HBA-LCA S.B. 669 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 669 By: Ratliff Public Education 4/21/1999 Engrossed BACKGROUND AND PURPOSE S.B. 669 sets forth new procedural guidelines for the regulation of school district purchases and contracts for the construction and repair of improvements by institutions of higher learning. In 1997, the 75th Legislature established procedures for school districts to follow when entering contracts with construction manager-agents or construction managers-at-risk, and to allow institutions of higher education to use the design/build process for permanent improvements. S.B. 669 assimilates and clarifies these procedures for alternative construction methods used by schools and universities. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS HBA-LCA S.B. 669 76(R)SECTION 1. Amends Sections 44.031(a), (b), (f), (h), (i), (j), and (l), Education Code, as follows: (a) Requires a school district contract, except contracts for the purchase of produce or vehicle fuel, valued at $25,000 or more in the aggregate for each 12-month period to be made by the method that provides the best value for the district. Sets forth a list of such methods, including a request for proposals, for services other than construction services and a job order contract for the minor construction, repair, rehabilitation, or alteration of a facility. (d) Authorizes the board of trustees of a school district (board), rather than the district, to adopt rules and procedures for the acquisition of goods or services. (f) Provides that this section does not apply to contracts, rather than fees received, for professional services. Provides that in a two-step procurement process, the time and place where the second-step bids, proposals, or responses will be received are not required to be published separately. (h) Authorizes the board, if it determines that a delay posed by the procurement, rather than competitive bidding, process prescribed by this subchapter would prevent or substantially impair the conduct of classes or other essential school activities, to make contracts for the replacement or repair of the equipment or facilities on terms the board determines to be appropriate under the circumstances, if school equipment or facilities are destroyed or severely damaged. Makes conforming and nonsubstantive changes. (i) Makes a change conforming to SECTION 2 (Section 44.0311, Education Code). (j) Makes a change conforming to SECTION 2 (Section 44.0311, Education Code). (l) Makes a change conforming to SECTION 2 (Section 44.0311, Education Code). SECTION 2. Amends Subchapter B, Chapter 44, Education Code, by adding Section 44.0311, as follows: Sec. 44.0311. DELEGATION. (a) Authorizes the board of trustees of the district, as appropriate, to delegate its authority under this subchapter regarding an action authorized or required by this subchapter to be taken by a school district to a designated person, representative, or committee. Requires the district to provide notice of the delegation and the limits of the delegation in the request for bids, proposals, or qualifications, or in an addendum to the request. Provides that if the district fails to provide that notice, a ranking, selection, or evaluation of bids, proposals, or qualifications other than by the board in an open public meeting is advisory only. (b) Prohibits the board from delegating the authority to act regarding an action authorized or required by this subchapter to be taken by the board of a school district. SECTION 3. Amends Section 44.032(f), Education Code, to authorize a court to enjoin performance of a contract made in violation of this subchapter, rather than Section 44.031(a) or (b). Authorizes any interested party to bring an action for an injunction. Entitles a party, rather than a citizen, who prevails in an action brought under this subsection to reasonable attorney's fees as approved by the court. Makes conforming changes. SECTION 4. Amends Section 44.035, Education Code, as follows: Sec. 44.035. New title: EVALUATION OF BIDS AND PROPOSALS FOR CONSTRUCTION SERVICES. (a) Requires the board of a school district that is considering a construction contract using a method specified by Section 44.031(a), before advertising, to determine which method provides the best value for the district. Makes a nonsubstantive change. (b) Requires the district to base its selection among offerors on criteria authorized to be used under Section 44.031(b). Requires the district to publish in the request for bids, proposals, or qualifications the specific criteria that will be used to evaluate the offerors and the relative weights, if any, given to the criteria. Makes a conforming change. (c) Requires the district to document the basis of its selection and to make the evaluations public on or before awarding the contract. Makes a conforming change. SECTION 5. Amends Section 44.036(a)(3), Education Code, to provide that "design criteria package" means a set of documents that provide sufficient information to permit a design-build firm to prepare a response to a school district's request for qualifications and any additional information requested, including criteria for selection. SECTION 6. Amends Sections 44.036(e), (f) and (j), Education Code, as follows: (e) Authorizes the district, after qualifying no more than five offerors, to interview those offerors for final selection as part of phase one of a two-phase selection process. Requires the district, as part of the second phase, to evaluate the information submitted by the offerors on the basis of the selection criteria stated in the request for qualifications and the results of any interview. Authorizes the district to request additional information regarding certain items. Requires the district to rank each proposal