The Ohio Legislature passed House Bill 153 on May 5, 2011. H.B. 153—a budget bill—which includes significant changes for Ohio’s public construction projects. Some changes will become effective on September 28, 2011, but others are forecast to become effective in early 2012. As such, we will have to wait a while longer to experience the full effect of the public construction reform.
The following is a sampling of impending changes to public construction works in Ohio:
(1) Prevailing Wage Law (effective September 28, 2011):
These adjustments to Ohio’s prevailing wage law will take effect on September 28, 2011:
Threshold for prevailing wage application to new construction rises from $78,258 to $125,000.00;
Threshold for prevailing wage application to renovation, reconstruction, remodeling, enlargement, repair, or painting work rises from $23,447.00 to $38,000; and
Implementation of a “safe harbor” from liability for a contractor found to have underpaid prevailing wage, if the contractor makes full restitution and each violation is no more than $1,000.00 per employee.
(2) New Options for Construction Delivery (forecast to become effective in early 2012):
One aspect of the reform will allow Public Authorities in Ohio to utilize one of several construction delivery systems for Public Improvements. In addition to Ohio’s classic “multiple prime” public contracting, under which the public authority awards several contracts directly to heavy trade contractors, Public Authorities will now have the option to construct a Public Improvement under any of the following construction delivery systems: (1) Construction Manager at Risk; (2) Design-Build Firm; (3) Design-Assist Firm; or (4) General Contractor.
(3) Pre-qualification Criteria (forecast to become effective in early 2012):
The Ohio Department of Administrative Services, State Architect’s Office, is currently drafting “prequalification criteria” that will be required of subcontractors before they may work on a Public Improvement. Once the criteria are established and approved by the State Attorney General’s office, we should begin to experience Public Authorities’ implementation of the new construction delivery options.
(4) Bonding Requirements (forecast to become effective in early 2012):
H.B. 153 will also impact bonding requirements for Ohio’s public construction projects. The first draft of the new bonding regulations was circulated the week of September 12, 2011. The proposed regulations called for the Construction Manager at Risk, Design-Build Firm, Design-Assist Firm, General Contractor, or Multiple Prime Contractors to procure performance and payment bonds for projects under $20 Million. For projects over $20 Million, however, bonding could be passed down to subcontractors.