Chapter 2 - The Process Of Construction Contract Procurement. For Facilities Projects

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2 Chapter 2 - The Process Of Construction Contract Procurement Table of Contents

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Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2 The Process

Of

Construction Contract Procurement

For

Facilities Projects

CHAPTER 2 TABLE OF CONTENTS

CHAPTER 2.1 - REQUIREMENTS FOR PROCUREMENT OF CONSTRUCTION A. LEGISLATION

B. REFERENCES

C. THRESHOLD AMOUNTS ... (See Article 2.1-1) Article 2.1-1 Annually Adjusted Thresholds

Article 2.1-2 Procurement Decision Document

Article 2.1-3 Prevailing Wage Rates – Residential Rates For Student Housing CHAPTER 2.2 - CONSTRUCTION CONTRACT FORMS

A. STANDARD CONTRACT FORMS ... (See Article 2.2-1) B. SELECTION OF CONTRACT FORM

Article 2.2-1 Current List of Construction Contract Forms CHAPTER 2.3 – THE BID PACKAGE

A. OVERVIEW B. DEFINITIONS

C. CONTENTS OF BID PACKAGE ... (See Article 2.3-1) D. PREPARATION

E. BID FORM – ONE BOUND IN BID PACKAGE & SECOND SEPARATE COPY Article 2.3-1 Bid Package & Contract Documents

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2 Chapter 2 - The Process Of Construction Contract Procurement Table of Contents

Page 2 of 2 CHAPTER 2.4 – DESIGN PHASE

A. OVERVIEW

B. PROFESSIONAL PROCUREMENT AND ADMINISTRATION C. SEPARATE PRIMES

D. BID FORMATS AND BID COMPONENTS ... (See Article 2.4-1) E. MBE/WBE PROGRAM & POLICY... (See Article 2.4-2) F. PROPRIETARY & NON-PROPRIETARY SPECIFICATIONS

G. FINISHES ... (See Article 2.4-3) H. LIQUIDATED DAMAGES

Article 2.4-1 Defined Bid Formats With Bid Components Article 2.4-2 MBE/WBE Proactive Effort Policy & Provisions CHAPTER 2.5 – BID PHASE

A. OVERVIEW

B. ADVERTISEMENT ... (See Article 2.5-1) C. PRE-BID CONFERENCE ... (See Article 2.5-2) D. ADDENDA ... (See Article 2.5-3) E. RECEIPT OF BIDS

F. OPENING AND READING OF BIDS

G. EVALUATION OF BIDS... (See Article 2.5-4) H. AWARD ... (See Article 2.5-5) I. BID PROTEST

Article 2.5-1 Bidding / Builders Exchanges Article 2.5-2 Pre-Bid Conference – Agenda Article 2.5-3 Addenda - Example

Article 2.5-4 Forms for Evaluations of Bids

Checklist - Determination of Contractor Responsibility Checklist - Determination of Contractor Responsiveness Sample Letter - Request for Bidder’s Information

Checklist – Professional’s Responsibilities for Bid Evaluations Article 2.5-5 Award of Project – Sample Letter

CHAPTER 2.6 – CONTRACT AWARD PHASE A. OVERVIEW

B. LOWEST RESPONSIBLE AND RESPONSIVE BIDDER C. TIMELY AWARD OF CONSTRUCTION CONTRACT D. CONTRACT PREPARATION

E. CONTRACT TRANSMITTAL TO LEGAL

F. WORK ORDERS FOR QUALIFICATION CONTRACTS Articles None

CHAPTER 2.7 – CONSTRUCTION PHASE A. OVERVIEW

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.1 Chapter 2 - The Process Of Construction Contract Procurement Page 1 of 11 Chapter 2.1 - Requirements For Procurement of Construction

Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.1

Requirements For

Procurement of Construction

For Facilities Projects

CHAPTER 2.1 TABLE OF CONTENTS

A. LEGISLATION

Act 188 of 1982 State System Of Higher Education Commonwealth of Pennsylvania Act 57 of 1998 Commonwealth Procurement Code Commonwealth of Pennsylvania Act 142 of 2002 Amendments to Procurement Code Commonwealth of Pennsylvania Act of 1913 Separate Primes Legislation Commonwealth of Pennsylvania Act 442 Pennsylvania Prevailing Wage Commonwealth of Pennsylvania Act of Mar. 3, 1978 Steel Products Procurement Act Commonwealth of Pennsylvania Act of Nov. 28, 1986 Reciprocal Limitations Act Commonwealth of Pennsylvania Act of July 23, 1968 Trade Practice Commonwealth of Pennsylvania Act of 1967 Public Works Contractors’ Bond Law Commonwealth of Pennsylvania Act of 1990 Americans With Disabilities Act Federal

B. REFERENCES

System’s Legal Manual Manual For Preparing & Processing Contracts For Goods & Services

C. THRESHOLD AMOUNTS...(See Article 2.1-1) 1. Annual Adjustments to Threshold Amounts

2. Publication of Annually Adjusted Thresholds

3. No-Bid or Competitive Bid Threshold $10,000 Threshold Amounts (Adjusted Annually) 4. Bonding Thresholds Various Threshold Amounts (Adjusted Annually) 5. Separate Prime Procurements Threshold $25,000 Threshold Amount (Fixed Threshold) 6. Prevailing Wages Threshold $25,000 Threshold Amount (Fixed Threshold) ...(See Article 2.1-3) 7. Procurement Decision Document...(See Article 2.1-2)

CHAPTER 2.1 LIST OF ARTICLES

Article 2.1-1 Annually Adjusted Thresholds Article 2.1-2 Procurement Decision Document

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Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.1

Requirements For

Procurement of Construction

For Facilities Projects

A. LEGISLATION

1. ACT 188 OF 1982 – Enabling Legislation for the PA State System

Act 188 provides certain definitions and mandates that the System must follow regarding contract procurement of construction and services. Some of those are as follows:

a. SECTION 20-2001-A: Definition of Maintenance

Maintenance means those activities, materials, labor, and contracts that:

(i) are necessary to replace, restore, refurbish, or enhance real property (ii) do not alter the architectural or engineering characteristics of the structure, (iii) do not affect the structural integrity of any existing facility or utility system.

as follows:

painting roadways

landscaping parking facilities

caulking & insulation downspout & gutters roof repair & replacement masonry repointing & repair window repair & replacement

sidewalk & curbing reconstruction & replacement track & athletic court resurfacing & reconstruction

asbestos abatement (in accordance with state & federal statutes & regulations) non- load bearing interior wall replacement, reconstruction, & construction NOTE: This definition of Maintenance is from Act 188 of 1982. A definition for other

purposes appears in Act 442 - PA Prevailing Wage legislation (See Section C of this Chapter). The Construction Support Office can provide other information and examples of maintenance to assist Universities in determining when projects are maintenance.