submitted on the basis of the criteria set forth in the request for qualifications. Requires the district to select the design-build firm that submits the proposal offering the best value for the district on the basis of the published selection criteria and on its ranking evaluations. Requires the district to first attempt in good faith to negotiate with the selected offeror a contract on fair and reasonable terms. Requires the district to, formally and in writing, end negotiations with that offeror and proceed to negotiate with the next offeror in the order of the selection ranking until a contract is reached or negotiations with all ranked offerors end, if the district is unable to negotiate a satisfactory contract with the selected offeror. (f) Requires the firm's engineers or architects, upon section of a design-build firm, to complete the design, submitting all design elements for review and determination of scope compliance to the district or district's engineer or architect before or concurrently with construction. Makes a nonsubstantive change. (j) Requires the penal sums of the performance and payment bonds to be delivered to the district be in an amount equal to the project budget, as specified in the design criteria package, if a fixed contract amount or guaranteed maximum price has not been determined at the time a design-build contract is awarded. Requires the design-build firm to deliver the bonds not later than the 10th day after the date the design-build firm executes the contract unless the design-build firm furnishes a bid bond or other financial security acceptable to the district to ensure that the design-build firm will furnish the required performance and payment bonds when a guaranteed maximum price is established. Makes a conforming change. SECTION 7. Amends Sections 44.037(b) and (c), Education Code, as follows: (b) Authorizes a district using the construction manager-agent method, under contract between the district and the construction manager agent, to require the construction manager-agent to provide administrative personnel, equipment necessary to perform duties under this section, and on-site management and other services specified in the contract. Makes a conforming change. (c) Prohibits the district's engineer or architect from serving, alone or in combination with another person, as the construction manager-agent unless the engineer or architect is hired to serve as the construction manager-agent under a separate or concurrent procurement process conducted in accordance with this subchapter. Provides that this subsection does not prohibit the district'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. SECTION 8. Amends Sections 44.038(c), (e), (f), (g), (h), (i), (j), (k), and (l), and 44.039(c)-(g), Education Code, as follows: Sec. 44.038. CONTRACTS FOR FACILITIES: CONSTRUCTION MANAGER-AT-RISK. (c) Prohibits the district's engineer, architect, or construction manager-agent for a project from serving, alone or in combination with another, as the construction manager-at-risk. (e) Requires the district to select the construction manager-at-risk in either a one-step or two-step process. Requires the district to prepare a request for proposals (RFP), in the case of a one-step process, or a request for qualifications (RFQ), in the case of a two-step process, that includes general information on the project site, project scope, schedule, selection criteria, estimated budget, and the time and place for receipt of proposals or qualifications, as applicable, a statement as to whether the selection process is a one-step or two-step process, and other information that may assist the district in its selection of a construction manager-at-risk. Requires the district to state the selection criteria in the request for proposals or qualifications, as applicable. Authorizes the selection criteria to include the offeror's experience, past performance, safety record, proposed personnel and methodology, and other appropriate factors that demonstrate the capability of the construction manager-at-risk. Authorizes the district to request, as part of the offeror's proposal, proposed fees and prices for fulfilling the general conditions, if a one-step process is used. Prohibits the district from requesting fees or prices in step one, if a twostep process is used. Makes a conforming change. (f) Requires the district at each step to receive, publicly open, and read aloud the names of the offerors. Requires the district, at the appropriate step, to also read aloud the fees and prices stated in each proposal. (g) Requires the district to first attempt in good faith to negotiate with the selected offeror a contract on fair and reasonable terms. Requires the district to, formally and in writing, end negotiations with that offeror if it is unable to negotiate a satisfactory contract, and to proceed to negotiate with the next offeror in the order of the selection ranking until a contract is reached or negotiations with all ranked offerors end. Redesignated from existing Subsection (h). Makes conforming changes. (h) Requires a construction manager-at-risk to publicly advertise, in accordance with Section 44.031(g), and receive bids or proposals from contractors or subcontractors. Redesignated from existing Subsection (i). (i) Prohibits the disclosure of the contents of a bid or proposal to a person not employed by the construction manager-at-risk, engineer, architect, or district. Redesignated from existing Subsection (j). (j) Redesignated from existing Subsection (k). (k) Authorizes the construction manager-at-risk to fulfill without advertising the contract requirements or select a contractor or subcontractor to fulfill those requirements if a selected contractor or subcontractor defaults in the performance of its