Frederick A.
Vierow
Attorney-at-law
Phone: (614) 888-0666
Direct Cell: (614) 361-7116
E-mail: fvierow@columbus.rr.com
Revised
recent construction law CHANGES
Major changes involving construction related contracts were
made in HB 87 (Bueher), the Transportation Appropriation Act, and HB 95
(Calvert), the General Fund Appropriation Act. HB 87 was signed by Governor Taft on
The force account provision relating to townships was
subsequently again amended in SB 82 (Amstutz).
SB 82 was initially introduced to make changes in the county credit card
law but which was amended during the legislative process to cover a number of
items including the township force account changes. SB 82 was signed by Governor Taft on
The force account provisions relating to the Ohio Department
of Transportation were subsequently again amended in HB 70 (Willamowski). HB 70 was originally introduced to designate Interstate Route 75 as the "
Each section of law can be found in the respective bills on the General Assembly website at: http.//www.legislature.state.oh.us/search.cfm. Just bring up the bill on the website and put the Revised Code Section number in the "find" engine and search until the section if found. See footnotes herein for the section numbers.
The following major changes were made:
(1) Force account limits were increased, reporting requirements were mandated, and penalties for violation of the limits were enacted (HB 87, HB 95). The reporting requirements for townships were again subsequently amended (SB 82), and the Ohio Department of Transportation requirements were again subsequently amended (HB 70). [1]
(2) The dollar amount exempt from competitive bidding, is increased and in some instances notice requirement for competitive bidding is updated. (HB 95). [2]
(3) The Ohio Department of Transportation (ODOT) and counties are permanently authorized to employ a design build process subject to certain limitations. (HB 87). [3]
(4) The professional design selection process is amended to clarify that a public authority can determine other relevant factors to be used in the selection process and to restrict the use of fee estimates, proposals or other compensation estimates or measures prior to the selection and ranking of the professional design consultant. (HB 95). [4]
(5) A new section of law was enacted to prohibit state and political subdivision from entering into a contract for goods, services or construction with a person who has pending an unresolved finding of recovery from the Auditor of State and requiring the state and political subdivisions to check a Auditor of State database for such findings of recovery. (HB 95). [5]
(6) A state "Diversity, Growth and Equity Program" or "EDGE Program" is established to provide disadvantaged businesses with assistance and preferences in obtaining state contracts. (HB 95). [6]
Force account program
Force account introduction
The force account sections of law were significantly amended in HB 87 (Bueher), the Transportation Appropriation Act. The changes in the force account law were part of an overall plan to provide increased funding for state and local transportation projects. HB 87 was supported by all major transportation organizations, including the organizations representing public entities.
HB 87 was signed by Governor Taft on
HB 87 amends county [7], township [8], municipal [9] and ODOT [10] force account sections of law. The sections of law applicable to each type of entity are different from the sections of law applicable to other type of entity. As a result, counties, township, municipalities and ODOT must consult its section of law to determine the appropriate applicable law.
HB 87 also enacted a new section of law controlling force account limits on joint force account projects between entities. [11]
Generally speaking, HB 87 left prior sections of law in place and merely changed the language to meet certain policy goals.
The changes have six major goals:
(1) The limits in the current force account sections of law are increased significantly but not by as much as the inflationary increase from the last prior enactment of an increase in force account amounts.
(2) Force account limits are established for force account work on joint projects between various entities (counties, townships, municipalities or ODOT).
(3) If an estimate of forced account work is required, the items required to be included in an estimate of force account work, are more detailed.
(4) Estimates are required to be recorded on a
form designed by the state auditor. The
state auditor has designed the form and issued Technical Bulleting 2003-003 dated
(5) The state auditor is assigned the responsibility of auditing the estimates and determining the assessment of a penalty if force account limits are exceeded.
(6) Penalties are established for violation of force account limits by counties, townships and municipalities (but not for ODOT except on joint projects).
HB 87 also requires the staff of the Legislative Service
Commission (LSC), upon approval by the LSC, to study the number of force
account projects completed by counties, townships, municipalities and ODOT and
assess the use of taxpayer funds for those projects. [13] The study is also to address findings by the
state auditor, including whether various entities were found to have violated
the force account limits and whether any political subdivisions were subject to
reduced force account limits as a result of the audits. The LSC staff, if authorized by the Legislative
Service Commission, is to begin the study in January of 2006 and submit its
report to the General Assembly not later than
The state auditor's responsibilities enacted in HB 87, were
subsequently again modified in HB 95 (Calvert), the General Fund Appropriation
Act, signed by Governor Taft on
The township force account provisions,
were subsequently again modified in SB 82 (Amstutz), a county credit card bill,
signed by Governor Taft on
The force account provisions relating to the Ohio Department
of Transportation were subsequently again amended in HB 70 (Willamowski), a
road and bridge naming bill,
signed by Governor Taft on
Key force account questions
Generally, a public officials duties and authority are directed by statute. Most often the statute is a general expression of a duty required of the public official which implies the authority to carry out that duty. The force account laws are an exception to that general rule. It states that in certain activities involving roads, bridges and culverts, the force account provisions must be followed. All other duties can proceed in the normal fashion pursuant to a general expression of authority.
In order to properly comply with the force account law and proceeding with a force account project, the public office needs to ask the following questions need to be asked:
(1) Does the work involve the use of public work forces?
(2) Does the work involve work on a road, a highway or a street; a bridge; a culvert; in the case of a municipality, a public way; or in the case of ODOT, a traffic control system?
(3) Does the work involve maintenance, repair, improvement, construction, reconstruction, resurfacing or widening?
(4) Is the public office authorized to perform the work?
(5) In an estimate of costs required?
(6) Is the estimate properly made? Are all the costs properly included and recorded on the proper form?
(7) Is the amount of the force account under the applicable limit for the work?
If the answer to any of the first three questions is "no", the work does not constitute force account work for purposes of the statute and the force account laws may be ignored. Answering the last four questions, determine if the public office may proceed with the force account work without violating the force account law.
