(Reprinted with amendments adopted on April 21, 2003)

 

Senate Bill No. 491–Committee on Government Affairs

 

(On Behalf of the Public Works Board)

 

March 24, 2003

____________

 

Referred to Committee on Government Affairs

 

SUMMARY—Makes various changes regarding bidding on contracts for public works of this state. (BDR 28‑487)

 

FISCAL NOTE:    Effect on Local Government: No.

                             Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to public works; requiring certain subcontractors to become qualified to be subcontractors on contracts for public works; providing that those subcontractors are presumed to be qualified except under certain circumstances; authorizing the Board to disqualify subcontractors under certain circumstances; providing for a process to appeal such a disqualification; revising the criteria that the Board is required to adopt for the qualification of bidders on contracts for public works; authorizing the Board and the governing body of a local government to issue subpoenas relating to hearings on denials of applications for qualification to bid on or be subcontractors on contracts for public works; specifying the burden of proof in such hearings; revising the provisions governing the awarding of design-build contracts; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

 

2-1  Section 1. Chapter 338 of NRS is hereby amended by adding

2-2  thereto a new section to read as follows:

2-3  1.  Each subcontractor whose name is required to be included

2-4  in a bid pursuant to NRS 338.141 must, to be eligible to provide

2-5  labor or a portion of the work or improvement to a contractor to

2-6  whom the State Public Works Board awards a contract pursuant

2-7  to this chapter, be qualified in accordance with criteria established

2-8  by regulation by the State Public Works Board. The criteria

2-9  established by the State Public Works Board pursuant to this

2-10  subsection must be made applicable to a subcontractor but must

2-11  otherwise be substantively identical to the criteria set forth in

2-12  paragraph (b) of subsection 3 of NRS 338.1375.

2-13      2.  A subcontractor shall be presumed to be qualified pursuant

2-14  to subsection 1 unless the State Public Works Board has received

2-15  verifiable information indicating that the subcontractor:

2-16      (a) Has been disciplined or fined by the State Contractors’

2-17  Board for a violation of chapter 624 of NRS; or

2-18      (b) Does not meet the criteria established by regulation

2-19  pursuant to this section.

2-20      3.  Upon receipt of verifiable information of a type described

2-21  in subsection 2, the State Public Works Board shall conduct an

2-22  investigation to determine whether the subcontractor meets the

2-23  criteria established by regulation pursuant to this section. Except

2-24  as otherwise provided in subsection 4, if the State Public Works

2-25  Board determines that the subcontractor does not meet such

2-26  criteria, the State Public Works Board may disqualify the

2-27  subcontractor, for a period set by the State Public Works Board,

2-28  from participating in public works projects which are sponsored

2-29  by the State Public Works Board. The State Public Works Board

2-30  shall provide written notice to the subcontractor of any such

2-31  disqualification.

2-32      4.  A subcontractor may appeal a disqualification pursuant to

2-33  subsection 3 in the manner set forth in NRS 338.1381.

2-34      Sec. 2.  NRS 338.1373 is hereby amended to read as follows:

2-35      338.1373  1.  A local government shall award a contract for

2-36  the construction, alteration or repair of a public work pursuant to the

2-37  provisions of:

2-38      (a) NRS 338.1377 to 338.139, inclusive; or

2-39      (b) NRS 338.143 to 338.148, inclusive.

2-40      2.  The provisions of NRS 338.1375 to 338.1383, inclusive, and

2-41  section 1 of this act and 338.139 do not apply with respect to

2-42  contracts for the construction, reconstruction, improvement and

2-43  maintenance of highways that are awarded by the Department of

2-44  Transportation pursuant to NRS 408.313 to 408.433, inclusive.

 

3-1  Sec. 3.  NRS 338.1375 is hereby amended to read as follows:

3-2  338.1375  1.  The State Public Works Board shall not accept a

3-3  bid on a contract for a public work unless the person who submits

3-4  the bid has qualified pursuant to NRS 338.1379 to bid on that

3-5  contract.

