Every public authority—by definition, counties, townships, school boards, municipal corporations, and any other political subdivision—must follow the qualification-based selection process in awarding contracts to design professionals, unless the estimated fee for professional services will be less than $25,000. The statute defines "design professionals" as architects, landscape architects, engineers, and surveyors.

Easily implemented, the statutory guidelines allow a public authority much discretion in selecting its design professionals. There is no competitive bidding. Selection must focus on the firm's qualifications, instead of the fee to be charged for the services. This focus allows public authorities to select the best-qualified design professional for the project, rather than the firm proposing the lowest fee.

There are only two situations in which the selection guidelines do not apply: (1) to contracts in which the design professional fee is estimated to be less than $25,000; and (2) to a project determined by the public authority to be an emergency requiring immediate action. (In the case of an emergency, the governing body of a public authority must pass a written resolution declaring an emergency and identifying the circumstances under which it resolves to take action outside of the selection guidelines.)

SELECTION PROCEDURES

The Public Announcement. Once a public authority has determined that it needs the services of a design professional, the guidelines require that it publicly announce the availability of the contract for those services. The public announcement may be made in two ways:

• It may be given to qualified design professional firms that have a current statement of qualifications on file with the district offices; or

• It may be sent to trade associations, the news media, or any other public media considered appropriate.

Public authorities are not required to place their announcements in a newspaper of general circulation or advertise them at all. The sole intent of the public announcement requirement is to provide information to interested firms.

If a public authority wishes to publish a notice in its local newspaper announcing that it is accepting statements of qualification and/or statements of interest for a particular contract, it may do so very simply and may direct that interested firms contact a designated administrator to obtain the formal public announcement or a more detailed request for proposals.

Public authorities should consider maintaining a file of current qualification statements from design professional firms, to serve as a basis for providing public announcements to qualified firms. Qualification statements maintained in the file must be kept current; firms should be requested to submit updated statements at least annually. Public authorities may also wish to use this file to "pre-qualify" firms for an anticipated project. If a public authority does not have such a file, it may identify firms by obtaining professional associations' or local business organizations' membership directories or consulting the Yellow Pages.

Public announcements must be made in a consistent manner. Unlike the competitive bidding statutes, the Design Professional Selection Law contains no specific time frame for the posting of public announcements or for the receipt of statements of qualification and interest. The statute gives the public authority some discretion in determining the amount of time to allow design professional firms to respond to the announcement¾it must allow a reasonable amount of time to permit the firms to prepare an appropriate response.

What should the public announcement include? The Ohio Association of Consulting Engineers' How to Comply with Ohio's Design Professional Selection Law: A Guideline for Public Authorities has several suggestions:

• A general description of the project, including its intended function, size, capacity, and any other pertinent information.

• Project budget and anticipated funding sources.

• Anticipated project schedule, including completion of design work, beginning of construction, and planned project completion date.

• Specific services to be provided by the design professional, such as feasibility studies, design, and construction observation or management.

• An invitation to interested firms to submit a statement of qualifications (and the number of copies to be submitted).

• The deadline by which interested firms must respond and where these responses should be sent.

The Selection Process. How can the public authority determine if a professional design firm is qualified to provide the requested services? Here are some criteria:

• Competence, as indicated by technical training, education and experience of the firm's personnel, especially those individuals who would be assigned to the project to perform the services required.

• Capability in terms of its workload and the availability of qualified personnel, equipment, and facilities to perform the required professional design services competently and expeditiously.

• Past performance, as reflected by the evaluations of previous clients who can judge the firm's ability to control costs, quality of work, and attention to deadlines.

• Other similar factors, such as past performance with the public authority, past experience with the specific type of project involved, knowledge of particular design requirements, and experience with an identified architectural style.

The Ohio Association of Consulting Engineers' publication (cited above) cautions that fee information may not be requested at this stage. Price is not among the qualification factors that may be considered in selection of the most qualified firm. From a practical standpoint, at this stage of the process the public authority and the design professional have not agreed upon a detailed scope of services, so it would be impossible for a design professional to quote an accurate fee.