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b. SECTION 20-2003-A.1: Project Contracts

• Contract Execution & Administration. The Pennsylvania State System of

Higher Education is hereby authorized to execute and administer contracts for construction, repair, renovation, and maintenance projects, including all aspects of project management, design, construction, and legal and administrative services related to and necessary for the completion of projects.

• Capital Projects Not Authorized. This authorization does not include

capital projects that are funded by Commonwealth general obligation bonds, capital appropriations or pursuant to "The Fiscal Code," unless delegated by the Department of General Services to the System.

• Merit Selections of Architects & Engineers. The System is authorized to

review the work, experience, and qualifications of architects and engineers seeking contracts from the System. On the basis of merit and at the System’s discretion, the System will select and appoint architects and engineers for the design, contract administration, and inspection of authorized projects.

• Advertisement & Public Bid. All authorized contracts that exceed $10,000,

other than contracts for the retention of architects and engineers, must be advertised in the manner provided by law and competitively bid and awarded to the lowest responsible bidder.

• Other Legislation. Act 188 does not amend, repeal, or otherwise modify the

provisions of

- The Separations Act

Commonly known as the “Separate Primes Legislation”

The Act of May 1, 1913 (P.L. 155, No. 104), entitled "An act regulating the letting of certain contracts for the erection, construction, and alteration of public buildings".

- Pennsylvania Prevailing Wage Act

The Act of Aug. 15, 1961 (P.L. 987, No. 442).

2. ACT 57 OF 1998 - Commonwealth Procurement Code

As a government entity, the Pennsylvania State System of Higher Education is required to follow numerous statutes, regulations, policies, and procedures for the procurement of construction and services. One piece of primary legislation critical to the System’s procurement practices is Act 57 of 1998, the Commonwealth

Procurement Code . Act 57, a relatively recent act, was instrumental in simplifying

the process and requirements for contracting. Professionals are encouraged to review and have access to Act 57.

Act 57 is available on the System’s web site at:

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3. OTHER LEGISLATION

In addition to Act 188 and Act 57, as amended, the following list includes other legislation that the System must comply with during the design and execution of construction projects:

• Act of 1913 Separate Primes Legislation Commonwealth of PA • Act 442 Pennsylvania Prevailing Wage Commonwealth of PA • Act of Mar. 3, 1978 Steel Products Procurement Act Commonwealth of PA • Act of Nov. 28, 1986 Reciprocal Limitations Act Commonwealth of PA • Act of July 23, 1968 Trade Practice Commonwealth of PA • Act of 1967 Public Works Contractors’ Bond Law Commonwealth of PA • Act of 1990 Americans With Disabilities Act Federal

This list is provided to inform the user of this manual that the Construction Support Office may have electronic versions of legislation that can be used to reference and investigate certain requirements and conditions.

This list is not provided to give the user of this manual a complete list of all mandates that the System must follow and does not relieve the user of this manual from becoming familiar with all necessary statutes, regulations, policies, and procedures.

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B. REFERENCES

1. OFFICE OF CHIEF COUNSEL

Manual For Preparing & Processing Contracts For Goods & Services

The System’s Office of Chief Counsel has prepared a manual to assist in Commonwealth contracting – Manual For Preparing And Processing Contracts For

Goods And Services. This manual was prepared as a result of the implementation of

Act 57 of 1998, promulgated on November 11, 1998, and has been updated.

The purpose of this manual is to provide a user-friendly guide to Commonwealth contracting for the Office of the Chancellor and the System Universities. Further assistance can be found on the Legal Office home page at:

http://www.sshechan.edu/LegalWeb/legal.html

From the home page, you can access the manual and other information through the following sites:

http://www.sshechan.edu/LegalWeb/procure.htm http://www.sshechan.edu/LegalWeb/procure.htm#gen

http://www.sshechan.edu/LegalWeb/manual.pdf

Information provided here should not be used as a substitute for legal advice. The user should contact appropriate legal counsel for legal advice.

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Manual For Preparing & Processing

Contracts For Goods

&

Services

The Chief Counsel’s Manual includes discussion of the following: • Legal Review Of Contracts

• Common Types Of Contracts • Prohibited Contracts

• Methods Of Source Selection

• SPCs & Blueback Contracts: Required Provisions & Attachments • SPCs, SBCS, & Blueback Contracts: Contract Preparation

• SPCs & Bluebacks: Modification After Execution • Prohibited Contract Clauses

• Amending Existing Contracts • Bonds

• Record Keeping • Debarment

• Legal & Contractual Remedies • Small & Disadvantaged Businesses • Ethics & Anti-Bid Rigging Activities • Disposal Of Surplus Property • Bid Protest Procedure Flowchart • Contract Remedies Flowchart • Glossary Of Terms

• Board Of Governor’s Policy 1990-07-A • Board Of Governor’s Policy 1998-04 • Memorandums Of Chief Legal Counsel

The Chief Counsel’s Manual includes forms for the following: • SPC - Service Purchase Contract, Renewal, & Amendment • SBC - Service Bid Contract & Preparation

• Blueback Contract - Forms, Renewal, & Amendment • Renewal By Letter

• RFP - Request For Proposal

• Interagency Memorandum Of Understanding • Emergency Contract Certification

• Sole Source Contract Certification • Transmittal Form

• Checklist For Drafting Contracts • Novation Form

The user of the E/A Instructions Manual

shall verify certain instructions with the provisions contained in the

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C. THRESHOLD AMOUNTS

The Pennsylvania State System of Higher Education is required by statute to follow certain guidelines depending upon thresholds, either adjusted annually or fixed, for contract amounts. Those guidelines and thresholds are discussed in this section.