Force account limits
The increase in force account limits vary by type of government entity. Generally the legislature went through the existing sections of law and increased by 2 1/2 to 3 times the amount each entity had in its sections of law prior to HB 87.
The limits are based upon estimates made by county engineers or other applicable persons.
The county force account limits is increased from $10,000 to $30,000 per mile for road construction and reconstruction, including widening and resurfacing and from $40,000 to $100,000 for all bridges and culverts force account work. [15]
The township force account limit for the maintenance and repair of roads is increased from $15,000 to $45,000 in force account costs. This amount is not a per mile amount. It appears to be a per contemplated contract amount. The amount for undertaking construction or reconstruction of a township road is increased from $5,000 to $15,000 per mile. [16]
The municipal force account amounts for construction, reconstruction, widening, resurfacing, or repair of a street or other public way are harmonized at $30,000 for force account costs. While before HB 87, a village or municipality could proceed by force account if the amount exceeded $30,000 in force account costs, they were required to take bids if the estimate exceeded $10,000 in force account costs and then reject the bids before proceeding by force account. They were also required to keep a complete and accurate account in detail of the work and keep it on file if it exceeded $10,000. In both instances, HB 87 increased the $10,000 amount to $30,000. The sections do not apply to bridges or culverts nor to charter cities. [17]
The ODOT force account limit for highway work, exclusive of structures and traffic control signals, is increased from $10,000 per mile to $25,000 per mile. For bridge, culverts or traffic control signals, the force account amount is increased from $20,000 to $50,000 for force account costs. [18]
A new section of law restricts the amount of force account work on joint force account projects between counties, ODOT, townships, and municipalities. It would include joint work between two of the same type of entities, i.e. between two townships. Under this section, the force account limit for the joint work is caped by an overall limit. The caped amount is the highest limit that any one participating entity may perform on the joint project. The participating entities are prohibited from aggregating their limits. In addition, each participating entity is capped by the limit applicable to that entity. [19]
The force account limits are based on estimates by the entity. In the case of a county or township, that estimate is prepared by the county engineer. [20]
State audits and penalties for violation of force account limits
Audits by the state auditor
The auditor's responsibilities are set forth in RC
117.16. The auditor of state is required
to develop a force account project assessment form and make it available to
public offices. The state auditor has
developed the form pursuant to his statutory authority [21]
and has issued Auditor of State Technical Bulletin 2003-003 regarding the force
account changes. Both were mailed to
local officials on
It is mandatory that the auditor's form be used to estimate or report the costs of force account projects, except on projects done in connection with ODOT. [24] On projects done in connection with ODOT, the use of ODOT's Transportation Management System is acceptable. [25]
In preparing an estimate or reporting the cost of a force account project, a public office is only required to report force account work and not the costs of an entire project that may include work that is undertaken by private contract. The purpose of the force account law is to determine the true costs of force account work and not an entire project.
The form is to include "costs for employee salaries and benefits, any other labor costs, materials, freight, fuel, hauling, overhead expense, workers compensation premiums, and all other costs and expenses, including a reasonable allowance for the use of all tools and equipment used on or in connection with such work and for the depreciation on the tools and equipment". All of these expenses are related to the force account work and do not include any expenses not related to the force account work.
Key to properly completing the form is to follow closely the instructions in the Auditor of State's Bulletin and to respond to every part of the form.
Auditor of State Bulletin 2003-003 provides several safe harbor rates that can be used in calculating a force account estimate. The Bulletin provides: (1) a safe harbor rate for fringe benefits based on 30% of wages; (2) a safe harbor rate for employee overhead of 38% based on the total of base wages and fringe benefits, and (3) a safe harbor rate for material overhead based on 15% of the cost of materials. The advantage of using the safe harbor rate is that the state auditor will not challenge that part of any estimate that uses the safe harbor rate beyond determining if it is mathematically correct. The use of a safe harbor rate is valid even if job-costing records show a higher or lower cost. If a rate other than the safe harbor rate is used, the public official may be required to justify the rate used.
With respect to equipment, if the equipment is owned by the entity, the rate must reflect the original purchase price of the equipment, maintenance costs, time in service, depreciation, freight, fuel, and hauling. While the public office may use any generally accepted rate that reflects its use, the Bulletin specifically authorizes the use of the statewide rates published by ODOT and updated quarterly. If the ODOT rates are used, the rates used must be the last updated rate at the time the estimate is made and must be used for all equipment. The ODOT rates are on the ODOT website. [26] Currently the rates may be accessed from the main ODOT website by going to the drop down menu and clicking of "Equipment Standard Rates".
A proper estimate must: (1) be on the auditor's form, (2) must include all the items on the form as required by law, (3) the public office must be prepared to support it's estimate and (4) the estimate must be below the force account limit.
To facilitate audits, it is strongly recommended that force account estimates and related records be kept separate from other records. If the force account estimate differs from any job costing records kept by the public office, the public office needs to be prepared to justify the difference except where safe harbor calculations are used.
Force account records are public records.
The auditor is required to audit the use of the form to determine compliance with force account limits. The auditor is to undertake the audit by examining the forms and records of a sample of the force account projects completed since an audit was last conducted. If a violation is found, the auditor is to audit all force account work since the last audit. [27]
The audits are likely to occur at the time of the regular audit of the public office but that is not specified in the section of law. If the state auditor receives a compliant that a violation of the force account limits and the auditor has reasonable cause to believe it is in the public interest to conduct an audit, the auditor may conduct a special audit. [28]
Violations
In the auditor's section of law, penalties are established for violation of the force account limit. Reading the force account sections of law together with the auditor's section of law, the violation is for an estimate that exceeds the permissible limits.
It is not a violation for actual costs to exceed the limit. However, anytime actual costs exceed the limit, it certainly raises a red flag as to the appropriateness of the estimate, and it is critical that the estimate be properly prepared. A pattern of consistently under estimating the limit to get under the limit, followed by actual costs continuing to exceed the limit, is an open invitation for finding a violation. Anytime the estimate approaches the dollar thresholds, a red zone occurs and the public office should have appropriate documentation and the public office's reasoning is critically important.