Evaluating Qualification Statements. Each public authority must establish a procedure for reviewing and evaluating the statements of qualification received in response to the project's public announcement. Depending upon the scope of the project, the public authority may wish to have a selection committee appointed to review and evaluate statements of qualification. Evaluation may be based upon the statements of qualification alone, or may include interviews with individual firms. Interviews provide a forum in which each firm can discuss the following areas in more detail:

• Services to be provided;

• Scope of the project;

• Staffing for the project;

• The firm's intended approach to the project;

• The firm's internal quality control program; and

• The firm's procedures for communicating with the public authority and administering the project.

The Ohio Chapter of the American Institute of Architects provides additional guidance for evaluating design professionals in its publication, Qualification-Based Selection: A Process for the Selection of Architects by Public Owners.

After evaluating all of the qualification statements, the public authority must select and rank no fewer than three firms that it considers to be the most qualified for the project. If only one or two firms are determined to be qualified, the statute requires the public authority to state in writing that fewer than three firms are qualified and then to proceed to "rank" the firm or firms.

Although there is no requirement that the ranking be in writing, a written record is recommended. This can be in the form of a resolution, although the statute does not require a formal resolution. In a resolution the public authority can also authorize an identified representative or group to negotiate a contract with the firm determined most qualified to provide the required services.

Contract Negotiation. Once a firm has been chosen as the most qualified for the project, the public authority must proceed to negotiate a contract with that firm. Contract negotiations should define several aspects of the project:

• The scope of the project;

• The estimated project time schedule;

• The appropriate level of staffing, including the names of key staff to be assigned to the project;

• The responsibilities and procedures for the project; and

• The amount of compensation that is fair and reasonable to both parties and takes into account the estimated value, scope, complexity, and nature of the services requested.

Negotiations should ensure that the design firm and the public authority have a mutual understanding of the essential requirements of the project. If the public authority succeeds in negotiating an agreement with the design professional, the agreement should be presented to the public authority and a formal resolution approving the agreement and authorizing its execution should be adopted.

When Contract Negotiations Fail. When a public authority can't negotiate a contract with the most qualified firm, there is a procedure to follow. The public authority must terminate the negotiations by written notification to the top-ranked firm before entering into negotiations with the firm ranked next most qualified.

The same procedure is to be followed until the public authority succeeds in negotiating an acceptable contract. Should the public authority be unable to negotiate a contract with any of the firms selected and ranked during the initial evaluation process, it must start over. The public authority must select and rank additional firms, based upon the same qualifications, and continue with negotiations in the same manner as in the initial selection process.

OTHER REQUIREMENTS

Ohio statutory law now requires professional liability insurance for any person providing professional design services to a public authority. The design professional must have and maintain, or be covered by, a professional liability insurance policy or policies during the period the services are to be rendered. The insurance carrier must be a company authorized to do business in Ohio and must afford coverage for the design services to be rendered by the individual or firm. The amount of professional liability insurance to require is left to the discretion of the public authority.

The statute provides that the public authority may waive the insurance requirement "for good cause," or it may allow the person or firm providing the professional design services to provide other assurances of financial responsibility.

CONCLUSION

Ohio's Design Professional Selection Law affords public authorities the opportunity to select and hire the best design professional for their construction projects. Instead of submitting a specific fee proposal for a project that may as yet be undefined, design professionals submit their qualifications for consideration by public authorities. This process gives public authorities the freedom to select the most highly qualified professional for the project.

This freedom is particularly important in the construction process, where the preparation of a complete and timely set of plans and specifications is crucial to the success of any project. While fees are still an important consideration for any public authority, they are no longer the basis for selecting the providers of design professional services. By following the selection guidelines contained in the Ohio Revised Code, counties, townships, municipalities, school boards, and other political subdivisions can reap the benefits of choosing the most qualified design professional for their projects.

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HOLMAN & GILLIS ON CONSTRUCTION DOCUMENTS

WHAT DO CONTRACTS REQUIRE FOR SURETY BONDS?

First in a Series—In each issue of ohioconstructionlaw.com, Michael S. Holman and Sylvia L. Gillis will discuss important terms found in typical construction documents. Each article will explain the language found in construction documents and provide practical guidance. We kick off the new series with a discussion of surety bonds.

A bond is "[a]n obligation by which one party (surety) agrees to guarantee performance by another (principal) of a specified obligation for the benefit of a third person or entity (obligee)." The Architect's Handbook of Professional Practice, Definitions at 3 (1994).

Bonds take on many different forms--bid bonds, performance bonds, payment bonds and combination bid guarantee-payment-and performance bonds, for instance.

