ROAD AGENCY BIDDING REQUIREMENTS

House Bill 4476 as introduced

Sponsor:  Rep. Gary R. Eisen

Committee:  Transportation

Revised 1-8-20

SUMMARY:

House Bill 4476 would amend 1951 PA 51 (“Act 51”), the act that governs the distribution of funding for state and local road and bridge programs. Specifically, the bill would amend section 11c of the act, which prescribes construction contract bidding requirements for Michigan Department of Transportation (MDOT) and local road agency projects.

Generally speaking, and with certain exceptions described in Background, below, section 11c currently requires MDOT and local road agency construction or preservation projects whose cost exceeds $100,000 to be performed by contract awarded by competitive bidding.

House Bill 4476 would increase the project cost reference from $100,000 to $500,000.

MCL 247.661c

BACKGROUND:

[Note: The original HFA summary of this bill suggested that MDOT awarded some capital construction contracts by other than competitive bidding. This is not correct.]

Section 11c of Act 51 currently requires that all MDOT construction projects concerning highways, streets, roads, and bridges whose cost exceeds $100,000 for construction or preservation as defined in section 10c “be performed by contract awarded by competitive bidding unless the department affirmatively finds that under the circumstances relating to those projects, some other method is in the public interest.”

Section 11c also directs the director of the department to “report his or her findings to the state transportation commission 90 days before work is commenced and promptly in writing to the appropriations committees of the senate and house of representatives.” If the department determines that emergency action is required, reports need not be filed before a contract is awarded; however, the section requires that the reports “be promptly filed.”

MDOT construction and capital preservation projects are performed by private construction contractors employed through a competitive bidding process. The department does not use its own forces to perform capital construction work. Most MDOT construction projects are awarded through a Design-Bid-Build process in which the department is responsible for project design, private construction contractors submit bids, and the contract is awarded to and performed by the responsive low bidder. MDOT also uses contracting methods other than Design-Bid-Build, including Design-Build and Construction Manager/General Contractor (CM/GC).

All of these procurement methods involve a competitive bid process. The department does not award capital construction contracts by noncompetitive means. Both Design-Bid-Build and Design-Build contracts are awarded to the responsive low bidder. CM/GC contracts are also competitively bid, although the contract award may be based on other qualification selection criteria and not solely on lowest bid price.

Section 11c includes a similar requirement with respect to local road agency construction contracts. Specifically, the section requires that “all construction projects of a local road agency whose cost exceeds $100,000 for construction or preservation... shall be performed by contract awarded by competitive bidding unless the local road agency affirmatively finds that under the circumstances relating to those projects, some other method is in the public interest.” Local road agency maintenance projects and certain advanced traffic management and signals projects are excluded from the scope of the requirement.

Current language directs that “a county road commission shall report its findings before work is commenced in writing to the county board of commissioners of that county. A city or village shall report its findings before work is commenced in writing to the governing elected body of that city or village.”

Current law defines “local road agency” to mean what that term means under section 9a of Act 51, i.e., “a county road commission or designated county road agency or city or village that is responsible for the construction or maintenance of public roads within the state under this act.”

This Act 51 requirement for local road agency construction projects parallels federal-aid program requirements that generally require federal-aid highway projects to be performed by contracts awarded by competitive bidding. However, Federal Highway Administration (FHWA) policy allows noncompetitive contract work under specific circumstances. Specifically, FHWA policy allows local agency force account work when the state department of transportation demonstrates that force account work is more cost-effective than competitive bidding (and for emergency work).[1]

Construction work performed by local road agency forces, as opposed to private contractors through competitive bidding, is termed “force account” work.[2]

The department’s Local Agency Program Unit publishes an annual report of noncompetitive local agency projects. That report is available on the department’s website.

FISCAL IMPACT:

It is not clear how the bill would affect state or local contracting requirements.

MDOT construction and capital preservation projects are currently performed by private construction contractors employed through a competitive bidding process. The department does not award contracts by noncompetitive means.

In addition, it is not clear how the bill would affect the use of local agency force account work on federal-aid projects. Those projects are currently governed by federal aid program requirements and related MDOT guidelines.

                                                                                                Fiscal Analyst:   William E. Hamilton

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.

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