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.

 

~

 

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  information that:

2-16      (a) The State Public Works Board determines to be sufficient

2-17  and verifiable; and

2-18      (b) Indicates the subcontractor does not meet the criteria

2-19  established by regulation pursuant to subsection 1.

2-20      3.  Upon receipt of sufficient and verifiable information of a

2-21  type described in subsection 2, the State Public Works Board shall

2-22  require a subcontractor regarding whom such information is

2-23  received to submit to the State Public Works Board, on a form

2-24  prescribed by the State Public Works Board, an application for

2-25  qualification in accordance with the criteria established by

2-26  regulation pursuant to subsection 1. After receiving such an

2-27  application, the State Public Works Board shall determine

2-28  whether the subcontractor is qualified in accordance with the

2-29  criteria established by regulation pursuant to subsection 1. Except

2-30  as otherwise provided in subsection 4, if the State Public Works

2-31  Board determines that the subcontractor does not meet such

2-32  criteria, the State Public Works Board may disqualify the

2-33  subcontractor, for a period set by the State Public Works Board,

2-34  from participating in public works projects which are sponsored

2-35  by the State Public Works Board. The State Public Works Board

2-36  shall provide written notice to the subcontractor of any such

2-37  disqualification.

2-38      4.  A subcontractor may appeal a disqualification pursuant to

2-39  subsection 3 in the manner set forth in NRS 338.1381.

2-40      Sec. 2.  NRS 338.1373 is hereby amended to read as follows:

2-41      338.1373  1.  A local government shall award a contract for

2-42  the construction, alteration or repair of a public work pursuant to the

2-43  provisions of:

2-44      (a) NRS 338.1377 to 338.139, inclusive; or

2-45      (b) NRS 338.143 to 338.148, inclusive.

3-1  2.  The provisions of NRS 338.1375 to 338.1383, inclusive, and

3-2  section 1 of this act and 338.139 do not apply with respect to

3-3  contracts for the construction, reconstruction, improvement and

3-4  maintenance of highways that are awarded by the Department of

3-5  Transportation pursuant to NRS 408.313 to 408.433, inclusive.

3-6  Sec. 3.  NRS 338.1375 is hereby amended to read as follows:

3-7  338.1375  1.  The State Public Works Board shall not accept a

3-8  bid on a contract for a public work unless the person who submits

3-9  the bid has qualified pursuant to NRS 338.1379 to bid on that

3-10  contract.

3-11      2.  The State Public Works Board shall by regulation adopt

3-12  criteria for the qualification of bidders on contracts for public works

3-13  of this state. The criteria adopted by the State Public Works Board

3-14  pursuant to this section must be used by the State Public Works

3-15  Board to determine the qualification of bidders on contracts for

3-16  public works of this state.

3-17      3.  The criteria adopted by the State Public Works Board

3-18  pursuant to this section:

3-19      (a) Must be adopted in such a form that the determination of

3-20  whether an applicant is qualified to bid on a contract for a public

3-21  work does not require or allow the exercise of discretion by any one

3-22  person.

3-23      (b) May include only:

3-24          (1) The financial ability of the applicant to perform a

3-25  contract;

3-26          (2) The principal personnel of the applicant;

3-27          (3) Whether the applicant has breached any contracts with a

3-28  public agency or person in this state or any other state;

3-29          (4) Whether the applicant has been disqualified from being

3-30  awarded a contract pursuant to NRS 338.017 or 338.1387; [and]

3-31          (5) The performance history of the applicant concerning

3-32  other recent, similar contracts, if any, completed by the applicant [.]

3-33  ; and

3-34          (6) The truthfulness and completeness of the application.

3-35      Sec. 4.  NRS 338.1381 is hereby amended to read as follows:

3-36      338.1381  1.  If, within 10 days after receipt of the notice

3-37  denying [his application,] an application pursuant to NRS

3-38  338.1379 or disqualifying a subcontractor pursuant to section 1 of

3-39  this act, the applicant or subcontractor, as applicable, files a

3-40  written request for a hearing with the State Public Works Board or

3-41  the governing body of the local government, the Board or governing

3-42  body shall set the matter for a hearing within [10] 20 days after

3-43  receipt of the request. The hearing must be held not later than [20]

3-44  45 days after the receipt of the request for a hearing[.] unless the

3-45  parties, by written stipulation, agree to extend the time.