It is very important for an Owner, Design Professional or Contractor to read and understand the language in the bond. For each bond, the language defines the surety's obligation, unless a statute provides for a specific form of bond. In this case, the form required by the statute may be read into the bond, regardless of the language in the bond itself. Many bonds contain limitations and conditions that restrict the Owner's or obligee's rights.

Under Paragraph 11.5 of the American Institute of Architects' (AIA) Document A201-1997, General Conditions of the Contract for Construction, the Owner has the right to require the Contractor to provide payment and performance bonds. Paragraph 11.5 contains these specific provisions:

11.5 PERFORMANCE BOND AND PAYMENT BOND

11.5.1 The Owner shall have the right to require the Contractor to furnish bonds covering the faithful performance of the Contract and the payment of obligations arising thereunder as stipulated in the bidding requirements or specifically required in the Contract Documents on the date of execution of the Contract.

11.5.2 Upon request of any person or entity appearing to be a potential beneficiary of bonds covering payment of obligations arising under the Contract, the Contractor shall promptly furnish a copy of the bonds or shall permit a copy to be made.

Paragraph 11.5 does not say that the Contractor is entitled to additional payment for providing the bonds the Owner requests. If the Owner requests a bond, the Contractor should include an amount to cover the bond premium in its bid or Contract Price.

Paragraph 11.5 also does not specify what form of bond the Contractor must provide. The Owner or Design Professional should state the required form in the bid documents. (More in a moment on the form of the bond.) For additional protection, we recommend that the Owner or Design Professional set forth financial and size requirements that the surety must meet. Including financial and size requirements in the bid documents should minimize the possibility that the surety will default.

Form of bond. As we previously stated, many bonds contain limitations and conditions that restrict the Owner's or obligee's rights. The AIA has form payment and performance bonds--AIA Document A312-1984. These bonds contain several conditions that must be met before the surety is obligated to perform. If the AIA form of bond is used and there is a Contractor default, the Owner and the Design Professional should be careful to fulfill these conditions.

On public works projects in the State of Ohio, the Contractor is required to provide a bid guarantee and a payment and performance bond. The Contractor can meet the statutory obligation to provide a bid guarantee by providing, among other financial guarantees, a bid bond or a combination bid guarantee-payment-and-performance bond. The forms for the performance and payment bond and combined bid guarantee-payment-and-performance bond are set forth in Sections 153.57 and 153.571 of the Ohio Revised Code. These forms of bonds contain no conditional language. We recommend that private owners consider using these statutory forms of bonds for their projects, also.

Other Bond Issues. AIA Document A201-1997, General Conditions of the Contract for Construction, also provides other terms related to surety bonds. They are summarized below. References are to paragraphs and subparagraphs in A201-1997.

• 4.4.7 Upon receipt of a Claim against the Contractor, the Architect or Owner may give notice to the Contractor's surety. As a practical matter, the Owner should give the surety notice of any Claim against the Contractor.

• 5.4.1.2 Under Paragraph 5.4, the Contractor makes a contingent assignment of the subcontracts upon termination of the Contractor's contract for cause. This subparagraph provides that such assignment is subject to any prior rights of the surety.

• 9.8.5 Upon Substantial Completion, the Owner may pay the Contractor part of the retainage. If the Owner does so, this subparagraph would require the consent of the surety. Before forwarding any Payment Application recommending the release of retainage, the Design Professional should be careful to ensure that the surety has consented to the payment.

• 9.10.2 This Subparagraph is similar to Subparagraph 9.8.5, but applies to final payment.

• 9.10.3 This Subparagraph provides under certain circumstances for the release of retainage upon Substantial Completion if the final completion is delayed through no fault of the Contractor. The consent of the surety is required before releasing the retainage for the completed work.

• 14.2.2 This Subparagraph applies where the Owner terminates the Contractor's contract for cause. When one of the reasons for termination for cause exists, the Owner is required to give both the Contractor and the Contractor's surety notice before exercising its remedies under this subparagraph. The Owner's exercise of these remedies is made subject to any prior rights of the surety.

The Revised Code of Ohio contains a number of sections applicable to bonds. Two of these sections are discussed below. References are to sections of the Revised Code of Ohio.

• 9.32 Upon awarding of a contract, this section requires that the public owner simultaneously notify the surety and the surety's agent of the award.