If the form is not completed or is not fully answered, it is also a red flag to auditors to audit further to determine if the force account limits were violated.
Penalties
If the auditor finds that the public office has violated the force account limit, it is required to notify the public office that, for a period of one year from the date of notification, its force account limit have been reduced to the pre-HB 87 limits. For example, the county limits are reduced to $10,000 per mile for road construction or reconstruction and $40,000 dollars construction, reconstruction, maintenance, or repair of a bridge or culvert. [29]
If the auditor finds a second or subsequent violation, the limits are reduced for a two-year period. [30]
If the auditor finds a third or subsequent violation, a monetary penalty is assed in addition to the two-year reduction in the limits. [31]
If the auditor of state finds a third or subsequent violation, the auditor is to certify to the state tax commissioner an amount the auditor determines to be 20% of the total cost of the force account project that is the basis of the violation. The tax commissioner is to withhold the amount from any funds under the tax commissioner's control. If the tax commissioner cannot withhold the amount necessary to cover the penalty, the tax commissioner is to certify the deficiency to the county auditor who is to deduct the deficiency from any funds that the county auditor controls. The payment of the penalty is not restricted to fees, excises, or license taxes relating to registration, operation, or use of vehicles on public highways, or to fuels used for propelling such vehicles. The tax commissioner and county auditor can deduct the funds from any funds under their respective control.
Any funds withheld are to be redistributed through the Local Transportation Improvement Program (L-TIP). [32]
Although the county engineer is required to prepare estimates for a board of township trustees, a violation of the township force account limit would result in a reduction in township limits and if applicable, the payment of a penalty from township funds. It would not result in the imposition of a reduction the county limits or require a payment from county funds.
The penalties in the force account laws are in addition to any other penalties that might appear in the Revised Code.
County force account section of law
The county force account section of law is contained in RC
5543.19. Amendments to this section are
effective
Under the force account section, a county engineer has four tasks that must be concluded before work can be accomplished by force account.
(1) The county engineer must determine if the work is subject to the force account section of law.
(2) The county engineer must obtain authorization from the board of county commissioners to proceed by force account.
(3) In certain instances, the county engineer must prepare an estimate of the force account before proceeding by force account.
(4) The county engineer must prepare the estimate on a form designated by the state auditor and include items specified by the section of law.
If the county engineer's estimate exceeds the applicable limit, the board of county commissioners is required to invite and received competitive bids for furnishing all the labor, materials, and equipment necessary to complete the work covered by the estimate.
The commissioners must take competitive bids for the whole contract and in regard to its component parts, including labor and materials. Neither plans nor specification may be drawn to favor any manufacturer or bidder unless required by the public interest.
[Note: Under an existing section of law, the county engineer is required to approve all estimates which are paid from county funds for the construction, improvement, maintenance, and repair of roads and bridges by the county. This section of law is related to estimates of charges paid by the county and is not linked to force account estimates. [33]]
(1) The county engineer must determine if the
work is subject to the force account section of law.
The force account section of law is limited work on roads, bridges and culverts. The force account section of law apples only their construction, reconstruction, improvement, maintenance or repair of those roads. [34]
The use of the county force account is not limited to county roads, bridges and culvert but may be applicable to any road, bridge of culvert on which the county is authorized to work. [35] However, if a joint force account work with another entity is undertaken, the new special joint project limits would apply (See the Joint Force Account Project Paragraph). [36]
If the activity involving an employee does not involve changing a road, bridge or culvert, that activity does not constitute a force account activity. The following activities using county employees are examples of work that would not need to be reported under the force account law: (1) clearing an obstruction such as a tree failing on a road, (2) clearing brush or mowing along side a roadway, (3) cleaning a culvert or a drainage ditch, (4) snow removal, (5) placement of signs along the roadway, and (6) installation and maintenance of guardrails. None of these activities involve the change in a road, bridge or culvert
Force account by the definition in the section of law only applies to instance where the engineer is acting as "contractor, using labor employed by the engineer using material and equipment either owned by the county or leased or purchased in compliance with the competitive bidding statutes ... ." [37]
Work pursuant to a construction contracts and subcontracts with a private party, does not constitute force account work. Some concern has been expressed about the phrasing of the language in the definition of "force account" that excludes subcontracts.[38] After examining the purpose of the force account legislation, the history of the legislation enacting the definition, the Legislative Service Commission analysis of that legislation, and the litigation proceeding that legislation, the proper interpretation of the language is that subcontracts are not part of the force account work so long as the subcontracts are competitively bid. The common element that must be included in a construction contract or subcontract is the contractor's use of private labor.
Examples of subcontracts, include contracts that provide for the provision and installation of box beams, precast box culverts or three sided box culverts (for example, Conspan). For example, in the common practice of bidding a three-sided culvert, delivered and installed in place with county employees preparing the side and then after the beam has been placed, using county employees to back fill, the contract would constitute a subcontract and not need to be part of the force account calculation.
However, if the contract merely provide for the purchase of the beam or culvert and delivery to the construction site where county employees would install the beam or culvert, it would be a purchase order for materials and not a subcontract. In this instance, the cost would be for materials used in connection with the force account work and cost must be included in the force account calculation for materials. The requirement to include materials in the estimate applies even if the materials alone were acquired by competitive bidding.
The force account work does not include materials, tools, or equipment that are used only by a contractor or subcontractor even if the county purchased the items. If the county directly purchases or leases material, tools or equipment and there is a subcontractor "on the job", it becomes a factual issue whether material, tools, or equipment is being used on or in connection with the work by the county employees or is being used by the subcontractor. In the three sided box example, the cost of the beams even if purchased by the county, would not be part of the force account work but would be part of the work preformed by the contractor or subcontractor and therefore not included. If the answer is that both handle the same material, tools, or equipment, it would appear to be included in the definition of force account for purposes of the law at least to the extend that the county employees uses the material, tools or equipment. If the answer is both, perhaps an allocation can be made.
