New Law Makes Soliciting Construction Bids Easier

Recently passed legislation in Ohio is driving notable reform to state construction law. Among the new measures is a more efficient process for soliciting bids and employing prime contractors on public sector construction projects.

Reform measures in the new law, known as Amended H.B. 153, are the result of recommendations made by the Ohio Construction Reform panel, a group of public sector owners, private builders, contractors, labor unions and public officials.

Public owners have claimed for years that the existing Multiple Prime Contracting Model – which required the solicitation of separate bids and the employment of separate prime contractors for plumbing and gas-fitting; steam and hot-water heating, ventilating apparatus and steam-power plant, and electrical equipment work – was inadequate and often led to disputes, delays and unnecessary expenses.

In response, the panel developed three new models to provide options with greater efficiencies:

1. General Contracting Delivery Model. This model authorizes public owners to hire one prime contractor who collects bids, holds the subcontractors’ contracts and manages all aspects of construction.

2. Construction Manager-at-Risk Model. This model is similar to that of a traditional construction manager, but with notable differences regarding the ability to actually performs construction, the use of designers and the providing of guaranteed maximum prices for construction hard costs.

3. Design-Build Model. This model authorizes public owners to hire one business entity that can provide design-build services.

Policymakers believe these models will reduce inefficiencies through superior planning, risk-shifting and oversight. The reform measures will be effective after the Ohio Department of Administrative Services’ issues detailed implementation procedures, which is not anticipated until 2012.

For a memo containing further details about the changes, contact Stephen Kocon.

To read the complete text of HB 153, including the changes to Ohio construction law, visit this page.

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Stephen P. Kocon is an attorney in Youngstown, Ohio. His practice areas include business law, business succession planning and real estate law.