• 153.56 This section requires that subcontractors and suppliers on public works projects must meet certain time requirements in order to make a claim against the Contractor's payment bond. Among these requirements are the following:

• Furnishing a statement of the amount due to the surety not later than 90 days after the acceptance of the public improvement by the Owner.

• Bringing suit on the bond not later than one year after acceptance of the public improvement by the Owner. The subcontractor or supplier must wait 60 days after giving the surety a statement of the amount due before bringing suit. [Note: If the subcontractor or supplier misses either of these time limits, the subcontractor or supplier probably will have lost its right to recover under the Contractor's payment bond.]

We hope that this article is helpful. If you have suggestions for other contract clauses you would like to see explained in future articles, please let us know.

Michael S. Holman, Esq.
Sylvia L. Gillis, Esq.

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WHAT THE COURTS ARE SAYING . . .

Each month, ohioconstructionlaw.com summarizes recent decisions of Ohio and federal courts that may affect construction projects and those involved with them in Ohio. From time to time, we may even include a case from another state, if it seems particularly relevant.

If we overlook a case that you think is significant, E-mail us with your suggestions. We can always use feedback, and we would enjoy hearing from you!

This month, we lead off with a June 1st decision of the Sixth Circuit (the Federal Court of Appeals for Ohio, Michigan, Kentucky and Tennessee) striking down Ohio's minority set-aside program—a program that, for 20 years, has affected bidding on public construction projects. Our second case comes from a ruling of the Franklin County Court of Common Pleas last month applying Ohio's Prompt Payment Act to award interest and attorney's fees to a subcontractor.

Federal Court Determines Minority Business Enterprise Act Violates U.S. Constitution Because Ohio Lacks Data To Justify Preferences.

The roller coaster history of Ohio's Minority Business Enterprise Act continued this month when the Sixth Circuit decided Associated General Contractors of Ohio, Inc. v. Drabik, ___ F.3d ___ (6th Cir. 2000) (available on Westlaw at 2000 WL 703031), and declared the statute unconstitutional.

When the General Assembly passed the statute in 1980, they required state agencies administering construction projects to restrict bidding of 5% of prime contracts to minority-owned businesses, as well as requiring that a portion of all prime contracts be subcontracted to minorities. The legislators could not have envisioned in 1980 the up-and-down fortunes of the program they created:

• Declared unconstitutional by a federal district court ruling in 1982;

• Declared constitutional the next year when the Sixth Circuit overruled the lower court's decision in Ohio Contractors Ass'n v. Keip, 713 F.2d 167 (6th Cir. 1983);

• Declared unconstitutional in 1997 by a state court ruling limited to the application of minority set-asides in goods and services contracts, which was upheld by the Court of Appeals in Ritchey Produce Co. v. State of Ohio Dep't of Administrative Services, 1997 WL 629965 (Ohio App. 10 Dist. Oct. 7, 1997), agreeing that the statute as administered violated the Constitution;

• Declared constitutional once more by the Ohio Supreme Court in 1999 when it reversed the ruling in Ritchey Produce, 85 Ohio St.3d 194, 707 N.E.2d 8871 (1999);

• But declared unconstitutional the year before in a different forum—once more, a federal court—when Federal Judge James L. Graham of the Southern District of Ohio decided Associated General Contractors of Ohio, Inc. v. Drabik; and most recently

• Declared unconstitutional again this month by the Sixth Circuit's decision affirming Judge Graham's ruling, Associated General Contractors of Ohio, Inc. v. Drabik, ___ F.3d ___ (6th Cir. 2000).

So is it constitutional or unconstitutional for Ohio to require a set-aside on all state contracts for bidding by minority-owned businesses? For goods and services contracts, the Ohio Supreme Court says "constitutional" in Ritchey Produce. For construction contracts, the Sixth Circuit says "unconstitutional" in Associated General Contractors.

For now the state has been permanently enjoined by the federal courts from applying the Minority Business Enterprise Act when any state construction projects are bid. To set aside construction equal to five percent of the value of the project and limit bidding on that portion to minority-owned firms (as the statute required) would violate that injunction. At this writing, Attorney General Betty D. Montgomery had not decided whether Ohio should ask for a rehearing before the full Sixth Circuit (all twelve judges, instead of just three), should seek a ruling from the United States Supreme Court, or should just accept the latest word of the Sixth Circuit.

