Paul Bill Lets TxDOT Skip Low Bid And Negotiate With Builders

The text as introduced · 2,563 words

89R5624 SRA-F

By: Paul
H.B. No. 3563

A BILL TO BE ENTITLED

AN ACT

relating to the method used to select engineers and general

contractors for certain transportation-related construction

projects.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 223, Transportation Code, is amended by

adding Subchapter G to read as follows:

SUBCHAPTER G. CONSTRUCTION MANAGER-GENERAL CONTRACTOR METHOD

Sec. 223.301. DEFINITION. In this subchapter,

"construction manager-general contractor method" means a delivery

method by which the department contracts with an engineer for

design and construction phase services and contracts separately

with a construction manager to serve as the general contractor and

to provide consultation during the design and construction of a

state highway.

Sec. 223.302. USE OF CONSTRUCTION MANAGER-GENERAL

CONTRACTOR METHOD. Notwithstanding any other law requiring a

particular procurement procedure, including Subchapter A of this

chapter, the department may use the construction manager-general

contractor method to select a general contractor for a state

highway project as provided by this subchapter.

Sec. 223.303. CONSTRUCTION MANAGER. (a) For purposes of

this subchapter, a construction manager may be a sole

proprietorship, partnership, corporation, or other legal entity.

(b) A construction manager serves as the general contractor

for a state highway project and assumes the risk for the

construction of the state highway at the contracted price.

(c) A construction manager shall provide consultation to

the department regarding construction of a state highway project

during and after the design of the project, including consultation

regarding preconstruction services such as scheduling, pricing,

phasing, technical innovations, site investigation, and risk

mitigation.

(d) The contracted price may be a guaranteed maximum price

or converted to a lump sum.

Sec. 223.304. USE OF ENGINEER. (a) On or before the

selection of a construction manager, the department shall select an

engineer to prepare the construction documents for the state

highway project.

(b) The engineer selected for a state highway project under

Section 223.041 may not serve, alone or in combination with another

person, as the construction manager for that project.

(c) Subsection (b) does not prohibit the engineer from

providing customary construction phase services under the

engineer's contract with the department in accordance with

applicable licensing laws.

Sec. 223.305. ADOPTION OF CRITERIA AND RULES. (a) The

department shall adopt weighted selection criteria and rules for

the selection process and award of contracts under this subchapter,

which may include interviews with top-ranked offerors.

(b) The rules adopted under Subsection (a) must address the

selection process applicable to the award of a contract for

preconstruction services and for construction management and

construction services, including the process for contract

negotiations with the construction manager for construction of the

project or work packages associated with the project in accordance

with contract documents.

Sec. 223.306. EVALUATION TEAM. (a) Before preparing a

request under Section 223.307 for a state highway project, the

director shall appoint a team of at least three members to assist

the department in evaluating proposals and qualifications received

by the department. The members may be department employees or

outside consultants.

(b) At least one-half, or as near one-half as possible, of

the team members must be engineers registered in this state. An

engineer who serves on the team and is not a department employee may

not otherwise be involved in the project for which the request is

prepared under Section 223.307.

(c) The team must include at least one person who is a senior

management employee of a general contractor that:

(1) is registered as a prequalified general contractor

under department rules;

(2) is not involved in the project for which the

request is prepared under Section 223.307; and

(3) has no other conflict of interest as determined by

the department.

Sec. 223.307. SELECTION PROCESS. (a) The department may

select the construction manager in a one-step or two-step process.

(b) The department shall prepare a single request for

proposals, in the case of a one-step process, and an initial request

for qualifications followed by a request for proposals and any

required interviews, in the case of a two-step process. A request

prepared under this subsection must include:

(1) a statement as to whether the selection process is

a one-step or two-step process;

(2) information regarding the project's location,

scope, and limits;

(3) publicly available cost estimates and a budget for

the project;

(4) information regarding funding that may be

available for the project;

(5) the selection criteria adopted under Section

223.305 and the relative weighted value for each criterion;

(6) the time and place for receipt of qualifications

or proposals, as applicable; and

(7) any other information that may assist the

department in the selection of a construction manager.

(c) If a one-step process is used, the department may

request, as part of the offeror's proposal, the offeror's:

(1) proposed billable rates for preconstruction

services personnel;

(2) proposed fee for home office overhead; and

(3) profit fee on the negotiated construction price

for performing construction services.

