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Construing Job Order Contract Provisions of LGC Subch. H Login/Join 
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Relevant statutory provisions: LGC Section 271.120 (and entirety of Subchapter H).

Background:
(1)County Purchasing Agent issued IFB for Job Order Contract for "minor construction and renovation" services. Two contracts were awarded. Currently, job order modifications are issued each time a minor construction project arises. (If anyone is asking why we used an IFB rather than an RFP, this decision was made contrary to my recommendation. Though the statute permits use of either procurement form, I think the JOC experts out there would agree that the RFP makes much more sense for this type of contract. Next time.)

(2) Now our Facilities Dept. wants to use the JOC for several weatherization projects that have been designed in-house. (One of our JOC contractors is qualified to do these projects.) Estimates for each weatherization job order is anywhere from $20,000 to $50,000; budget total for ALL planned weatherization projects is about $450,000 to $500,000.

(3)Section 271.120(b) provides 2 methods for establishing contractual unit prices. We used the second option: that is, we provided a list of work items and required offerors to bid one or more coefficients or multipliers (in our case, they used unit price regular hours and unit price overtime hours as the multiplier). (Option #1 is to specify published construction unit price books and the applicable line items or divisions.) The contractor for the weatherization projects wants to use the second option for his unit pricing.

(4) The unit price bid sheet we included in the IFB does not include several items that will be needed for the weatherization projects (e.g., the IFB listed demolition of drywall of certain proportions; we will need demolition of other types of walls, as well as metal doors, a crane system, metal stairs, etc. -- none of which was listed in the IFB bid sheet).

Legal Questions:

(1) Can we use the JOC for the weatherization projects if the total amount of these projects is $450-500,000, or does it not matter what the total amount of all the weatherization projects is, as long as each individual project remains small enough to be considered �minor�?

(2) Can we use the job order modification to add items to the unit price bid sheet, or are we limited, in using the JOC, to only those items listed in the original IFB?

(3) Since we opted for contractual unit prices based on listed work items and unit price hours as the coefficient/multiplier in our IFB, can we use the second unit price method (price books and line items) for these projects, as our contractor wants to do?

Some thoughts:
Normally, the County issues modifications after an IFB is awarded that may include services or goods not included in the original IFB specifications. Can the County use that standard practice/policy to justify using this JOC for projects that have arisen that require items not listed in the JOC IFB? Can we use the same analysis to conclude we can use a different contractual unit pricing method that the method we used to evaluate bids and award the contracts? (Note: In awarding the JOC, the County used every listed bid item and corresponding unit price to evaluate bidders. This contractor was one of the two low bidders using these criteria.)

I've reviewed the legislative analysis and history, as well as case law (though I haven't completed my case research). No clarification found. The Legislature does makes clear that purpose of adding Subchapter H (especially design-build) was to provide governmental bodies more flexibility in constructing facilities.

The statute (271.120(a)) states that JOCs can be used where the work is of a recurring nature but the delivery times are indefinite and indefinite quantities and orders are awarded substantially on the basis of prepriced tasks. Does the word "substantially" leave room for doing what we want to do?

Any answers, similar experiences or comments are welcome!

Thanks.

Tenley Aldredge
Asst. Travis County Attorney
 
Posts: 2 | Location: Austin, Texas, USA | Registered: May 17, 2002Reply With QuoteReport This Post
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For those who do not know, Tenly is one of the leading experts on construction law from a County perspective in the State of Texas, hence the questions appearing to come from Law School. I feel like a fool because I do not know what an IFB means. So casting aside the fact that I am unsure of the jargon and these other digressions, I will make a few guesses and raise maybe more questions than I answer.

Overlaying the new Job Order Contract section 271.120 of Texas Local Government Code is the old requirement of section 262.031 of the Texas Local Government Code that provides that the County may not change order the bid or proposal by more than 25 per cent. Because the JOC allows unit price it would seem that the County could evade the 25 per cent requirement as long as the budget allows it. But did it? I know that in my county the Purchasing Agent would state an approximate amount in total that was sought for purchase by unit pricing so that any large discounts would be in play. No discounts would seem applicable to the construction scenario presented. However, Tenly, your Purchasing Agent may have established those limits in the bid. If so, you may have a 25 percent problem.