In the application of the thresholds, the user of this manual shall verify the instructions of this manual with the provisions of the manual produced by:

Office Of Chief Counsel

Manual For Preparing And Processing Contracts For Goods And Services

(discussed in previous paragraphs).

1. ANNUAL ADJUSTMENTS TO THRESHOLD AMOUNTS

Act 57 of 1998 provides for annual adjustments to certain thresholds to reflect the annual percentage change in the Composite Construction Cost Index (CCCI) of the United States Department of Commerce occurring in the one-year period ending December 31 of each year. See Article 2-1, Annually Adjusted Thresholds.

2. PUBLICATION OF ANNUALLY ADJUSTED THRESHOLDS

DGS Publication. The annual adjustments to thresholds to reflect the annual

percentage change in the Composite Construction Cost Index (CCCI) are computed and publish by Department of General Services. Historically, the updated thresholds for any year have not been published till mid-April. The Construction Support Office obtains the updated thresholds from the Department through the website.

The current thresholds are provided in Article 2.1-1, Act 57 Threshold Amounts. The thresholds that are effective on January 1 for the current year have been posted on the Commonwealth’s website at the following address:

http://www.dgs.state.pa.us/dgs/CWP/view.asp?A=353&QUESTION_ID=113753

If the above address is changed, the site may be located by doing a search of the DGS website for the word “thresholds”

The above site may be found by going to the Commonwealth’s web address

http://www.state.pa.us/PAPower/

and doing a word search (PA Power Search) for “Act 57 Thresholds”.

The Construction Support Office informs the System’s Office of Chief Counsel

as to the availability of the updated thresholds. The Chief Counsel then prepares a memo for transmission to the Universities, informing them of the updated thresholds.

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3. “NO-BID” OR “COMPETIVE BID” PROCUREMENT THRESHOLD

$10,000 Original Threshold Amount ...(Adjusted Annually – See Article 2.1-1) a. NO-BID PROCUREMENT

• Act 57 in Section 514 discusses requirements for small procurements and

specifies the following:

The head of the Purchasing Agency may authorize, in writing, procurements without formal bid procedures, if the following apply:

- If the procurement is not the subject of a Statewide Requirements Contract between the Purchasing Agency and a Contractor,

- If the amount for a supply or service does not exceed the amount established by the Purchasing Agency for small, no-bid procurements.

The department may authorize the no-bid procurement of construction

projects that do not exceed a total construction cost of $10,000 (adjusted

annually by the CCCI)

- Projects may not be artificially divided so as to constitute a small procurement that is under the threshold.

- Total Construction Costs means the cost of all separate prime contracts that constitute the project. Projects may not be artificially divided into separate contracts so as to constitute a small procurement that is under the threshold.

Note: A University’s business policies may have more stringent No-Bid Requirements that must be followed.

• The Office Of Chief Counsel’s Manual For Preparing And Processing

Contracts For Goods And Services provides the following instructions in

Section IV, Methods of Source Selection, E. Small Procurements:

“Although no formal bidding is required, universities must contemplate prudent business practices and should solicit at least three telephone bids, when possible , with at least one such potential contractor being a woman-based or minority-based entity.”

“It should be the university’s practice that, despite no obligation for formal bidding, certain cases for economic benefit may dictate that formal bidding is utilized. Regardless, the selected contractor should not only be the lowest responsive bidder, but a responsible one as well.”

“The selected contractors should have their bid confirmed in writing in a subsequent SPC containing the specifics of the procurement completed, as noted in this section of the manual.”

b. COMPETITIVE BID PROCUREMENT

• Projects that exceed the $10,000 Original Threshold Amount must be formally advertised and competitively bid, and awarded to the lowest, responsive, and responsible bidder.

- Projects may not be artificially divided so as to constitute a small procurement that is under the threshold.

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4. BONDING THRESHOLDS

BID, PERFORMANCE, PAYMENT, & MAINTENANCE

Various Original Threshold Amounts ...(Adjusted Annually – See Article 2.1-1)

See Article 2.1-2 for tabulation of when bonds are required

• Bid Guarantee. A Bid Guarantee is discretionary for any project.

• Performance Bond (Original Threshold Amounts shown)

Thresholds for Contract Amounts

Bond Use Is

Discretionary or Required Amount of Bond

Less Than $25,000 Discretionary

$25,000 to $100,000 Required 50% Of Contract Cost (min.)

Over $100,000 Required 100% Of Contract Cost

• Payment Bond (Original Threshold Amount shown)

Thresholds for Contract Amounts

Bond Use Is

Discretionary or Required Amount of Bond

Over $100,000 Required 100% Of Contract Cost

• Maintenance Bond. A Maintenance Bond is discretionary for any project.

For the above, Discretionary means “at the discretion of the System”.

Required bond forms are included in Bid Package & Standard Forms of Agreement. Refer to act of December 20, 1967 (P.L.869, No.385), known as the

Public Works Contractors' Bond Law of 1967.

• Sole Source Procurements. The Chief Counsel recommends that consideration be

given to requiring bonds for Sole Source Contracts because no other firm may be able to provide the service or construction.

5. SEPARATE PRIME PROCUREMENTS THRESHOLD

$25,000 Threshold Amount ... (Fixed Threshold, Not Adjusted Annually)

• Projects with Total Construction Costs equal to or exceeding $25,000

are subject to the Act of May 1, 1913 (P.L.155, No.104), entitled "An act regulating

the letting of certain contracts for the erection, construction, and alteration of public buildings”, known as the Separations Act. The threshold applies to the Total

Project and not to individual contracts within a Total Project.

