This bill authorizes the Commissioner of Administration to use three new methods of contracting for state construction: (1) design-build; (2) construction manager at-risk; and (3) job order contracting. Each of these methods is subject to detailed conditions and limitations. The bill also authorizes the University of Minnesota to enter into design-build contracts.

Section 1. [Construction Plans and Specifications; Design-Build, Construction Manager At-Risk, or Job Order Contracting.] Provides new authority to the Commissioner of Administration to use design-build, construction manager at-risk, and job order contracting for state construction projects. Clarifies that a contract using any of these methods must not make the primary designer or construction manager a subcontractor or joint venture partner to the other or limit the independent obligations of the primary designer and construction manager to the commissioner. This section also authorizes Minnesota State Colleges and Universities (MnSCU) to use the new methods of contracting and to exercise them through its Board of Trustees.

Section 2. [Definitions.] Defines "design-build" to mean a contract between the commissioner and the design-builder in which the design-builder agrees to design and construct a project at a guaranteed maximum or fixed price.

Section 3. [Design-Build, Construction Manager At-Risk, and Job Order Contracting Contracts.]

Subdivision 1 [Definitions.] Provides definitions applicable to the new contracting authority created in this bill. "Commissioner," is defined to mean the Commissioner of Administration or the Board of Trustees of MnSCU, whichever controls the project.

Subdivision 2 [Authority.] Authorizes the Commissioner of Administration to award a design-build contract under either qualification-based or design- and price-based selection processes; to select a construction manager at-risk and award a guaranteed maximum price contract; and select a contractor by job order contracting. For the first two types of contracting, the commissioner is required to make specific written findings that this type of contracting is in the public interest. This authority is subject to the preferences already provided in law for small businesses, targeted groups, and economically disadvantaged areas.

This subdivision also provides that for projects funded with state general obligation bonds, there are percentage limits based on the number of total projects let by number in each fiscal year:

• For design-build contracts, no more than five percent of the total projects in fiscal years 2006 and 2007 and ten percent after that may use this method;

• For construction manager at-risk contracts, no more than five percent of the total number of contracts in fiscal years 2006 and 2007 and ten percent after that may use this method.

Requires projects to comply with the Capitol Area Architectural and Planning Board statutes if they are applicable.

Specifies that when the commissioner enters into a design-build or construction manager at-risk contract, soliciting requests for those methods does not obligate the commissioner to enter into that type of contract. The solicitations may be canceled or responses rejected and a competitive bidding process used.

Section 4. [Design-Build.] Provides the limits on and procedures applicable to the design-build method of contracting for construction projects.

Subdivision 1. [Conflict of Interest.] Specifies that a member of the state Designer Selection Board (DSB) may not participate in any review or selection of a firm in which the member has a financial interest.

Subdivision 2. [Design Builder Licensing Requirements.] Specifies that the design-builder must employ, partner, or subcontract with persons who are appropriately licensed and registered to provide the services required to complete the project.

Subdivision 3. [Solicitation of Qualifications or Proposals.] Requires agencies who wish to use the design-build process to submit a written request to the Commissioner of Administration. The University of Minnesota is not required to submit a written request to the commissioner but must follow the procedures established in this section. The written request must be provided to the state Designer Selection Board and must describe the project, the cost, and the description of any special requirements of the proposed project.

Paragraph (b) specifies the contents of the request for qualifications or proposals to solicit design-builders for both the design-build qualification-based and design-build price-based methods of contracting. The request must include a description of the project and the procedures for submitting qualifications for proposals.

Subdivision 4. [University of Minnesota Projects.] Allows the University of Minnesota to use the design-build method, which includes both the design-build qualification-based selection process or the design-build and price-based selection process. Provides that the Board of Regents will make the final choice among the proposals from the two highest scoring proposals forwarded to it. Limits the University's use of the design-build contracting method to no more than five percent of total projects let in fiscal years 2006 and 2007 and to ten percent in years following.

Subdivision 5. [Design-Build Qualification-Based Selection Process.] Provides the requirements for the design-build qualification-based selection process. This requires the Commissioner of Administration to establish procedures and criteria to evaluate design-builders and their qualifications. After the qualifications have been obtained from each design-builder, the DSB will select three to five proposals and then select the design-builder who scores highest on evaluation criteria. For MnSCU projects, the DSB will pick two design builders and the MnSCU Board will pick among them. The Commissioner or the MnSCU board will then negotiate the contract with the selected design-builder. If negotiations are not successful, the commissioner may request the board to make another selection.

Subdivision 6. [Acceptance by Commissioner.] Provides the requirements for a design-build qualification-based contract, including the development of design documents before project bidding; that the design-builder competitively bid all trade contract work; that mechanical or electrical subcontractor members of the design-builder team competitively bid subcontracted work; and that the design-builder and commissioner enter into a guaranteed maximum price contract.

Subdivision 7. [Design-Build and Price-Based Proposals.] Provides the requirements for the design-build and price-based process. The selection must be based on best value, which includes price and design and other criteria. Requires the commissioner to establish procedures and criteria used to evaluate design-builders. After the DSB has obtained and evaluated qualifications, it must select three proposers and then provide that list to the commissioner. The commissioner will then issue a request for proposals to the design-builders and put those proposals through a sealed bid process. The commissioner is required to award a stipend of not less than .3 percent of the estimated cost of design and construction of the project to each design-builder submitting a proposal who is not selected to complete the project.

Subdivision 8. [Design-Build and Price-Based Selection Process.] Requires the DSB to interview the three proposers selected under subdivision 7 and to select one proposal based on the criteria for the project. After a proposal is accepted, the commissioner and design-builder will enter into a fixed-price contract.

Section 5. [Construction Manager At-Risk.] Requires each agency to use the construction manager at-risk process to submit a written request for proposals to the commissioner.

Subdivision 2. [Selection Process.] Requires the commissioner to create a selection committee of at least three members who review proposals from construction managers at-risk and evaluate their qualifications. The selection committee must create a list of three to five proposals for the commissioner, who must then issue a request for proposal that requires fee expense and other information from managers on the list. The selection committee must then interview the construction managers and recommend the construction manager scoring highest on evaluation criteria to the commissioner.

Subdivision 3. [Contract.] Requires the commissioner to negotiate with the recommended construction manager at-risk. The designer selected by the DSB must develop design documents for approval by the commissioner. The construction manager at-risk must competitively bid all trade contract work from a list of qualified firms. Mechanical or electrical subcontractors may be listed as part of the construction manager team instead of being bid separately. The construction manager at-risk and the commissioner must enter into a guaranteed maximum price contract for the project.

Section 6. [Job Order Contracting.] Authorizes the commissioner to use job order contracting for projects with a cost that does not exceed $250,000. The commissioner must issue a request for qualifications, including criteria that will be used for projects. The commissioner must review the responses and establish a list of responders who have the ability to enter into a master contract for projects.

Subdivision 4. [Construction Services Bidding.] Provides the number of bids the commissioner must solicit from master contract holders, depending on the size of the project: (1) for projects up to $50,000, at least two bids; (2) for projects over $50,000 and less than $100,000, at least three bids; and (3) for projects over $100,000 and less than $250,000, at least four bids. This section requires the commissioner to select the contractor who submits the lowest price bid.

Subdivision 6. [Reasonable Distribution of Bid Requests Among Qualified Contractors.] Requires the commissioner to develop a system to ensure a reasonable opportunity for all qualified contractors to bid on construction services.

Section 7. [Effective Date.] Make the bill effective the day following final enactment.

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