Job Order Contracting for Small Facilities and Maintenance Projects - - PowerPoint PPT Presentation

Job Order Contracting for Small Facilities and Maintenance Projects

TE XAS P UBLI C P URCH ASI N G ASSOCI ATI ON SUM M E R CON F E RE N CE KE RRVI LLE , TE XAS J UN E 9 , 2 0 16

Sarah Langlois Byron Jones

Why does legal compliance matter?

• Different procurement rules apply
• Contracts not properly procured can be voided or unenforceable
• Officials and officers who violate procurement statutes can be subject to

criminal penalties

• Public works contracts may trigger bonding and prevailing

wage requirements

• Legal mistakes can:
• DELAY projects
• Jeopardize budgets and result in

cost-overruns

• Subject gov’t entity to financial liability

to vendors and subcontractors

Non-Construction vs. Construction

• The Government Code does not provide a definition of the term

“construction;” however all “construction services” are governed under Tex. Gov’t Code Chapter 2269

• Legislature used the term “construction services,” rather than

“public works” when requiring compliance with Chapter 2269.

• It is unclear where “maintenance” falls.
• We have guidance, though, from public works statutes, OSHA,

the AG’s Office, and caselaw.

Maintenance

What is “maintenance”?

 According to the Texas Attorney General:

ordinary upkeep repairs

necessary to preserve something in good condition

to “keep up, keep from change; preserve” includes “ordinary repairs necessary and proper from

time to time for that purpose”

• Tex. Att’y Gen. Op. No. O-1216 (1930)

What is “maintenance”?

 According to OSHA:

 Maintenance activities =

“making or keeping a structure, fixture or foundation

(substrates) in proper condition in a routine, scheduled, or anticipated fashion.”

“This definition implies ‘keeping equipment working in

existing state, i.e., preventing its failure or decline.’”

OSHA decision (08/ 11/ 1994] - Construction vs. Maintenance [1926.32; 1910.12])

 OHSA relies on the same definitions for maintenance vs.

construction that the Department of Labor uses in determining prevailing wage compliance.

What is “maintenance”?

 According to OSHA:

 “Determinations

• f whether

a contractor is engaged in maintenance operations rather than construction activities must be made on a case-by-case basis, taking into account all information available at a particular site.”

 Factors to determ ine whether a project constitutes

m aintenance or construction:

One-for-one replacement Scale and complexity of the project, including the

amount of time and material required to complete the job

The physical size of the object being worked on

OSHA Letter to Raymond Knobb (11/ 18/ 2003)

What is “maintenance”?

 According to Texas Comptroller / Tex. Admin. Code:

 Maintenance on real property:

 For operational and functional improvements to realty,

maintenance means scheduled, periodic work that is necessary to sustain or support safe, efficient, continuous operations, or to prevent the decline, failure, lapse, or deterioration of the improvement.

 Maintenance does not include work to remodel, modify, upgrade,

perform major repair, or restore, even if the work is scheduled or periodic.

34 TEX. ADMIN. CODE Chapter 3, Section 3.357(7)

Statutory Definitions

 Electrical Maintenance Work – The replacement, or repair

• f existing electrical appurtenances, apparatus, equipment,

machinery, or controls used in connection with the use of electrical energy in, on, outside, or attached to a building, residence, structure, property, or premises.

 All replacements or repairs must be of the same rating and type as the existing

installation.

 No improvements may be made that are necessary to comply with applicable

codes under Texas Occupations Code, Chapter 1305.

 Electrical maintenance work does not include the installation of any new

electrical appurtenances, apparatus, equipment, machinery, or controls beyond the scope of any existing electrical installation.

16 TEX. ADMIN. CODE Chapter 73, Section 73:10(17)

What is “maintenance”?

 Generally:

 The replacement of a piece of equipment or components with

equipment or components that are

 equal in grade, quality and capacity,  without the addition of any new or upgraded components or

appurtenances

 will not amount to a “public work” and can be considered to be

strictly maintenance projects.

