Ohio DAS adopts rules to effectuate “Construction Reform”

Kegler Brown Construction Newsletter

As mandated by the Ohio General Assembly who abolished multiple prime mandated contracting and authorized design-build and construction manager at-risk contracting on public work, the Department of Administrative Services (“DAS”) has drafted the first set of rules on these subjects:

  1. Surety bonds - After meeting much resistance to the original prospect of permitting less than 100% performance and payment bonds on larger projects, DAS has relented and mandated 100% performance and payment bonds be posted by the design-builder or construction manager at-risk on all projects, regardless of size.
  2. Contract forms - The State is adopting contract forms aligned closely with the current language in other prime contracts. Political subdivisions like counties and townships would be able to utilize trade association forms including ConsensusDOCS, AIA, DBIA or EJCDC.
  3. Subcontract forms - Design-builders and construction manager at-risk contractors would have to utilize a standard subcontract form, which, among other things, mandates:
    • Prompt Pay no later than 10 days upon receipt;
    • Retainage shall be at the rate retained by the owner on the contractor; and
    • Lien rights cannot be waived.

A public hearing on these rules is set for November 14, 2011, and they are expected to go into effect by year-end. The new contracting methods cannot be implemented by public owners until these key rules are formally adopted.