4-1  2.  The hearing must be held at a time and place prescribed by

4-2  the Board or governing body. At least 10 days before the date set for

4-3  the hearing, the Board or governing body shall serve the applicant

4-4  or subcontractor with written notice of the hearing. The notice may

4-5  be served by personal delivery to the applicant or subcontractor or

4-6  by certified mail to the last known business or residential address of

4-7  the applicant [.] or subcontractor.

4-8  3.  The applicant or subcontractor has the burden at the

4-9  hearing of proving by substantial evidence that the applicant is

4-10  entitled to be qualified to bid on a contract for a public work, or

4-11  that the subcontractor is qualified to be a subcontractor on a

4-12  contract for a contract for a public work.

4-13      4.  In conducting a hearing pursuant to this subsection, the

4-14  Board or the governing body of a local government may:

4-15      (a) Administer oaths;

4-16      (b) Take testimony;

4-17      (c) Issue subpoenas to compel the attendance of witnesses to

4-18  testify before the Board or governing body;

4-19      (d) Require the production of related books, papers and

4-20  documents; and

4-21      (e) Issue commissions to take testimony.

4-22      5.  If a witness refuses to attend or testify or produce books,

4-23  papers or documents as required by the subpoena issued pursuant

4-24  to subsection 4, the Board or governing body may petition the

4-25  district court to order the witness to appear or testify or produce

4-26  the requested books, papers or documents.

4-27      6.  The Board or governing body shall issue a decision on the

4-28  matter within 5 days after the hearing and notify the applicant, in

4-29  writing, of its decision within [5] 15 days after it is issued. The

4-30  decision of the Board or governing body is a final decision for

4-31  purposes of judicial review.

4-32      Sec. 5.  NRS 338.1387 is hereby amended to read as follows:

4-33      338.1387  1.  A public body awarding a contract for a public

4-34  work shall not award the contract to a person who, at the time of the

4-35  bid, is not properly licensed under the provisions of chapter 624 of

4-36  NRS or if the contract would exceed the limit of his license. A

4-37  subcontractor named by the contractor who is not properly licensed

4-38  for that portion of the work , or who, at the time of the bid, is on

4-39  disqualified status with the State Public Works Board pursuant to

4-40  section 1 of this act, shall be deemed unacceptable. If the

4-41  subcontractor is deemed unacceptable, the contractor shall provide

4-42  an acceptable subcontractor before the award of the contract.

4-43      2.  If, after awarding the contract, the public body discovers that

4-44  the person to whom the contract was awarded is not licensed, or

4-45  that the contract would exceed his license, the public body shall

5-1  reject the bid and may accept the next lowest bid for that public

5-2  work from a responsive bidder who was determined by the public

5-3  body to be a qualified bidder pursuant to NRS 338.1379 or was

5-4  exempt from meeting such qualifications pursuant to NRS 338.1373

5-5  or 338.1383 without requiring that new bids be submitted.

5-6  Sec. 6.  NRS 338.139 is hereby amended to read as follows:

5-7  338.139  1.  A public body may award a contract for the

5-8  construction, alteration or repair of a public work pursuant to NRS

5-9  338.1375 to 338.1389, inclusive, to a specialty contractor if:

5-10      (a) The majority of the work to be performed on the project to

5-11  which the contract pertains consists of specialty contracting for

5-12  which the specialty contractor is licensed; and

5-13      (b) The project to which the contract pertains is not part of a

5-14  larger public work.

5-15      2.  If a public body awards a contract to a specialty contractor

5-16  pursuant to NRS 338.1375 to 338.1389, inclusive, all work to be

5-17  performed on the project to which the contract pertains that is

5-18  outside the scope of the license of the specialty contractor must be

5-19  performed by a subcontractor who [is] :

5-20      (a) Is licensed to perform such work [.]; and

5-21      (b) At the time of the performance of the work, is not on

5-22  disqualified status with the State Public Works Board pursuant to

5-23  section 1 of this act.