 Routine maintenance is not a public work!  Chapter 2253 regarding performance and payment bonds does not

apply to maintenance contracts.

 Chapter 2258 regarding prevailing wage rates does not apply to

maintenance contracts.

 May procure via non-2269 methods (like TEC 44 for ISDs)

Construction and Public Works

What is “construction work”?

 According to Texas Labor Code:

 “Building or construction” includes:  (A) erecting or preparing to erect a structure, including a

building, bridge, roadway, public utility facility, or related appurtenance;

 (B) remodeling, extending, repairing, or demolishing a

structure; or

 (C) otherwise improving real property or an appurtenance to

real property through similar activities.

• TEX. LABOR CODE § 406.096(e)(1)

 AG:

Section 406.096 “applies to every ‘building

• r

construction contract’ entered into by the State or a political subdivision of the State, no matter how small the subject matter of the contract may be.”

• Tex. Att’y Gen. Op. No. DM-300 (1994)

What is “construction work”?

 According to OSHA:

 “Construction work is not limited to new construction.

It includes the repair of existing facilities. The replacement of structures and their components is also considered construction work.”

OSHA decision (08/ 11/ 1994)

What is a “public works contract”?

 A Public Work Contract is defined as:

 “…

a contract for constructing, altering, or repairing a public building or carrying out or completing any public work.”

 “Public work labor” is defined as:

 “…

labor used directly to carry out a public work.”

• TEX. GOV’T CODE § 2253.001(4)-(6)

 Caselaw has clarified that a “public work contract” does not include all

contracts entered into by a governmental entity, but rather, has been limited to traditional construction projects involving the development

• r repair of a building. LA Ash, Inc. v. Tex. A&M Univ., 2008 Tex. App. LEXIS

8206, 2008 WL 4742135 (Tex. App. Waco Oct. 29, 2008); see also Acratod Co. v. Housing Auth. of Houston, 1999 Tex. App. LEXIS 889, 1999 WL 82450 (Tex. App. Houston 1st Dist. Feb. 11, 1999).

What is a “public work”?

 Texas courts have expressly found that the definition

• f “public work” includes a contract:

 to reconstruct a portion of a street  to remodel a city building  to build an elementary school  to make additions and renovations to a school district building  to construct a water supply system and treatment plant  for air conditioning of a county courthouse where the central

system air conditioners and window units were to be installed in the courthouse as fixtures or improvements of a fixed nature

 to construct a new roadway and parking lot

What is NOT a “public work”?

 Texas courts have explicitly held that the definition

• f “public work” does not include a contract:

 between a state university and prime contractor for the

removal and disposal of contaminated water and residue in pond.

 to develop and implement a records-retention schedule, a

disaster recovery plan and a storage solution for old records.

 with a county to prepare and deliver a map, plat-book system,

and delinquent tax list.

Public Work v. Maintenance



Good rule of thumb: Generally, if a construction contract does not fall within the definition of “maintenance,” it is safe to consider it a “public work contract” if it involves construction work related to a public building.



Definition of “routine maintenance” is narrow; safest bet is to use Job Order Contracting



For the past 75 years, the AG has defined maintenance as work required to keep a building in its current condition and prevent from

• decay. Providing something new that didn't exist

before is not maintenance. It is a very fact-based and case-by-case determination.

What do you think? Maintenance or Public Work?

 Relocating portable buildings  Connecting electricity to portable buildings  Removing wall in building  Demolition work  Installation of playground equipment  Installation of electrical outlet(s) for a technology

project

What are “construction services” under 2269?