Do local governments need to be concerned with this latest ruling, which enjoins only state action? Yes. Even though the Associated General Contractors ruling applies only to state construction, any public official dealing with construction at any level should be concerned. Any official who restricts the bidding on part of a construction contract to minority-owned contractors should anticipate a lawsuit. Such a lawsuit is likely to include a claim that the official is personally liable for a violation of the plaintiff's civil rights. While Associated General Contractors would not control the outcome of such a suit, it could be persuasive authority to support the plaintiff's claim.

The case before the Sixth Circuit arose from the construction of the Toledo Correctional Facility, a $50 million project. The Department of Administrative Services (DAS) set aside an entire building, or 20% (an estimated $10 million worth of construction) for bidding by minority-owned businesses ("MBEs").

By statute, such businesses were defined as at least 51% owned and controlled for at least a year by "members of one of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals." To participate in the set-aside portion of the bidding, such a business must be officially certified by the state as an MBE.

At issue was the fact that only one or two MBEs maintain sufficient bonding capacity to bid on a $10-million building. This fact led to another question: Can such companies be economically disadvantaged?

The plaintiffs in Associated General Contractors represented Ohio general contractors. The defendant was Sandra Drabik, Director of the Ohio DAS. Plaintiffs claimed the racial preference in bidding violated the Equal Protection Clause of the Fourteenth Amendment to the Constitution. The District Court and the Sixth Circuit both agreed.

Over the years, the United States Supreme Court has worked out the standards for reviewing statutes that establish racial preferences. To withstand constitutional challenges, evidence must establish that the government engaged in systematic racial discrimination. Typically, such evidence is established through a formal "predicate study." Then, any such statute must be "narrowly tailored" to satisfy a "compelling government interest." Wygant v. Jackson Board of Education, 476 U.S. 267, 274 (1986).

Ohio argued that the Minority Business Enterprise Act was so tailored. But Supreme Court precedent required Ohio to support that conclusion with strong factual evidence that the specific remedial action required by the statute was necessary because the state itself had actively discriminated in the past or had passively participated in the private industry's discriminatory practices.

This the state could not do—at least not to the satisfaction of the federal courts. The state's evidence of discrimination was primarily from 1980 when the statute was enacted. Its best evidence compared the percentage of contracts awarded to minorities to the percentage of minority-owned businesses in Ohio.

While these statistics might appear to be good evidence, the Sixth Circuit pointed out a fatal weakness: The percentage of minority-owned businesses in Ohio was based on all businesses of any kind, rather than limited to the percentage of minority-owned construction businesses. If the study had compared apples to apples, the apparent discrepancy might have disappeared. Comparing the percentage of construction contracts awarded to minorities with the percentage of minority-owned businesses eligible for bidding on those contracts might have created a different picture altogether, according to the Sixth Circuit.

The Sixth Circuit also found that the Minority Business Enterprise Act was not "narrowly tailored." It lumped together several minorities: Blacks, Native Americans, Hispanics, and Orientals. According to the Sixth Circuit:

"[The Act] may well provide preference where there has been no discrimination, and may not provide relief to groups where discrimination might have been proven."

Additionally, the exact extent of the "Hispanic" and "Oriental" designations was not clear to the Sixth Circuit. (The Ritchey case in the state courts was brought by a businessman of Lebanese descent who considered himself Oriental and who sought a goods and services contract with the state. Denied MBE certification, he sued, claiming the preference was unconstitutional.)

Although Ohio's statistics were better than the data offered in some cases taken to the U.S. Supreme Court, they were still not enough, according to the Sixth Circuit. It affirmed the lower court's decision that Ohio's statute could not withstand the constitutional challenge.

How could the Ohio Supreme Court have reached such a different conclusion only a year before? It dealt with a different section of the statute—that applicable to procurement contracting, rather than to construction contracts. But that distinction hardly seems sufficient to explain such a different outcome. The Ohio Supreme Court took pains to say that it was not disagreeing with Judge Graham's District Court opinion (already on record when the Ohio Supreme Court ruled).

But the Sixth Circuit earlier this month took exactly the opposite approach. In closing, the Sixth Circuit specifically noted that its opinion was "not reconcilable with Ritchey, despite the Ohio Supreme Court's attempt to distinguish the cases."