3-6  2.  The State Public Works Board shall by regulation adopt

3-7  criteria for the qualification of bidders on contracts for public works

3-8  of this state. The criteria adopted by the State Public Works Board

3-9  pursuant to this section must be used by the State Public Works

3-10  Board to determine the qualification of bidders on contracts for

3-11  public works of this state.

3-12      3.  The criteria adopted by the State Public Works Board

3-13  pursuant to this section:

3-14      (a) Must be adopted in such a form that the determination of

3-15  whether an applicant is qualified to bid on a contract for a public

3-16  work does not require or allow the exercise of discretion by any one

3-17  person.

3-18      (b) May include only:

3-19          (1) The financial ability of the applicant to perform a

3-20  contract;

3-21          (2) The principal personnel of the applicant;

3-22          (3) Whether the applicant has breached any contracts with a

3-23  public agency or person in this state or any other state;

3-24          (4) Whether the applicant has been disqualified from being

3-25  awarded a contract pursuant to NRS 338.017 or 338.1387; [and]

3-26          (5) The performance history of the applicant concerning

3-27  other recent, similar contracts, if any, completed by the applicant [.]

3-28  ; and

3-29          (6) The truthfulness and completeness of the application.

3-30      Sec. 4.  NRS 338.1381 is hereby amended to read as follows:

3-31      338.1381  1.  If, within 10 days after receipt of the notice

3-32  denying [his application,] an application pursuant to NRS

3-33  338.1379 or disqualifying a subcontractor pursuant to section 1 of

3-34  this act, the applicant or subcontractor, as applicable, files a

3-35  written request for a hearing with the State Public Works Board or

3-36  the governing body of the local government, the Board or governing

3-37  body shall set the matter for a hearing within [10] 20 days after

3-38  receipt of the request. The hearing must be held not later than [20]

3-39  45 days after the receipt of the request for a hearing[.] unless the

3-40  parties, by written stipulation, agree to extend the time.

3-41      2.  The hearing must be held at a time and place prescribed by

3-42  the Board or governing body. At least 10 days before the date set for

3-43  the hearing, the Board or governing body shall serve the applicant

3-44  or subcontractor with written notice of the hearing. The notice may

3-45  be served by personal delivery to the applicant or subcontractor or

4-1  by certified mail to the last known business or residential address of

4-2  the applicant [.] or subcontractor.

4-3  3.  The applicant or subcontractor has the burden at the

4-4  hearing of proving by substantial evidence that the applicant is

4-5  entitled to be qualified to bid on a contract for a public work, or

4-6  that the subcontractor is qualified to be a subcontractor on a

4-7  contract for a contract for a public work.

4-8  4.  In conducting a hearing pursuant to this subsection, the

4-9  Board or the governing body of a local government may:

4-10      (a) Administer oaths;

4-11      (b) Take testimony;

4-12      (c) Issue subpoenas to compel the attendance of witnesses to

4-13  testify before the Board or governing body;

4-14      (d) Require the production of related books, papers and

4-15  documents; and

4-16      (e) Issue commissions to take testimony.

4-17      5.  If a witness refuses to attend or testify or produce books,

4-18  papers or documents as required by the subpoena issued pursuant

4-19  to subsection 4, the Board or governing body may petition the

4-20  district court to order the witness to appear or testify or produce

4-21  the requested books, papers or documents.

4-22      6.  The Board or governing body shall issue a decision on the

4-23  matter within 5 days after the hearing and notify the applicant, in

4-24  writing, of its decision within [5] 15 days after it is issued. The

4-25  decision of the Board or governing body is a final decision for

4-26  purposes of judicial review.

