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First Substitute H.B. 217

Representative Wayne A. Harper proposes the following substitute bill:







Sponsor: Wayne A. Harper

             9      LONG TITLE
             10      General Description:
             11          This bill makes substantial changes to the Division of Facilities Construction and
             12      Management (DFCM) contracting procedures and requirements for construction
             13      contracts.
             14      Highlighted Provisions:
             15          This bill:
             16          .    requires DFCM to prepare draft rules establishing a process for resolving claims
             17      made by contractors and subcontractors;
             18          .    suggests certain elements of that process that the rule may include;
             19          .    requires DFCM to submit the draft rules to the Government Operations Interim
             20      Committee for its review and comment; and
             21          .    makes technical corrections.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None

             26      Utah Code Sections Affected:
             27      AMENDS:
             28          63A-5-205, as last amended by Chapter 365, Laws of Utah 1999
             29          63A-5-208, as last amended by Chapter 91, Laws of Utah 2000
             31      Be it enacted by the Legislature of the state of Utah:
             32          Section 1. Section 63A-5-205 is amended to read:
             33           63A-5-205. Contracting powers of director -- Retainage.
             34          (1) As used in this section "capital developments" and "capital improvements" have the
             35      same meaning as provided in Section 63A-5-104 .
             36          [(1)] (2) In accordance with Title 63, Chapter 56, Utah Procurement Code, the director
             37      may:
             38          (a) enter into contracts for any work or professional services which the division or the
             39      State Building Board may do or have done; and
             40          (b) as a condition of any contract for architectural or engineering services, prohibit the
             41      architect or engineer from retaining a sales or agent engineer for the necessary design work.
             42          [(2)] (3) The judgment of the director as to the responsibility and qualifications of a
             43      bidder is conclusive, except in case of fraud or bad faith.
             44          (4) The division shall make all payments to the contractor for completed work in
             45      accordance with the contract and pay the interest specified in the contract on any payments that
             46      are late.
             47          [(3)] (5) If any payment on a contract with a private contractor to do work for the
             48      division or the State Building Board is retained or withheld, it shall be retained or withheld and
             49      released as provided in Section 13-8-5 .
             50          Section 2. Section 63A-5-208 is amended to read:
             51           63A-5-208. Definitions -- Certain public construction bids to list subcontractors --
             52      Changing subcontractors -- Bidders as subcontractors -- Dispute resolution process --
             53      Penalties.
             54          (1) As used in this section:
             55          (a) "First-tier subcontractor" means a subcontractor who contracts directly with the
             56      prime contractor.

             57          (b) "Subcontractor" means any person or entity under contract with a contractor or
             58      another subcontractor to provide services or labor for the construction, installation, or repair of
             59      an improvement to real property.
             60          (c) "Subcontractor" includes a trade contractor or specialty contractor.
             61          (d) "Subcontractor" does not include suppliers who provide only materials, equipment,
             62      or supplies to a contractor or subcontractor.
             63          (2) The director shall apply the provisions of this section to achieve fair and
             64      competitive bidding and to discourage bid-shopping by contractors.
             65          (3) (a) (i) (A) On each public construction project, the director shall require the
             66      apparent lowest three bidders to submit a list of their first-tier subcontractors indicating each
             67      subcontractor's name, bid amount, and other information required by rule.
             68          (B) Other bidders who are not one of the apparent lowest three bidders may also
             69      submit a list of their first-tier subcontractors containing the information required by this
             70      Subsection (3).
             71          (C) The director may not consider any bid submitted by a bidder if the bidder fails to
             72      submit a subcontractor list meeting the requirements of this section.
             73          (ii) On projects where the contractor's total bid is less than $500,000, subcontractors
             74      whose bid is less than $20,000 need not be listed.
             75          (iii) On projects where the contractor's total bid is $500,000 or more, subcontractors
             76      whose bid is less than $35,000 need not be listed.
             77          (b) (i) The bidders shall submit this list within 24 hours after the bid opening time, not
             78      including Saturdays, Sundays, and state holidays.
             79          (ii) This list does not limit the director's right to authorize a change in the listing of any
             80      subcontractor.
             81          (c) The bidders shall verify that all subcontractors listed as part of their bids are
             82      licensed as required by state law.
             83          (d) Twenty-four hours after the bid opening, the contractor may change his
             84      subcontractors only after:
             85          (i) receiving permission from the director; and
             86          (ii) establishing that:
             87          (A) the change is in the best interest of the state; and

