By: Attorneys Maria Brownell, Danielle Haindfield and Jim Wainwright
On April 13, 2017, Governor Branstad signed Senate File 438, An Act Relating to Bidding and Contracting for Public Improvement Projects (the "Act"), into law. The new law affects notices to bidders for public improvements, bids awarded for public improvements, and contracts for public improvements entered into on or after April 13, 2017.
The law limits governmental entities' rights to determine and assess bidders' qualifications and to require or prohibit prospective bidders, offerors, contractors, or subcontractors from entering into or adhering to an agreement with one or more labor organizations regarding a public improvement. Specifically, the law prohibits a governmental entity from:
- Requiring a potential bidder on a public improvement to provide any information which the potential bidder may deem to be confidential or proprietary as a requirement for being deemed a responsive, responsible bidder; and
- Imposing any requirement that directly or indirectly restricts potential bidders to any predetermined class of bidders defined by experience on similar projects, size of company, union membership, or any other criteria.
Governmental entities may still request information from the apparent lowest responsive bidder to assist the governmental entity in determining that bidder's responsibility. However, a governmental entity may only request information related to the apparent lowest responsive bidder's experience, number of employees, and ability to finance the cost of the public improvement.
Additionally, governmental entities and their architects/engineers will now be limited in the type of specification language that may be used to establish minimum bidder criteria based on experience or qualifications. For example, mandating a bidder have a set number of years of experience performing similar work on comparable size projects may now be subject to challenge.
The law also establishes a new subchapter of Iowa Code Chapter 73A, entitled "The Fair and Open Competition in Governmental Construction Act." Governmental entities awarding a contract for a public improvement and any construction manager acting on their behalf shall not, in any bid specifications, project agreements, or other controlling documents do any of the following:
- Require a bidder, offeror, contractor or subcontractor to work with labor organizations with respect to the public improvement project, or a related public improvement project; or
- Prohibit a bidder, offeror, contractor or subcontractor from working with labor organizations with respect to the public improvement project, or a related public improvement project; or
- Discriminate against any bidder, offeror, contractor or subcontractor for its choice to work with or not work with any labor organization with respect to the public improvement project, or a related public improvement project.
The law also prohibits a governmental entity from awarding a grant, tax abatement, or tax credit where that award is conditional on any term that would be contrary to the new law's requirements.
Finally, any public official who fails to perform any of the duties of this new Act could be found guilty of a simple misdemeanor and be removed from office. Governmental entities should work closely with their design/construction administration team and legal counsel to ensure all documents related to publicly bid projects on or after April 13th comply with the new law.
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