Ohio Enacts “Construction Reform” for Three Test Projects

Kegler Brown Construction Alert

After a contentious debate that held up the budget bill until the “eleventh hour,” the General Assembly and the governor have reached a compromise in which Ohio Construction Reform will be enacted for the limited purpose of three (3) pilot projects, the largest of which will be the OSU Medical Center expansion that is fast approaching. During the debate on this issue, President Gordon Gee of The Ohio State University promised $300 million of savings on this $1 billion project, if Ohio Construction Reform was enacted.

The legislation would eliminate, on three (3) test projects, what public owners think is a “multi-prime mandate” and authorize alternative contract delivery systems, such as design-build, general contracting and construction manager at-risk, that are not currently authorized by the public bidding statutes. These three (3) projects must be LEED-certified and structured to maximize the participation of EDGE contractors. The results are supposed to be analyzed and studied to determine whether further broad-based reform is appropriate.

While many believe that alternative contract delivery systems should be able to be utilized on public works, others are concerned that trade contractor protections will be lost in the process and there will be something other than a “level playing field” with respect to competition. In particular, trade contractors are rightfully concerned that elimination of the multi-prime system will encourage negative practices like bid-shopping, payment delays (at a minimum going from 30 days for payment from the state directly to a prime contractor to an additional 10 days if the former prime contractor is now a subcontractor), and permitting inequitable subcontract language. Supporters of the legislation advocate that pre-qualification of MEP contractors and public bidding of the MEP “subcontractors” will mitigate these concerns.
While the impact of the changes implemented for these three (3) projects is not yet known, this could be the start of radical change in the topography of Ohio’s public works bidding and construction well into the future.