             88          (B) the contractor establishes reasons for the change that meet the standards established
             89      by the State Building Board.
             90          (e) If the director approves any changes in subcontractors that result in a net lower
             91      contract price for subcontracted work, the total of the prime contract may be reduced to reflect
             92      the changes.
             93          (4) (a) A bidder may list himself as a subcontractor when the bidder is currently
             94      licensed to perform the portion of the work for which the bidder lists himself as a subcontractor
             95      and:
             96          (i) the bidder intends to perform the work of a subcontractor himself; or
             97          (ii) the bidder intends to obtain a subcontractor to perform the work at a later date
             98      because the bidder was unable to:
             99          (A) obtain a bid from a qualified subcontractor; or
             100          (B) obtain a bid from a qualified subcontractor at a cost that the bidder considers to be
             101      reasonable.
             102          (b) (i) When the bidder intends to perform the work of a subcontractor himself, the
             103      director may, by written request, require that the bidder provide the director with information
             104      indicating the bidder's:
             105          (A) previous experience in the type of work to be performed; and
             106          (B) qualifications for performing the work.
             107          (ii) The bidder must respond in writing within five business days of receiving the
             108      director's written request.
             109          (iii) If the bidder's submitted information causes the director to reasonably believe that
             110      self-performance of the portion of the work by the bidder is likely to yield a substandard
             111      finished product, the director shall:
             112          (A) require the bidder to use a subcontractor for the portion of the work in question and
             113      obtain the subcontractor bid under the supervision of the director; or
             114          (B) reject the bidder's bid.
             115          (c) (i) When the bidder intends to obtain a subcontractor to perform the work at a later
             116      date, the bidder shall provide documentation with the subcontractor list describing:
             117          (A) the bidder's efforts to obtain a bid of a qualified subcontractor at a reasonable cost;
             118      and

             119          (B) why the bidder was unable to obtain a qualified subcontractor bid.
             120          (ii) If the bidder who intends to obtain a subcontractor to perform the work at a later
             121      date is awarded a contract, the director shall supervise the bidder's efforts to obtain a qualified
             122      subcontractor bid.
             123          (iii) The director may not adjust the amount of the contract awarded in order to reflect
             124      the actual amount of the subcontractor's bid.
             125          (5) The division may not disclose any subcontractor bid amounts obtained under this
             126      section until the division has awarded the project to a contractor.
             127          [(6) (a) The director may establish a Contractor Performance Review Committee to:]
             128          [(i) adjudicate complaints about contractor, subcontractor, and supplier performance by
             129      following the procedures and requirements of Section 63-56-48 ; and]
             130          [(ii) when appropriate, impose suspensions or debarments from bidding on state
             131      building contracts on contractors, subcontractors, and suppliers for cause.]
             132          [(b) In conducting hearings and making decisions under this Subsection (6), the
             133      Contractor Performance Review Committee is acting as the chief procurement officer or the
             134      head of purchasing agency for purposes of Section 63-56-48 .]
             135          (6) (a) The director shall, in consultation with the State Building Board, prepare draft
             136      rules establishing a process for resolving disputes involved with contracts under the division's
             137      procurement authority.
             138          (b) The draft rules shall be presented to the Government Operations Interim Committee
             139      for review, comment and recommendations before August 31, 2004.
             140          (c) The director shall consider, and the rules may include:
             141          (i) requirements regarding preliminary resolution efforts between the parties directly
             142      involved with the dispute;
             143          (ii) requirements for the filing of claims, including notification, timeframes, and
             144      documentation;
             145          (iii) identification of the types of costs eligible for allocation and a method for
             146      allocating costs among the parties to the dispute;
             147          (iv) required time periods, not to exceed 60 days, for the resolution of the claim;
             148          (v) provision for an independent hearing officer, panel, or arbitrator to extend the time
             149      period for resolution of the claim by not to exceed 60 additional days for good cause;

             150          (vi) provision for the extension of required time periods if the claimant agrees;
             151          (vii) requirements that decisions be issued in writing;
             152          (viii) provisions for administrative appeals of the decision;
             153          (ix) provisions for the timely payment of claims after resolution of the dispute,
             154      including any appeals;
             155          (x) a requirement that the final determination resulting from the dispute resolution
             156      process provided for in the rules is a final agency action subject to judicial review as provided
             157      in Sections 63-46b-14 and 63-46b-15 ;
             158          (xi) a requirement that a claim or dispute that does not include a monetary claim
             159      against the division or its agents is not limited to the dispute resolution process provided for in
             160      this Subsection (6);
             161          (xii) requirements for claims and disputes to be eligible for this dispute resolution
             162      process;
             163          (xiii) the use of an independent hearing officer, panel, arbitration, or mediation; and
             164          (xiv) the circumstances under which a subcontractor may file a claim directly with the
             165      division.
             166          (d) Persons pursuing claims under the process required by this Subsection (6):
             167          (i) are bound by the decision reached under this process unless the decision is properly
             168      appealed; and
             169          (ii) may not pursue claims or disputes under the dispute resolution process established
             170      in Sections 63-56-49 through 63-56-58 .
             171          (7) In addition to all other reasons allowed by law or rule, the director may reject all
             172      bids if none of the bidders whose bid is within the budget of the project submit a subcontractor
             173      list that meets the requirements of this section.
             174          (8) Any violation of this section, or any fraudulent misrepresentation by a contractor,
             175      subcontractor, or supplier, may be grounds for:
             176          (a) the contractor, subcontractor, or supplier to be suspended or debarred by [a
             177      Contractor Performance Review Committee] the director; or
             178          (b) the contractor or subcontractor to be disciplined by the Division of Professional and
             179      Occupational Licensing.

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