Total Construction Costs means the cost of all separate prime contracts that constitute the project. Projects may not be artificially divided into separate contracts so as to constitute a small procurement that is under the threshold.

• Projects with Total Construction Costs less than $25,000 are not subject to the

Separations Act and may be awarded in accordance with Section 511 of Act 57.

• Individual Prime Contracts with Construction Costs exceeding $4,000 (fixed)

are subject to the Separations Act.

• Separate Primes, as defined in the Separations Act, include work for Plumbing,

HVAC (Heating, Ventilation, and Air Conditioning), and Electrical Construction. General Construction is not covered by the Act and is not required to be a Separate Prime Contract.

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6. PREVAILING WAGES THRESHOLD

$25,000 Threshold Amount ... (Fixed Threshold, Not Adjusted Annually)

Prevailing Wages are required for construction, reconstruction, demolition, alteration, and/or repair work other than maintenance work, done under contract and paid for in

whole or in part out of the funds of a public body where the estimated cost of the total

project is in excess of twenty-five thousand dollars ($25,000). This does not include work performed under a rehabilitation or manpower-training program.

The Prevailing Wage Act, Act No. 442 August 15, 1961 (P.L.987) as amended August 9, 1963, provides the following definition:

"Maintenance work" means the repair of existing facilities when the size, type,

or extent of such facilities is not thereby changed or increased.

NOTE – MAINTENANCE

This definition of "Maintenance work" is from Act No. 442 and is different from the definition of “Maintenance” in Act 188. These definitions are provided for different purposes. The definition in Act No. 442 applies to the Prevailing Wages Threshold. The Construction Support Office can provide other information concerning the definition and examples of “maintenance” to help the Universities determine when projects are

“maintenance” for the purposes of Prevailing Wages.

The final determination of when projects are “maintenance” for the purposes of Prevailing Wages rests with the Department of Labor and Industry. When there is any question, a determination should be requested from the Department of Labor and Industry before the project is advertised.

Maintenance is also defined for other purposes in Act 188. See Sec A of this Chapter.

NOTE - MAINTENANCE PROJECTS OVER $100,000

According to L&I,

Prevailing Wage Rates are not required for maintenance projects over $100,000.

NOTE - RESIDENTIAL WAGE RATES & COMMERCIAL WAGE RATES

See Article 2.1-3 for discussion of

Prevailing Wage Rates – Residential Rates For Student Housing.

7. PROCUREMENT DECISION DOCUMENT

The Procurement Decision Document should be used by the University to determine and document the following:

• Determination of the Contract Form

• Determination of Bonds required for the project

• Determination of the form of Public Notice The Procurement Decision Document

• should explain reasons for the determinations and for apparent exceptions to usual methods, including a risk analysis for exceptions.

• should be reviewed and signed by the University’s Contract Officer, indicating approval.

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.1 Chapter 2 – The Process Of Construction Contract Procurement Article 2.1-1 Chapter 2.1 - Requirements For Procurement of Construction

Article 2.1-1

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.1 Chapter 2 – The Process Of Contract Procurement For Facilities Projects Article 2.1-2 Chapter 2.1 - Requirements For Procurement of Construction

Article 2.1-2

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.1 Chapter 2 – The Process Of Contract Procurement For Facilities Projects Article 2.1-3 Chapter 2.1 - Requirements For Procurement of Construction

Article 2.1-3

Prevailing Wage Rate

Residential Rates For Student Housing

This Article 2.1-3 also includes related information in the following:

Article 2.1-3a

THE LETTER FROM

Pennsylvania Department Of Labor & Industry

Labor Law Compliance Division

James A. Holzman, Deputy Chief Counsel

July 11, 2002

Article 2.1-3b

MEMORANDUM NO. 130, MARCH 17, 1978

U.S. Department Of Labor

Standard Of Comparison “Projects Of A Character Similar”

Under Davis-Bacon And Related Acts

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.2 Chapter 2 – The Process Of Contract Procurement For Facilities Projects Page 1 of 7 Chapter 2.2 – Construction Contract Forms

Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.2

Construction Contract Forms

CHAPTER 2.2 TABLE OF CONTENTS

A. STANDARD CONTRACT FORMS... (See Article 2.2-1) B. SELECTION OF CONTRACT FORM

CHAPTER 2 .2 LIST OF ARTICLES

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Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.2

Construction Contract Forms

A. STANDARD CONTRACT FORMS

The System has created various standard forms of Construction Contracts that are available to the Universities for the purposes of performing construction, maintenance, and repairs for facilities projects. The Construction Contract Forms, known as Standard Forms Of Agreements For Facilities Projects, are listed in Article 2-3 - Construction Contract List. These contract forms and the procedures to administer them are included and discussed in the Facilities Manual,

Volume 50, Construction Contract Procurement & Administration For Facilities Projects.

All contracts that utilize one of the below Contract Forms must be reviewed and approved by University Legal Counsel and the Office of the Attorney General. All contracts that exceed $500,000 for the contract’s term must be reviewed by the Office of General Counsel. Approval times should be considered in the execution process.

TYPES OF CONTRACTS & CONTRACT FORMS (See next page for more info) There are 5 Contract Types by which the Standard Forms Of Agreements For Facilities Projects have been categorized as follows:

1. Type One Construction Contracts Specific Projects 1A. 71K100 Specific Facilities Projects < $25,000(fix) (Construction/Maintenance/Repair) 1B. 71K110 Specific Facilities Projects > $25,000(fix) (Construction/Maintenance/Repair) 2. Type Two Construction Contracts Open End Contracts With Unit Prices

2A. SSHE-120 Open End Facilities Requirements Contracts (Prevailing Wage) 2B. SSHE-121 Open End Facilities Requirements Contracts (Non-Prevailing Wage)

3. Type Three Construction Contracts Qualification Contracts 3A. 71K150 Open End Qualified Separate Primes Contract for Facilities Projects

Includes Separate Primes of Electrical, Plumbing, HVAC, Mechanical, Fire Protection Includes General Construction which is not a Separate Prime

