Bill Summary – FastDemocracy

68th Legislature                                                                                                HB 151.1
                                                 HOUSE BILL NO. 151
                                            INTRODUCED BY M. HOPKINS
                              BY REQUEST OF THE DEPARTMENT OF ADMINISTRATION
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   A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING STATE BUILDING CONSTRUCTION
   PROCUREMENT LAWS; RAISING THE COST THRESHOLD OF CONSTRUCTION ACTIVITIES THAT
   REQUIRE LEGISLATIVE APPROVAL; RAISING CERTAIN COST THRESHOLDS FOR SUPERVISION
   REQUIREMENTS OF BUILDING CONSTRUCTION; PROVIDING FOR INFLATIONARY ADJUSTMENT OF
   CERTAIN COST THRESHOLDS THROUGH RULEMAKING; AUTHORIZING THE DEPARTMENT OF
   ADMINISTRATION TO NEGOTIATE A CONTRACT WITHOUT COMPETITIVE BIDDING IF AN EMERGENCY
   OR PUBLIC EXIGENCY EXISTS AND TO NEGOTIATE DEDUCTIVE CHANGES OF A GREATER
   PERCENTAGE OF THE TOTAL COST OF THE PROJECT WHEN BIDS RECEIVED EXCEED THE
   APPROPRIATION; RAISING THE COST THRESHOLD UNDER WHICH THE DEPARTMENT OF
   ADMINISTRATION MAY PREPARE WORKING DRAWINGS FOR BUILDING CONSTRUCTION; RAISING
   THE COST THRESHOLD FOR WAIVING CERTAIN SECURITY REQUIREMENTS; ALLOWING FOR PUBLIC
   NOTICE THROUGH ELECTRONIC MEANS FOR COMPETITIVE BIDDING ON CERTAIN PROJECTS;
   ALLOWING BUILDING CONSTRUCTION BIDS TO BE SECURED BY AN IRREVOCABLE LETTER OF
   CREDIT; PROVIDING RULEMAKING AUTHORITY; AMENDING SECTIONS 18-2-102, 18-2-103, 18-2-105,
   18-2-111, 18-2-201, 18-2-301, 18-2-302, AND 18-2-501, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE
   DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              Section 1. Section 18-2-102, MCA, is amended to read:
              "18-2-102.   Authority to construct buildings. (1) Except as provided in 22-3-1003 and subsection
   (2) of this section, a building costing more than $150,000 may not be constructed without construction activities
   costing more than $300,000 require the consent of the legislature. Legislative approval of repair and
   maintenance costs as part of an agency's operating budget constitutes the legislature's consent. When a
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   building costing more than $150,000 $300,000 is to be financed in a manner that does not require legislative
   appropriation of money, the consent may be in the form of a joint resolution.
              (2)    (a) The governor may authorize the emergency repair or alteration of a building and is
   authorized to transfer funds and authority as necessary to accomplish the project. Transfers may not be made
   from the funds for an uncompleted capital project unless the project is under the supervision of the same
   agency.
              (b)    The regents of the Montana university system may authorize the construction of revenue-
   producing facilities referred to in 20-25-302 if they are to be financed wholly from the revenue from the facility.
              (c)    The regents of the Montana university system, with the consent of the governor, may authorize
   the construction of a building that is financed wholly with federal or private money if the construction of the
   building will not result in any new programs.
              (d)    The regents of the Montana university system may authorize the construction of facilities as
   provided in 20-25-309.
              (e)    The department of military affairs, with the consent of the governor, may authorize the
   construction of a building that is financed wholly with federal or private money on federal land for the use or
   benefit of the state."
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              Section 2. Section 18-2-103, MCA, is amended to read:
              "18-2-103.    Supervision of construction of buildings. (1) For the construction of a building activities
   costing more than $150,000 $300,000, the department shall:
              (a)    review and accept all plans, specifications, and cost estimates prepared by architects or
   consulting engineers;
              (b)    approve all bond issues or other financial arrangements and supervise and approve the
   expenditure of all money;
              (c)    solicit, accept, and reject bids and, except as provided in Title 18, chapter 2, part 5, award all
   contracts to the lowest qualified bidder considering conformity with specifications and terms and
   reasonableness of the bid amount;
              (d)    review and approve all change orders; and
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              (e)      accept the building when completed according to accepted plans and specifications.
              (2)      The department may delegate on a project-by-project basis any powers and duties under
   subsection (1) to other state agencies, including units of the Montana university system, upon terms and
   conditions specified by the department.