These questions revolve around the imprecision of the English language and turn on factors outside a straightforward legal analysis. Undaunted, I proceed.

Legal Questions:

(1) Can we use the JOC for the weatherization projects if the total amount of these projects is $450-500,000, or does it not matter what the total amount of all the weatherization projects is, as long as each individual project remains small enough to be considered ?minor??

Since I and the rest of the world do not know what is minor in Travis County and whether something minor there would or would not be minor in Hudspeth County, it would be impossible to answer this one completely. But what the heh, $500,000 doesn�t buy what it used to so it may be minor itself. But to what do you apply the 25 per cent limit $500,000 or one of the minor jobs?

(2) Can we use the job order modification to add items to the unit price bid sheet, or are we limited, in using the JOC, to only those items listed in the original IFB?

I suspect you are limited, �. . . orders are awarded substantially on the basis of predescribed and prepriced tasks.� TLGC � 271.120(a). For example, I don�t know that stair removal (not listed) is substantially the same as drywall removal (listed). Stair removal wasn�t predescribed or prepriced. I am unimpressed with the word �substantially� used in this context, although I think minor in question 1 is more elastic.

(3) Since we opted for contractual unit prices based on listed work items and unit price hours as the coefficient/multiplier in our IFB, can we use the second unit price method (price books and line items) for these projects, as our contractor wants to do?

I would quess, No, since the two methods are separated by an �or� implying mutual exclusion of the other and the County picked the other method. TLGC � 271.120(b). After all did the County specs specify one or more construction unit price books? If it did not it would be hard to now claim that other bidders had a chance to bid on the basis of the books not proposed.
roll eyes
 
Posts: 267 | Location: Mansfield, Texas | Registered: August 07, 2001Reply With QuoteReport This Post
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Ray -
Thanks for goin' out on that limb and taking
a stab at my questions. Your comments
are truly appreciated (though your sarcastic
characterization of me as "one of the
leading experts" on County construction
issues is NOT!) This is a new area of law,
so as far as I'm concerned, no opinion
is unimpeachable. My response to your
response is as follows:

(1) I don't agree that the 25% maximum change
order limit applies to job order
contracts. The very nature of a job
order arrangement precludes a fixed
contract amount; since the governmental
body doesn't know the exact number or size of
all the job orders that will be issued
under a JOC, there can be no true set
contract price. (We used a "sample
project" in our IFB only to determine each
bidder's unit prices. The actual awarded
contracts had no "contract amount.")
Arguably, the 25% cap would apply to an
existing job order issued pursuant to a job
order contract (if the scope of that
particular project changed), but not to
the entire job order contract awarded.
Finally, I think that any such limit would be imposed by Section 271.060, not 262.031, since
the former applies to change orders in
construction contracts, while the latter
applies to all County Purchasing Act
acquisitions. I may be very wrong about that,
since I am NOT an expert.

(2) I tend to agree with your conclusion re:
minor or non-minor.

(3) I tend to agree with your conclusion that
we shouldn't use a different unit pricing
method. Perhaps the contractor can convert his pricing.

(4) I Still think a governmental body
should be able to add unit items each time
it issues a new job order under the awarded
job order contract. As I said in my original
posting, why not analogize to traditional
IFBs, where change orders and mods routinely
add services or goods based on a
scope of work that has to be revised
due to concealed conditions or unanticipated
problems? The IFB in those
traditional cases doesn't always include
all the unforeseen goods and services that
turn out to be necessary, and the contract
isn't awarded on prices for those goods and
services. With job order contracts, such
uncertainty is a given, or a job order contract
would not be appropriate in the first place.
Don't know for sure, but that's how I see it.

Again, Ray, thanks for your input. You definitely
helped!

-Tenley
 
Posts: 2 | Location: Austin, Texas, USA | Registered: May 17, 2002Reply With QuoteReport This Post
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I did not see your reply sooner. You might check section 271.060 of the Texas Local Government Code that limits change orders in construction if you use Certificates of Obligation to fund the project. I wonder if general obligation bonds have a similar problem. However, I did not take a sarcastic tone regarding your capabilities your analysis of the problems generated by these statutes is excellent. eek
 
Posts: 267 | Location: Mansfield, Texas | Registered: August 07, 2001Reply With QuoteReport This Post
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