5-24      Sec. 7.  NRS 338.141 is hereby amended to read as follows:

5-25      338.141  1.  Except as otherwise provided in subsection 2[,]

5-26  and NRS 338.1727, each bid submitted to any officer, department,

5-27  board or commission for the construction of any public work or

5-28  improvement must include:

5-29      (a) The name of each subcontractor who will provide labor or a

5-30  portion of the work or improvement to the contractor for which he

5-31  will be paid an amount exceeding 5 percent of the prime

5-32  contractor’s total bid. Within 2 hours after the completion of the

5-33  opening of the bids, the contractors who submitted the three lowest

5-34  bids must submit a list containing the name of each subcontractor

5-35  who will provide labor or a portion of the work or improvement to

5-36  the contractor for which he will be paid an amount exceeding 1

5-37  percent of the prime contractor’s total bid or $50,000, whichever is

5-38  greater, and the number of the license issued to the subcontractor

5-39  pursuant to chapter 624 of NRS. [If] Except as otherwise provided

5-40  in this paragraph, if a contractor [fails] :

5-41          (1) Fails to submit [such a] the list within the required time

5-42  [, his]; or

5-43          (2) Submits a list that includes the name of a subcontractor

5-44  who, at the time of the submission of the list, is on disqualified

6-1  status with the State Public Works Board pursuant to section 1 of

6-2  this act,

6-3  the contractor’s bid shall be deemed not responsive. A contractor’s

6-4  bid shall not be deemed not responsive on the grounds that the

6-5  contractor submitted a list that includes the name of a

6-6  subcontractor who, at the time of the submission of the list, is on

6-7  disqualified status with the State Public Works Board pursuant to

6-8  section 1 of this act if the contractor, before the award of the

6-9  contract, provides an acceptable replacement subcontractor in the

6-10  manner set forth in subsection 1 of NRS 338.1387.

6-11      (b) A description of the portion of the work or improvement

6-12  which each subcontractor named in the bid will complete.

6-13      2.  The contractor shall list in his bid pursuant to subsection 1

6-14  the name of a subcontractor for each portion of the project that will

6-15  be completed by a subcontractor.

6-16      3.  A contractor whose bid is accepted shall not substitute any

6-17  person for a subcontractor who is named in the bid, unless:

6-18      (a) The awarding authority objects to the subcontractor, requests

6-19  in writing a change in the subcontractor and pays any increase in

6-20  costs resulting from the change; or

6-21      (b) The substitution is approved by the awarding authority or an

6-22  authorized representative of the awarding authority. The substitution

6-23  must be approved if the awarding authority or authorized

6-24  representative of the awarding authority determines that:

6-25          (1) The named subcontractor, after having a reasonable

6-26  opportunity, fails or refuses to execute a written contract with the

6-27  contractor which was offered to the subcontractor with the same

6-28  general terms that all other subcontractors on the project were

6-29  offered;

6-30          (2) The named subcontractor files for bankruptcy or becomes

6-31  insolvent; or

6-32          (3) The named subcontractor fails or refuses to perform his

6-33  subcontract within a reasonable time or is unable to furnish a

6-34  performance bond and payment bond pursuant to NRS 339.025.

6-35      4.  As used in this section, “general terms” means the terms and

6-36  conditions of a contract that set the basic requirements for a project

6-37  and apply without regard to the particular trade or specialty of a

6-38  subcontractor, but does not include any provision that controls or

6-39  relates to the specific portion of the project that will be completed

6-40  by a subcontractor, including, without limitation, the materials to be

6-41  used by the subcontractor or other details of the work to be

6-42  performed by the subcontractor.

6-43      Sec. 8.  NRS 338.1721 is hereby amended to read as follows:

6-44      338.1721  To qualify to participate in a project for the design

6-45  and construction of a public work, a design-build team must:

7-1  1.  Obtain a performance bond and payment bond as required

7-2  pursuant to NRS 339.025;

7-3  2.  Obtain insurance covering general liability and liability for

7-4  errors and omissions;

7-5  3.  Not have been found liable for breach of contract with

7-6  respect to a previous project, other than a breach for legitimate

7-7  cause;

7-8  4.  Not have been disqualified from being awarded a contract

7-9  pursuant to NRS 338.017, 338.1387, 338.145 or 408.333; [and]

7-10      5.  Ensure that the members of the design-build team possess

7-11  the licenses and certificates required to carry out the functions of

7-12  their respective professions within this state[.] ; and

7-13      6.  If the project is for the design and construction of a public

7-14  work of the State, ensure that the prime contractor is qualified to

7-15  bid on a public work of the State pursuant to NRS 338.1379.