Includes Disciplines, such as Elevators, Asphalt Paving, and others appropriate for Qualification 4. Type Four Construction Contracts Design Build Contracts

4A. SSHE (tba) Specific Design / Build Projects

5. Type Five Construction Statements Qualification Statements 5A. SSHE (tba) Statement of Qualification

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TYPES OF CONTRACTS & CONTRACT FORMS

The below provides brief descriptions explaining the use of the

Contract Types and the Standard Forms Of Agreements For Facilities Projects

1. Type One Construction Contracts

Specific Projects

1A. 71K100 Specific Facilities Projects < $25,000 (Construction/Maintenance/Repair) 1B. 71K110 Specific Facilities Projects > $25,000 (Construction/Maintenance/Repair)

• The 71K100 Contract Form is a Specific Contract for Facilities Projects used when Contract Amounts (Total Project Costs) are less than the $25,000 threshold (Fixed Threshold).

• The 71K110 Contract Form is a companion to the 71K100 Contract Form and is a Specific Contract for Facilities Projects used when Contract Amounts (Total Project Costs) are expected to be greater than the $25,000 threshold (Fixed Threshold).

2. Type Two Construction Contracts

Open End Unit Price Contracts

2A. SSHE-120 Open End Facilities Requirements Contracts (Prevailing Wage)

2B. SSHE-121 Open End Facilities Requirements Contracts (Non-Prevailing Wage)

• The SSHE-120 & SSHE-121 Contract Forms are Open End Facilities Requirements Contracts. A Requirements Contract is an Open End Contract that specifies only Unit Prices for Specific Items under which Individual Work Orders are issued.

• One Contractor at a University is selected based on a satisfactory response to an Invitation to Bid or to a Request for Proposal that solicits Unit Prices for specific types of work. Individual Work Orders are then issued to the Contractor for each project during the term of the Open End, Requirements Contract.

The selection of more than one Contractor would provide differing Unit Prices, therefore, possibly negating the selection of a Contractor for an Individual Work Order based on the lowest price.

• Forms have been developed for each of a Prevailing Wage Project and Non-Prevailing Wage Project.

3. Type Three Construction Contracts

Qualification Contracts

3A. 71K150 Open End Qualified Separate Primes Contract for Facilities Projects

• The 71K150 Contract Form is a Qualification Contract. Contractors are determined by the System to be qualified to perform the work of a Separate Prime or Discipline based on submission of a satisfactory response (Qualification Application) to an Invitation To Qualify. The Qualified Contractors are provided the opportunity to respond to Invitations To Bid (or Requests For Proposal, as necessary). Projects are awarded to the lowest responsible and responsive bidder with the execution of an Individual Work Order.

• For contracts NOT expected to exceed $1,000,000 (71K150 only) for the Contract Term, 71K150 Contract Form does not require the signature of the Office of General Counsel.

• For contracts expected to exceed $1,000,000 (71K150 only) for the Contract Term, 71K150 Contract Form does require the signature of the Office of General Counsel.

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4. Type Four Construction Contracts

Design Build Contracts

4A. SSHE (tba) Specific Design / Build Projects NOT YET AVAILABLE

The SSHE (no designation yet) Contract Form is for Design/Build Projects and is still in development. There are issues needing resolution relating to requirements for Prevailing Wages, Separate Primes, and Minority and Women Owned Business Enterprise participation.

5. Type Five Construction Statements

Qualification Statements

5A. SSHE (tba) Statement of Qualification (See Example below)

Qualification Statements are not Contract Forms, but are statements that declare a firm to be qualified in an area of expertise for which an Invitation To Qualify was issued.

Qualification Statements are not contracts or commitments to provide qualifications or to purchase any services, but are a method to identify qualified entities that will most likely be able to provide creative proposals to meet requirements of a project.

EXAMPLE: Qualified Private Developers for Student Housing Projects

• Qualification Statement. A Qualification Statement is used when a Private Developer is determined to be qualified to finance, design, construct, and operate student housing projects, on campus and/or off-campus. Qualification is determined based on the submission of a satisfactory response (Qualification Application) to an Invitation To Qualify. The Qualified Developer is then provided the opportunity to respond to Invitations To Bid (or Requests For Proposal, as necessary). The project is awarded to the best value proposal.

• Not A Contract Or Commitment. The Qualification Statement for a Private Developer is not a contract or commitment to provide a qualification or to purchase any services, but is a method to identify a Private Developer that will most likely be able to provide creative proposals to meet the diverse student housing needs at the System’s Universities.

• Contract arrangements are very complex. Arrangements utilize a public-private cooperative approach featuring so-called “off balance sheet financing”, a ground lease with the private developer, and tax exempt bond financing.

• Generally, the University has little or no privity of contract with the parties actually developing the project. However, there may be University involvement for an on-campus project.

• The System is not necessarily a party in the contracts for the Private Development Project. However, the Chancellor’s Office, through the Chief Counsel’s Office and the Facilities Division, is extremely interested in the selection of a Qualified Private Developer and the arrangement of contracts that result in the financing, design, construction, and operation of the project.

• For any Privately Developed Project, the Chancellor’s Office will be involved in certain aspects of project development and review.

• Detailed discussion of procedures involved in a Private Development Project are not within the scope of this manual and are handled separate from the instructions of this manual. • CONSULT WITH THE FACILITIES DIVISION AND THE CHIEF COUNSEL’S

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B. SELECTION OF CONTRACT FORM

1. PROFESSIONAL’S INVOLVEMENT

The Design Professional may be asked to participate in the selection of the appropriate Contract Form for any given construction project.

1A. 71K100 Specific Facilities Projects < $25,000 (Fixed) (Constr./Maint./Repair)

The Design Professional may occasionally develop designs to be constructed under Type One Contracts (Specific Facilities Projects) less than the $25,000 threshold (Fixed Threshold).

1B. 71K110 Specific Facilities Projects > $25,000 (Fixed) (Constr./Maint./Repair)

The Design Professional will most often design projects to be constructed under Type One Contracts (Specific Facilities Projects) that exceed the $25,000 threshold (Fixed Threshold).