 Tex. Gov’t Code Chapter 2269 “applies to a public

work contract made by a governmental entity,” plus certain facilities maintenance contracts

 “Public Work contract” defined as any contract for

constructing, altering or repairing a public building

 Routine

maintenance is not public work

• r

construction

 Definition of “routine maintenance” is narrow; safest

bet is to use Job Order Contracting

When to Use Chapter 2269 vs. non-2269 procurem ent m ethod for Maintenance

 Good rule of thumb: Procure maintenance service contracts

under Tex. Gov’t Code Chapter 2269, rather than under non- 2269 method (like TEC 44 for ISDs), if:

 Maintenance

and routine repair contracts could include significant replacements, repairs

• r

installation

• f

new structures, appurtenances, features, components or fixtures;

 Repairs will be performed by laborers, workers or mechanics

who would be required to furnish performance or payment bonds or would be entitled to a minimum prevailing wage rate under public works laws; or

 There is a potential for a repair to require the services of an

architect or engineer, the securing of permits, or compliance with updated building or electrical codes.

Authorized delivery methods under 2269

• Competitive Bidding (must have construction documents

/ defined project)

• Competitive Sealed Proposals (must have construction

documents / defined project)

• Construction Manager-at-Risk (must have construction

documents / defined project)

• Job Order Contracting or Coop (projects not yet defined;

to be determined/ assigned later; some may require construction documents)

• Design-Build
• Construction Manager-Agent

Job Order Contracting

 Only construction method:

 that allows selection of more than one winner

/ award more than one contract

 where you can select the vendor without yet

having (1) determined scope or (2) prepared construction documents

 that

allows you to procure construction- related services via a purchasing cooperative

Job Order Contracting

 “A procurement method used for m aintenance,

repair, alteration, renovation rem ediation,

• r m inor construction” of facilities “when the

work is of a recurring nature but the delivery tim es, types, and quantities of work required are indefinite.”

• TEX. GOV’T CODE § 2269.401

Job Order Contracting

Requirements for JOCs for Buildings & Facilities

 JOC applies only to a facility that is a building, the design

and construction of which is governed by accepted building codes, or a structure or land, whether improved or unimproved, that is associated with a building

• TEX. GOV’T CODE § 2269.402

 District may award JOCs for the maintenance, repair,

alteration, renovation, remediation, or minor construction of a facility, if:

1) the work is of a recurring nature but the delivery times are indefinite; and 2) indefinite quantities and orders are awarded substantially on the basis of predescribed and prepriced tasks

• TEX. GOV’T CODE § 2269.403

 a highway, road, street, bridge, utility, water supply

project, water plant, wastewater plant, water and wastewater distribution or conveyance facility, wharf, dock, airport runway or taxiway, drainage project, or related type of project associated with civil engineering construction

 a building a structure that is incidental to a project that

is primarily a civil engineering construction project

• TEX. GOV’T CODE § 2269.402

NO JOC for…

 Board approves method; District issues RFCSP stating maximum

contract amount

 Proposers bid using coefficients or multipliers of unit price book or

• ther pre-priced list of task, materials or work items

 Proposers

submit information relating to qualifications and experience

 District executes contract(s) with one or more vendors for future “as

needed work;” maximum 2-year base term with up to three annual renewals

 District issues individual job orders once need arises and scope is

developed for a particular sub-project/ task

 Job order or purchase order must be signed  By law, Board must approve any job order that exceeds $500,000

Statutory Requirements for JOCs

• TEX. GOV’T CODE Ch. 2269, Subchapter I

 Procurement should clearly state that it is for a

JOC; follow statutory requirements for JOCs using a RFCSP

 “The governmental entity may establish

contractual unit prices for a job order contract by:

 (1) specifying one or more published construction unit price

books and the applicable divisions or line items; or

 (2) p rov id ing a list of w ork item s and requiring the

• fferors to propose one or more coefficients or multipliers to

be applied to the price book or p rep riced w ork item s as the price proposal.”

• TEX. GOV’T CODE § 2269.404

Unit Pricing Requirements

• District selects vendor without having to use its own

competitive procurement process

• Only satisfies the procurement requirement, NOT the

contracting requirement

• Statute requires a written and signed job order between

the vendor and the District

• Cannot be used for substantial pre-planned construction
• r renovation; must meet the definition of JOC

 Only construction method that allows

for use of a cooperative in lieu of self-procurement

Using JOCs procured by Purchasing Cooperatives

 A local government may not enter into a contract to

purchase construction-related goods or services through a purchasing cooperative in an amount greater than $50,000 unless a person designated by the local government certifies in writing that:

1) the project for which the construction-related goods or services are being procured does not require the preparation of plans and specifications under Chapter 1001 or 1051, Occupations Code; or 2) the plans and specifications required under Chapters 1001 and 1051, Occupations Code, have been prepared.