              (3)      Before a contract under subsection (1) is awarded, two formal bids must have been received, if
   reasonably available.
              (4)      (a) The department need not require the provisions of Montana law relating to advertising,
   bidding, or supervision when proposed construction costs are $75,000 $150,000 or less. However, with respect
   to a project having a proposed cost of $75,000 $150,000 or less but more than $25,000 $50,000, the agency
   awarding the contract shall procure at least three informal bids from contractors registered in Montana, if
   reasonably available.
              (b)      Starting on July 1, 2028, and every 5 years after that, the department shall adjust the limits in
   subsection (4)(a) for inflation. The inflation adjustment is found by dividing the consumer price index for June of
   the previous tax year by the consumer price index for June 2023. The newly adjusted limits must be rounded to
   the nearest $1,000 and adopted by rule.
              (5)      The department may negotiate a contract, without competitive bidding, with a contractor
   qualified to do business in Montana if:
              (a)      an emergency as defined in 10-3-103 exists; or
              (b)      a public exigency as defined in 2-17-101 exists.
              (5)(6)   For the construction of buildings owned or to be owned by a school district, the department
   shall, upon request, provide inspection to ensure compliance with the plans and specifications for the
   construction of the buildings. "Construction" The term "construction" includes construction, repair, alteration,
   equipping, and furnishing during construction, repair, or alteration. These services must be provided at a cost to
   be contracted for between the department and the school district, with the receipts to be deposited in the
   department's construction regulation account in a state special revenue fund.
              (6)(7)   It is the intent of the legislature that student housing and other facilities constructed under the
   authority of the regents of the university system are subject to the provisions of subsections (1) through (3).
              (7)(8)   The department of military affairs may act as the contracting agency for buildings constructed
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   under the authority of 18-2-102(2)(e). However, the department of administration may agree to act as the
   contracting agency on behalf of the department of military affairs. Montana law applies to any controversy
   involving a contract."
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              Section 3. Section 18-2-105, MCA, is amended to read:
              "18-2-105.    General powers and duties of department of administration. In carrying out powers
   relating to the construction of buildings, the department of administration may:
              (1)    inspect buildings not under construction;
              (2)    contract with the federal government for advance planning funds;
              (3)    transfer funds and authority to agencies and accept funds and authority from agencies;
              (4)    subject to 2-17-135, purchase, lease, and acquire by exchange or otherwise, land and
   buildings in Lewis and Clark County and equipment and furnishings for the buildings;
              (5)    issue and sell bonds and other securities;
              (6)    maintain an inventory of all buildings;
              (7)    appoint a project representative to supervise architects' and consulting engineers' inspection of
   construction of buildings to ensure that all construction is in accordance with the contracts, plans, and
   specifications. The cost of supervision may be charged against money available for construction.
              (8)    negotiate deductive changes, not to exceed 7% 15% of the total cost of a project, with the
   lowest responsible bidder when the lowest responsible bid causes the project cost to exceed the appropriation
   or with the lowest responsible bidders, if multiple contracts will be awarded on the project, when the total of the
   lowest responsible bids causes the project cost to exceed the appropriation. A bidder is not required to
   negotiate a bid but is required to honor the bid for the time specified in the bidding documents. The department
   may terminate negotiations at any time."
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              Section 4. Section 18-2-111, MCA, is amended to read:
              "18-2-111.    Policy regarding practice of architecture or engineering -- preparation of working
   drawings by department limited. (1) It is the policy of the state not to engage in the practice of architecture or
   engineering. However, this policy may not be construed as prohibiting the department of administration from:
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              (a)     engaging in preplanning functions necessary to prepare a building program for presentation to
   the legislature;
              (b)     supervising construction as provided in 18-2-105(7); or
              (c)     preparing working drawings for minor projects.
              (2)     The department of administration may not prepare working drawings for the construction of a
   building construction activities, with the exception of repair or maintenance projects, when the total cost of the
   construction will exceed $75,000 $150,000.
              (3)     This policy may not be construed to grant the department an exception from the licensing
   requirements of Title 67, chapter 65 or 67, or the seal requirements provided in 18-2-114 and 18-2-122."