(d) If a two-step process is used, the department may not

request proposed billable rates, fees, or prices in step one. In

step two, the department may request that five or fewer offerors,

selected on the basis of qualifications, experience, technical

competence, and ability to develop the project, provide additional

information, including the offeror's:

(1) proposed billable rates for preconstruction

services and general conditions personnel;

(2) proposed fee for home office overhead; and

(3) profit fee on the negotiated construction price

for performing construction services.

(e) If a one-step process is used, proposed billable rates

for general conditions personnel must be negotiated on selection of

the construction manager.

Sec. 223.308. SELECTION OF CONSTRUCTION MANAGER. (a) The

department shall:

(1) rank the offerors in accordance with the selection

criteria provided in the request for proposals under Section

223.307(b)(5); and

(2) select the offeror that submits the proposal with

the highest ranking.

(b) The award of a preconstruction services contract under

Subsection (a) authorizes the construction manager to:

(1) provide consultation to the department and project

engineer; and

(2) enter into open and transparent negotiations with

the department during the design phase of the project to refine the

project's cost and schedule for the construction management and

construction services contract.

(c) The department shall use the services of an independent

cost estimator for each work package associated with the project to

validate the negotiated costs for the construction management and

construction services contract. The independent cost estimator

shall follow procedures outlined in the Federal Highway

Administration Major Project Program Cost Estimating Guidance, as

it existed on September 1, 2025, and as adapted by the department.

(d) On successful negotiations under Subsection (b)(2), the

department shall execute a construction management and

construction services contract with the construction manager for

either construction of the project or selected work packages

associated with the project.

(e) Negotiations under Subsection (b)(2) shall be

terminated if the department is unable to reach a price agreement

with the construction manager. If negotiations are terminated, the

department may competitively bid the construction of the project in

accordance with the department's procedures under Subchapter A.

(f) Not later than the seventh day after the date a

preconstruction services contract is awarded under this section,

the department shall make public the selection rankings determined

under Subsection (a).

Sec. 223.309. PERFORMANCE OF WORK. (a) A construction

manager shall perform a minimum percentage of construction work,

excluding general conditions work, as required by the department's

rules regarding standard specifications for highway and bridge

construction.

(b) A construction manager shall publicly advertise for

bids or proposals and receive bids or proposals from subcontractors

for the performance of the remaining construction work.

Sec. 223.310. PERFORMANCE OR PAYMENT BOND. The

construction manager shall deliver any performance and payment

bonds not later than the 10th day after the date the construction

manager is awarded a preconstruction services contract under

Section 223.308 unless the construction manager furnishes a bid

bond or other financial security acceptable to the department to

ensure that the construction manager will furnish the required

performance and payment bonds when a guaranteed maximum price is

established.

SECTION 2. Chapter 370, Transportation Code, is amended by

adding Subchapter L to read as follows:

SUBCHAPTER L. CONSTRUCTION MANAGER-GENERAL CONTRACTOR METHOD

Sec. 370.451. DEFINITION. In this subchapter,

"construction manager-general contractor method" means a delivery

method by which an authority contracts with an engineer for design

and construction phase services and contracts separately with a

construction manager to serve as the general contractor and to

provide consultation during the design and construction of a

transportation project.

Sec. 370.452. USE OF CONSTRUCTION MANAGER-GENERAL

CONTRACTOR METHOD. Notwithstanding any other law requiring a

particular procurement procedure, including Subchapter E of this

chapter, an authority may use the construction manager-general

contractor method to select a general contractor for a

transportation project as provided by this subchapter.

Sec. 370.453. CONSTRUCTION MANAGER. (a) For purposes of

this subchapter, a construction manager may be a sole

proprietorship, partnership, corporation, or other legal entity.

(b) A construction manager serves as the general contractor

for a transportation project and assumes the risk for the

construction of the project at the contracted price.

(c) A construction manager shall provide consultation to an

authority regarding construction of a transportation project

during and after the design of the project, including consultation

regarding preconstruction services such as scheduling, pricing,

phasing, technical innovations, site investigation, and risk

mitigation.

(d) The contracted price may be a guaranteed maximum price

or converted to a lump sum.

Sec. 370.454. USE OF ENGINEER. On or before the selection

of a construction manager, an authority shall select an engineer to

prepare the construction documents for the transportation project.

Sec. 370.455. ADOPTION OF CRITERIA AND RULES. (a) An

authority shall adopt weighted selection criteria and rules for the

selection process and award of contracts under this subchapter,

which may include interviews with top-ranked offerors.

