What Procurement Managers Need to Know About Construction Materials Management Office John White – Materials Management Officer and State Engineer

What is Construction? The process of: Building a public infrastructure facility, Altering a public infrastructure facility, Repairing a public infrastructure facility, Remodeling a public infrastructure facility, Improving a public infrastructure facility, or demolishing a public infrastructure facility. See § (7)

What is a Public Infrastructure Facility?

Infrastructure: The basic facilities, equipment, and installations needed for the functioning of an organization. The American Heritage Dictionary, Second College Edition, 1985

Facility: Something (such as a building or large piece of equipment) that is built for a specific purpose. Merriam-Webster Dictionary, online edition

Includes – Public structure – Public building – Public improvements of any kind to real property

When Does Work on a Public Infrastructure Facility Not Constitute Construction? Routine operation, Routine repair, or Routine maintenance to an existing public infrastructure facility.

So - What Does Happen When Construction and Non-Construction Intersect?

When faced with the question, is it construction or non-construction consider some procurement and non-procurement regulations that apply to construction and the policy behind them

Performance & Payment Bonds Performance & payment bonds required for construction contracts over $50,000 [ (2)] Payment bond required for construction contracts over $50,000 [ ] Why?

What lien rights would the contractor have if the procurement were conducted in the private sector? See et seq.

Licensing Laws Title 40: Professions and Occupations – Chapter 3: Architects – Chapter 10: Fire Protection Sprinkler Systems Act – Chapter 11: Contractors – Chapter 22: Engineers & Surveyors – Chapter 79: South Carolina Alarm System Business Act

Building Codes Title 10, Chapter 1, Sect. 180 Title 6, Chapter 9, Sect. 110(A)

In Addition to the Foregoing, Consider the Predominate Factor of the Procurement Goods & Services or Construction?

Example Solicitation for KI Panels Installed Case No.: ngston_-_SCC.pdf

Facts Moveable Wall Panels No Screws or Bolts Attach to Building Limited Tools Required

Facts Factory installed electrical an integral part of specified panels – Electric pigtails connect to building electrical LLR opines that a general contractors specialty license of interior renovation is required to install panels Building Code applies to moveable walls over 5’ – 8” tall An architect prepared the plans & specifications

Facts Cost of electrical work = $4,850 Cost of installation ~ $18,000 Cost of wall panels ~ $103,000

Is it construction or a procurement of goods?

Well - Is it an Improvement to Real Property? Consider factors such as whether the item is attached in such a manner that its removal will damage the building (e.g. screw holes in a floor, wall, or ceiling); whether the character of the article is such that it is normally considered to be a part of the real property (e.g. pews in a church or wall cabinets in a kitchen); and whether the annexing party intended the article to become a fixture. Hyman v. Wellman Enters., 337 SC 80, 522 SE2d 150 (Ct. App. 1999); Carson v. Living Word Outreach Ministries, Inc., 315 SC 64, 431 SE2d 615 (Ct. App. 1993); Carjow, LLC v. Simmons, 349 S.C. 514, 563 S.E.2d 359 (Ct. App. 2002).

Predominate Factor Test “Under this test, courts evaluate transaction to determine whether the predominate factor … is the rendition of service with goods incidentally involved, or is a transaction of sale, with labor incidentally involved.” U.S. v. Southern Contracting of Charleston, Inc., 862 F.Supp. 107 (1994); See also Plantation Shutter Co. v. Ezell, 492 S.E.2d 404 (S.C. Ct. App. 1997).

So – What Is the Answer to Our Question

What about a painting contract over $50,000?

Bottom Line If in Doubt Ask

A Construction Procurement Called a Procurement of Goods & Services is Still a Construction Procurement and Must Comply With All Laws Applicable to Construction Procurements

A Procurement of Goods & Services Called a Construction Procurement is Still A Procurement of Goods & Services and Must Comply With All Laws Applicable to the Procurement of Goods & Services

So Its Construction

Next Step – Hire the Architect Engineer Qualification based selection – Section et seq (i.e. Licensing Law) Prohibits Architects from competing on price Why not use low bid?

Hyatt Regency Hotel Walkway Collapse – 114 Killed – 216 Injured 1984 US House of Representatives Subcommittee report on Structural Failures in Public Facilities – One of six critical factors in causing the structural failures at the Kansas City Hyatt Regency was the selection of architects and engineers on low bid

Specifications Prepared by Architects Must be Non-Restrictive:

Next Major Step Construction Services Procurement – Competitive Sealed Bidding /-

The following sub-sections of Apply (1) Condition for Use (2) Invitation for Bids (3) Notice (4) Receipt and Safeguarding of Bids (5) Bid Opening

The following sub-sections of Apply (7) Correction or Withdrawal of Bids (8) Discussion with Bidders (9) Tie Bids (13) Minor Informalities and Irregularities in Bids

Sections of superseded by Article 9 (6) Bid Acceptance and Bid Evaluation Subcontractor listing (See (b)) (10) Award Notice of Date and Location of Posting (See (c)) – Must Wait 10 if > $50,000 – If only one bid must still Post but do not wait (11) Request for Qualifications (See )

Provisions of Article 9 Modifying Competitive Bidding Under Article (d) Negotiations after Unsuccessful Competitive Sealed Bidding supersedes Subcontractor Substitution Prequalification Bond & Security Errors and Omissions Insurance

Provisions of Article 9 Modifying Competitive Bidding Under Article Contract Clauses and their Administration Change Orders Architect-Engineer, or Construction Manager Performance of Other Work