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Proposed Consolidation of the Indiana Public Construction Statutes Proposed Consolidation of the Indiana Public Construction Statutes

Proposed Consolidation of the Indiana Public Construction Statutes

The Interim Committee on Government of the Indiana General Assembly has taken up the task of consolidating the public works and public construction statutes that are applicable to state agencies, public universities, local governments, cities, towns and counties, and other municipalities including airports, conservancy districts, and municipal utilities. Expressly excluded from the consolidation is the Indiana Department of Transportation. Bob Rudolph of the Legislative Services Agency presides over an informal working group that has been reviewing and commenting on the drafts since late September. The meetings of the working group were “streamed” through the General Assembly’s website, and videos of those meetings have been archived and are available for viewing. The current draft is available at http://iga.in.gov/documents/8cee52f5.

This is an effort to assemble in one place and to make more uniform the applicable requirements for and administration of contracts relating to public works. It is a “work in progress.” This article is provided more a “heads up,” or notice to the construction community, that this process is under way, than as an analysis of the provisions since the Interim Committee has not yet issued a full completed draft of its proposal, but has only issued portions with reserved sections for the content to be provided later. The current draft suggests they do not intend to change the general outlines of public works statutes. It proposes to retain the design-build and construction manager as constructor statutes virtually intact. There is currently a reserved space for “bidding,” so we do not know what is going to be proposed for the traditional bid process, nor is there any suggestion as to what bidding provisions will survive.

Following its October 30 meeting, the working group is “in recess” until after the conclusion of the 2019 legislative session, although Bob Rudolph plans to have a more complete legislative draft available in the spring. The working group will reconvene in May or June, working through the summer. The Interim Committee will review and consider approving the draft legislation for introduction in the 2020 legislative session, with a proposed effective date of January 1, 2021, although that may change. Among the statutes to be consolidated are:

  • IC 4-13.6, which contains provisions governing state public works generally, including guaranteed energy savings projects, although certain provisions also apply to local public works construction, including requirements for prequalification of contractors on public works projects and requirements for job training by contractors;
  • IC 5-16, which contains provisions applicable to state agencies and certain professionals working on state public works projects, but which also contains provisions applicable to all public construction projects, including requirements for the use of domestic steel, and the employment of construction managers as advisors;
  • IC 5-30, the design-build statute that is applicable to certain state agencies, state universities and certain local government agencies;
  • IC 5-32, the construction manager as constructor statute;
  • IC 36-1-12, the public works statute applicable to local governments, political subdivisions and their agencies;
  • IC 21-33-4, qualified energy savings contracts applicable to the state universities; and
  • IC 36-1-12.5, the statute authorizing political subdivisions to enter into guaranteed energy savings projects.

The current working draft contains bracketed cross references to assist a reader in understanding the current statutory provision from which language in the draft is derived.

Although the current working draft includes a new chapter on the administration of state government public works, IC 4-13-1.8, the most significant portion of the working draft is the inclusion of a new article: the consolidation, recodification and revision to the statutes regarding public works at IC 5-22.5, and entitled: “Public Works.” The current projected effective date for this statute is January 1, 2021. The current draft of IC 5-22.5-1 provides that the new article applies to a public works contract or a professional services contract solicited after December 31, 2020.

Certain agencies are expressly exempted: (i) the commission for higher education; (ii) military officers and military and armory boards of the state; (iii) the state fair commission; (iv) any entity established by the general authority as a body corporate and politic (unless its enabling statute provides otherwise); (v) INDOT; (vi) a municipal utility, when the work is done by its employees; (vii) hospitals organized and operating under IC 16-22 or IC 16-23; and (viii) operating agreements under IC 5-23.

The proposed new article contains a chapter on transitional provisions in Chapter 1.1 to enable the affected entities to continue to use the provisions of the current statutes up to the date the new statute takes effect and to “grandfather” transactions undertaken prior to the effective date of the new statute. 

A consolidated list of applicable definitions is contained in Chapter 2, applicable throughout the article, and relies in part on existing definitions in the various statutes and, in part, attempts to reconcile slightly differing terms to provide more uniform guidance across all jurisdictions, including a new definition, expanded definition or application, in whole or in part, of “construction,” ”contract,” “contractor,” ”facility” “public funds” “public works” and “responsible.” 

Chapter 3 contains general provisions applicable to all public works contracts, including requirements for negotiation in good faith, notice provisions, establishment of minority business enterprises goals, and disqualification of contractors dealing with Iran. Chapter 4 governs the administration of public works contracts generally at every level of government.

The provisions governing qualification of contractors and professional services is found in Chapter 5 and includes provisions for engineers, architects, and surveyors. Much of this language is currently found in IC 4-13.6 and IC 5-16-13 and applies to state agency contracts. At the present time, the draft contains language expressly allowing the exclusion of providers of professional services on local public works projects from the requirements of the chapter. 

Chapter 6 currently recodifies IC 36-1-9.5, a little-used statute providing a procedure for prequalifying contractors on airport contracts. Chapter 7 contains the required provisions that must be included in a public works contract or a professional services contract. Chapter 8 is currently a placeholder for bidding requirements. Chapter 9 is a placeholder for contracts solicited by requests for quotes. Chapter 10 applies to the award of contracts for professional services and other contracts that may be awarded without bidding. Chapter 11 is a placeholder for contracts awarded under emergency circumstances. Chapter 12 is a placeholder for the performance of public works projects by the public agency itself, currently known as using the agency’s own workforce or employees. The recodification of the design-build statute is found at Chapter 13 and is the recodification of IC 5-30. Chapter 14 is the recodification of IC 5-32, which authorizes the employment of construction managers as constructors on public works projects.

Chapter 15 is a placeholder for provisions on bonding, escrow and retainage. Chapter 16 contains requirements for drug testing of employees of public works contractors.

Chapter 17 contains provisions governing the use of energy efficient technology currently contained in IC 4-13.6-9, IC 5-16-12.2 and IC 36-1-12.7. Chapter 18 is the recodification of IC 4-13.6-8, governing energy cost savings contracts. Chapter 19 contains provisions governing qualified energy savings projects for state educational institutions. Chapter 20 recodifies IC 36-1-12.5, guaranteed energy savings contracts and energy efficient programs used by schools and political subdivisions.

The working draft is definitely still a “work in progress.” The Interim Committee on Government and Bob Rudolph welcome any and all suggestions for revisions to the working draft. Please feel free to contact Gary Dankert (gary.dankert@icemiller.com) or Karen Arland (karen.arland@icemiller.com if you have any questions or concerns.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
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