work or fails to execute a subcontract after being selected in accordance with this section. (l) Requires penal sums of performance and payment bonds delivered to the district to be in an amount equal to the project budget, as specified in the RFQ, if a fixed contract amount or guaranteed maximum price has not been determined at the time the contract is awarded. Requires the construction manager to deliver the bonds not later than the 10th day after the date the construction manager executes the contract unless the construction manager furnishes a bid bond or other financial security acceptable to the district to ensure that the construction manager will furnish the required performance and payment bonds when a guaranteed maximum price is established. Sec. 44.039. SELECTING CONTRACTOR FOR CONSTRUCTION SERVICES THROUGH COMPETITIVE SEALED PROPOSALS. (c) Requires the district to select those services for which it contracts in accordance with Section 2254.004, Government Code, and to identify them in a request for proposal (RFP). (d) Makes a conforming change. Redesignated from existing Subsection (f). (e) Makes a conforming change. Redesignated from existing Subsection (g). (f) Makes a conforming change. Redesignated from existing Subsection (h). (g) Requires the district to first attempt in good faith to negotiate with the selected offeror a contract on fair and reasonable terms. Authorizes the district and its engineer or architect to discuss with the selected offeror options for a scope or time modification and any price change associated with the modifications. Requires the district to, formally and in writing, end negotiations with that offeror, rather than terminate further discussions, and proceed to the next offeror in the order of the selection ranking until a contract is reached or all proposals are rejected, if the district is unable to negotiate a contract with the selected offeror. Makes conforming changes. SECTION 9. Amends Section 44.040(b), Education Code, to provide that Section 271.027(b), Local Government Code, which prohibits a contract from being awarded to a person who is not the lowest bidder without notice. SECTION 10. Amends Section 44.041, Education Code, as follows: Sec. 44.041. New title: JOB ORDER CONTRACTS FOR FACILITIES CONSTRUCTION OR REPAIR. (a) Includes minor construction, in addition to minor repair, rehabilitation, or alteration, of a facility as a service for which a school district may award a job order contract if the work is recurrent but delivery times are indefinite and indefinite quantities and orders are awarded substantially on the basis of predescribed and repriced tasks. (b) Authorizes the school district to establish contractual unit prices for a job order contract by specifying one or more published construction unit price books and the applicable divisions or line items, or providing a list of work items and requiring the offeror to bid or propose one or more coefficients or multipliers to be applied to the price book or work items as the price proposal. (c) Makes a conforming change. Created from existing text. (d) Makes a conforming change. Redesignated from existing Subsection (c). (e) Makes conforming changes. Redesignated from existing Subsection (d). (f) Authorizes the order to be a fixed price, lump-sum contract based substantially on contractual unit pricing applied to estimated quantities or to be a unit price order based on the quantities and line items delivered. Redesignated from existing Subsection (e). (g) Created from existing text. (h) Provides that the base term of a job order contract is for the period and with any renewal option that the district sets forth in the request for proposals. Prohibits the base term from exceeding two years and is not renewable without further advertisement and solicitation of proposals, if the district fails to advertise that term. (i) Requires those services to be provided in accordance with applicable law, if a job order contract or an order issued under the contract requires engineering or architectural services that constitute the practice of engineering within the meaning of the Texas Engineering Practice Act or the practice of architecture within the meaning of Article 249a, V.T.C.S. SECTION 11. Amends Section 51.779, Education Code, as follows: Sec. 51.779. New title: EVALUATION OF BIDS AND PROPOSALS FOR CONSTRUCTION SERVICES. (a) Requires an institution of higher education (institution) that is considering a construction contract, before advertising, to determine which method provides the best value for the institution. Makes a conforming change. (b) Requires the institution to base its selection among the offerors on criteria established by the institution. Requires the institution to publish in the request for bids, proposals, or qualifications the specific criteria that will be used to evaluate the offerors and the relative weights, if any, given to the criteria. Makes a conforming change. (c) Requires the institution to document the basis of its selection and to make the evaluation public on or before the award of the contract. Makes a conforming change SECTION 12. Amends Section 51.780(a)(3), Education Code, to provides that "design criteria package" means a set of documents that provides sufficient information to permit a design-build firm to prepare a response to an institution's request for qualifications and any additional information selected, including criteria for selection. Makes a conforming change. SECTION 13. Amends Sections 51.780(f) and (k), Education Code, as follows: (f) Makes conforming and nonsubstantive changes regarding the two-phase method through which the board or its representative is required to select a design-build firm. (k) Requires that the penal sums of the performance and payment bonds be