Amendment SSA1-SB298

LRBs0399/2

JTK:bjk&kjf:ph

2009 - 2010 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO 2009 SENATE BILL 298

April 9, 2010 - Offered by Committee on Ethics Reform and Government Operations.

SB298-SSA1,1,4 An Act to amend 16.855 (2) (intro.), 16.855 (13) (a), 16.855 (14) (a) and 16.855 (15); and to create 16.855 (14) (ae) and 16.855 (14) (am) to (aq) of the statutes; relating to: state building contracting and construction procedures and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This substitute amendment makes changes in state building contracting and construction procedures.

Currently, with certain exceptions, contracts for construction work on state construction projects that cost more than $40,000 must be let by contract to the lowest responsible bidder and must be preceded by public notice and a public bidding process. Wisconsin-based bidders are accorded a preference over bidders whose home governments grant them a preference in making governmental purchases. With certain exceptions, if bids are required to be solicited and the estimated cost of a project exceeds $150,000, the Department of Administration (DOA) must solicit single and separate bids on each portion of the work that DOA designates. DOA must attempt to ensure that 5 percent of the total amount expended for construction work in each fiscal year is awarded to minority-owned businesses. Contractors must be granted certain progress payments while a project is underway. With certain exceptions, if the estimated cost of a project exceeds $150,000, the project is subject to approval of the Building Commission.

The substitute amendment permits DOA either to: 1) solicit both single and separate bids on any division of the work it designates; or 2) solicit only single bids on all divisions of the work that DOA designates. The substitute amendment also permits DOA to utilize another contracting procedure to construct any project called "construction-manager-at-risk contracting" for any project having an estimated cost of $40,000,000 or more. Under the construction-manager-at-risk contracting procedure, DOA hires a construction manager to provide pre-construction services and to manage the construction process. The construction manager must solicit bids for all work on a project unless the manager submits a bid for a portion of the work. The substitute amendment also permits DOA to prescribe, by rule, additional contracting procedures not specified in current law or in the substitute amendment that DOA may utilize for any project.

The substitute amendment provides the following when DOA uses a contracting procedure in which it solicits only single bids on all divisions of the work (single prime contracting): 1) the prime contractor must submit to DOA the names of the subcontractors that are proposed to be retained; 2) the prime contractor must provide proof to DOA of each proposed subcontractor's ability to obtain a bond that guarantees performance of its division of the work subject to criteria set by DOA; 3) the prime contractor must submit progress payment requests to DOA and must promptly pay the subcontractors for their proportionate share of the work when a payment is received from DOA; and 4) retainages from subcontractors must be limited to their proportionate share of the work. In addition, the substitute amendment provides that when DOA uses the single prime contracting procedure to construct a project, DOA must ensure that each subcontractor has access to the elements of the project information available to the prime contractor that are required for the subcontractor to effectively participate in the project.

Under all of the proposed new contracting procedures, as well as any other procedures prescribed by DOA, DOA must advertise for and solicit bids on all or any portion of the work it designates and comply with all other laws governing construction procedures, except that DOA may provide, by rule, that any of these laws do not apply to a specific project that is constructed using the construction-manager-at-risk procedure, and except that, as currently provided, the Building Commission may waive compliance with any of these laws for construction of a specific project.

Currently, with certain exceptions, a bidder on a contract for a state project need not submit with its bid a list of the subcontractors to be used on the project, but DOA may require a list of the subcontractors to be submitted before the contract is awarded. This substitute amendment permits DOA to require each bidder on a state project to submit with its bid a list of its subcontractors to be used on the project.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB298-SSA1, s. 1 Section 1. 16.855 (2) (intro.) of the statutes is amended to read:

SB298-SSA1,3,4 16.855 (2) (intro.) Except as provided in subs. (10) and (14) (ae), (am), and (ao) and except for projects authorized under s. 16.858, whenever the estimated construction cost of a project exceeds $40,000, or if less and in the best interest of the state, the department shall:

SB298-SSA1, s. 2 Section 2. 16.855 (13) (a) of the statutes is amended to read:

SB298-SSA1,3,12 16.855 (13) (a) A The department may require each person who submits a bid to provide a list of the major subcontractors shall not be required to be submitted, as designated by the department in its solicitation documents, for work to be performed with the person's bid. The Except as provided in sub. (14) (ae) 2., the department may also require the each prime contractor to submit in writing the names of prospective subcontractors for the department's approval before the award of a contract to the prime contractor.

SB298-SSA1, s. 3 Section 3. 16.855 (14) (a) of the statutes is amended to read:

SB298-SSA1,3,25 16.855 (14) (a) If a project requires prior approval of the building commission under s. 13.48 (10) (a) and or bids are required to be solicited under sub. (2), the department shall take may solicit both single bids and separate bids on any division of the work that it designates. If a project does not require prior approval of the building commission under s. 13.48 (10) (a) and bids are required to be solicited under sub. (2), the department may take single bids or separate bids on any division of the work that it designates or may solicit only single bids on all divisions of the work. If the department awards contracts by the division of work, the department shall award the contracts according to the division of work selected for bidding. Except as provided in pars. (am) and (ao) and sub. (10m) (a), the department shall award all contracts to the lowest qualified responsible bidder or bidders that result in the lowest total construction cost for the project.

SB298-SSA1, s. 4 Section 4. 16.855 (14) (ae) of the statutes is created to read:

SB298-SSA1,4,2 16.855 (14) (ae) 1. In this paragraph:

SB298-SSA1,4,5 a. "Base bid" means the bid of a prime contractor for all work to be performed on a project submitted in accordance with the solicitation, excluding any alternatives or options.