So, until the next ruling by yet another court (or a possible rehearing by the Sixth Circuit) no construction contract can legally be set aside for bidding by minority-owned construction businesses. Goods and services contracts, however, continue under the old program. But, given the up-and-down history of the Minority Business Enterprise Act, it would be wise to stay tuned for the next installment in what has proven to be a continuing saga.

Under the Prompt Payment Act, Court Awards Subcontractor 18% Interest Plus Attorney's Fees, Without Even a Trial.

As explained in last month's issue of ohioconstructionlaw.com, the Prompt Payment Act, R.C. § 4113.61, promotes prompt payment of subcontractors and suppliers by penalizing contractors who get paid themselves but delay more than ten days in paying those under them. The penalties mandate 18% interest per year, plus attorney's fees and costs if a lawsuit is necessary and the court orders payment.

That statute was put to the test recently in a decision issued May 16th, Thomas Glass Co. Inc. v. Aubry-Hansen, Inc., Case No. 99CVE-05-3713 in the Franklin County Court of Common Pleas, a case arising from the construction of a Dave & Buster's restaurant in Hilliard, Ohio. There were several unusual facts about the case:

• The contractor had paid the subcontractor all but $840 when the lawsuit was filed, and it paid that balance three months later. Still, the lawsuit continued.

• The parties agreed on all the material facts, disputing only how the Prompt Payment Act should be applied.

• Judge Patrick M. McGrath decided the case based on a summary judgment (a decision reached without a trial because no factual issues remain).

By the time of the court's ruling, two issues remained: how much interest was due, and was the plaintiff entitled to attorney's fees and costs? Under the Prompt Payment Act, interest begins to run the eleventh day following the contractor's receipt of payment from the owner, § 4113.61(A)(1). But the contractor claimed the plaintiff had not established that date. The court disagreed: Plaintiff had credible evidence that the owner had paid for all of plaintiff's work by December 28, 1998, at which time the plaintiff was entitled to be paid in full.

Thus, the court—without a trial—was able to calculate the full amount of the 18% interest: $1,301.70. (On a dispute over $840.) Furthermore, the court ordered the plaintiff to file an affidavit for attorney's fees within five days, giving the defendant five days to respond.

The court's willingness to consider such sanctions may have been influenced by something in addition to the Prompt Payment Act. In the opinion, Judge McGrath cautioned both parties that "the vitriolic nature of correspondence between counsel in this case has not gone unnoticed by the court."

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WHAT THE LEGISLATORS ARE CONSIDERING . . .

This monthly column focuses on legislation pending in Ohio that is of interest to the construction industry. Occasionally, we will highlight a recently enacted law of particular significance or a pending bill that deserves more than two or three sentences. Our highlighted bill this month should interest anyone with employees who might be injured on the job. The bill, which has just passed the House, would make it harder to obtain workers' compensation benefits if the injury occurred while the employee was under the influence of drugs or alcohol.

When there has been no action on a bill since the previous month, we will repeat the previous summary for the benefit of any readers who may have missed it earlier. Our goal is to provide a concise summary, including just enough information that anyone who wants to learn more will know where to direct questions about the bills. For the text of any particular bill, link here.

*** HIGHLIGHTED BILL ***

Limiting Access to Workers' Compensation
Coverage for Drug- & Alcohol-Related Injuries
House Bill 122 (Rep. Cates, R-West Chester)

Workers who are injured while under the influence of drugs or alcohol will find it tougher to obtain workers' compensation benefits if House Bill 122 becomes the law. The bill, introduced by Representative Gary Cates (R-West Chester), would make it the worker's task to prove his or her impairment did not cause the injury. This bill passed the full House on May 10th and is scheduled for hearings before the Senate Insurance, Commerce and Labor Committee.

Currently, workers injured on the job are eligible for workers' compensation benefits unless they injure themselves on purpose or their injury results from their own intoxication or impairment due to drugs ("a controlled substance not prescribed by a physician"). Even employees who test positive for alcohol or drugs are not presumed to have caused their own injuries. It is up to their employers to prove that the accident happened because the employee was impaired.

Under House Bill 122, all that would change. An employee who sustains a work-related injury and tests positive for alcohol or illegal drugs (under standards set in the bill) will be denied benefits under the Ohio workers' compensation system—unless the employee can prove his or her impairment did not cause the injury.