(2) The county engineer must obtain authorization from the board of county commissioners to proceed by force account.
A county engineer must obtain authorization from the board of county commissioners in order to proceed by force account on roads, bridges or culverts using his own employees. [39]
The authorization can be in the form of a very simple
resolution. For example, Auglaize County
Board of Commissioners at the beginning of each year adopts a resolution
authorizing the
A different section of law, unchanged by HB 87 or HB 95, permits a county engineer to proceed by force account when emergency repairs are necessary on roads, bridges or culverts, including state highways. [40] The county engineer need not make an estimate or be governed by the force account statute. The county engineer is required to keep on hand at all times a supply of material for the purposes of making such repairs. Upon report that a county road or bridge needs immediate attention, if the county engineer deems it an emergency repair, the county engineer may proceed at once to make such repair by force account. He may proceed without preparing plans, specifications, estimates of cost, or forms of contract.
The board of county commissioners is authorized to appropriate a sum of money each year sufficient to enable the county engineer to carry out the emergency force account work. The appropriations are to be placed in the "county engineer's emergency repair fund". All expenses incurred in employing extra help or in purchasing materials used in such repairs are to be paid from such fund on vouchers signed by the county engineer. If the total cost of the repairs is not more than $5,000, section of law deems the costs as necessary for emergency repairs. The $5,000 limit would appear to apply to the cost of employing extra help and for purchasing materials and not to the cost of using existing employees.
Another section of law, unchanged by HB 87 or HB 94, authorizes the board of county commissioners to complete a defaulted contract by force account when the estimated cost of completing the contract does not exceed $5,000. [41] If the work does not exceed $5,000, the board of commissioners may also complete the work by contract let without advertising.
(3) In
certain instances, the county engineer must prepare an estimate of the force
account before proceeding by force account.
As stated above, the county engineer must be authorized by the board of county commissioners to proceed with force account work. In some of those instances, the county engineer is also required to prepare an estimate of force account work before proceeding. The law does not indicate if the board of county commissioners authorization must precede the county engineer's completion of the estimate or vice versa. Either order would appear to be permissible.
The requirement to prepare a force account estimate differs between work on roads and work on bridges or culverts.
Road force account estimates
The county engineer is not required to prepare a force account estimate on all roadwork.[42] The county engineer must, however, have authorization from the board of county commissioners for all force account work even if an estimate is not required (see Paragraph 2, above).
An estimate of force account work is only required when that work involves the construction or reconstruction of a road. Construction and reconstruction includes widening and resurfacing. It does not include maintenance or repair of a road. Sometimes the distinction between repair and resurfacing can be close. It can be said that the chip and seal process is a process designed to expend the life of a road and therefore is a maintenance item and not a resurfacing item. Repairing a berm would seem to be maintenance work and not a widening project. The term widening appears to refer to the roadway itself. The statute treats "improvements" to the road in the same manner as repair and maintenance. This would be for improvements that would not be considered "reconstruction".
Bridge and culver force account estimates
The county engineer is required to prepare an estimate whenever the contemplated force account work involves construction, reconstruction, improvement, maintenance, or repair of a bridge or culvert. [43]
(4) The county engineer must prepare the
estimate on a form designated by the state auditor and include items specified
by the section of law.
The county force account section of law requires the county engineer to use a form developed by the statue auditor in making an estimate of force account costs (see discussion under State audits and penalties for violation of force account limits).
The county force account section of law by cross-reference requires the estimate contain items specified in the auditor force account section of law. [44] The items must relate to the force account work and need not include any other items. For example, if the county is constructing a bridge, and public employees are only being used on only a small portion of the bridge, it is the costs attributed to the public employees that need to be estimated along with the materials, tools, and equipment that the public employees use. The parts of the bridge not touched by the force account work, need not be included in the estimate.
The estimate must include "costs for employee salaries and benefits, any other labor costs, materials, freight, fuel, hauling, overhead expense, works' compensation premiums, and all other items of cost and expense, including a reasonable allowance for the use of all tools and equipment used on or in connection with such work and for the depreciation on the tools and equipment."
As discussed earlier, neither construction contracts nor construction subcontracts are part of the information required on the form. For the same reason, materials, tools and equipment used by the contractor or subcontractor are not to be included on the form.
In summary:
(1) Use the auditor's form.
(2) Answer all items required by the form.
(3) Report only those items related to the force account work.
If the board of county commissioners authorize the work and the estimate is below the force account limit, the county engineer may employ such labors and vehicles, use such county employees and property, lease such implements and tools, and purchase such materials as are necessary to perform the force account work.
Force account records are public records and as such, may be inspected and copied by the public.
Other county force account requirements
Another existing section of law, unamended in either HB 95 or HB 87, requires the county engineer when a road is constructed, reconstructed, widened, resurfaced, repaired or improved by force account and when the estimated cost exceeds $3,000 per mile, to keep a complete and accurate record in detail of the cost of doing the work. The record is of the final cost and perhaps by implication, estimates when $3,000 and over. [45]
The record must include the cost of labor, materials, freight, hauling, fuel, and all other items of cost, including a reasonable allowance for the use of tools and equipment owned by the county and for depreciation on such tools. [46]
The estimate and costs under this section must be on the form provided by the state auditor. [47]
The county engineer is required to keep the account, and within 90 days after the completion is required to file a detailed and itemized statement of the costs with the board of county commissioners. The commissioners are required to examine the statement and to correct the statement, if necessary. The commissioners are required to keep the record on file for no less than 2 years and it must be open to public inspection. [48]
If this statement differs in any significant way from the county engineers' force account assessment and the cost exceeds the force account limit, the county engineer must be prepared to explain the differences at the time of audit.