4-27      Sec. 5.  NRS 338.141 is hereby amended to read as follows:

4-28      338.141  1.  Except as otherwise provided in subsection 2[,]

4-29  and NRS 338.1727, each bid submitted to any officer, department,

4-30  board or commission for the construction of any public work or

4-31  improvement must include:

4-32      (a) The name of each subcontractor who will provide labor or a

4-33  portion of the work or improvement to the contractor for which he

4-34  will be paid an amount exceeding 5 percent of the prime

4-35  contractor’s total bid. Within 2 hours after the completion of the

4-36  opening of the bids, the contractors who submitted the three lowest

4-37  bids must submit a list containing the name of each subcontractor

4-38  who will provide labor or a portion of the work or improvement to

4-39  the contractor for which he will be paid an amount exceeding 1

4-40  percent of the prime contractor’s total bid or $50,000, whichever is

4-41  greater, and the number of the license issued to the subcontractor

4-42  pursuant to chapter 624 of NRS. If a contractor fails to submit such

4-43  a list within the required time [, his]or if the list includes the name

4-44  of a subcontractor who has been disqualified by the State Public

5-1  Works Board pursuant to section 1 of this act, the contractor’s bid

5-2  shall be deemed not responsive.

5-3  (b) A description of the portion of the work or improvement

5-4  which each subcontractor named in the bid will complete.

5-5  2.  The contractor shall list in his bid pursuant to subsection 1

5-6  the name of a subcontractor for each portion of the project that will

5-7  be completed by a subcontractor.

5-8  3.  A contractor whose bid is accepted shall not substitute any

5-9  person for a subcontractor who is named in the bid, unless:

5-10      (a) The awarding authority objects to the subcontractor, requests

5-11  in writing a change in the subcontractor and pays any increase in

5-12  costs resulting from the change; or

5-13      (b) The substitution is approved by the awarding authority or an

5-14  authorized representative of the awarding authority. The substitution

5-15  must be approved if the awarding authority or authorized

5-16  representative of the awarding authority determines that:

5-17          (1) The named subcontractor, after having a reasonable

5-18  opportunity, fails or refuses to execute a written contract with the

5-19  contractor which was offered to the subcontractor with the same

5-20  general terms that all other subcontractors on the project were

5-21  offered;

5-22          (2) The named subcontractor files for bankruptcy or becomes

5-23  insolvent; or

5-24          (3) The named subcontractor fails or refuses to perform his

5-25  subcontract within a reasonable time or is unable to furnish a

5-26  performance bond and payment bond pursuant to NRS 339.025.

5-27      4.  As used in this section, “general terms” means the terms and

5-28  conditions of a contract that set the basic requirements for a project

5-29  and apply without regard to the particular trade or specialty of a

5-30  subcontractor, but does not include any provision that controls or

5-31  relates to the specific portion of the project that will be completed

5-32  by a subcontractor, including, without limitation, the materials to be

5-33  used by the subcontractor or other details of the work to be

5-34  performed by the subcontractor.

5-35      Sec. 6.  NRS 338.1721 is hereby amended to read as follows:

5-36      338.1721  To qualify to participate in a project for the design

5-37  and construction of a public work, a design-build team must:

5-38      1.  Obtain a performance bond and payment bond as required

5-39  pursuant to NRS 339.025;

5-40      2.  Obtain insurance covering general liability and liability for

5-41  errors and omissions;

5-42      3.  Not have been found liable for breach of contract with

5-43  respect to a previous project, other than a breach for legitimate

5-44  cause;

6-1  4.  Not have been disqualified from being awarded a contract

6-2  pursuant to NRS 338.017, 338.1387, 338.145 or 408.333; [and]

6-3  5.  Ensure that the members of the design-build team possess

6-4  the licenses and certificates required to carry out the functions of

6-5  their respective professions within this state[.] ; and

6-6  6.  Ensure that the prime contractor is qualified to bid on a

6-7  public work pursuant to NRS 338.1379 or is exempt from meeting

6-8  such qualifications pursuant to NRS 338.1383.

6-9  Sec. 7.  NRS 338.1723 is hereby amended to read as follows:

6-10      338.1723  1.  A public body shall advertise for preliminary

6-11  proposals for the design and construction of a public work by a

6-12  design-build team in a newspaper of general circulation in this state.

