Ohio Attorney General Clarifies Restrictions
On OSFC Contracts with Construction Managers

By: Benjamin B. Hyden, Bricker & Eckler Construction Fellow

Reprinted from July 2006 ohioconstructionlaw.com

Highlights. When the OSFC contracts for construction management services or approves a board of education’s contract for design professional services, those contracts are not competitively bid. Providers of construction management and design professional services are selected following statutorily prescribed qualification-based processes. Ohio statutes prohibit anyone contributing over $1,000 in a two-year period to a public office holder from entering into a contract with the public agency under that office holder’s control unless that contract is competitively bid. Does that restriction apply to these contracts? The OSFC wanted to know, so it asked the Ohio Attorney General for a formal opinion. That answer came down last month and should be of interest to anyone involved in such contracts.

Background

When a state agency has a legal question, it can request a formal opinion of the Ohio Attorney General, the State’s chief legal counsel. Recently, the Ohio School Facilities Commission (referred to as the “OSFC” or the “Commission”) had an interesting question regarding the application of R.C. § 3517.13. The OSFC wanted to know if the campaign contribution limits set in that statute apply to professional design services agreements entered into by school districts and approved by the Commission, or to the contracts that the OSFC itself enters into with construction managers and other consultants. According to the Ohio Attorney General, in Opinion No. 2006-027, the campaign contribution limits do not apply to these services agreements.

The Questions

Basically, R.C. § 3517.13(I) and (J) say no agency or department of the State or any of its political subdivisions may award a contract, other than one let by competitive bidding, for the purchase of goods or services costing more than $500.00 to anyone who has, within the two previous calendar years, given one or more contributions totaling more than $1,000.00 to the holder of the public office having ultimate responsibility for the award of the contract or to the public officer’s campaign committee.

It’s easy to understand why the OSFC wanted the Attorney General’s opinion. R.C. § 3318.30(A) empowers the OSFC to carry out various powers and duties. One such power is the ability to enter into contracts in order to perform its functions. The OSFC’s function is to provide financial assistance to public school districts to construct classroom facilities, which requires the OSFC to approve contracts for professional design services entered into by individual school district boards of education. When it comes to construction management services, the OSFC actually selects and enters into those contracts itself.

Did the OSFC have to be concerned about what contributions might have been made by those architects and construction managers? Although the members of the OSFC do not run for office and would have no use for campaign contributions, another part of the statute—R.C. § 3527.13(K), would apply to contributions made to the Governor if an official appointed by the Governor is responsible for the award of an unbid contract. Since the Governor appoints two members of the OSFC (the Director of Administrative Services and the Director of the Office of Budget and Management), this statute might apply to OSFC contracts.

Additionally, the OSFC noted that its contracts contain language requiring the vendor or consultant to certify that it is familiar with applicable ethics laws, including R.C. § 3517.13, and that it is in compliance with those laws. Even if the statutes did not require compliance with the contribution limits, would this language in the contracts require such compliance?

The Answer

First, the Attorney General found that the qualification-based selection process established by the General Assembly in R.C. §§ 153.65 -153.71 for the selection of design professionals was not equivalent to the competitive bidding exception in R.C. § 3517.13(I) and (J). Therefore, all recipients of design services agreements would potentially be subject to the campaign limits.

But other exceptions applied to keep the campaign contribution limit from applying. Division M of R.C. § 3517.13 expressly excludes contracts awarded by boards of education, commissions, and other such entities created by law. Division M includes one caveat, however: It requires that all members of the entity act collectively in the awarding of a contract.

The Attorney General concluded that the campaign contribution limits do not apply to professional design services contracts awarded by the board of education of a school district, acting collectively, and approved by the OSFC, or to the construction management or other consulting contracts awarded by the OSFC, acting collectively.

Turning to the effect of the contractual language, the Attorney General determined that his answer was still the same: Parties entering into contracts with the OSFC or into OSFC-approved contracts did not have to be concerned with their campaign contributions to the Governor, since the statute did not apply to such contracts. As the Attorney General explained, “A contracting party may donate amounts in excess of $1,000 to a public officer’s campaign committee and, if the contracting party is doing public work only with the Commission or with a board of education subject to the Commission’s approval, and not with another public agency to which R.C. § 3517.13 applies, the contracting party will be able to certify that it is not in violation of R.C. § 3517.13.”

For now, the OSFC form documents for both professional design services and construction management services contain a provision prohibiting the campaign contributions proscribed by R.C. § 3517.13. If that changes, you will read about the change here.