Iowa recently enacted a statute that allows public owners to use Construction Manager at Risk (“CM-R”) as the project delivery system (Iowa Code §§ 26A.1 to 26A.4). The CM-R delivery method is seen as favorable for many public owners, because the Construction Manager (CM) holds the downstream subcontractor and supplier agreements, and guarantees a maximum price for the work. This E-Brief highlights the new law’s key requirements for the selected CM to solicit and prequalify subcontractor and supplier packages on public construction projects.
Step 1: Prepare a Request for Statement of Qualifications
First, Iowa law requires the CM prepare a request for statement of qualifications, which must include the following:
- (1) project site,
- (2) project scope,
- (3) schedule,
- (4) selection criteria (discussed in Step 2), and
- (5) time and place to submit statement of qualifications.
The request must be posted at least 13 days, but not more than 45 days, before the response submission date.
The request must also be posted publicly in
- (1) a relevant contractor plan room service with statewide circulation,
- (2) a relevant construction lead generating service with statewide circulation, and
- (3) an internet site sponsored by either a governmental entity or a statewide association that represents the governmental entity.
Step 2: Evaluate and Determine Which Firms Meet Prequalification Criteria
Second, the CM must evaluate and determine which subcontractors/suppliers meet the prequalification criteria based on the statements of qualifications submissions. Prequalification criteria must be objective and relate to the relevant trade work and/or materials package, and is limited to:
- (1) A firm’s experience as a contractor,
- (2) Capacity of key personnel,
- (3) Technical competence,
- (4) Capability to perform,
- (5) Past performance of the firm and the firm’s employees (including the firm’s safety record and the firm’s compliance with state and federal law),
- (6) Availability to the location of the project, and
- (7) Familiarity with the location of the project.
Prequalification criteria cannot include training, testing, or other certifications that may only be obtained through organized labor affiliated organizations or other limited-membership organizations.
Step 3: Send Notice to All Firms that Submitted a Statement of Qualifications
After the CM evaluates the statement of qualifications submissions, the CM must send a notice to all firms at least 15 days before the subcontractor/supplier bids are due. The notice must include a list of all firms that met the prequalification criteria.
For firms that met the prequalification criteria: the notice must include the time and place to submit bids.
For any firm that did not meet the prequalification criteria: the notice must provide information regarding which criteria the subcontractor/supplier did not meet.
Step 4: Evaluate and Award Bids
The new law also governs the process that public owners and CMs must follow when awarding subcontracts for the work.
Subcontractors and Suppliers Award
To evaluate and award bids, the CM and the government entity must, at the time and place specified in the notice to the bidders,
- (1) open bids,
- (2) announce the name of the contractor/supplier submitting the bid, and
- (3) file all bids received.
Once all bids are opened, reviewed, and filed, the contracts must be awarded to the lowest responsive, responsible bidder.
CM Self-Performance Award
If the CM wants to self-perform any work, the rules are slightly different.
The CM may perform work for a trade package that is below the competitive bid threshold. However, if a trade package exceeds the competitive bid threshold, the CM must notify the government entity, in writing, of the CM’s intent to submit a bid for the trade package.
If the CM intends to submit a bid to self-perform, the government entity controls the selection process for that specific trade package. If the CM is not the apparent low bidder for the specific trade package, the government entity may still award the CM that package if it’s in the best interest of the project.
While the new law presents an exciting opportunity for public owners and contractors to utilize the CM-R delivery method, it does include specific requirements that must be followed throughout the subcontractor and supplier procurement process. Contractors should review these requirements in detail to ensure their team is prepared to manage the complex bid procedures before they agree to serve as a CM on a public project in Iowa.
If you have any questions, please contact one of Woods Aitken’s Construction Attorneys. We encourage you to subscribe to our Construction Law E-Briefs for the latest construction news, tips, and updates.