2A. SSHE-120 Open End Facilities Requirements Projects (Prevailing Wage) 2B. SSHE-121 Open End Facilities Requirements Projects (Non-Prevailing Wage)

The Design Professional may occasionally develop designs to be constructed under Type Two Contracts (Open Ended Unit Price Contracts).

3A. 71K150 Open End Qualified Separate Primes Contract for Facilities Projects

The Design Professional may occasionally develop designs to be constructed under Type Three Contracts (Qualification Contracts). The implementation of this form occurred in 2001 with the Design Of Sprinkler Systems In Residence Halls for the 14 Universities. The use of this contract is expected to increase.

4A. SSHE (tba) Specific Design / Build Projects Not Yet Available

The Design Professional is not usually involved in the selection of a Contact Forms for projects that are constructed using Type Four Contracts (Design/Build Methodology)

5A SSHE (tba) Open End Qualified Lease/Purchase Developers (3rd Party Developer)

The Design Professional is not involved in the selection of Qualification Statements for the Private Development of Student Housing. These projects are strictly handled by the System.

2. CONSIDERATIONS FOR SELECTION OF CONTRACT FORM

The appropriate Contract Form for a construction project is selected while considering the following:

• Threshold Amounts

• Project Type and Complexity

• Procurement Decision Document

• Available Construction Contact Forms

• Advertisement to Firms on Qualification Lists (Work Orders issued under Qualification Contracts)

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.2 Chapter 2 – The Process Of Contract Procure ment For Facilities Projects Article 2.2-1 Chapter 2.3 – The Bid Package

Article 2.2-1

Current List

of

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.3 Chapter 2 – The Process Of Contract Procurement For Facilities Projects Page 1 of 5 Chapter 2.3 – The Bid Package

Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.3

“Bid Documents”

Or

“Bid Package”

The terms “Bid Documents” and “Bid Package” are used interchangeably in the E/A Manual

CHAPTER 2.3 TABLE OF CONTENTS

A. OVERVIEW B. DEFINITIONS

C. CONTENTS OF BID PACKAGE ... (See Article 2.3-1) D. PREPARATION

E. BID FORM – ONE BOUND IN BID PACKAGE & SECOND SEPARATE COPY

CHAPTER 2.3 LIST OF ARTICLES

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Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.3

“Bid Documents”

Or

“Bid Package”

The terms “Bid Documents” and “Bid Package” are used interchangeably in the E/A Manual

A. OVERVIEW

This chapter briefly discusses preparation of the Bid Package and provides an outline of

the Bid Package.

Chapter 3 will detail the specific items included in the Bid Package.

B. DEFINITIONS

Detailed definitions are provided in Chapter 16, Definitions.

• Bid Package or Bid Documents. Includes the Bid Manual and the Drawings.

- Project Manual. The 8 1/2'” x 11” Bound Portion of the Bid Package. - Drawings. Design Professional’s Drawings.

• Contract Documents. Includes Contract Agreement, Bid Package, Addenda, Bid

Proposal (Bid Form), Contract Bonds, and any modifications (Change Orders or as appropriate).

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C. CONTENTS OF BID PACKAGE

An outline of the contents of the Bid Package in provided in Article 2-4

The Bid Package is divided into the following major 6 sections: Section 1 Bid Information & Instructions

Section 2 Proposal Instructions & Bid Form Section 3 Contract Form

Section 4 Contract Conditions Section 5 Technical Specifications Section 6 Contract Drawings

The Bid Package is not necessarily labeled and divided with the above Sections 1-6, but the sections of the package are ordered as above.

The new Bid Protest Procedures provided in Act 142 of 2002 will be incorporated into Rider D of the Agreement.

Make sure the contract scope meets the University’s needs and is contractually correct.

D. PREPARATION

The Design Professional prepares or assembles the Bid Package.

The package is developed based on the Scope of Work that has been developed for the project, agreed to by the System, and is contained in the Professional’s Agreement with the System – “Standard Form of Agreement for Professional Design Services”.

As defined in the Agreement, both the Design Professional and the University have responsibility in the preparation of the Bid Package, whether separately prepared or jointly prepared.

• Design Professional’s Responsibility. The aspects of the Bid Package that are part of the Design Professional’s responsibility are described in the Professional’s Agreement.

• University’s Responsibility. Certain aspects of the Bid Package are generally performed by the University, such as establishing the scope of the project, approving the construction schedule, and approving the design concept.

• If the University does not sign the title page of the drawings, the University should provide a letter to the Design Professional that the Bid Package has been reviewed by the University.

• The Design Professional should assure that the Bid Package is complete when issued and all necessary University approvals have been obtained.

University’s “Options”. Certain aspects of the Bid Package, such as the Notice to Contractors, the Bid Form, and Request for Prevailing Wage Determination, may be “optionally” prepared by the University. Such “options” shall be reflected in the Professional’s Scope of Work.

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Universities may differ in their “optional selections” in preparation of the Bid Package.

When a University elects to prepare certain documents or perform certain tasks involved in preparation of the Bid Package, the University and the Design Professional should coordinate performance of that work, allowing sufficient time to incorporate final documents, whether prepared by the University or the Design Professional, into the Bid Package, making a complete Bid Package.

Before the University elects to perform work related to preparation of the Bid Package, the University should evaluate the following:

- Are University staff absolutely required to prepare elected documents?

- Would the University’s staff be better utilized in performing other tasks and having the Design Professional prepare optional items?

- Does University staff have sufficient workload, such that optional items should be prepared by the Design Professional?

E. BID FORM – TWO COPIES REQUIRED

ONE BID FORM BOUND IN BID MANUAL

ONE BID FORM PROVIDED SEPARATELY

Two copies of the Bid Form are provided to each requestor of the Bid Package as follows:

1. One copy of the Bid Form is included in the Bid Manual, the 8-½” x 11” bound portion of Bid Package that is provided to each requestor.