7-16      Sec. 9.  NRS 338.1723 is hereby amended to read as follows:

7-17      338.1723  1.  A public body shall advertise for preliminary

7-18  proposals for the design and construction of a public work by a

7-19  design-build team in a newspaper of general circulation in this state.

7-20      2.  A request for preliminary proposals published pursuant to

7-21  subsection 1 must include, without limitation:

7-22      (a) A description of the public work to be designed and

7-23  constructed;

7-24      (b) Separate estimates of the costs of designing and constructing

7-25  the public work;

7-26      (c) The dates on which it is anticipated that the separate phases

7-27  of the design and construction of the public work will begin and

7-28  end;

7-29      (d) The date by which preliminary proposals must be submitted

7-30  to the public body, which must not be less than 30 days after the

7-31  date that the request for preliminary proposals is first published in a

7-32  newspaper pursuant to subsection 1; [and]

7-33      (e) A statement setting forth the place and time in which a

7-34  design-build team desiring to submit a proposal for the public work

7-35  may obtain the information necessary to submit a proposal,

7-36  including, without limitation, the information set forth in subsection

7-37  3[.] ; and

7-38      (f) If the proposal is for a public work of the State, a statement

7-39  setting forth that the prime contractor must be qualified to bid on

7-40  a public work of the State pursuant to NRS 338.1379 before

7-41  submitting a preliminary proposal.

7-42      3.  A public body shall maintain at the time and place set forth

7-43  in the request for preliminary proposals the following information

7-44  for inspection by a design-build team desiring to submit a proposal

7-45  for the public work:

8-1  (a) The extent to which designs must be completed for both

8-2  preliminary and final proposals and any other requirements for the

8-3  design and construction of the public work that the public body

8-4  determines to be necessary;

8-5  (b) A list of the requirements set forth in NRS 338.1721;

8-6  (c) A list of the factors that the public body will use to evaluate

8-7  design-build teams who submit a proposal for the public work,

8-8  including, without limitation:

8-9       (1) The relative weight to be assigned to each factor pursuant

8-10  to NRS 338.1727; and

8-11          (2) A disclosure of whether the factors that are not related to

8-12  cost are, when considered as a group, more or less important in the

8-13  process of evaluation than the factor of cost;

8-14      (d) Notice that a design-build team desiring to submit a proposal

8-15  for the public work must include with its proposal the information

8-16  used by the public body to determine finalists among the design-

8-17  build teams submitting proposals pursuant to subsection 2 of NRS

8-18  338.1725 and a description of that information;

8-19      (e) A statement that a design-build team whose prime contractor

8-20  holds a certificate of eligibility to receive a preference in bidding on

8-21  public works issued pursuant to NRS 338.1389 or 338.147 should

8-22  submit a copy of the certificate of eligibility with its proposal; and

8-23      (f) A statement as to whether a design-build team that is selected

8-24  as a finalist pursuant to NRS 338.1725 but is not awarded the

8-25  design-build contract pursuant to NRS 338.1727 will be partially

8-26  reimbursed for the cost of preparing a final proposal and, if so, an

8-27  estimate of the amount of the partial reimbursement.

8-28      Sec. 10.  NRS 338.1727 is hereby amended to read as follows:

8-29      338.1727  1.  After selecting the finalists pursuant to NRS

8-30  338.1725, the public body shall provide to each finalist a request for

8-31  final proposals for the public work. The request for final proposals

8-32  must:

8-33      (a) Set forth the factors that the public body will use to select a

8-34  design-build team to design and construct the public work, including

8-35  the relative weight to be assigned to each factor; and

8-36      (b) Set forth the date by which final proposals must be

8-37  submitted to the public body.

8-38      2.  If one or more of the finalists selected pursuant to NRS

8-39  338.1725 is disqualified or withdraws, the public body may select a

8-40  design-build team from the remaining finalists if at least two

8-41  finalists remain.

8-42      3.  Except as otherwise provided in this subsection, in assigning

8-43  the relative weight to each factor for selecting a design-build team

8-44  pursuant to subsection 1, the public body shall assign, without

8-45  limitation, a relative weight of 5 percent to the possession of a

9-1  certificate of eligibility to receive a preference in bidding on public

9-2  works and a relative weight of at least 30 percent to the proposed

9-3  cost of design and construction of the public work. If any federal

9-4  statute or regulation precludes the granting of federal assistance or

9-5  reduces the amount of that assistance for a particular public work

9-6  because of the provisions of this subsection relating to preference in

9-7  bidding on public works, those provisions of this subsection do not

9-8  apply insofar as their application would preclude or reduce federal

9-9  assistance for that public work.