If the injured employee refuses testing for drugs or alcohol, the bill provides additional teeth: the reluctant employee is then presumed to have been under the influence, and the injury is presumed to result from that impaired state. Again, it is up to the employee to prove that presumption is false.

This bill was passed by the full House and is currently scheduled for hearings before the Senate Insurance, Commerce and Labor Committee. For more information on this legislation, contact Miranda Motter at Bricker & Eckler LLP, (614) 227-2345.

*** SUMMARIES OF PENDING LEGISLATION ***

I. Bidding

Reverse Bid Preference H.B. 40, Representative Jolivette (R, Hamilton)

This bill would establish a reverse preference, for bid comparison purposes only, on public construction contracts whenever a political subdivision provides a preference to local contractors. In effect, contractors receiving a preference from a political subdivision would be penalized when they bid on public projects outside of that subdivision. County government offered amendments to insure monitoring and enforcement of the provisions.

Passed by the House; pending Senate State and Local Government Committee hearings.

Minority Business Enterprise Repeal H.B. 288, Representative Williams (R, Akron); S.B. 122, Senator Watts (R, Columbus)

These bills would eliminate the minority business enterprise program and replace it with a "challenged business enterprise" program based on economic disadvantage rather than minority status.

Assigned to the House Criminal Justice Committee and Senate Judiciary Committee respectively for hearings.

Design-Build H.B. 286, Representative Coughlin (R, Cuyahoga Falls)

By eliminating Ohio's mandatory competitive bidding law, this bill would allow public authorities to use contractor-led "design-build contractors" in the construction of public improvements.

Assigned to Subcommittee of the House Commerce and Labor Committee for hearings.

Separate Prime Contract Repeal H.B. 359, Representative Krebs (R, Camden)

This bill would eliminate the requirement that public agencies at the state and local level accept separate prime contracts for the three skilled trades, thus excluding privity of contract for electrical, plumbing and HVAC bidders. It would also increase the competitive bidding threshold from $10,000 to $50,000.

Assigned to Subcommittee of the House Commerce and Labor Committee for hearings.

Illegal Aliens' Employers Barred from State Contracts, H.B. 630, Representative Schuring (R, Canton)

This bill prohibits a state agency from awarding contracts to any person who has been convicted of employing an unauthorized alien with the three years prior to the contract date.

Assigned to the House State Government Committee for hearings.

II. Public Projects

Expanding the Classroom Facilities Assistance Program S.B. 272, Senator Cupp (R, Lima)

This bill makes numerous changes in the Classroom Facilities Assistance Program, which permits the State and the local school district to share the costs of constructing classroom facilities.

Passed by both Senate and House; assigned to the Conference Committee for hearings.

Updating Rules for the Ohio Department of Transportation S.B. 295, Senator Oelslager (R, Canton)

Under this bill, ODOT could include a binding arbitration clause in any construction contract. The bill would also expand ODOT's power to acquire and dispose of property and would permit quicker removal of obstructions in the roadway.

Passed by the House; pending before the Senate.

III. Construction Site

OUPS, "Call-Before-You-Dig," S.B. 193, H.B. 393, Senator Blessing (R, Cincinnati), Representative Olman (R, Maumee)

This bill replaces the existing call-before-you-dig laws with a single statewide one-call notification system that would apply to both public and private improvement projects. The bill would require the establishment of a single, nonprofit corporation to operate the system. For additional information on this bill, see the March 2000 issue of ohioconstructionlaw.com.

Assigned to the House Local Government and Townships Committee and Senate Ways and Means Committee, respectively, for hearings.

Construction Debris H.B. 540, Representative Schuring (R, Canton)

This bill would make various changes in the law regarding the removal and disposal of demolition and construction debris.

Assigned to the House Energy and Environment Committee.

IV. County Improvements

County Improvements H.B. 549, Representative Terwilliger (R, Maineville)

This bill modifies various county road and water supply, sanitary, and drainage facilities laws with respect to the procedures for the acquisition, construction, maintenance, and operation of various facilities and other improvements.

Passed by the House Transportation and Public Safety Committee; currently awaiting consideration before the full House of Representatives.

V. Licenses

Engineer & Architect Enforcement H.B. 560, Representative Coughlin (R, Cuyahoga Falls)

This bill adds enforcement language to the existing licensure board authority for engineers and architects. Currently, the state may only enjoin non-licensed individuals, with no penalty for enforcement.