2. A second copy of the Bid Form, separately bound, is provided to each requestor of the Bid Package to be used for the Bidder’s proposal submission.

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.3 Chapter 2 – The Process Of Contract Procurement For Facilities Projects Article 2.3-1 Chapter 2.3 – The Bid Package

Article 2.3-1

Bid Package

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_____________________________________________________________________________________________ Engineering / Architectural Instructions for Facilities Projects Chapter 2.4 Chapter 2 – The Process Of Construction Contract Procurement Page 1 of 35 Chapter 2.4 – The Design Phase

Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.4

The Design Phase

CHAPTER 2.4 TABLE OF CONTENTS

A. OVERVIEW

B. PROFESSIONAL PROCUREMENT AND ADMINISTRATION C. SEPARATE PRIMES

D. BID FORMATS AND BID COMPONENTS ... (See Article 2.4-1) E. MBE/WBE PROGRAM & POLICY... (See Article 2.4-2) F. PROPRIETARY & NON-PROPRIETARY SPECIFICATIONS

G. FINISHES ... (See Article 2.4-3) H. LIQUIDATED DAMAGES

CHAPTER 2.4 LIST OF ARTICLES

Article 2.4-1 Defined Bid Formats With Bid Components Article 2.4-2 MBE/WBE Proactive Effort Policy & Provisions

Proactive Solicitation & Encouraged Participation In System Facilities Projects For Certified MBE/WBE Enterprises

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Pennsylvania State System of Higher Education

Facilities Manual - Volume 30

Engineering / Architectural Instructions Manual

Chapter 2.4

The Design Phase

A. OVERVIEW

This chapter briefly discusses certain aspects of the Design Phase of a project, including the following:

1. There are certain aspects of the Design Professional’s Agreement that the University must keep in mind during the execution of the design, such as the Design Professional’s Scope of Work, the Design Schedule, and actions that may affect the Professional’s Fee.

2. There are certain decisions that must be made regarding the selection of the Separate Prime Contracts, how finishes will be specified, and the need for any components that are Proprietary.

3. The Design Professional and the University must decide on values to be assigned for reasonable participation by Certified MBE/WBE Firms.

4. The University must determine and justify amounts to be assigned for Liquidated Damages.

5. The Design Professional and the University must decide on the best Bid Format to be used for the Project.

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B. PROFESSIONAL PROCUREMENT & ADMINISTRATION

1. PROFESSIONAL CONTRACTS

The design of a project is either performed by the University or by a Design Professional. If by the Design Professional, design is performed either under

• a Specific Contract for Professional Services or

• an Open Ended Contract for Professional Services

a. Specific Contract for Professional Services. Currently, for the design of a

specific project, the University performs all the procedures for the procurement of a Design Professional, including advertisement, review of proposals, selection of the Design Professional, negotiations with the Design Professional, and execution of the contract

b. Open Ended Contract for Professional Services. Design Professionals holding

Open End Contracts are either procured by the Chancellor’s Office or the University.

• Centrally Held Open End Agreements. Currently, the Chancellor’s Office provides a limited number and type of Professional Services under Open End Agreements. These Agreements have been utilized by the Universities for certain projects. Individual Work Orders are written against these Agreements by the Office of the Chancellor or by the University under the supervision of the Construction Support Office.

• University Held Open End Agreements. Predominantly, the Universities individually procure their own Design Professionals under Open End Agreements for various types of architectural and engineering services.

• Term of the Agreement. Currently, Open End Agreements consists of 2 initial years, with 2 options for renewal of 2 years each, for a maximum of 6 years.

• Agreement Limits. Current limits placed on Open End Agreements for Professional Services are as follows:

Compensation Limit $475,000 Per Year Individual Work Limit $100,000 Per Project

Limits are exceeded as approved and amended by the Chancellor’s Office. The above contract forms and their limits are those that are currently used by the System. The System regularly reviews the procurement of Professionals in order to improve the efficiency of procurement by the Universities within Act 57 requirements, whether specific procurement by an individual University, regional procurement by several Universities, or central procurement by the Chancellor’s Office. The System is expected to develop additional types of specific, regional, and central procurements.

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2. PROFESSIONAL’S SCOPE OF WORK

The Scope of Work for design services is developed and contracted for as follows:

• After a Design Professional has been appropriately selected, the University will issue a Request for Proposal that includes a Scope of Work. The University may note any exceptions to the EA Manual.

• The Design Professional will develop a Fee Proposal for the Scope of Work developed by the University. The Fee Proposal may include clearly noted revisions to the Scope of Work that should first be discussed with the University. The Fee Proposal should not exceed the expectancies of the Scope of Work.

• The University and the Design Professional will negotiate and determine the final Fee Proposal for a negotiated Scope of Work that is to be included in the Contract Agreement or Individual Work Order.

During the process of the work, both the Design Professional and the University must be aware of and keep in mind the negotiated Scope of Work that was agreed upon and included in the Agreement.

In discussing and requesting any services during the process of the work, the University should determine if the services are part of the negotiated Scope of Work or if services could be considered to be additional work.

Any additional work approved by the University and performed by the Design Professional must be included in an appropriately executed Amendment to the Contract Agreement or Individual Work Order.

3. PROFESSIONAL’S SCHEDULE

a. Design Professional’s Adherence to Schedule

The Design Professional is expected to adhere to the Time Schedule that was agreed to and included in the Professional’s Agreement with the University. The Agreement includes remedies for a Design Professional’s failure to adhere to the schedule, if the failure is the fault of the Design Professional. Those remedies, as stipulated in the Professional’s Agreement, may include:

• amending the schedule and directing the Professional to expeditiously proceed with the design of the Project, in which case the System may hold the

Professional responsible for any costs attributable to the delay

• termination of the Agreement for default of the Professional, in accordance

with the provisions of the General Conditions of the Agreement.

The Design Professional’s ability or inability to meet the Time Schedule should be reflected in the University’s written review of the Design Professional’s performance.

b. University’s Performance Under The Agreement

The University should be aware of aspects of the University’s work that may affect the Professional’s performance, such as, length of time required to review design submissions. If the University exceeds any prescribed time limits for review, there must be sufficient and documented justification, otherwise, the University could become part of the cause of delays in completion of the design.