9-10      [3.] 4. A final proposal submitted by a design-build team

9-11  pursuant to this section must be prepared thoroughly[,] and be

9-12  responsive to the criteria that the public body will use to select a

9-13  design-build team to design and construct the public work described

9-14  in subsection 1 . [and comply with the provisions] A final proposal

9-15  is exempt from the requirements of NRS 338.141.

9-16      [4.] 5. After receiving the final proposals for the public work,

9-17  the public body shall:

9-18      (a) Select the most cost-effective and responsive final proposal,

9-19  using the criteria set forth pursuant to subsections 1 and [2;] 3; or

9-20      (b) Reject all the final proposals.

9-21      [5.] 6. If a public body selects a final proposal pursuant to

9-22  paragraph (a) of subsection [4,] 5, the public body shall, at its next

9-23  regularly scheduled meeting:

9-24      (a) Review and ratify the selection.

9-25      (b) Award the design-build contract to the design-build team

9-26  whose proposal is selected.

9-27      (c) Partially reimburse the unsuccessful finalists if partial

9-28  reimbursement was provided for in the request for preliminary

9-29  proposals pursuant to paragraph (f) of subsection 3 of NRS

9-30  338.1723. The amount of reimbursement must not exceed, for each

9-31  unsuccessful finalist, 3 percent of the total amount to be paid to the

9-32  design-build team as set forth in the design-build contract.

9-33      (d) Make available to the public a summary setting forth the

9-34  factors used by the public body to select the successful design-build

9-35  team and the ranking of the design-build teams who submitted final

9-36  proposals. The public body shall not release to a third party, or

9-37  otherwise make public, financial or proprietary information

9-38  submitted by a design-build team.

9-39      [6.] 7. A contract awarded pursuant to this section:

9-40      (a) Must specify:

9-41          (1) An amount that is the maximum amount that the public

9-42  body will pay for the performance of all the work required by the

9-43  contract, excluding any amount related to costs that may be incurred

9-44  as a result of unexpected conditions or occurrences as authorized by

9-45  the contract;

10-1          (2) An amount that is the maximum amount that the public

10-2  body will pay for the performance of the professional services

10-3  required by the contract; and

10-4          (3) A date by which performance of the work required by the

10-5  contract must be completed.

10-6      (b) May set forth the terms by which the design-build team

10-7  agrees to name the public body, at the cost of the public body, as an

10-8  additional insured in an insurance policy held by the design-build

10-9  team.

10-10     (c) Except as otherwise provided in paragraph (d), must not

10-11  require the design professional to defend, indemnify or hold

10-12  harmless the public body or the employees, officers or agents of that

10-13  public body from any liability, damage, loss, claim, action or

10-14  proceeding caused by the negligence, errors, omissions, recklessness

10-15  or intentional misconduct of the employees, officers and agents of

10-16  the public body.

10-17     (d) May require the design-build team to defend, indemnify and

10-18  hold harmless the public body, and the employees, officers and

10-19  agents of the public body from any liabilities, damages, losses,

10-20  claims, actions or proceedings, including, without limitation,

10-21  reasonable attorneys’ fees, that are caused by the negligence, errors,

10-22  omissions, recklessness or intentional misconduct of the design-

10-23  build team or the employees or agents of the design-build team in

10-24  the performance of the contract.

10-25     [7.] 8. Any provision of a contract that is in violation of

10-26  paragraph (c) of subsection [6] 7 is declared to be contrary to the

10-27  public policy of this state and is void.

10-28     [8.] 9. A design-build team to whom a contract is awarded

10-29  pursuant to this section shall:

10-30     (a) Assume overall responsibility for ensuring that the design

10-31  and construction of the public work is completed in a satisfactory

10-32  manner; and

10-33     (b) Use the workforce of the prime contractor on the design-

10-34  build team to construct at least 15 percent of the public work.

10-35     Sec. 11.  This act becomes effective upon passage and

10-36  approval.

 

10-37  H