Analysis of DAS Contract Documents

Kegler Brown Construction Newsletter

The State of Ohio Department of Administrative Services ("DAS") has recently changed all of the contract documents that are used for State public works projects in its recently drafted Standard Conditions of Contract for Construction (September, 1993). These changes are the most extensive in several decades and should be of crucial importance to anyone performing construction work on state projects. The most important changes or noteworthy provisions include the following:

No Damage for Delay - Contractors are to have no claim against the State for delay damages with their sole remedy against the State being an extension of time. Contractors will assume third-party beneficiary status and be able to sue other prime contractors for delay caused by other primes on the project.

Lead Contractor - Rather than doing away with the multi-prime system, a compromise concept was adopted where a Lead Contractor responsible for project coordination and scheduling bids seven days in advance of the other primes. The time proposal for project completion submitted by the successful Lead Contractor bidder (which cannot exceed the Associate Architect's estimate) becomes the project completion date and other primes can choose to bid, or not bid, accordingly with full knowledge of who the Lead Contractor will be and the project duration. This information must be provided to the other prime bidders no later than 72 hours prior to the bid opening, excluding weekends and holidays. The Lead Contractor may recommend that payments be withheld or liquidated damages assessed against another prime.

Addendums - Cannot be issued by the Associate Architect later than 72 hours prior to the bid opening, excluding weekends and holidays. If issued later than that, the bid opening will be automatically extended one week.

Equals - Information concerning a proposed equal must be submitted to the Associate Architect no later than 10 days prior to the bid opening to receive consideration.

Non-Collusive Affidavit - Bidders must now submit a signed non-collusion affidavit which provides that there has been no collusion or communication with "any other Bidder or third party." This provision may effectively bar job targeting to the extent it requires communication between the bidder and the union concerning the bid price. The bid of any bidder engaging in collusion shall be rejected.

Bid Irregularities - The Director of DAS may allow a bidder a reasonable opportunity to cure minor irregularities or technical deficiencies in a bid. This may allow post-bid clarifications such as including a missing bid form, signing an unsigned bond or similar measures.

Mechanical Contractors - May be required to submit a contractor's license or bond certification.

Low Bids - Where the low bidder is more than 20% below the median of all other bids on $100,000 estimates and up, and 25% below the median on estimates less than $100,000, no contract shall be entered until the Director and the Associate analyze the bid, the bidder's financial responsibility and notify the bidder's surety.

Subcontractor/Supplier Lists - Must be provided to the Associate Architect within 10 days of the date of the Notice to Proceed for approval. Contractor shall not replace any subcontractor or supplier without written approval of the Director.

MBE Set-Asides - Goals are 5% for subcontractors and 5% for suppliers. Requirements are 7% of contract price of which at least 5% must be subcontracts, with the balance being suppliers, unless modified by the Set Aside Review Board. These percentages must be satisfied or an application to the Board made within 10 days of the date of the Notice to Proceed.

Prevailing Wages - Director shall notify contractor within 7 working days of any change in rates and the Contractor must pay any wage increase during the term of the contract.

Fax - Formal notices may be given by facsimile transmission but the notice is not considered official until the original signed document is delivered or sent certified mail.

RFI's - The Associate Architect must respond in writing within 3 days of receipt to any written request for an interpretation or clarification of the contract documents.

Discharge Permit - The contractor must comply with all conditions of the National Pollutant Discharge Elimination System Permit which is to be obtained by the Associate Architect.

Supervision - The Director may reject the Contractor's proposed superintendent and any approved superintendent may not be changed without the written approval of the Director. The Contractor must remove any of his employees or those of subcontractors or suppliers who are found by the Architect to be incompetent, guilty of misconduct, or detrimental to the project.

Partnering - All parties are to meet prior to construction to develop a partnering agreement.

Owner - Information and services required of the Owner are to be furnished with "promptness" to avoid delay in the progress of the project.

Backcharges - The Contractor has 3 working days to cure any problem or the Director may hire others to correct the problem and backcharge the Contractor. Any decision of the Director to backcharge the Contractor is final.

Time Extension - May only be granted if the request is submitted in writing to the Associate Architect within 10 days after the initial occurrence and the delay is due to (1) inclement weather, fire, labor dispute; (2) neglect of another prime; or (3) any unforeseeable cause beyond the Contractor's control. The Associate is to make a recommendation within 7 days of the request, and the Director is to make a final determination within 10 days thereafter.

Change Orders - There will be three types of change orders - regular, emergency and field order - with specific procedures for each. There will also be specific pricing guidelines stating what types and amounts of charges are recoverable. The Director has the right to require notarized invoices for material costs and to audit the records of not only the Contractor, but also his subcontractors and suppliers.

Dispute Resolution - Any claim by the contractor must be submitted within 10 days after the initial occurrence. After that there are time periods for the Associate Architect, State Architect, Contractor, Project Representative and Director to take action to facilitate this Article 8 process with the end result being settlement or a final decision of the Director. The dispute may be referred to another Alternative Dispute Resolution mechanism, such as mediation, if the parties agree and the State Architect or Director may delegate their duties to third parties.

Payment - Is to be made within 30 days from the Director's approval, although this is inconsistent with the case law which provides that draws must be paid within 30 days from the approval of the Associate Architect.

Final Payment - If accepted by the Contractor, this waives any claims against the State except those previously made in writing.

Final Inspection - Within 7 days of a request, the Associate Architect shall accept or reject the request stating his reasons. If accepted, the Associate shall provide his punchlist within 3 days of the inspection and these items must be completed by the Contractor within 30 days. The Director may partially release retainage if the season prevents the completion of certain work (i.e. landscaping) and withhold 2 times the cost of the remaining work.

Termination for Cause - Upon receiving notice, the Contractor has 5 days to cure the problem. If he fails to cure within 20 days, the contract may be terminated. The surety then has 10 days to commence work.

Shop Drawings - All shop drawings on equipment must include a written statement confirming they will perform as specified when installed properly. The Associate Architect is to review all shop drawings within 15 days of receipt.

Evaluations - There will be evaluation forms prepared at the conclusion of the job concerning the Contractor's and Associate Architect's performance.