JLM C.S.S.B. 583 75(R) BILL ANALYSIS PUBLIC EDUCATION C.S.S.B. 583 By: Ratliff (Craddick) 5-21-97 Committee Report (Substituted) BACKGROUND In 1995, the Legislature passed S.B. 1, the omnibus public education reform bill. S.B. 1 included one section modifying the basic purchasing statutes for school districts and allowed districts to choose from any of a list of purchasing methods, including competitive bidding, competitive sealed proposals, request for proposals, catalogue purchases, inter local contracts, or design-build contracts. (New Section 44.031, Education Code.) The reference to design-build in this statute has created confusion. Prior to the passage of S.B. 1, a series of Attorney General Opinions held that public entities in Texas could not utilize designbuild procedures because the practice is incompatible with the Professional Services Procurement Act (now Chapter 2254, Government Code), which prohibits competitive bidding for professional services. Since S.B. 1 authorizes school districts to use design-build contracts but does not specify the procedures to be used, it is unclear how the two statutes fit together. Also, institutions of higher education do not currently have authority to utilize design-build contracts. PURPOSE C.S.S.B. 583 establishes a more specific procedure for districts to follow in utilizing design-build contracts. C.S.S.B. 583 also authorizes institutions of higher education to enter into design-build contracts and establishes procedures that must be used that mirror those provided for school districts. RULEMAKING AUTHORITY It is the committee's opinion that this bill does grant additional rulemaking authority to the board of an institution of higher education in Section 3. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sec. 44.031 (a), (b), (e), and (g) to provide for exceptions from general purchasing provisions for school districts. SECTION 2. Adds new Sections 44.0315, 44.035, 44.036, 44.037, 44.038, 44.039, 44.040, and 44.041 to the Education code: Sec. 44.0315. Definitions Sec. 44.035. Establishes guidelines for competitive sealed proposals for construction services. Sec. 44.036. Establishes procedures that school districts must follow in entering into contracts using design-build delivery procedures. The procedures require a request for qualifications and a two-phase evaluation process. Sec. 44.037. Establishes procedures that school districts must follow in contracting with a construction manager-agent. A construction manager-agent is selected on basis of qualifications. Sec. 44.038. Establishes procedures that school districts must follow in contracting with a construction manager-at-risk. The procedures require a request for competitive sealed proposals, a ranking of proposers, and a negotiation process. Guidelines are established under which the construction manager may self-perform work. Sec. 44.039. Establishes procedures that school districts must follow in selecting contractors through competitive sealed proposals. Sec. 44.040. Provides guidelines for procurement of contractors through competitive bidding. Sec. 44.041. Establishes procedures that school districts must follow in awarding job order contracts. SECTION 3. Amends Chapter 51, Education Code, to add a new Subchapter S: Sec. 51.776. Definitions. Sec. 51.777. Provides for delegation by boards of institutions of higher education. Sec. 51.778. Provides that contracts for construction are void without competitive bidding, except as provided in this subchapter. Sec. 51.779. Establishes guidelines for competitive sealed proposals for construction services. Sec. 51.780. Establishes procedures that institutions of higher education must follow in entering into contracts using design-build delivery procedures. The procedures require a request for qualifications and a two-phase evaluation process. Sec. 51.781. Establishes procedures that institutions of higher education must follow in contracting manager-agent. A construction manager-agent is selected on the basis of qualifications. Sec. 51.782. Establishes procedures that institutions of higher education must follow in contracting with a construction manager-at-risk. The procedures require a request for competitive sealed proposals, a ranking of proposers, and a negotiation process. Guidelines are established under which the construction manager may self-perform work. Sec. 51.783. Establishes procedures that institutions of higher education must follow in selecting contractors through competitive sealed proposals. Sec. 51.784. Establishes procedures that institutions of higher education must follow in awarding job order contracts. SECTION 4. Repeals Sec. 51.907, Education Code. SECTION 5. Effective date: September 1, 1997. SECTION 6. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The committee substitute makes minor changes to the sections of the bill describing design-build procedures. These include changing the maximum firms that can be short listed from three to five, deleting the requirement that a district or institution reimburse proposers for engineering or architectural design, adding a requirement for inspection and verification testing independent of the design-build firm, and adding a section clarifying that performance and payment bonds are not required for the design portion of design-build contract. The most significant changes in the committee substitute expand the bill beyond design-build issues to cover other alternative delivery systems. School districts have taken advantage of procurement reforms in S.B. 1 to begin utilizing a wide variety of procurement options. Delivery methods such as construction management, competitive sealed proposals for construction services, and job order contracting are increasingly prevalent. Unfortunately, neither S.B. 1 nor other law establishes procedural guidelines for these delivery methods, even though school districts are not commonly familiar with them. The major changes in the committee substitute establish procedural guidelines which school districts and institutions of higher education must follow to enter in contracts for construction manager-agents, construction managers-at-risk, competitive sealed proposals for construction services and job order contracts.