteed 21 maximum price contract and the governmental entity’s selection 22 criteria at least fourteen days prior to publishing a request 23 for statements of qualifications. Public disclosure shall 24 be in a relevant contractor plan room service with statewide 25 circulation, a relevant construction lead generating service 26 with statewide circulation, and on an internet site sponsored 27 by either a governmental entity or a statewide association that 28 represents the governmental entity. 29 2. The governmental entity shall select or designate an 30 engineer licensed under chapter 542B, a landscape architect 31 licensed under chapter 544B, or an architect licensed 32 under chapter 544A by utilizing a quality-based selection 33 process. Fee-based selection of the engineer, landscape 34 architect, or architect shall be prohibited. The engineer, 35 -3- SF 2364 (2) 88 ec/rn 3/ 9

S.F. 2364 landscape architect, or architect selected or designated by 1 the government entity under this subsection shall have the 2 responsibility of preparing construction documents for the 3 project and shall review the construction for conformance with 4 design intent. 5 3. a. (1) The governmental entity shall prepare a request 6 for statements of qualifications. The request shall include 7 general information on the project site, project scope, 8 schedule, selection criteria, and the time and place for 9 receipt of statements of qualifications. Selection criteria 10 and general information included in the request for statements 11 of qualifications may be developed in coordination with 12 the engineer, landscape architect, or architect selected or 13 designated by the governmental entity as provided under this 14 section. 15 (2) Selection criteria may include the contractor’s 16 experience undertaking projects of similar size and scope 17 in either the public or private sector, past performance, 18 safety record, proposed personnel, and proposed methodology. 19 Selection criteria shall include experience in both the public 20 and the private sector. Selection criteria shall not include 21 specific delivery methods, including guaranteed maximum price 22 projects. In addition, selection criteria shall not include 23 training, testing, or other certifications that may only 24 be obtained through organized labor affiliations or other 25 limited-membership organizations. 26 (3) A request for statements of qualifications under this 27 subsection shall be subject to the requirements of section 28 73A.28. In addition, a governmental entity shall not by 29 ordinance, rule, or any other action relating to the request 30 for qualifications stipulate criteria that would directly 31 or indirectly restrict the selection of a construction 32 manager-at-risk to any predetermined class of providers based 33 on labor organization affiliation or any other criteria other 34 than that allowed pursuant to this paragraph. 35 -4- SF 2364 (2) 88 ec/rn 4/ 9

S.F. 2364 b. The request for statements of qualifications shall be 1 posted not less than thirteen and not more than forty-five days 2 before the date for response in a relevant contractor plan room 3 service with statewide circulation, in a relevant construction 4 lead generating service with statewide circulation, and on an 5 internet site sponsored by either a governmental entity or a 6 statewide association that represents the governmental entity. 7 If circumstances beyond the control of the governmental 8 entity require postponement and there are no changes to the 9 project’s contract documents, a notice of the revised date 10 shall be posted not less than four and not more than forty-five 11 days before the revised date for answering the request for 12 proposals and statements of qualifications in a relevant 13 contractor plan room service with statewide circulation, in a 14 relevant construction lead generating service with statewide 15 circulation, and on an internet site sponsored by either a 16 government entity or a statewide association that represents 17 the governmental entity. 18 c. The governmental entity shall receive, publicly open, and 19 read aloud the names of the contractors submitting statements 20 of qualifications. Within forty-five days after the date of 21 opening the statements of qualifications submissions, the 22 governmental entity shall evaluate each proposal or statement 23 of qualifications submission in relation to the criteria set 24 forth in the request. 25 4. a. After considering the statements of qualifications, 26 the governmental entity shall issue a request for proposals 27 to each contractor who meets the qualifications which shall 28 include selection and evaluation criteria. Each contractor 29 issued a request for proposals shall be permitted to submit 30 a proposal and each proposal submitted shall include the 31 construction manager-at-risk’s proposed fees. The request 32 for proposals shall be subject to the requirements of section 33 73A.28 and the same limitations applied to selection criteria 34 for the request for statements of qualifications in this 35 -5- SF 2364 (2) 88 ec/rn 5/ 9

S.F. 2364 chapter. 1 b. The governmental entity shall receive, publicly open, and 2 read aloud the names of the contractors submitting proposals. 3 Within forty-five days after the date of opening the proposals, 4 the governmental entity shall evaluate and rank each proposal 5 in relation to the criteria set forth in the applicable 6 request. 7 c. The governmental entity or its representative shall 8 select the construction manager-at-risk that submits the 9 proposal that offers the best value for the governmental 10 entity based on the published selection criteria and on 11 its ranking evaluation. The governmental entity shall 12 first attempt to negotiate a contract with the selected 13 construction manager-at-risk. If the governmental entity 14 is unable to negotiate a satisfactory contract with the 15 selected construction manager-at-risk, the governmental entity 16 shall, formally and in writing, end negotiations with that 17 construction manager-at-risk and proceed to negotiate with the 18 next construction manager-at-risk in the order of the selection 19 ranking until a contract is reached or negotiations with all 20 ranked construction managers-at-risk end. 21 d. The governmental entity shall make available to the 22 public the final scoring and ranking evaluation of the request 23 for proposals received. 24 5. a. If the estimated total cost of trade contract work 25 and materials packages is in excess of the adjusted competitive 26 bid threshold established in section 314.1B, the construction 27 manager-at-risk shall advertise for competitive bids, receive 28 bids, prepare bid analyses, and award contracts to qualified 29 firms on trade contract work and materials packages in 30 accordance with all of the following: 31 (1) The construction manager-at-risk shall prepare a 32 request for statements of qualifications. The request shall 33 include general information on the project site, project 34 scope, schedule, selection criteria, and the time and place 35 -6- SF 2364 (2) 88 ec/rn 6/ 9