Assigned to the House Commerce and Labor Committee for hearings.

Skilled Trades Licensure, H.B. 434, Representative Buehrer (R, Delta)

This bill would license HVAC, refrigeration, electrical, plumbing, and hydronics contractors under a statewide system, removing the requirement that they be licensed by each locality in which they do business. For additional information on this bill, see the May 2000 issue of ohioconstructionlaw.com.

Passed by the House; pending Senate Insurance, Commerce and Labor Committee hearings.

Interior Designer Certification S.B. 138, Senator Cupp (R, Lima)

This bill requires the Director of Commerce to certify interior designers who meet certain requirements as "Ohio certified interior designers."

Assigned to the Senate Insurance, Commerce, and Labor Committee for hearings.

Landscape Architecture Certification S.B. 156, Senator Cupp (R, Lima)

This bill redefines "landscape architecture" and "landscape architectural services" for purposes of registration. It also prohibits engaging in the unregistered practice of landscape architecture.

Assigned to the Senate Insurance, Commerce and Labor Committee for hearings.

Contract Venue H.B. 491, Representative Willamowski (R, Lima)

This bill makes void and unenforceable as against public policy any provision of a construction contract or other agreement for any improvement to real property in Ohio that is subject to the laws of another state or that requires any litigation, arbitration, or other dispute resolution process to occur in another state.

Passed by the House; pending Senate Judiciary Committee hearings.

Bond Time Limit H.B. 490, Representative Willamowski (R, Lima)

A technical correction bill to clarify the ruling in a court case, this bill would set the time for filing a lawsuit on a surety bond. The deadline would be 90 days after the completion of the entire public works project for which the bond was provided, rather than 90 days after the particular work was completed.

Assigned to the Senate Judiciary Committee for hearings.

VI. Purchasing

Buy Ohio H.B. 512, Representative D. Miller (D, Cleveland)

This bill would designate steel slag as a product included in the Buy Ohio program and require that steel slag used on capital improvements be purchased in the United States.

Assigned to the House State Government Committee for hearings.

VII. Compensation and Wages

Comp Time vs. Overtime H.B. 39, Representative Coughlin (R, Cuyahoga Falls)

This bill would permit private employers to award their employees compensatory time off rather than monetary overtime compensation. In addition, employers would be allowed to establish biweekly work schedule programs with their employees. An employee could work more than 40 hours in one week without it being considered overtime, so long as the employee does not work more than 80 hours in any two consecutive weeks. Under the bill, the employer could not require an employee to accept these programs, which would have to be voluntary.

Passed by the House Commerce and Labor Committee; pending full House vote and Senate consideration.

School Prevailing Wage H.B. 254, Representative Beatty (D, Columbus)

This bill would reinstate prevailing wage for school building projects, repealed two years ago.

Assigned to the House Finance and Appropriations Committee for hearings.

Prevailing Wage Repeal H.B. 20, Representative Hood (R, Canfield)

This bill would repeal Ohio's prevailing wage law.

Assigned to the House Commerce and Labor Committee for hearings.

VIII. Unions and Collective Bargaining

"Right to Work" H.B. 175, Representative Hood (R, Canfield)

This bill would prohibit employers from being a "closed-shop," meaning that employees cannot be required to join a labor union. Leadership has not initiated consideration of the bill, which repeats the historic ballot initiative that swept Republicans from office nationwide in 1958.

Assigned to the House Commerce and Labor Committee for hearings.

Project Labor Agreements S.B. 60, Senator Shoemaker (D, Bourneville)

This bill would allow school districts to enter into project labor agreements (PLAs) on their school building projects. The bill reacts to H.B. 101, which prohibited PLAs and has since been ruled unconstitutional by the courts.

Assigned to the Senate Insurance, Commerce, and Labor Committee for hearings.

IX. Workers' Compensation

Presumption in Compensation Claims H.B. 122, Representative Cates (R, West Chester)

This bill would make it more difficult for employees to qualify for workers' compensation benefits if they were injured while under the influence of drugs or alcohol. Injured employees who refused to be tested for drug or alcohol use would be presumed under the influence and would have to prove that their impairment did not cause their injury. See the detailed analysis above.

Passed by the House; pending Senate Insurance, Commerce and Labor Committee hearings.

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