Alliance For Job Order Contracting in Texas

Investigating Committee 2006

JOC Is Needed & Valuable

It is important to be clear and realize that HB 447 is not connected in anyway to the Galveston situation, in anyway.  It is a coincidence that HB 447 addresses JOC at this time and not because of the Galveston situation.

The situation started in Galveston in 2005 has now conclude with the investigating committee report, which is now done. A full copy of the report is available at the bottom of this page.

JOC was found to be important and needed in the state. That the issues generated had nothing to do with JOC.

The History:

1) Legislative ? The Speaker of the Texas House of Representatives charged the Committee on Education and the Committee on General Investigating and Ethics to study jointly  ??local government and school board use of taxpayer money to lobby the Legislature and attempts by school district officials to skirt competitive bidding requirements through the use of improper procurement contracts? for facility renovation and construction??

2) Judicial ? District Court Judge Lonnie Cox ruled that the Galveston Independent School District (GISD) acted contrary to Texas law by using a combination of job order contracting and inter-local agreement to contract for an $8,000,000 renovation of Austin Middle School.

3) Public Perception - Job Order Contracting (JOC) may be or is illegal in Texas. This FALSE perception is causing some government owners to delay entering into JOC contracts until the legality of JOC is settled. This is resulting in owner missing out on the significant benefits of JOC and delayed utilization of the taxpayer?s funds

The Alliance Recommendations Were: 

A) The current laws for procurement of Job Order Contracting in Texas address the concerns raised. This includes a requirement for competitive bidding, and the definition of the use of and size of a Job Order Contracting program.

B) Better education and awareness of boards and governing bodies utilizing any form of construction contracting, including Job Order Contracting is needed.

C) The current procurement law could be enhanced to better define the use of Job Order Contracting through purchase cooperatives and interlocal agreements with the following: 

§ 44.041.  JOB ORDER CONTRACTS FOR FACILITIES CONSTRUCTION OR REPAIR
 (a)1. A school district may also utilize job order contracts awarded to a purchasing cooperative and/or through an interlocal agreement, after determination by the district that the original job order contract was procured in accordance with the requirements of the purchasing code outlined in § 44.031. PURCHASING CONTRACTS and § 44.035. EVALUATION OF BIDS AND PROPOSALS FOR CONSTRUCTION SERVICES and § 44.041.  JOB ORDER CONTRACTS FOR FACILITIES CONSTRUCTION OR REPAIR      

The Outcome:

In January 2007 the investigating committee released its report and findings. The full report is attached. Again, HB 447, this is not connected to the Galveston situation.  It is a coincidence that HB 447 addresses JOC now ? it is NOT because of the Galveston situation.

The committee stated: "Job Order Contracting is a valuable tool"

The key findings related to JOC are:

Job Order Contracts 

This contracting method became available to school districts in 1997 as the result of the passage of Senate Bill 583 (Chapter 1179, Acts of the 75^th Legislature, regular Session, 1997), which also added Section 44.041, Education Code, to establish the necessary procedural requirements for job order contracts for facilities construction or repairs.  This section was amended in 1999 with the passage of Senate Bill 669 (Chapter 1225, Acts of the 76^th Legislature, Regular Session, 1999) to allow job order contracts to be used for construction as well as repairs and alterations.

Section 44.041, Education Code, authorizes a school district to award job order contracts for “the minor construction, repair, rehabilitation, or alteration of a facility if the work is of a recurring nature but the delivery times are indefinite and indefinite quantities and orders are awarded substantially on the basis of the proscribed and prepriced tasks.”  Schools districts often use job order contracting to keep a contractor in place to perform a series of smaller construction programs that may arise.  Examples include adding small bathrooms, installing new lights, and paving parking lots.  Typically, these projects are beyond a district’s maintenance capabilities and are in the cost range of a few thousand dollars to $350,000. 

When Galveston ISD procured a job order contract under an interlocal contact for a $7 million - $8 million for a middle school renovation project (see related discussion under “Interlocal Contracts”), the school district maintained in court proceedings that the cost was within range of a minor repair.  The district also asserted that the word “minor” in the statute only modifies the word “construction” and that the words “repair, rehabilitation, and alteration” stand alone.  The judge rejected this argument, noting that the word “minor” predated the later addition of the word “construction” and that, thus, the modifier applied to all four nouns in the series.

Section 44.041, Education Code, authorizes districts to establish contractual unit prices that apply for the term of the job order contract and specifies how may be accomplished.  One way is by using the prices in one or more published construction unit price books.  The RS Means pricing guide, for example, offers unit prices for a broad range of construction tasks and includes regional modifiers to adjust pricing for difference parts of the country.  The other way is by asking vendors to propose one or more multipliers to the prices in a unit price book to reflect geographic variations in price.  As an example, a Houston school district might identify a particular pricing manual, such as RS Means Site Work and Landscape Cost Data 2006, and require vendors to base prices for drainage, paving, and sewerage work on a proposed percentage of the Houston-adjusted unit prices in the manual.

Competitive Procurement requirements for job order contracting include the requirement in Section 44.041(c), Education Code, for a district to advertise for and publicly open sealed proposals.  Subsection (h) provides that if a district fails to advertise the base term of contract, term is limited to two years and may not be renewed without further advertisement and solicitation of proposals.  Most contractors support shorter contracts for up to two years lower the risk that fuel costs, material shortages, and other factors will affect their profit since unit prices for the work are established in advance.  They further maintain that shorter contracts promote greater competition for contracts.

Conclusion 

The Sub-Committee and the General Investigating and Ethics Committee were charged with investigating whether school district officials were skirting the competitive bidding process particularly relating to facility renovations and construction.

This Sub-Committee held two hearings on this subject and primarily focused on Job Order Contracting, (JOC).  The committee has reviewed all aspects of JOC and those entities involved and believes that Job Order Contracting is a valuable tool for school districts to utilize for certain types of repair work.

Recommendations

This committee offers the following recommendations to address its charge:

· In addition to conditions established under Education Code § 44.041, job order contracts may also be awarded for emergency repairs.

·All JOC contracts must be approved by the governing body in regular, special or emergency session, prior to be awarded.

· All individual JOC products exceeding $500,000 shall be approved by the governing body in regular, special or emergency session, prior to be awarded.

· All bids for job order contracts shall be opened and read aloud in public. 

· The Committee recommends further study of a system of registration for a construction manager – agent as defined by VTCA, Education Code § 44.037, which provides consultation to the school district regarding construction, rehabilitation, alteration, or repair of the facility.