S.F. 2364 for receipt of statements of qualifications. The construction 1 manager-at-risk shall provide public notice of the request for 2 statements of qualifications in a relevant contractor plan room 3 service with statewide circulation, a relevant construction 4 lead generating service with statewide circulation, and on an 5 internet site sponsored by either a governmental entity or a 6 statewide association that represents the governmental entity. 7 The request for statements of qualifications shall be posted 8 not less than thirteen and not more than forty-five days before 9 the date for response. 10 (2) (a) The construction manager-at-risk shall utilize 11 objective prequalification criteria in the request for 12 statements of qualifications. All firms who meet the 13 objective prequalification criteria as a qualified firm 14 shall be allowed to submit a bid for the relevant trade 15 contract work and materials package. Upon determining which 16 firms meet the prequalification criteria, the construction 17 manager-at-risk shall notify all firms who responded to the 18 request for qualifications whether they successfully meet the 19 prequalification criteria. The notification shall include a 20 list of all firms who were deemed to have successfully met the 21 prequalification criteria. Notification shall be given no 22 less than fifteen days prior to the subcontractor bids being 23 due. Subcontractors who failed to meet the prequalification 24 standards shall also be provided with information regarding 25 which prequalification criteria were not met. In addition, 26 a firm that is prequalified with the state department of 27 transportation pursuant to section 314.1 shall be considered 28 to meet the objective prequalification criteria as a qualified 29 firm and shall be allowed to submit a bid for purposes of work 30 related to parking lots, streets, site development, or bridge 31 structure components. 32 (b) Prequalification criteria shall be limited to a 33 firm’s experience as a contractor, capacity of key personnel, 34 technical competence, capability to perform, the past 35 -7- SF 2364 (2) 88 ec/rn 7/ 9

S.F. 2364 performance of the firm and the firm’s employees to include 1 the firm’s safety record and compliance with state and federal 2 law, and availability to and familiarity with the location of 3 the project subject to bid. Prequalification criteria shall 4 be reasonably and materially related to the relevant trade 5 contract work and materials package. The prequalification 6 criteria shall not include training, testing, or other 7 certifications that may only be obtained through organized 8 labor affiliated organizations or other limited-membership 9 organizations. 10 (3) The governmental entity and the construction 11 manager-at-risk shall participate in the bid review and 12 evaluation process. The governmental entity and the 13 construction manager-at-risk shall open, announce the name 14 of the contractor submitting a bid, and file all proposals 15 received, at the time and place specified in the notice to 16 bidders. After the bids have been opened, reviewed, and 17 tabulated, the contracts shall be awarded to the lowest 18 responsive, responsible bidder. All awards and bids shall be 19 made available to the public. 20 (4) Notwithstanding any other provisions of this paragraph 21 to the contrary, the construction manager-at-risk may 22 self-perform work for a trade package that is below the 23 adjusted competitive bid threshold established in section 24 314.1B. If a trade package is in excess of the adjusted 25 competitive bid threshold established in section 314.1B, the 26 construction manager-at-risk shall notify the governmental 27 entity in writing of its intent to submit a bid proposal for 28 a trade package. In submission of a bid, the construction 29 manager-at-risk shall comply with the requirements of this 30 paragraph. The governmental entity shall receive the bids, 31 participate in, and provide oversight of all bid analyses 32 pertinent to the award of subcontracts or rejection of bids on 33 any trade package for which the construction manager-at-risk 34 submits a bid to self-perform. Where the construction 35 -8- SF 2364 (2) 88 ec/rn 8/ 9

S.F. 2364 manager-at-risk is not the apparent low bidder, the government 1 shall be responsible for determining whether a recommendation 2 of award to the construction manager-at-risk is in the best 3 interests of the project. A construction manager-at-risk shall 4 not be required to comply with bidding requirements for general 5 conditions as provided in the contract with the governmental 6 entity. If the construction manager-at-risk self-performs 7 the construction work, it shall adhere to any agreement it 8 may have with one or more labor organizations. However, the 9 construction manager-at-risk shall not be obligated to adhere 10 to any terms and conditions of any labor agreement with one or 11 more labor organizations for those trade contracts that are 12 not self-performed by the construction manager-at-risk for the 13 public improvement, and such terms shall be deemed void and 14 unenforceable. 15 b. If a selected trade contractor materially defaults in 16 the performance of its work or fails to execute a contract, 17 the construction manager-at-risk may, without advertising, 18 fulfill the contract requirements or select a replacement trade 19 contractor to fulfill the contract requirements. 20 Sec. 10. NEW SECTION . 26A.4 Prohibited contracts. 21 1. Notwithstanding any other provision of law to the 22 contrary, a governmental entity shall not be authorized 23 to enter into a design-build contract for the construction 24 of a public improvement. For purposes of this subsection, 25 “design-build contract” means a single contract providing for 26 both design services and construction services that may include 27 maintenance, operations, preconstruction, and other related 28 services. 29 2. A governmental entity shall not be authorized to 30 enter into a guaranteed maximum price contract for public 31 improvements relating to highway, bridge, or culvert 32 construction. 33 -9- SF 2364 (2) 88 ec/rn 9/ 9