House Bill No. 217

Introduced By bergsagel

A Bill for an Act entitled: "An Act increasing construction cost authorization that does not require legislative consent; increasing the cost limit for projects subject to advertising and bidding; ELIMINATING THE APPROVAL OF NEGOTIATED CONTRACTS BY THE BOARD OF EXAMINERS; INCREASING THE COST OF BUILDING OR CONSTRUCTION PROJECTS FOR WHICH SECURITY MAY BE WAIVED; amending sections 18-2-102, 18-2-103, and 18-2-105, 18-2-201, 18-2-301, AND 18-2-302, MCA; and providing an effective date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 18-2-102, MCA, is amended to read:

"18-2-102.   Authority to construct buildings. (1) Except as provided in subsection (2), a building costing more than $50,000 $150,000 may not be constructed without the consent of the legislature. Legislative approval of repair and maintenance costs as part of an agency's operating budget constitutes the legislature's consent. When a building costing more than $50,000 $150,000 is to be financed in a manner that does not require legislative appropriation of money, the consent may be in the form of a joint resolution.

(2)  (a)  The governor may authorize the emergency repair or alteration of a building and is authorized to transfer funds and authority as necessary to accomplish the project. Transfers may not be made from the funds for an uncompleted capital project unless the project is under the supervision of the same agency.

(b)  The regents of the Montana university system may authorize the construction of revenue-producing facilities referred to in 20-25-302 if they are to be financed wholly from the revenue from the facility.

(c)  The regents of the Montana university system, with the consent of the governor, may authorize the construction of a building that is financed wholly with federal or private money if the construction of the building will not result in any new programs.

(d)  The department of military affairs, with the consent of the governor, may authorize the construction of a building that is financed wholly with federal or private money on federal land for the use or benefit of the state."

Section 2.  Section 18-2-103, MCA, is amended to read:

"18-2-103.   Supervision of construction of buildings. (1) For the construction of a building costing more than $50,000 $150,000, the department of administration shall:

(a)  review and accept all plans, specifications, and cost estimates prepared by architects or consulting engineers;

(b)  approve all bond issues or other financial arrangements and supervise and approve the expenditure of all moneys money;

(c)  solicit, accept, and reject bids and award all contracts to the lowest qualified bidder considering conformity with specifications and terms and reasonableness of the bid amount;

(d)  review and approve all change orders; and

(e)  accept the building when completed according to accepted plans and specifications.

(2)  The department may delegate on a project-by-project basis any powers and duties under subsection (1) to other state agencies, including units of the Montana university system, upon terms and conditions specified by the department.

(3)  Before a contract under subsection (1) is awarded, two formal bids must have been received, if reasonably available.

(4)  The department need not require the provisions of Montana law relating to advertising, bidding, or supervision when proposed construction costs are $25,000 $75,000 or less. However, with respect to a project having a proposed cost of $25,000 $75,000 or less but more than $5,000 $25,000, the agency awarding the contract shall procure at least three informal bids from contractors licensed in Montana, if reasonably available.

(5)  For the construction of buildings owned or to be owned by a school district, the department of administration shall, upon request, provide inspection to ensure compliance with the plans and specifications for the construction of the buildings. "Construction" includes construction, repair, alteration, equipping, and furnishing during construction, repair, or alteration. These services must be provided at a cost to be contracted for between the department of administration and the school district, with the receipts to be deposited in the department of administration's construction regulation account in a state special revenue fund.

(6)  It is the intent of the legislature that student housing and other facilities constructed under the authority of the regents of the university system are subject to the provisions of subsections (1) through (3).

(7)  The department of military affairs may act as the contracting agency for buildings constructed under the authority of 18-2-102(2)(d);. however However, the department of administration may agree to act as the contracting agency on behalf of the department of military affairs. Montana law applies to any controversy involving a contract."

SECTION 3.  SECTION 18-2-105, MCA, IS AMENDED TO READ:

"18-2-105.   General powers and duties of department of administration. In carrying out powers relating to the construction of buildings, the department of administration may:

(1)  inspect buildings not under construction;

(2)  contract with the federal government for advance planning funds;

(3)  transfer funds and authority to agencies and accept funds and authority from agencies;

(4)  purchase, lease, and acquire by exchange or otherwise, land and buildings in Lewis and Clark County and equipment and furnishings for the buildings;

(5)  issue and sell bonds and other securities;

(6)  maintain an inventory of all buildings;

(7)  appoint a project representative to supervise architects' and consulting engineers' inspection of construction of buildings to ensure that all construction is in accordance with the contracts, plans, and specifications. The cost of supervision may be charged against money available for construction.