The direction in this section to file with the board of county commissioners, does not restrict the amount that can be spent on force account work and therefore failure to file does not subject the office to the statutory penalty. [49]
Township force account projects
The township force account section of law is RC 5575.01.
Amendments to this section became effective
Road repair or maintenance.
If a board of township trustees wishes to maintain or
repair a road by force account, it must first ask the county engineer to
complete the state audition's force account assessment form. [52] It is mandatory that the auditor's form be
used, except on projects done in connection with ODOT, the use of the
Transportation Management System is acceptable.
[53]
If the estimate is less than $45,000, the board of trustees may proceed by force account or by contract without competitive bidding.
If the estimate is $45,000 or more, the board must let the contract by competitive bidding or complete the competitive bidding process.
Road construction or reconstruction.
If a board of township trustees wishes to construct or reconstruct a road by force account, it must first ask the county engineer to prepare an estimate.
Interestingly this section does not reference the auditor of state form but mandates the estimate include labor, material, freight, fuel, hauling, use of machinery and equipment, and all other items of cost. However, public officers are required to use the state auditor's form in another section of the law. [54]
The township section also does not specifically include "widening or resurfacing" in the definition of "construction and reconstruction" as provided in the county force account law. However, a court might be tempted to use the county language in trying to interpret whether widening or resurfacing is construction or reconstruction versus repair or maintenance.
If the board of trustees finds it in the best interest of the public, it may, in lieu of issuing a contract, proceed by force account. However if the total estimate cost of the work exceeds $15,000 per mile, the board is required to go through the bidding process, consider the bids, and reject them before proceeding by force account. The force account work must be done in compliance with the plans and specifications upon which the bids were based.
The township force account section does not contain a statutory definition of "force account".
The township force account section was subsequently again
amended by SB 82 to provide that force account assessment forms are not
required for road maintenance or repair projects of less that $15,000 or road
construction or reconstruction projects of less that $5,000 per mile. [55] The amendment is effective on
Municipal force account section of law
The municipal force account sections of law are RC 723.52 and RC 723.53.
Amendments to these section, became
effective
Before letting or making any contract for construction, reconstruction, widening, resurfacing or repair of a street or other way, the director of public service in a city or the legislative authority in a village must make an estimate of the cost of doing such work. If the municipality has an engineer or an officer having a different title but the duties and functions of an engineer, the estimate must be prepared by that person. The estimate has to be on the state auditor's assessment form (even if the cost is to be estimated for purpose of competitive bidding). [57]
If the estimate for the work is $30,000 or less, the proper officers may proceed by force account. This is a total cost requirement and not a per mile requirement.
If the estimate for the work exceeds $30,000, bids must be invited and received. After receipt of the bids, the bids may be rejected and the work done by force account or direct labor but must be performed in compliance with the plans and specifications upon which the bids are based. It is unlawful to divide a street or connecting streets into separate section to defeat these requirements and a street includes portions of connecting street on which the same or similar construction, reconstruction, widening, resurfacing, or repair is planned or projected.
When the work is done by force account and the cost of the work exceeds $30,000, the engineer or other person must keep a complete and accurate account of the costs.[58] The account must be filed within 90 days of completing the project, with the office required to directing the work.
The officer or board is required to examine the statement, correct it if necessary and keep it on file for at least two years. The record must be available for public inspection.
The municipal force account sections do not contain a statutory definition of "force account".
ODOT force account section of law
The Ohio Department of Transportation (ODOT) force account
section of law is RC 5517.02. The
initial amendments to this section (contained in HB 87) ceame effective
As amended in HB 87, before undertaking the construction, improvement, maintenance, or repair of a state highway, or bridge or culvert thereon, or the installation, maintenance, or repair of a traffic control signal on a state highway, ODOT must make an estimate of the cost of the work using the state auditor's form. The state auditor by technical bulleting has authorized the use of the Transportation Management System in lieu of its force account project assessment form. [59]
Construction of bridges, culverts, traffic signals
If the work contemplated is the construction of a bridge, culver, or the installation of a traffic control signal, is $50,000 or less, ODOT may proceed by force account. [60]
Maintenance or repair including highways, structures, and
traffic control signal work
If the work contemplated is maintenance or repair work, the estimated cost of the completed operation, or series of connected operations, does not exceed $25,000 dollars per mile of highway, exclusive of structures and traffic control signals, or $50,000 for any single structure or traffic control signal. [61] The term "structures" is not defined, but most certainly would include bridges and culverts.
In an emergency rendered necessary by flood, landslide, or other extraordinary emergency, ODOT may proceed by force account. If ODOT determines inability to complete the work by force account, ODOT may contract for the work without advertising for bids ad ODOT considers for the best interest of ODOT. [62]
Unless force account is specifically authorized, ODOT must proceed by contract let in accordance with the competitive bidding laws applicable to it, and let to the lowest competent and responsible bidder. [63]
The ODOT force account section does not contain a statutory definition of "force account".
ODOT provision was modified in HB 70 by removing the requirement for an estimate for maintenance and repair of a state highway, bridge, culvert or traffic control device and specifically requiring an estimate and specifically requiring an estimate for reconstruction by widening or resurfacing and subjection reconstruction by widening or resurfacing to the force account limits.
A new section of law is enacted for joint force account
work. The new section is effective
The new section provides an aggregate limit for all force account work done by each of the participating entities. The participating entities may not aggregate their limits. The controlling limit is the higher limit that applies between the participating entities.
Further, the share of each participating entity may not exceed its respective force account limit.
Only one of the entities is required to complete the state auditor's form prior to proceeding. While not specifically stated in the section of law, the reporting entity would likely be required to report all force account work, not just that entities. Because each entity appears to be subject to its own limit, each entity may still want to have on hand a report of its force account work and that report should be identical to that of the reporting entity.
The joint project may not proceed by joint force account if any one of the entities is currently subject to a reduction in a force account limit under the auditor's force account section of law. [65] Entities proceeding under a joint arrangement, may want a provision in any joint agreement, whereby each party asserts that it is not under a force account reduction.