in an amount equal to the project budget, as specified in the design criteria package, if a fixed contract amount or guaranteed maximum price has not been determined at the time a design-build contract is awarded. Requires a design-build firm to deliver the bonds not later than the 10th day after executing the contract unless the firm furnishes a bid bond or other financial security acceptable to the institution to ensure that the design-build firm will furnish the required performance and payment bonds when a guaranteed maximum price is established. SECTION 14. Amends Sections 51.781(b) and (c), Education Code, as follows: (b) Authorizes an institution using a construction manager-agent, under the contract between the institution and the construction manager-agent, to require the construction manager-agent to provide administrative personnel, equipment necessary to perform duties under this section, and on-site management and other services specified in the contract. (c) Prohibits the institution's engineer or architect from serving, alone or in combination, as the construction manager-agent, unless the engineer or architect is hired to serve as the construction manager-agent under a separate or concurrent procurement conducted in accordance with this subchapter. Provides that this subsection does not prohibit the institution'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. Makes conforming changes. SECTION 15. Amends Sections 51.782-51.784, Education Code, as follows: Sec. 51.782. CONTRACTS FOR FACILITIES: CONSTRUCTION MANAGER-AT-RISK. (c) Prohibits the institution's engineer, architect, or construction manager-agent for a project from serving alone or in combination with another, as the construction manager-at-risk. (e) Requires the governing body of an institution (board) to select the construction manager-at-risk in either a one-step or two-step process. Sets forth procedures related to steps one and two of the process. (f) Makes a conforming change. (g) Makes conforming changes. Redesignated from existing Subsection (h). (h) Makes conforming changes. Redesignated from Subsection (i). (i) Makes conforming changes. Redesignated from Subsection (j). (j) Makes conforming changes. Redesignated from Subsection (k). (k) Redesignated from Subsection (l). (l) Authorizes the construction manager-at-risk, without advertising, to itself fulfill the contract requirements or select a replacement trade contractor or subcontractor to fulfill the contract requirements, if a selected trade contractor or subcontractor defaults in the performance of its work or fails to execute a subcontract after being selected in accordance with this section. (m) Requires penal sums of performance and payment bonds delivered to the district to be in an amount equal to the project budget, as specified in the request for qualifications, if a fixed contract amount or guaranteed maximum price has not been determined at the time the contract is awarded. Requires the construction manager to deliver the bonds not later than the 10th day after the date the construction manager executes the contract unless the construction manager furnishes a bid bond or other financial security acceptable to the district to ensure that the construction manager will furnish the required performance and payment bonds when a guaranteed maximum price is established. Sec. 51.783. SELECTING CONTRACTOR FOR CONSTRUCTION SERVICES THROUGH COMPETITIVE SEALED PROPOSALS. (c) Requires the board to provide for certain independent testing methods and identify them in the RFP. (d) Requires the board to state in the RFP the selection criteria that will be used in selecting the successful offeror. (f) Requires the board to receive, publicly open, and read aloud the names of the offerors and, if any are required to be stated, all prices, stated in the proposal. Redesignated from existing Subsection (g). (g) Requires the board to first attempt in good faith to negotiate with the selected offeror a contract on fair and reasonable terms. Authorizes the board and its engineer or architect to discuss with the selected offeror options for a scope or time modification and any price change associated with the modifications, rather than cost reduction. Requires the board to formally and in writing, end negotiations with that offeror. Makes conforming changes. Redesignated from Subsection (h). Sec. 51.784. New title: JOB ORDER CONTRACTS FOR FACILITIES CONSTRUCTION OR REPAIR. (a) Authorizes an institution to award job order contracts for the minor construction, repair, rehabilitation, or alteration of a facility. (b) Authorizes the institution to establish contractual unit prices for a job order contract by certain procedures. (c) Makes conforming changes. Redesignated from existing Subsection (b). (d) Makes conforming changes. Redesignated from Subsection (c). (e) Makes conforming changes. Redesignated from Subsection (d). (f) Makes conforming changes. Redesignated from Subsection (e). (g) Created from existing text. (h) Provides that the base term of a job order contract is for the period and with any renewal option that the institution sets forth in the request for proposals. Prohibits the base term from exceeding two years and from being renewed without further advertisement and solicitation of proposals, if the institution fails to advertise that term. (i) Requires those services to be provided in accordance with applicable law, if a job order contract or an order issued under the contract requires engineering or architectural services that constitute the practice of engineering within the meaning of the Texas Engineering Practice Act or the practice of architecture within the meaning of (Article 249a, V.T.C.S.). SECTION 16. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 17. Emergency clause.