SB298-SSA1,4,7 b. "Single prime contracting" means a contracting procedure in which the department solicits only single bids on all divisions of the work on a project.

SB298-SSA1,4,10 2. If the department elects to use single prime contracting for the construction of a project, the department shall set forth the divisions of the work in the solicitation. The department shall also enforce the following requirements:

SB298-SSA1,4,17 a. Each bidder shall submit in writing the names of the subcontractors who are proposed to be retained to perform services required under the base bid for each division of the work specified by the department together with the amount to be paid by the prime contractor to each subcontractor. No modification may be made in the submission unless the department permits a modification. The department may permit a modification after the opening of bids but prior to execution of the contract with the prime contractor.

SB298-SSA1,4,21 b. For each subcontractor that is enumerated by the prime contractor, the prime contractor shall provide to the department proof of the subcontractor's ability to obtain a bond that guarantees performance of its division of the work subject to criteria set by the department.

SB298-SSA1,4,24 c. The prime contractor shall submit progress payment requests to the department for each period designated by the department and upon receiving each progress payment shall pay each subcontractor for its division of the work promptly.

SB298-SSA1,5,3 d. In making payments to each subcontractor, the prime contractor shall limit the amount of any retainage to the proportionate share of the retainage under sub. (19) that is attributable to the subcontractor's division of the work.

SB298-SSA1,5,6 e. The prime contractor shall promptly pay each subcontractor for any retainage when the work contracted to that subcontractor is completed to the satisfaction of the department.

SB298-SSA1,5,10 3. If the department elects to use single prime contracting for the construction of a project, the department shall ensure that each subcontractor has access to the elements of the project information available to the prime contractor that are required for the subcontractor to effectively participate in execution of the project.

SB298-SSA1, s. 5 Section 5. 16.855 (14) (am) to (aq) of the statutes are created to read:

SB298-SSA1,5,21 16.855 (14) (am) 1. In this paragraph, "construction-manager-at-risk contracting" means a contracting procedure in which a person is selected by the department to act as a construction manager for a project; to provide pre-construction services during the design phase of the project; and to manage the construction process, which includes, but is not limited to, supervision of public notice and bidding for construction work on the project, contracting for construction work required to be performed on the project, compliance with all terms and conditions of applicable collective bargaining agreements, if any, and assumption of responsibility for the project's cost, completion schedule, and workmanship of construction.

SB298-SSA1,6,3 2. As an alternative to the procedures under par. (a), the department may utilize construction-manager-at-risk contracting to construct a project having an estimated cost of $40,000,000 or more. The department shall prescribe, by rule, the specific procedures to be used by the department for projects constructed using construction-manager-at-risk contracting. A rule promulgated under this subdivision may provide that any provision of this section does not apply to a project constructed in accordance with the procedures prescribed in the rule.

SB298-SSA1,6,9 3. When the department elects to utilize construction-manager-at-risk contracting to construct a project, the construction manager shall solicit bids on all work on the project in the manner prescribed under this subsection unless the construction manager elects to submit a bid to perform a portion of the work. In that case, the department shall solicit bids for that portion of the work in accordance with procedures prescribed by rule.

SB298-SSA1,6,12 (an) The department may prescribe, by rule, additional contracting procedures not enumerated in this subsection that the department may utilize to construct any project that requires approval of the building commission under s. 13.48 (10) (a).

SB298-SSA1,6,16 (ao) On any project constructed under a procedure identified in or prescribed under par. (ae), (am), or (an), the department shall comply with all provisions of this section unless the building commission waives compliance under s. 13.48 (19), or a rule promulgated under par. (am) provides for an alternative procedure.

SB298-SSA1,6,17 (ap) The department shall define, by rule:

SB298-SSA1,6,21 1. Any specific contracting procedures not specified in par. (ae) that prime contractors must use when the department elects under par. (a) to solicit only single bids on all divisions of the work on a project to provide protections to major subcontractors.

SB298-SSA1,6,24 2. The specific contracting procedures identified in or authorized to be prescribed under pars. (am) and (an) and how they will be applied to construction projects.

SB298-SSA1,7,2 3. The criteria that will be applied to the selection of the contracting procedure that will be utilized by the department on a particular project.

SB298-SSA1,7,5 4. The selection process that the department will use to select a contractor for any contracting procedure to be utilized on a project other than the procedures identified in par. (a).

SB298-SSA1,7,8 5. The procedures that the department will use to solicit bids for any portion of the work on a project in which the construction manager at risk for the project elects to submit a bid to perform the portion of the work.

SB298-SSA1,7,12 (aq) The department may define, by rule, the criteria that will be applied to the selection of a contracting procedure for a project when the building commission waives any provision of this section to permit the use of innovative types of design and construction processes under s. 13.48 (19).

SB298-SSA1, s. 6 Section 6. 16.855 (15) of the statutes is amended to read:

SB298-SSA1,7,15 16.855 (15) The department shall promulgate rules to implement the advertising and award of contracts under sub. (1).

SB298-SSA1, s. 7 Section 7. Initial applicability.

SB298-SSA1,7,19 (1) The treatment of section 16.855 (2) (intro.), (13) (a), (14) (a), (ae), and (am) to (aq), and (15) of the statutes first applies with respect to contracts for services or construction work entered into on the effective date of this subsection.

SB298-SSA1,7,20 (End)