(8)  negotiate deductive changes, not to exceed 7% of the total cost of a project, with the lowest responsible bidder when the lowest responsible bid causes the project cost to exceed the appropriation or with the lowest responsible bidders, if multiple contracts will be awarded on the project, when the total of the lowest responsible bids causes the project cost to exceed the appropriation. A bidder is not required to negotiate a bid but is required to honor the bid for the time specified in the bidding documents. The department may terminate negotiations at any time. Any contract award resulting from negotiation is subject to the approval of the board of examiners."

SECTION 4.  SECTION 18-2-201, MCA, IS AMENDED TO READ:

"18-2-201.   Security requirements. (1) Except as otherwise provided in 85-1-219 and subsections (4) through (6) of this section, whenever any board, council, commission, trustees, or body acting for the state or any county, municipality, or any public body contracts with a person or corporation to do work for the state, county, or municipality or other public body, city, town, or district, the board, council, commission, trustees, or body shall require the corporation, person, or persons with whom the contract is made to make, execute, and deliver to the board, council, commission, trustees, or body a good and sufficient bond with a licensed surety company as surety, conditioned that the corporation, person, or persons shall:

(a)  faithfully perform all of the provisions of the contract;

(b)  pay all laborers, mechanics, subcontractors, and material suppliers; and

(c)  pay all persons who supply the corporation, person or persons, or subcontractors with provisions, provender, material, or supplies for performing the work.

(2)  A copy of the bond must be filed with the county clerk and recorder of the county in which the work is to be performed or the improvement is to be made or, if the work is to be performed or the improvement is to be made in more than one county, with the county clerk of either county, except in cases of cities and towns, in which case the bond must be filed with the city or town clerk.

(3)  Notwithstanding the provisions of subsections (1) and (2), the state or other governmental entity may, in lieu of a surety bond, permit the deposit with the contracting governmental entity or agency of the following securities in an amount at least equal to the contract sum to guarantee the faithful performance of the contract and the payment of all laborers, suppliers, material suppliers, mechanics, and subcontractors:

(a)  lawful money of the United States; or

(b)  a cashier's check, certified check, bank money order, certificate of deposit, money market certificate, or bank draft, drawn or issued by:

(i) any federally or state-chartered bank or savings and loan association that is insured by or for which insurance is administered by the federal deposit insurance corporation; or

(ii) a credit union insured by the national credit union share insurance fund.

(4)  Notwithstanding the provisions of subsections (1) and (2), any board, council, commission, trustee, or body acting for any county, municipality, or any public body other than the state may, in lieu of a bond from a licensed surety company, accept good and sufficient bond with two or more sureties acceptable to the governmental body.

(5)  Except as provided in subsection (6), the state or other governmental entity may waive the requirements contained in subsections (1) through (4) for building or construction projects, as defined in 18-2-101, that cost less than $5,000 $25,000.

(6)  A school district may waive the requirements contained in subsections (1) through (4) for building or construction projects, as defined in 18-2-101, that cost less than $7,500."

Section 5.  Section 18-2-301, MCA, is amended to read:

"18-2-301.   Bids required -- advertising. (1) It is unlawful for any offices, departments, institutions, or any agent of the state of Montana acting for or in behalf of the state to do, to cause to be done, or to let any contract for the construction of buildings or the alteration and improvement of buildings and adjacent grounds on behalf of and for the benefit of the state when the amount involved is $25,000 $75,000 or more without first advertising in at least one issue each week for 3 consecutive weeks in two newspapers published in the state, one of which must be published at the seat of government and the other in the county where the work is to be performed, calling for sealed bids to perform the work and stating the time and place bids will be considered.

(2)  All work may be done, caused to be done, or contracted for only after competitive bidding.

(3)  If responsible bids are not received after two attempts, the department or agency may contract for the work in a manner determined to be cost-effective for the state.

(4)  This section does not apply to work done by inmates at an institution in the department of corrections."

SECTION 6.  SECTION 18-2-302, MCA, IS AMENDED TO READ:

"18-2-302.   Bid security -- waiver. (1) Except as provided in subsection (2), each bid must be accompanied by bid security in the amount of 10% of the bid. The security may consist of cash, a cashier's check, a certified check, a bank money order, a certificate of deposit, a money market certificate, or a bank draft. The security must be:

(a) drawn and issued by a federally chartered or state-chartered bank or savings and loan association that is insured by or for which insurance is administered by the federal deposit insurance corporation;

(b)  drawn and issued by a credit union insured by the national credit union share insurance fund; or

(c)  a bid bond or bonds executed by a surety company authorized to do business in the state of Montana.

(2)  The state or other governmental entity may waive the requirements for bid security on building or construction projects, as defined in 18-2-101, that cost less than $5,000 $25,000."

NEW SECTION. Section 7.  Effective date. [This act] is effective July 1, 1997.

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