6-13      2.  A request for preliminary proposals published pursuant to

6-14  subsection 1 must include, without limitation:

6-15      (a) A description of the public work to be designed and

6-16  constructed;

6-17      (b) Separate estimates of the costs of designing and constructing

6-18  the public work;

6-19      (c) The dates on which it is anticipated that the separate phases

6-20  of the design and construction of the public work will begin and

6-21  end;

6-22      (d) The date by which preliminary proposals must be submitted

6-23  to the public body, which must not be less than 30 days after the

6-24  date that the request for preliminary proposals is first published in a

6-25  newspaper pursuant to subsection 1; [and]

6-26      (e) A statement setting forth the place and time in which a

6-27  design-build team desiring to submit a proposal for the public work

6-28  may obtain the information necessary to submit a proposal,

6-29  including, without limitation, the information set forth in subsection

6-30  3[.] ; and

6-31      (f) A statement setting forth that the prime contractor must be

6-32  qualified to bid on a public work pursuant to NRS 338.1379 or be

6-33  exempt from meeting such qualifications pursuant to NRS

6-34  338.1383 before submitting a preliminary proposal.

6-35      3.  A public body shall maintain at the time and place set forth

6-36  in the request for preliminary proposals the following information

6-37  for inspection by a design-build team desiring to submit a proposal

6-38  for the public work:

6-39      (a) The extent to which designs must be completed for both

6-40  preliminary and final proposals and any other requirements for the

6-41  design and construction of the public work that the public body

6-42  determines to be necessary;

6-43      (b) A list of the requirements set forth in NRS 338.1721;

7-1  (c) A list of the factors that the public body will use to evaluate

7-2  design-build teams who submit a proposal for the public work,

7-3  including, without limitation:

7-4       (1) The relative weight to be assigned to each factor pursuant

7-5  to NRS 338.1727; and

7-6       (2) A disclosure of whether the factors that are not related to

7-7  cost are, when considered as a group, more or less important in the

7-8  process of evaluation than the factor of cost;

7-9  (d) Notice that a design-build team desiring to submit a proposal

7-10  for the public work must include with its proposal the information

7-11  used by the public body to determine finalists among the design-

7-12  build teams submitting proposals pursuant to subsection 2 of NRS

7-13  338.1725 and a description of that information;

7-14      (e) A statement that a design-build team whose prime contractor

7-15  holds a certificate of eligibility to receive a preference in bidding on

7-16  public works issued pursuant to NRS 338.1389 or 338.147 should

7-17  submit a copy of the certificate of eligibility with its proposal; and

7-18      (f) A statement as to whether a design-build team that is selected

7-19  as a finalist pursuant to NRS 338.1725 but is not awarded the

7-20  design-build contract pursuant to NRS 338.1727 will be partially

7-21  reimbursed for the cost of preparing a final proposal and, if so, an

7-22  estimate of the amount of the partial reimbursement.

7-23      Sec. 8.  NRS 338.1727 is hereby amended to read as follows:

7-24      338.1727  1.  After selecting the finalists pursuant to NRS

7-25  338.1725, the public body shall provide to each finalist a request for

7-26  final proposals for the public work. The request for final proposals

7-27  must:

7-28      (a) Set forth the factors that the public body will use to select a

7-29  design-build team to design and construct the public work, including

7-30  the relative weight to be assigned to each factor; and

7-31      (b) Set forth the date by which final proposals must be

7-32  submitted to the public body.

7-33      2.  If one or more of the finalists selected pursuant to NRS

7-34  338.1725 is disqualified or withdraws, the public body may select a

7-35  design-build team from the remaining finalists if at least two

7-36  finalists remain.

7-37      3.  Except as otherwise provided in this subsection, in assigning

7-38  the relative weight to each factor for selecting a design-build team

7-39  pursuant to subsection 1, the public body shall assign, without

7-40  limitation, a relative weight of 5 percent to the possession of a

7-41  certificate of eligibility to receive a preference in bidding on public

7-42  works and a relative weight of at least 30 percent to the proposed

7-43  cost of design and construction of the public work. If any federal

7-44  statute or regulation precludes the granting of federal assistance or

7-45  reduces the amount of that assistance for a particular public work

8-1  because of the provisions of this subsection relating to preference in

8-2  bidding on public works, those provisions of this subsection do not

8-3  apply insofar as their application would preclude or reduce federal

8-4  assistance for that public work.

