House Bill 153 and Public Construction Reform
On May 5, 2011, the Ohio House of Representatives passed House Bill 153, which includes significant reforms of Ohio's public construction laws. These construction reforms are expected to pass in the Ohio Senate and to be signed into law by Governor John Kasich.
House Bill 153 contained several amendments to the Ohio Revised Code regarding the public construction projects. This bill will substantially alter how public improvement projects are completed. Below is a list of significant provisions from the legislation:
- Eliminates Multiple-Prime Contracting Requirement. Under current law, public authorities undertaking a public improvement project must be constructed through a multiple-prime contracting method. House Bill 153 allows public authorities to choose to use multiple-prime contracting or alternative methods, such as using a construction manager at risk (CMAR) or a design-build firm (D/B Firm).
- Construction Manager at Risk (CMAR). A CMAR is a person with substantial discretion and authority to manage all phases of a construction project. Under House Bill 153, a CMAR must provide the public authority with a guaranteed maximum price using an open-book pricing method. The maximum price is the total amount to be paid by the public authority to the CMAR. When using CMARs, the public authority will select and rank at least three CMARs and will negotiate with the CMAR that it determines to be the best value.
- Design-Build Firm (D/B Firm). A D/B Firm provides services for both the design and the construction of a project. Under House Bill 153, a public authority will evaluate statements of qualifications from D/B firms and select at least three firms to rank. The public authority ranks the D/B firms and enters into negotiations with the firm it determines to be the best value.
- Increase of Project Cost Threshold for Complete Specifications. House Bill 153 increases the minimum project cost threshold that triggers the requirement for detailed specifications to be completed before putting a state public improvement contract to bid from $50,000 to $200,000. House Bill 153 also eliminates minimum thresholds of $5,000 (for determining if separate bids are required) and $50,000 (for determining whether Sections 153.50-153.52 apply to the erection of buildings or other structures).
- Exempts CMARs and D/B Firms from Bid Guaranties. Bidders on CMAR or D/B contracts are exempted from the requirement to submit bid guaranties under R.C. 153.54.
- Includes CMARs and D/B Firms in Prompt Pay Law. House Bill 153 specifically defines "contractor" to include CMARs and D/B Firms under the prompt pay law, which requires interest to be paid when a contractor does not pay a subcontractor in a timely manner.
The public construction reforms will significantly alter the landscape of public construction projects for both construction firms and for public entities. If you have any questions regarding the changes made by House Bill 153 or their impact, please contact Kevin Malof, or any other member of Frost Brown Todd's Construction and Government Services practice groups.