Regulations detailing new options for public construction projects cleared their final hurdle this week, but not without some concerns over how smaller Ohio contractors will be affected.
Last year, the biennial budget (HB 153 ) lifted 135-year old restrictions on how public entities must carry out construction projects and final rules detailing the new methods recently cleared the Joint Committee on Agency Rule Review, but not without misgivings from some Democrats, who questioned whether work for local builders and designers will dry up.
The rules, which are set to take effect Feb. 2, flesh out procedures for state and local entities that want to construct facilities using single-prime contractors. Previously, the law permitted only multiple-prime, which generally requires the owner to contract separately for each specialized trade.
Department of Administrative Services spokesman Dan Kaman said the new options allow for an expedited construction timetable. Project completion for design-build is on average 23-33% faster than multiple-prime design-bid-build, and the construction manager-at-risk method is 13-15% faster, he said.
“Coordination is better because there’s a single point of responsibility with these two methods… it allows more flexibility and more incentives to cooperate between subs and the prime,” he said in an interview.
“And obviously, with construction, time is money,” he said. By comparing the industry standards, the agency estimates the new procedures will save between 5-15% on building costs, he added.
(D-Columbus) said he’s discussed the new rules with several construction and engineering firms that complained they would put smaller, in-state firms at a disadvantage to the largest construction firms in the country.Rep. John Carney
Increased bonding requirements are forcing smaller contractors to partner with large out-of-state firms only to get additional bonding capacity, he said, noting that already happened when Ohio State University rebid several contracts after the new provisions in budget were enacted.
“They’re telling me: we’re being hired by universities all over the country, but we can’t get the ones in our own state to hire us,” he said.
“A lot of these folks graduated from Ohio State University and Ohio State University won’t hire them,” Rep. Carney said. “When you look at these projects, it’s two of the largest construction firms in the world that are getting a lot of this work and neither of them is based in Ohio.”
One of the advantages of the multiple-prime approach is that contractors needed only to bond their portion of the work, rather than the entire project, he said.
Rep. Carney said he didn’t request any specific revisions to the rules, but wants the administration to meet with in-state contractors to see if there were ways to ensure greater in-state participation.
“Lets make sure we’re having conversations with Ohio-based construction firms, architectural firms, engineering firms, making sure that they’re going to be in a good position to be able to get this work, provided they’re qualified,” he said, adding that some contractors were hesitant to step forward out of fear it would impact their ability to get future contracts.
Mr. Kaman said DAS already sought public feedback and held seven stakeholder meetings before filing the rules. “We tried to get a lot of these issues out of the way.”
DAS met with bonding firms to discuss ways to make the requirement more accessible for smaller contractors, but found it was limited to standard industry practices, he said. “We did not write these rules to take on the way bonding is done.”
One option the agency considered was “gap bonding,” which divides the financial burden between the prime contractor and various subcontractors, he said. “But we realized that that wasn’t feasible after numerous stakeholder meetings.”
Mr. Kaman said DAS sought to maximize participation by Ohio-based firms by including language in the rule that gives priority during the pre-qualification stage to companies with “knowledge of the local area and working relationships with local subcontractors and suppliers.”
Another concern the administration sought to address was how to ensure participation by minority contractors, Mr. Kaman said. Rather than spelling out the name of every local government’s diversity and inclusion program in the rule, DAS decided to award extra points to companies that previously met those programs’ performance goals, he said