(b) The rules adopted under Subsection (a) must address the

selection process applicable to the award of a contract for

preconstruction services and for construction management and

construction services, including the process for contract

negotiations with the construction manager for construction of the

project or work packages associated with the project in accordance

with contract documents.

Sec. 370.456. EVALUATION TEAM. (a) Before preparing a

request under Section 370.457 for a transportation project, an

authority shall appoint a team of at least three members to assist

the authority in evaluating proposals and qualifications received

by the authority. The members may be authority employees or outside

consultants.

(b) At least one-half, or as near one-half as possible, of

the team members must be engineers registered in this state. An

engineer who serves on the team and is not an authority employee may

not otherwise be involved in the project for which the request is

prepared under Section 370.457.

(c) The team must include at least one person who is a senior

management employee of a general contractor that:

(1) is registered as a prequalified general contractor

under department rules;

(2) is not involved in the project for which the

request is prepared under Section 370.457; and

(3) has no other conflict of interest as determined by

the authority.

Sec. 370.457. SELECTION PROCESS. (a) An authority may

select the construction manager in a one-step or two-step process.

(b) An authority shall prepare a single request for

proposals, in the case of a one-step process, and an initial request

for qualifications followed by a request for proposals and any

required interviews, in the case of a two-step process. A request

prepared under this subsection must include:

(1) a statement as to whether the selection process is

a one-step or two-step process;

(2) information regarding the project's location,

scope, and limits;

(3) publicly available cost estimates and a budget for

the project;

(4) information regarding funding that may be

available for the project;

(5) the selection criteria adopted under Section

370.455 and the relative weighted value for each criterion;

(6) the time and place for receipt of qualifications

or proposals, as applicable; and

(7) any other information that may assist the

authority in the selection of a construction manager.

(c) If a one-step process is used, an authority may request,

as part of the offeror's proposal, the offeror's:

(1) proposed billable rates for preconstruction

services personnel;

(2) proposed fee for home office overhead; and

(3) profit fee on the negotiated construction price

for performing construction services.

(d) If a two-step process is used, an authority may not

request proposed billable rates, fees, or prices in step one. In

step two, an authority may request that five or fewer offerors,

selected on the basis of qualifications, experience, technical

competence, and ability to develop the project, provide additional

information, including the offeror's:

(1) proposed billable rates for preconstruction

services and general conditions personnel;

(2) proposed fee for home office overhead; and

(3) profit fee on the negotiated construction price

for performing construction services.

(e) If a one-step process is used, proposed billable rates

for general conditions personnel must be negotiated on selection of

the construction manager.

Sec. 370.458. SELECTION OF CONSTRUCTION MANAGER. (a) An

authority shall:

(1) rank the offerors in accordance with the selection

criteria provided in the request for proposals under Section

370.457(b)(5); and

(2) select the offeror that submits the proposal with

the highest ranking.

(b) The award of a preconstruction services contract under

Subsection (a) authorizes the construction manager to:

(1) provide consultation to the authority and project

engineer; and

(2) enter into open and transparent negotiations with

the authority during the design phase of the project to refine the

project's cost and schedule for the construction management and

construction services contract.

(c) An authority shall use the services of an independent

cost estimator for each work package associated with the project to

validate the negotiated costs for the construction management and

construction services contract. The independent cost estimator

shall follow procedures outlined in the Federal Highway

Administration Major Project Program Cost Estimating Guidance, as

it existed on September 1, 2025, and as adapted by the department.

(d) On successful negotiations under Subsection (b)(2), the

authority shall execute a construction management and construction

services contract with the construction manager for either

construction of the project or selected work packages associated

with the project.

(e) Negotiations under Subsection (b)(2) shall be

terminated if the authority is unable to reach a price agreement

with the construction manager. If negotiations are terminated, the

authority may competitively bid the construction of the project in

accordance with the authority's procedures under Subchapter E.

(f) Not later than the seventh day after the date a

preconstruction services contract is awarded under this section,

the authority shall make public the selection rankings determined

under Subsection (a).

Sec. 370.459. PERFORMANCE OR PAYMENT BOND. The

construction manager shall deliver any performance and payment

bonds not later than the 10th day after the date the construction

manager is awarded a preconstruction services contract under

Section 370.458 unless the construction manager furnishes a bid

bond or other financial security acceptable to the authority to

ensure that the construction manager will furnish the required

performance and payment bonds when a guaranteed maximum price is

established.

SECTION 3. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.