In July, 2004, numerous amendments to c. 149, §44A-H, the public bid statute for procurement of buildings, became effective and in January, 2005, the new c. 149A, the alternative method of construction known as Construction Manager at Risk (CM at Risk), became effective. (See Construction Law Comments Vol. 30, Fall, 2004).
Public authorities are implementing the modifications to c. 149, §44A-H. This includes the requirements of retaining an Owner Project Manager (OPM) on projects over $1.5 million and prequalification of general contractors and subcon-tractors. The process of prequalification has become more standardized as the public authorities and OPMs are familiar with the DCAM regulations. Also, the process of DCAM certification of contractors and subcontractors on an annual basis goes into a final stage with the requirement starting January 1, 2006 that all subcontractors must submit a DCAM certificate of eligibility and update statement with every bid, a requirement already in effect for general contractors.
The wording of the new amendments has created some uncertainty which has resulted in the filing of a technical correction bill now pending in the legislature.
One area that resulted in a difference of interpretation related to payment bonds. The intent of the Special Commission on Public Construction Reform, which drafted the amendments, was clear to create uniformity in c. 149, §44A-H and c. 149A as to who pays the cost of subcontractor bonds. The intent was that on all projects requiring subcontractor prequalification, the subcontractor was to furnish and pay the cost of the bond. That means on all projects subject to c. 149, §44A-H that are over $10 million, where prequalification is mandatory, and on all projects under $10 million, where the public authority elects to prequalify the subcontractors, the subcontractor must furnish and pay for the bond.
On projects subject to c. 149A, the designated Trade Contractors, who must be prequalified, must also furnish and pay for the bond.
That leaves projects where there is no prequalification under c. 149, §44A-H. If on those projects a general contractor requests a bond from a filed subcontractor, the general contractor must pay the cost of the bond. The pending technical correction amendment contains language that clears up any confusion.
As to c. 149A, the Inspector General has approved three projects, a school, an airport terminal and a geriatric facility to proceed under this statute. This is an insufficient number of projects to determine how CM at Risk is working in the public sector. It will probably take two years before there is a sufficient number of projects to evaluate the CM at Risk statute.
This
newsletter is intended to provide general information of interest to the
construction industry. It is not intended to provide specific legal advice or
to address fact specific issues. For that you should consult your legal
counsel. Corwin & Corwin LLP assumes no liability in connection with the
use of this newsletter. The Supreme Judicial Court may consider this material
advertising.
©1992-2006 Corwin & Corwin LLP. All rights reserved.