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4. PROFESSIONAL’S FEE & MULTIPLE BASE BIDS

When using Multiple Base Bid Formats, whether Additive, Deductive, or Matrix forms, and when using Alternate Items, the basis for the Architect’s Fee must be considered with respect to providing a fair and reasonable fee for the preparation of all the necessary designs, whether they are selected for construction or not.

In order to prepare Bid Documents that clearly represent the Project and the intent of all base Bids to the Bidders, the Design Professional may need to produce additional designs, specifications, and drawings to show all Base Bid variations.

The Professional’s Design Fee negotiated for a Project should be based on the total design value to include all Base Bids, whether the Base Bid forms include Additives, Deductives, Matrices, or Alternates.

The University should recognize that if a Project is awarded that is not the largest Scope Of Work that has been designed by the Design Professional and desired by the University, then the Design Professional’s Fee will be a larger percentage of construction than if the desired Project was obtained. See example below:

Example: The Design Professional provides Deductive Base Bid Designs that

result in the following bids and award:

Base Bid 1 = $600,000 Largest Scope of Work Base Bid 2 = $550,000

Base Bid 3 = $500,000 Least Scope of Work Awarded Project If the Design Professional’s Fee is $50,000, the fee should not be solely evaluated as a percentage of Base Bid 3 (10% of Awarded Project), but could be evaluated as percentage of the Base Bid 1 (8.3% of Awarded Project). In evaluating any fee, remember that the Design Professional was required to design multiple Base Bids (multiple Scopes of Work), not just the awarded Base Bid.

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C. SEPARATE PRIMES

1. GENERAL DISCUSSION OF SEPARATE PRIME CONTRACTS

a. Definition

Separate Prime Contract – This Discussion. For the purposes of discussion in this chapter, we want to deal in general terms as to the discussion of Separate Prime Contracts. Here, we are not dealing with the separation of trades, but the execution of individual contracts by Separate Prime Contractors. Separate Prime Contractors are Contractors with which the System enters into a Contract (Separate Prime Contract) to complete portions of the separately bid work.

Separation of Trades – Not This Discussion. In the context of construction projects for the Pennsylvania State System of Higher Education, the term Separate Primes is used in relation to The Separations Act, commonly known as the “Separate Primes Legislation”. That Act of May 1, 1913 (P.L. 155, No. 104), is "An act regulating the letting of certain contracts for the erection, construction, and alteration of public buildings" and deals with the separation trades of including Plumbing Construction, HVAC Construction, and Electrical Construction. That act and its related thresholds for applicability are discussed in Chapter 2.1.

2. MULTI - PRIME COORDINATION

• Typically, the General Contractor is identified as the “lead” contractor and is responsible to coordinate construction activities as specified in various sections of the specifications to assure efficient and orderly installation of each part of the work. This requirement is evident in the following Division I Specifications:

Section 01040 Project Coordination Section 01200 Project Meetings Section 01300 Submittals Section 01315 CPM Scheduling

• The identified “lead” contractor is responsible for the coordination, production, maintenance, and distribution of overall construction schedule.

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3. QUALIFIED SEPARATE PRIMES

The Pennsylvania State System of Higher Education does, to a certain extent, qualify Contractors for the performance of certain Separate Prime Work. Chapter 2.2 discusses Type Three Construction Contracts (Qualification Contracts – Contract Form 71K150).

When the Qualification Process is used to procure construction, a list of Pre-Qualified Firms is maintained by the Construction Support Office and used for advertisement of projects, as allowed by Act 57. The Qualified Firms have executed Qualification Contracts with the System. In response to an Invitation To Bid (or Requests For Proposal, as necessary), the Qualified Firms may submit Bid Proposals. The project is awarded to the lowest responsible and responsive Bidder with the execution of an Individual Work Order.

There are no dollar limits for these Qualification Contracts, other than the need for the signature of the Office of General Counsel when the compensation is expected to exceed $1,000,000 for the term of the Qualification Contract.

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D. BID FORMATS AND BID COMPONENTS

1. TYPES OF BID FORMATS & BID COMPONENTS

There are currently two types of Bid Formats (the One Price Bid Format and the

Multiple Base Bid Format). These Bid Formats are composed of one or more Bid

Components (Lump Sum Amount, Unit Price Amounts, Total Bid Amount, Alternate

Price Amounts).

The Multiple Bid Format can take one of three forms (Deductive Base Bid Format, Additive Base Bid Format, or Matrix Base Bid Format).

a. Types of Bid Formats. There are two basic types of Bid Formats: One Price Bid Format

Multiple Base Bid Format (Commonly called Base Bid Format) b. Forms of Multiple Base Bid Formats. There are several forms of the Multiple

Base Bid Format:

Deductive Base Bid Format (Preferred Multiple Base Bid Format) Additive Base Bid Format

Matrix Base Bid Format

c. Bid Components for Bid Formats. Each Bid Format may consist of one or

more of the following Bid Components:

Lump Sum Amount Unit Price Amounts

Total Bid Amount (Includes Lump Sum Amount and Unit Price Amounts) Alternate Price Amounts (Adds or Deducts if utilized during Construction)

2. AWARD OF PROJECTS

The creation of a clear Bid Format allowing for the clear and easily decisive award of a project is critical.

a. One Total Bid Amount. In preparing any Bid Format with more than one Bid

Component, the Design Professional and the University must assure that there is only one Total Bid Amount by which the Project will be awarded to the lowest responsible and responsive Bidder.

b. Additional Criteria for Award. If there are additional criteria by which the

Bidders are to be evaluated, such as certified qualifications (licenses) or certified experience (whether by the firm and/or by employees of the firm), that criteria should be stated or referenced in the Notice To Contractors.

c. Competition. Awards must never be made based on “selection of a Contractor”

for any part of the project. All awards must be based on competition in conjunction with meeting any additional criteria.