Certification Requirement for Cooperative JOC Projects TEX. LOCAL GOV’T CODE § 791.011(j)

 Cannot

procure architectural

• r

engineering services via an interlocal contract

• TEX. GOV’T CODE § 791.011(h)

 But, can use a JOC even if architectural/ engineering

services are needed

 If a job order contract or order requires engineering

• r

architectural services, must select/ designate engineer/ architect to prepare construction docs for the project

• TEX. GOV’T CODE § 2269.408

NO Coop for…

JOCs and using an Architect or Engineer

• TEX. GOV’T CODE § 2269.408

 “If a job order contract or an order issued under the contract

requires architectural or engineering services that constitute the practice of architecture within the meaning of Chapter 1051, Occupations Code, or the practice of engineering within the meaning of Chapter 1001, Occupations Code, the governmental entity shall select or designate an architect or engineer to prepare the construction documents for the project.”

 Do

not need a separate A/ E to design “relocatable educational facilities” subject to and approved under Chapter 1202, Occupations Code (structure only); however, separate A/ E may be required for designing utility connections

• r

infrastructure (depending on cost).

 Within 30 days of erection and installation (and before

• ccupancy), a school district must have a portable or

modular building inspected, including the construction of the foundation system and the erection and installation of the building on the foundation.

 Must be inspected by the local building authority, if in a

jurisdiction with adopted building code.

 Must be inspected by a certified independent third party

inspector if in an area with no adopted building code or building inspector.

 Installation of portable/ modular

must be inspected even if manufacturer used State-approved and sealed plans for the building.

Portable and Modular Buildings

19 TEX. ADMIN. CODE § 61.1036(f)(3)

Bonds and Prevailing Wages

Public Works Bonds

 Performance bond required if contract is in excess of

$100,000

 Protects the District from financial losses arising from default, material

breach, termination or abandonment

 Payment bond required if a contract is in excess of $25,000

 Protects

the District from claims for nonpayment

• f

suppliers, subcontractors and sub-subcontractors

• TEX. GOV’T CODE § 2253.021

Prevailing Wage Rates

 Required on all Public Works projects; can use local rates

from a survey or the published U.S. Department of Labor’s (Davis Bacon) wages

 Board must adopt Prevailing Wage Rates (typically by

resolution)

 Prevailing Wage Rates must be published in the bid

specifications/ project manual and referenced in the contract documents

 Federally-Funded Projects – most have strict Davis Bacon

program requirements; coordinate with legal counsel prior to bidding/ contracting for compliance

Lagniappe

What Must Go To The Board?

• Determination of construction services project delivery

method (if other than competitive sealed bids)

• Approval
• f

competitive procurement results, where procurement is required

• Approval of all Interlocal Contracts for cooperatives
• Approval of the contract with any vendor
• Approval of all contract amendments or change orders
• All contract renewals and contract terminations
• Board may act to delegate all of the above powers (CH or CV

Local)

• Job Orders (including cooperative purchases) in excess of

$500,000

Sarah Langlois 5718 Westheimer Road, Suite 1200 Houston, Texas 77057 713.960.6000 slanglois@rmgllp.com

THE FOREGOING PRESENTATION WAS CREATED BY ROGERS, MORRIS & GROVER, LLP. THIS PRESENTATION IS INTENDED TO BE USED SOLELY FOR GENERAL INFORMATION PURPOSES AND IS NOT TO BE REGARDED AS LEGAL ADVICE. IF SPECIFIC LEGAL ADVICE IS SOUGHT, PLEASE CONSULT AN ATTORNEY.

Thank you for your time and attention!

Byron Jones 512.417.9974 b.jones@thegordiangroup.com