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              Section 5. Section 18-2-201, MCA, is amended to read:
              "18-2-201.   Security requirements. (1) (a) Except as otherwise provided in 85-1-219 and subsections
   (3) through (5) of this section, whenever any board, council, commission, trustees, or body acting for the state
   or any county, municipality, or public body contracts with a person or corporation to do work for the state,
   county, or municipality or other public body, city, town, or district, the board, council, commission, trustees, or
   body shall require the person or corporation with whom the contract is made to make, execute, and deliver to
   the board, council, commission, trustees, or body a good and sufficient bond with a surety company, licensed in
   this state, as surety, conditioned that the person or corporation shall:
              (i)     faithfully perform all of the provisions of the contract;
              (ii)    pay all laborers, mechanics, subcontractors, and material suppliers; and
              (iii)   pay all persons who supply the person, corporation, or subcontractors with provisions,
   provender, material, or supplies for performing the work.
              (b)     The state or other governmental entity listed in subsection (1)(a) may not require that any bond
   required by subsection (1)(a) be furnished by a particular surety company or by a particular insurance producer
   for a surety company.
              (2)     The state or other governmental entity listed in subsection (1)(a) may, in lieu of a surety bond,
   permit the deposit with the contracting governmental entity or agency of the following securities in an amount at
   least equal to the contract sum to guarantee the faithful performance of the contract and the payment of all
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   laborers, suppliers, material suppliers, mechanics, and subcontractors:
              (a)    lawful money of the United States; or
              (b)    a cashier's check, certified check, bank money order, certificate of deposit, money market
   certificate, bank draft, or irrevocable letter of credit, drawn or issued by:
              (i)    any federally or state-chartered bank or savings and loan association that is insured by or for
   which insurance is administered by the federal deposit insurance corporation; or
              (ii)   a credit union insured by the national credit union share insurance fund.
              (3)    Any board, council, commission, trustee, or body acting for any county, municipality, or public
   body other than the state may, subject to the provisions of subsection (1)(b), in lieu of a bond from a licensed
   surety company, accept good and sufficient bond with two or more sureties acceptable to the governmental
   entity.
              (4)    Except as provided in subsection (5), the state or other governmental entity may waive the
   requirements contained in subsections (1) through (3) for building or construction projects, as defined in 18-2-
   101, that cost less than $50,000 $150,000.
              (5)    A school district may waive the requirements contained in subsections (1) through (3) for
   building or construction projects, as defined in 18-2-101, that cost less than $7,500."
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              Section 6. Section 18-2-301, MCA, is amended to read:
              "18-2-301.   Bids required -- advertising public notice. (1) (a) It is unlawful for any offices Offices,
   departments, or institutions, or any agent of the state of Montana acting for or in on behalf of the state, to may
   not do, to cause to be done, or to let any contract for the construction of buildings or the alteration and
   improvement of buildings and adjacent grounds on behalf of and for the benefit of the state when the amount
   involved is $75,000 $150,000 or more without first advertising in at least one issue each week providing public
   notice for 3 consecutive weeks in two newspapers published in the state, one of which must be published at the
   seat of government and the other in the county where the work is to be performed, calling for sealed bids to
   perform the work and stating the time and place bids will be considered. Notice may include electronic
   notification, publication in newspapers of general circulation, or other appropriate means.
              (b)    Starting July 1, 2028, and every 5 years after that, the department shall adjust the limits in
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   subsection (1)(a) for inflation. The inflation adjustment is determined by dividing the consumer price index for
   June of the previous tax year by the consumer price index for June 2023. The newly adjusted limits must be
   rounded to the nearest $1,000 and adopted by rule.
              (2)     All work may be done, caused to be done, or contracted for only after competitive bidding.
              (3)     If responsible bids are not received after two attempts, the department or agency may contract
   for the work in a manner determined to be cost-effective for the state.
              (4)     This section does not apply to work done by inmates at an institution in the department of
   corrections.
              (5)     (a) The provisions of Montana law governing advertising and competitive bidding do not apply
   when the department of fish, wildlife, and parks is preserving or restoring the historic buildings and resources
   that it owns at Bannack if:
              (i)     the options listed in subsection (5)(b) are determined to be more cost-effective for the state;
   and
              (ii)    the implementation of the options listed in subsection (5)(b) is necessary to save historic
   buildings and resources from degradation and loss.
              (b)     For the preservation or restoration of historic buildings and resources at Bannack when the
   conditions listed in subsection (5)(a) are met, the department of fish, wildlife, and parks may accomplish the
   preservation or restoration through:
              (i)     a memorandum of understanding with a local, state, or federal entity or nonprofit o