New QBS Requirements

1. New QBS Requirements February 5, 2013

2. Responsible Bidder Requirements • IDOT and the Capital Development Board recently imposed policy changes in their respective procurement bulletins: • Responsible Bidder Requirements used as selection criteria for Qualifications Based Selections. • Currently being opposed as a bid protest with the CDB. • IDOT implemented the changes before the trade associations could develop a protest strategy. IDOT was provided an informal protest on behalf of the industry, which was rejected.

3. Responsible Bidder Requirements • Responsible Bidder Requirements: • Part of the Illinois Procurement Code -- a requirement for construction contractors, not professionals. • QBS precludes biddingof design professional services. This dichotomy precludes application of bidding requirements. • By imposing these conditions as part of the qualifications review, a firm’s proposal could be disqualified at the submittal stage, if IDOT or CDB feel such firms cannot provide proof of compliance.

4. Responsible Bidder Requirements • IDOT and CDB are imposing the Responsible Bidder Requirements on firms that may have material testers or drilling technicians subject to the Prevailing Wage • Those employees must participate in training approved by the Department of Labor’s Bureau of Apprenticeship and Training • USDOL Apprenticeship and Training programs generally are union-operated training programs

5. Responsible Bidder Requirements • IDOT and CDB policies state that all QBS contracts that “include on-site construction related activities, including but not limited to, material testing and drilling” must comply. • Open ended language could easily allow for expansion to other trades • On-site services is not defined, and could also be expanded by interpretation

6. Responsible Bidder Requirements • Scope of these requirements is a concern: IDOT only referenced a limited number of northern counties where unions have organized material testers and drilling hands. CDB has expanded this statewide, even though the Prevailing Wage only is applicable to the northern counties • Could signal that the IDOL plans to announce a statewide Prevailing Wage • IDOT rejected a proposal to narrow this language

7. Project Labor Agreements • IDOThas announced its intention to revise its standard Project Labor Agreement to incorporate the use of material testing and drilling employees for on-site construction related activities in counties where Prevailing Wage classifications exist • Design firms who employ such employees, or who retain consultants with such employees, will be required to become signatory to the PLA • The PLA will require design firms and their consultants to conform to local union practices.

8. Project Labor Agreements • Potential impacts of becoming signatory to a PLA are: • All new material testing and drilling employees will need to be hired through the local union hall • Use of current employees who perform the material testing and drilling services may be restricted due to union work rules: • For example, a current employee may need to be replaced by a hall-referred employee, where work rules provide for a certain ratio of existing/hall employees. • Use of the union employees will require the firm to make payment to union benefit plans and become signatory to their trust agreements. Currently, several union pension funds are underfunded, and exposure is shared by all contributors per federal law

9. Project Labor Agreements • PLAs are signed on a per-project basis. However, entering into benefit fund agreements usually requires an automatic renewal. Strict notice requirements for withdrawal exist, including making payments to cover the underfunded liabilities if withdrawal is to be granted • PLAs invoke the requirement for apprentices in particular trades, and may require firms to enter into approved training programs

10. Current Status • IDOT has rejected legal arguments and proceeded with implementing the responsible bidder requirements for QBS selections. • Contracts are currently being negotiated that will include these requirements (November bulletin) • CDB announced its plans to include responsible bidder requirements with its bulletin released in January. • Formal protests have delayed that process until the matter can be reviewed by the Executive Ethics Commission as required by law

11. Current Status • While IDOT and CDB have announced intentions to begin requiring design firms to become signatory to PLAs, we are not aware of whether or when that may occur • It is likely that a firm may simply be required to sign a project PLA as a condition of procurement • As a result, we are strongly encouraging design firms to consult an attorney with knowledge of these issues prior to entering into any negotiations with IDOT or CDB

12. FAQs • How are Prevailing Wage classifications established? • How will this impact local government? • Is anyone exempt? • How will firms manage this – separate payrolls and benefits? Separate corporations? • What are the logistics of the training program requirement?

13. Questions • Contact information: • ACEC – Dave Bender, Executive Director, DaveBender@acec-il.org • ISPE – Kim Robinson, Executive Director, kimrobinson@illinoisengineer.com • Bruce Bonczyk, PE, Bruce S. Bonczyk, Ltd, bbonczyk@601w.com