This section would only apply if two or more of those participating in the project are doing force account work. Where only one entity is doing force account work, only that entity's force account section of law would apply.
Other existing laws
The section of law that requires a subdivision to file a notice of intention to proceed where the subdivision intends to levy special assessment of charge is unchanged by either HB 87 or HB 95. That section refers to a force account resolution or ordinance with respect to the timing for filing a notice of intention to assess property owners. [66]
The section of law exempting wages of county employees when engaged in force account work from the prevailing wage sections of law, remains unchanged by either HB 87 or HB 95. [67]
Another section of law requires the county auditor before drawing a warrant for any moneys expended by the county on any highways, other than intercounty or state highways, or on any bridges or culverts on such highways, to require of the county engineer the assignment of such expense to the road and section thereof, bridge, or culvert in connection with which such expense was incurred. The auditor is to keep such records as are necessary to show clearly at the close of each year the amount of money expended from the county treasury on each section of road, other than intercounty or state highways, and on each bridge and culvert on such roads. A township clerk before drawing any warrant for money expended upon any road within the township, other than an intercounty or state highway, or on bridges or culverts on such roads, is to require of the engineer or board of township trustees the assignment of such expense to the road, bridge, or culvert in connection with which the expense was incurred. The clerk may keep such additional records as are necessary to show clearly at the close of each year the amount of money expended from the township funds on each section of road, other than intercounty or state highways, within the township, and on each bridge and culvert on such roads. The board of township trustees may require the clerk to keep such additional records. When general equipment or material for use in the entire county or township is purchased, the expense thereof need not be assigned to any section of road or to any bridge or culvert, but, so far as practicable, all items of expense shall be assigned to the specific section of road or to the particular bridge or culvert in connection with which they were incurred.
The director of transportation may prescribe all necessary and proper forms for maps and reports to be maintained by engineers, boards, auditors, and clerks. All auditors and clerks may be required by the director to transmit to him, in such form as he prescribes, the cost records they are required by law to keep pertaining to roads, bridges, and culverts within their counties or townships. [68]
Resurfacing Y
Re-construction Y
Widening Y
Repair
Pot hole
patching N
Base repair N
Maintenance
Crack sealing N
Chip & Seal N
Slurry seal N
Tarring N
Dust control N
Snow & Ice Control N
Guardrail
Construction N
Repair N
Drainage
Ditching/cleaning N
Ditch
elimination install N
Storm
sewer install N
Berm/Shoulder*
Construction N
Widening N
Repair/Maintenance N
Traffic Control Devices
Sign
installation N
Sign
replacement N
Sign
repair & maintenance N
Pavement
markings N
Traffic
signal work N
* If the berm or shoulder work is part of an overall
road, bridge or culvert project, may be a problem.
Installation Y
Repair Y
Cleaning & removing debris N
Inlet/outlet repair N
Headwall construction/repair N
Erosion control N
Snow & Ice Control N
Construction $
15,000 per project and over
Reconstruction $
15,000 per project and over
Maintenance $
5,000 per mile and over
Repair $ 5,000
per mile and over
Note: This chart was
prepared for discussion purposes and is not based upon a detailed legal
analysis. The legal advisor for the
county engineer is the county prosecuting attorney and that office should be
consulted whenever questions arise that might result in litigation.
Competitive bidding
HB 95 amends the competitive bidding laws. The amendments are effective
County government
The county competitive bidding law is amended to:
(1) Increase the exemption from competitive bidding from $15,000 to $25,000; [69]
(2) Increase the minimum amount by which emergency expenditures may be made by using informal bids from $15,000 to $25,000. The maximum amount for using informal emergency bids remains $50,000; [70]
(3) Exempts from competitive bidding purchases consisting of services related to information technology, such as programming services, that are proprietary or limited to a single source; [71]
(4) Provides that notice of competitive bidding may be distributed by electronic means, including posting the notice of the contracting authority's internet site on the world wide web. If the contracting authority posts on the world wide web, it may eliminate the otherwise required second notice in a newspaper of general circulation provided the first notice is published in a qualified newspaper and the internet notice meets certain requirements. [72]
Township government
The township competitive bidding laws are amended to
increase the amount exempt from the requirement for competitive bidding for
fire and ambulance districts, [73]
lighting including road lighting, [74]
private sewage collection tiles located within a township road right-of-way in
a township [75],
and road machinery, equipment and tool lease or purchase [76]. The amount in each instance is increase to
$25,000. The limit permitting a township
to dispose of road machinery, equipment or tools is also increased to $25,000. [77] These sections of law are effective
In HB 87, the amount for competitive bidding a road
maintenance or repair was increased along with the force account limits to
$45,000 for maintenance and repair of roads or $15,000 per mile for township
road construction or reconstruction. [78] The HB 87 section of law is effective
Municipal government
The village competitive bidding sections of law are amended to increase the competitive bidding exception to $25,000. [79]
Regional water and sewer districts
The water and sewer district competitive biding exemption is increased to $25,000 along with a similar increase in their force account authorization without prior competitive bidding. [80]
Design build projects
County design build
HB 87 enacts RC 5543.22, a new section of law, to allow a
county engineer to build bridge, highway or safety
projects by use of the design build process.
The new section is effective
The new section of law provides that notwithstanding the law on design contracts, a county engineer may combine the design and construction elements of a bridge, high, or safety project into a single contract. [81]
The cost of a design build project may not exceed $1,500,000. The cost limit would be based on the amount of the bid award.
The design engineer is required to award the contract in accordance with the competitive bidding statutes contained in RC 307.86 to 307.92 except that the engineer in lieu of plans, must prepare and distribute a scope of work document upon which bidders shall base their bids.
A note of caution, the ability to hold a contractor to a work standard, will only be as good as the scope of work document covers the standard. It will be critical to have a detailed scope of work document. If a concrete bridge is wanted, it should be specified or something else might be provided. If you want a bridge of a certain length, the scope of work document needs to set forth the requirement. If there is something not wanted that might otherwise fall within the scope document, the item should be specifically excluded in the scope of work document. Be leery of any standard form that might be so broad that the contractor determines the need from the contractor's perspective rather than from the perspective of the county engineer.
