Columbus
Dispatch Editorial
Build it Right
Ohio Senate shouldn’t weaken efforts to reform public contracting
Friday, June 3, 2011
Of all issues confronting Ohio Senate members in the state budget bill,
one decision should have been easy: keeping Gov. John Kasich’s
provision to eliminate absurd and antiquated rules for public
construction projects that waste time and taxpayers’ money.
The budget proposal passed by the Ohio House of Representatives left
Kasich’s construction-reform proposals intact, and would at long last
have allowed the state and local governments, cities, school districts,
universities and other public entities to employ the modern
construction-management methods used by the private sector and by
governments in other states.
The Senate, however, has added language that waters down the
House-passed reforms and would leave the state stuck with 19th-century
requirements.
No other state but Ohio still has a law requiring public construction
projects to hire four separate, independent “prime contractors” - one
each for mechanical, plumbing, electrical and general-trades work.
Those contractors like the requirement because it allows each to deal
directly with the government entity, including negotiating their own
prices and suing the state over conflicts that arise. But having four
independent bosses means more conflict and less coordination, which
means delays and higher-than-necessary costs for building public works.
Estimates are that this system, dating to 1877, raises the cost of
construction by at least 10 percent.
Kasich’s proposal, left intact in the House version, would have given
government builders other, better options than so-called multiple-prime
contracting. A key example is the “construction manager at risk”
structure, in which companies that want to manage a public building
project compete for the business based on their fees and other costs.
Management companies negotiate with the public entity building the
project to set a maximum price; they choose their subcontractors, and
keeping costs under control is up to them. If the project ends up
costing more than the agreed-upon price, they, not taxpayers, are
responsible for the difference.
The Senate version of the construction-reform language still allows
governments and universities to use construction methods other than
multiple-prime contracting, but it adds burdensome requirements that
render the option worthless.
For example, it would require every subcontract to be publicly bid and
every subcontractor to be pre-qualified. It also requires that project
design be complete before any subcontracts are let.
All of that erases the efficiency and advantages of the new management
methods. Allowing at-risk managers to choose subcontractors by their
own standards and to proceed with basic work while project design is
finalized speeds up the process significantly. Taxpayers are protected
because the at-risk manager must deliver the project as promised for
the agreed-upon price.
Ohio universities and state agencies that build large projects have
been begging for construction reform for years to save money and to
speed up construction projects. A broad panel put together by former
Gov. Ted Strickland in 2009 proposed some reforms that would have been
an improvement, but still preserved a sweet spot for some contractors,
allowing them to maintain their independent dealings with university
and government builders.
Legislation based on that plan failed, as have other efforts to bring
public construction into the 21 {+s}{+t} century.
Kasich and the House, in their budget proposals, finally offered
universities and governments access to the tools and methods used by
virtually every other large builder, public or private, nationwide.
The Senate budget language would undercut that much-needed change. The
Senate should adopt the approach of Kasich and the House.
Read it at the Columbus Dispatch
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