Construction Manager at Risk Project Delivery Method Now Permitted for Iowa Public Projects
Effective July 1, 2022, the Iowa Legislature added an alternative project delivery method to the options available to Iowa public entities: Construction Manager at Risk, also known as CM at risk and CMAR.
What do you mean by a Project Delivery Method?
There are various approaches that can be utilized in the design and construction of a project, referred to as project delivery methods. Design-bid-build has been the most common for years. Other methods include design-build, CM at risk (or CMAR), and CM as advisor. CMAR is still a traditional design-bid-build approach, but with the owner retaining a construction manager.
What are the Highlights of the Law?
The new law establishes a new Chapter 26A of the Iowa Code, which authorizes public projects to be constructed under the CMAR project delivery method. The one exclusion is for highway, bridge, and culvert work, for which the CMAR method is not lawful.
Generally speaking, a CMAR project delivery method involves the negotiation of a Guaranteed Maximum Price (“GMP”) for the cost of the entire project, with a CMAR who agrees to complete the project for the public entity-owner within the GMP.
SF183 also has two other components.
- First, the law expressly prohibits the Iowa Board of Regents from using design-build contracts, confirming that design-build contracts are prohibiting on all public projects.
- Second, the law expressly prohibits public entities from using fee-based selection of an architect, landscape architect, or engineer for a public project, confirming existing law.
Public Entity’s RFQ and RFP
The public entity must first publicly disclose its intent to utilize the CMAR method, and then, at least 14 days later, the entity posts its Request for Qualifications (“RFQ”), setting forth its selection criteria in compliance with Iowa Code Section 26A.3. Price proposals are not requested at this stage.
Per the law, a “governmental entity shall not . . . stipulate criteria that would directly or indirectly restrict the selection of a construction manager-at-risk to any predetermined class of providers based on labor organization affiliation.” (Section 26A.3(3)(a)(3))
Next, the public entity evaluates the responses to the RFQ and, thereafter, issues a Request for Proposal (“RFP”) to each contractor who meets the RFQ qualifications.
Public Entity’s Selection of the CMAR
Next, the public entity evaluates the proposals and selects the CMAR whose proposal offers the “best value” to the public entity based on the published selection criteria.
“Best value” is not defined under the law, but that phrase is clearly different than the general standard under Iowa’s public bidding law of the “lowest responsive, responsible bidder.” This is a significant change.
CMAR’s Selection of its Subcontractors and Suppliers
Per the law, the CMAR is required to bid out all work, with one exception for smaller instances of self-performed work. Like owners, CMARs shall not be obligated to adhere to any labor union agreement for those trade contracts that are not self-performed.
All subcontractors and suppliers who meet the initial prequalification criteria may then submit a bid for the relevant trade packages.
Next, the CMAR and public entity evaluate the bids and, for each contract, selects the company who is the “lowest responsive, responsible bidder,” which has been the long-standing standard under Iowa’s existing law.
For further details on this law, contact Jodie McDougal or your attorney with any questions.
Original source can be found here.
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