June 15, 2022

By Attorneys Danielle Haindfield, Kristine StoneMaria Brownell, and Conner Wasson

On June 14, 2022, Governor Reynolds signed Senate File 183 into law. Senate File 183 makes two significant changes to the public bidding law. First, it amends Iowa Code section 26.4 and prohibits a fee-based selection of an architect, landscape architect, or engineer for a public improvement project. These professionals must now be solicited using a qualifications-based process, with price not being the primary factor.

Second, the bill establishes a new Chapter 26A of the Iowa Code, which authorizes public improvement projects to be constructed under the Construction Manager at Risk (“CMAR”) project delivery method. Generally speaking, a CMAR project delivery method involves the negotiation of a Guaranteed Maximum Price (“GMP”) for the project with a Construction Manager who agrees to complete the project within the GMP. The GMP includes the cost of the construction work, plus the Construction Manager’s negotiated fee.

This is a major change to Iowa law in that prior to this legislation CMAR was illegal for most public entities in Iowa, and only Construction Manager as Advisor was allowed. With the Construction Manager as Advisor delivery method, the Construction Manager only acts as an advisor in packaging the work for bid and overseeing the construction administration, but the Construction Manager does not perform the actual construction work. Under the CMAR method, the Construction Manager not only packages the work, but also performs and assumes the risk for construction. 

ENGAGING THE CMAR

Iowa Code Chapter 26A requires a two-step solicitation process for a contractor to serve as the CMAR on the project. As a preliminary step, the owner must publicly disclose its intent to enter into a GMP contract at least fourteen days prior to posting a Request for Statement of Qualifications (“RFQ”) seeking a contractor to serve as a CMAR. The selection criteria within the RFQ must comply with Iowa Code sec. 26A.3(3). No price proposals are solicited as part of the RFQ process. The RFQ must be posted for not less than 13 days and not more than 45 days in the following three locations:

•    Relevant contractor plan room service with statewide circulation 
•    Relevant construction lead generating service with statewide circulation 
•    On an internet site sponsored by the governmental entity or statewide association that represents the governmental entity 

The owner shall receive, publicly open, and read aloud the names of contractors submitting responses to the RFQ. The owner must evaluate the RFQ proposals within 45 days after the date of opening.

The owner shall then issue a Request for Proposals (“RFP”) to each contractor who meets the qualifications in the RFQ. The RFP must include selection criteria which complies with Iowa Code sec. 26A.3(3). Each qualified contractor may then submit a proposal which shall include their proposed fee. The owner must receive, publicly open and read aloud the names of the contractors submitting proposals and proposals must be evaluated within 45 days after date of opening. The submitted proposals shall be ranked according to selection criteria. The owner must select the CMAR that submits the proposal that offers the best value for the governmental entity based on the published selection criteria and on its ranking evaluation. 

ENGAGING SUBCONTRACTORS & MATERIAL SUPPLIERS

Once the CMAR is engaged, Iowa Code Chapter 26A requires the CMAR to solicit subcontractors and material suppliers through a similar two-step bidding process. The CMAR must first issue an RFQ which shall include:

•    General information on the project site 
•    Project scope 
•    Schedule 
•    Selection criteria 
•    Time and place for receipt of responses 

The RFQ may only include objective prequalification criteria that meets the requirements of Iowa Code sec. 26A.3(5). In general, the law requires prequalification criteria be reasonably and materially related to the relevant trade contract work and materials package.

Public notice must be posted not less than 13 and not more than 45 days before the deadline for responses to the RFQ in the following three locations:

•    Relevant contractor plan room service with statewide circulation 
•    Relevant construction lead generating service with statewide circulation 
•    On an internet site sponsored by the governmental entity or statewide association that represents the governmental entity 

All firms who meet the prequalification criteria may submit a bid for the relevant trade contract work and materials package. In general, all firms must be notified whether they met the prequalification criteria no less than fifteen days prior to the subcontractor bids being due. Subcontractor and material package bids must be publicly opened and filed on the date and time specified in the notice to bidders. Bids are reviewed and evaluated by both the owner and CMAR. Contracts must be awarded to the lowest responsive, responsible bidder.

The CMAR may self-perform work for trade and materials packages that do not exceed the competitive bidding threshold established in Iowa Code sec. 314.1B. The CMAR may also submit a bid proposal to perform work that exceeds the competitive bidding threshold. The owner shall evaluate the bids in which the CMAR is included as a bidder. If the CMAR is not the apparent low bidder, the owner shall determine whether a recommendation for award to the CMAR is in the best interest of the project.

Iowa Code sec. 26A.4 clarifies that government entities are not authorized to enter into design-build contracts for public improvement projects. It further clarifies that the GMP/CMAR project delivery method is not available for horizontal infrastructure projects (highways, bridges, culverts).

This client alert includes a general overview of this bill. Public entities should work closely with their design/construction administration team and legal counsel to ensure GMP/CMAR projects comply with the new law. The new law becomes effective on July 1, 2022.

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Beaman, Bradley

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Brooks, Olivia

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Brownell, Maria

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Craig, Jason

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