Most importantly, contractor selection criteria should be used that will result in selection of a contractor who the county engineer can trust with making right decisions on items not spelled out in the scope of work document. Work experience criteria would be significant from this perspective.
A county engineer may request ODOT to review and comment on the scope of work document or the construction plans for conformance with state and federal requirements. If so requested, ODOT is required to review and comment on the document or plans.
ODOT design build
HB 87 amends RC 5517.011 to permit ODOT to follow a similar
process to combine design and construction elements in a highway or bridge
project. Amendments are effective
Design
consultant selection process
HB 95 amends an existing section of law and enacts another
section affecting the design selection process.
The sections are effective
The sections do the following:
(1) Under the prior law, a public entity could add "other similar factors" to the selection criteria. HB 95 amended this section to read "any other relevant factors as determined by the public authority". The change permits factors that may not be similar but are relevant and also clearly states that it is the public authority's determination as to what factors are relevant. [83]
(2) Enacts a new section of law prohibiting "any public authority from requiring any form of fee estimate, fee proposal, or other estimate or measure of compensation prior to selection and ranking the professional design firms". [84] This section is aimed at eliminating the so-called "two-envelope" system and was added by Representative Chris Widener at the request of OACE and AIA-Ohio. After selection and ranking, fee information can be obtained from the consultants and nothing prevents obtaining fee information from other sources prior to selection and ranking.
(3) Provides an exception to the fee information prohibition in instances when firms are selected and ranked by a state agency from a list of pre-qualified firms and the state agency's payment of funds for the professional design services has been pre-approved by the controlling board. [85] This section was added at the request of the Ohio Department of Administrative Services.
(4) The remaining sections of the design selection law are unchanged. [86] Prior to selecting and ranking the firms, public authorities continue to be able to hold discussions with individual firms to explore further the firms' statements of qualifications, the scope and nature of the services the firms would provide, and the various technical approaches the firms may take toward the project. [87] The authority to institute pre qualification requirements remains unchanged. [88] In ranking the firms, the ranking is based solely on the qualifications to do the job for which qualifications are sought and not on any additional qualifications. [89] Except for the change as to other factors noted in (1) above, the definition of qualifications remains the same. [90]
contracting requirment as to state finding for recovery
HB 95 enacts a requirement that prohibits state agencies and political subdivisions, including counties and townships, from awarding a contract for goods, services, or construction, paid for in whole or in part with state funds, to a person against whom a finding for recovery has been issued by the auditor of state, if the finding for recovery is unresolved. [91]
"Finding for recovery" means a determination issued by the auditor of state, contained in a report the auditor of state gives to the attorney general pursuant to R.C. 117.28, that public money has been illegally expended, public money has been collected but not been accounted for, public money is due but has not been collected, or public property has been converted or misappropriated.
Before awarding a contract, the state agency or political subdivision is required to check a data base to be maintained by the Auditor of State to ascertain if there are unresolved findings of recover against the potential suppliers or contractors.
The database contains a listing persons
against whom an unresolved finding for recovery has been issued, and the amount
of the money identified in the unresolved finding for recovery. The auditor of
state was required to have this database operational on or before
The findings for recovery date base may be accessed on the Auditor of State website at: http://www.auditor.state.oh.us/ffr/default.htm.
The Ohio Attorney General also maintains an unofficial data base which may be accessed on their website at: http://www.ag.state.oh.us/web_applications/fiduciary/.
A finding for recovery is unresolved unless one of the following applies:
(1) The money identified in the finding for recovery is paid in full to the state agency or political subdivision to which the money was owed;
(2) The debtor has entered into a repayment plan that is approved by the attorney general and the state agency or political subdivision to which the money identified in the finding for recovery is owed. A repayment plan may include a provision permitting a state agency or political subdivision to withhold payment to a debtor for goods, services, or construction provided to or for the state agency or political subdivision pursuant to a contract that is entered into with the debtor after the date the finding for recovery was issued.
(3) The attorney general waives a repayment plan for good cause;
(4) The debtor and state agency or political subdivision to which the money identified in the finding for recovery is owed have agreed to a payment plan established through an enforceable settlement agreement.
(5) The state agency or political subdivision desiring to enter into a contract with a debtor certifies, and the attorney general concurs, that all of the following are true:
(a) Essential services the state agency or political subdivision is seeking to obtain from the debtor cannot be provided by any other person besides the debtor;
(b) Awarding a contract to the debtor for the essential services is in the best interest of the state;
(c) Good faith efforts have been made to collect the money identified in the finding of recovery.
(6) The debtor has commenced an action to contest the finding for recovery and a final determination on the action has not yet been reached.
The new section will be effective
The Auditor of State issued Technical Bulletin 2003-09 on
A contract entered into in violation of this provision runs
the risk of being held to be void.
Because of this and the possibility that the county may be sued for
failure to check the database or by entering into the contract with a person
who has a pending claim, it is recommended that a provision be made part of the
bidding or procurement documents that requires bidders to certify that they
have no unresolved findings for recovery pending against them.
EDGE Program
(Encouraging Diversity, Growth and Equity program)
HB 95 creates EDGE program or Program to Encourage Diversity, Growth and Equity, to provide disadvantaged businesses with assistance and preferences in obtaining state contracts. [93]
In December, 2002, Governor Taft instituted the EDGE program by executive order. HB 95 provides statutory underpinning for the program. The EDGE Contract Assistance Program is similar to the federal Disadvantaged Business Enterprise (DBE) Program. The Ohio Department of Transportation currently administers a DBE Program. EDGE is a race and gender-neutral small business assistance program. EDGE establishes goals for state agencies, boards and commissions to access state government contracts for EDGE-eligible businesses when contracting for construction projects, professional design services, supplies and services. In part, EDGE replaces the contract set-asides to minority-owned businesses, declared unconstitutional by a federal judge. The new law may face a similar court challenge.