8-5  [3.] 4. A final proposal submitted by a design-build team

8-6  pursuant to this section must be prepared thoroughly[,] and be

8-7  responsive to the criteria that the public body will use to select a

8-8  design-build team to design and construct the public work described

8-9  in subsection 1 . [and comply with the provisions] A final proposal

8-10  is exempt from the requirements of NRS 338.141.

8-11      [4.] 5. After receiving the final proposals for the public work,

8-12  the public body shall:

8-13      (a) Select the most cost-effective and responsive final proposal,

8-14  using the criteria set forth pursuant to subsections 1 and [2;] 3; or

8-15      (b) Reject all the final proposals.

8-16      [5.] 6. If a public body selects a final proposal pursuant to

8-17  paragraph (a) of subsection [4,] 5, the public body shall, at its next

8-18  regularly scheduled meeting:

8-19      (a) Review and ratify the selection.

8-20      (b) Award the design-build contract to the design-build team

8-21  whose proposal is selected.

8-22      (c) Partially reimburse the unsuccessful finalists if partial

8-23  reimbursement was provided for in the request for preliminary

8-24  proposals pursuant to paragraph (f) of subsection 3 of NRS

8-25  338.1723. The amount of reimbursement must not exceed, for each

8-26  unsuccessful finalist, 3 percent of the total amount to be paid to the

8-27  design-build team as set forth in the design-build contract.

8-28      (d) Make available to the public a summary setting forth the

8-29  factors used by the public body to select the successful design-build

8-30  team and the ranking of the design-build teams who submitted final

8-31  proposals. The public body shall not release to a third party, or

8-32  otherwise make public, financial or proprietary information

8-33  submitted by a design-build team.

8-34      [6.] 7. A contract awarded pursuant to this section:

8-35      (a) Must specify:

8-36          (1) An amount that is the maximum amount that the public

8-37  body will pay for the performance of all the work required by the

8-38  contract, excluding any amount related to costs that may be incurred

8-39  as a result of unexpected conditions or occurrences as authorized by

8-40  the contract;

8-41          (2) An amount that is the maximum amount that the public

8-42  body will pay for the performance of the professional services

8-43  required by the contract; and

8-44          (3) A date by which performance of the work required by the

8-45  contract must be completed.

9-1  (b) May set forth the terms by which the design-build team

9-2  agrees to name the public body, at the cost of the public body, as an

9-3  additional insured in an insurance policy held by the design-build

9-4  team.

9-5  (c) Except as otherwise provided in paragraph (d), must not

9-6  require the design professional to defend, indemnify or hold

9-7  harmless the public body or the employees, officers or agents of that

9-8  public body from any liability, damage, loss, claim, action or

9-9  proceeding caused by the negligence, errors, omissions, recklessness

9-10  or intentional misconduct of the employees, officers and agents of

9-11  the public body.

9-12      (d) May require the design-build team to defend, indemnify and

9-13  hold harmless the public body, and the employees, officers and

9-14  agents of the public body from any liabilities, damages, losses,

9-15  claims, actions or proceedings, including, without limitation,

9-16  reasonable attorneys’ fees, that are caused by the negligence, errors,

9-17  omissions, recklessness or intentional misconduct of the design-

9-18  build team or the employees or agents of the design-build team in

9-19  the performance of the contract.

9-20      [7.] 8. Any provision of a contract that is in violation of

9-21  paragraph (c) of subsection [6] 7 is declared to be contrary to the

9-22  public policy of this state and is void.

9-23      [8.] 9. A design-build team to whom a contract is awarded

9-24  pursuant to this section shall:

9-25      (a) Assume overall responsibility for ensuring that the design

9-26  and construction of the public work is completed in a satisfactory

9-27  manner; and

9-28      (b) Use the workforce of the prime contractor on the design-

9-29  build team to construct at least 15 percent of the public work.

9-30      Sec. 9.  This act becomes effective upon passage and approval.

 

9-31  H