The goals of the program are based upon relative wealth of the business; social disadvantage based on any of membership in a racial minority or personal disadvantage due to color, ethnic origin, gender, physical disability, long-term residence in an environment isolated from the mainstream of American society; location in an area of high unemployment; other demonstration of personal disadvantage not common to other small business or by business location in a qualified census track; and economic disadvantage based on economic and business size thresholds and eligibility criteria designed to stimulate economic development through contract awards to businesses located in qualified census tracks.
Business entities that meet the criteria will be certified as EDGE business enterprise and the certified firms will be eligible to participate.
The state guarantee program for surety bond is amended to include the EDGE program participants.
EDGE will be jointly administered by the Ohio Department of Administrative Services and the Ohio Department of Development.
[1] RC 5543.19 (County), RC 5575.01 (Township), RC 723.52 (Municipal), RC 723.53 (Municipal), RC 5517.02 (ODOT), RC 117.16 (Reporting, form and penalties), RC 117.161 (Joint Projects).
[2] RC 307.86 (County), RC 307.87 (County), RC
505.376 (Township fire and ambulance), RC 505.01 (Township road lighting), RC
505.07 (Township road lighting), RC 521.05 (Township improvement), RC 5549.01
(Township road equipment), RC 5575.01 (Township road construction and repair -
in HB 87), RC 731.14 (Village), RC 731.141 (Village administrator), RC 735.05
(Village director of public works), RC 6119.10 (Regional water and sewer
district).
[3] RC 5543.22 (
[4] RC 153.65, RC 153.691. The design selection process is in RC 153.65 to 153.71.
[5] RC 9.24.
[6] RC 123.152. Also see RC 122.041 (ODOD responsibilities), RC 122.88 and RC 122.090 (State guarantee of surety bonds
[7] RC 5543.19.
[8] RC 5575.01.
[9] RC 723.52, RC 723.53.
[10] RC 5517.02.
[11] RC 117.161.
[12] Auditor of State website: Auditor's Form: www.auditor.state.oh, click on "Publications", click on Auditor's Forms, and click on form in either PDF Acrobate or Microsoft Excel for the spreadsheet; Technical Bulletin 2003-003: www.auditor.state.oh, click of "Publications", click on "Technical Bulletins", click on "Bulletin 2003-003".
[13] HB 87, Uncodified Section 8.
[14] RC 117.16.
[15] RC 5543.19.
[16] RC 5575.01.
[17] RC 723.52, RC 723.53.
[18] RC 5517.02.
[19] RC 117.161.
[20] RC 5543.19 (County); RC 5575.01(Township).
[21] RC 117.16.
[22] Auditor of State website: Auditor's Form: www.auditor.state.oh, click on "Publications", click on Auditor's Forms, and click on form in either PDF Acrobate or Microsoft Excel for the spreadsheet; Technical Bulletin 2003-003: www.auditor.state.oh, click of "Publications", click on "Technical Bulletins", click on "Bulletin 2003-003".
[23] Amanda
Basista, Phone: 1/800/282-0370 or in
[24] RC 117.16.
[25] Auditor of State Technical Bulletin 2003-003.
[26] ODOT website: http://www.dot.state.oh.us/maintadmin/EquipmentRates.asp.
[27] RC 117 (A) (3).
[28] RC 117 (B).
[29] RC 117.16 (C) (1).
[30] RC 117.16 (C) (2).
[31] RC 117.16 (C) (3).
[32] RC 164.14.
[33] RC 5543.02.
[34] RC 5543.19.
[35] RC 5543.19.
[36] RC 117.161.
[37] RC5543.19 (C) (Definition of force account); RC 307.86 to 307.92, (Competitive bidding sections of law).
[38] RC 5543.15 (C).
[40] RC 315.13.
[41] RC5555.68.
[42] RC 5543.19 (A).
[43] RC 5543.19 (B).
[44] RC 117.16 (A) (1).
[45] RC 5555.72.
[46] RC 5555.72.
[47] RC 117.16 (A).
[48] RC 5575.01.
[49] RC 117.16 (C).
[50] RC 505.08, RC 505.101.
[51] RC 5575.01, third paragraph.
[52] RC 5571.01, first paragraph.
[53] Auditor of State Technical Bulletin 2003-003.
[54] RC 117.16.
[55] RC 5575.01 (C) , SB
82, effective
[56] RC 723.53. second paragraph.
[57] RC 723.52.
[58] RC 723.53.
[59] Auditor of State Bulletin 2003-003, issued
[60] RC 5517.02 (B) (1).
[61] RC 5517.02 (B) (2).
[62] RC 5517.02 (B) (3)
[63] RC 5517.02 (A).
[64] RC 117.161.
[65] RC 117.161, RC 117.16.
[66] RC 319.61(A).
[67] RC 4115.06.
[68] RC 5543.05.
[69] RC 307.86.
[70] RC 307.86.
[71] RC 307.86.
[72] RC 307.87.
[73] RC 505.376.
[74] RC 521.01 and RC 521.07 .
[75] RC 521.05.
[76] RC 5549.21.
[77] RC 5549.21
[78] RC 5575.01
[79] RC 731.14, RC 731.141, RC 735.05.
[80] RC 6119.10.
[81] RC 5543.22.
[82] RC 5517.011
[83] RC 153.65 (D) (4).
[84] RC 153.691.
[85] RC 153.691.
[86] RC 153.65 to RC 153.71.
[87] RC 153.69.
[88] RC 153.68
[89] RC 153.69 (B).
[90] RC 153. 65 (D).
[91] HB 95, RC 9.24.
[92] Technical Bulletin 2003-09: http://www.auditor.state.oh.us, click on "Publications", click on "Technical Bulletins", click on "Technical Bulletin 2003-009".
[93] RC 122.041, RC 122.87, RC 122.88, RC 122.90, and RC 123.152.