Expert purchasing professionals have had to learn the new legal requirements for procuring contracts for construction and maintenance under Government Code 2269. Once a school district has determined that the construction project is not maintenance (replacing like-for-like), then the construction project is a public work contract where requirements for bonding and prevailing wages are triggered.
When is a payment bond or a performance bond needed? Are there times you will need both?
When do school districts have to meet the prevailing wage rate for construction projects?
Performance bonds cover the payments for the scope of work performance for a project, e.g. the quality of the work according to the plan, specifications and contract documents. Performance bonds are required from the prime contractor IF the public works contract is in excess of $100,000.
Payment bonds cover general or prime contractor payments to sub-contractors, and the materials and used and equipment used for the contracted project. Payment bonds (in the amount of the contract) are required if the contract is in excess of $25,000.
One cannot be substituted for another. [Texas Government Code 2253.021]
Prevailing wage requirements
Prevailing wage requirements do not apply to maintenance work, when like is being replace for like. But many projects that come from the maintenance department today are now properly classified as construction or public works contracts, which trigger the prevailing wage requirement.
School districts must either use the prevailing wage rate as determined by the United States Department of Labor (Davis-Bacon Act) or the board of trustees must set the prevailing wage rate by conducting a survey to determine what the general prevailing rate of daily wages is their community where the work will be completed. Each craft or type of worker needed, plus the rates for legal holiday and overtime work must be included.
Once the board has determined the general prevailing rate (or decided to use the U.S. Department of Labor’s Davis-Bacon rate) then contracts and Requests for Proposal must specify the wage rates. If the district does this but the contractor or subcontractor violates that wage requirement, that contractor must pay $60 for each worker employed for each calendar day or part of the day that the worker was paid less than the wage rates stipulated in the contract. If the district does not specify the wage rates in the contract and the contractor does not pay the wage requirement, then the district will be liable for the $60 for each worker employed for each calendar day or part of the day that the worker was paid less than the wage rates stipulated in the contract. If the employee knows the above and does not comply, then a fine and jail time or both could be the punishment. So, by including the prevailing wage rate in the contract and RFP or CSP, the school district will protect the district and put the responsibility and risk on the contractor instead of the district.
Learn more details in the presentation made at the Texas Association of School Business Officials Maintenance and Operations conference.
Using a quality purchasing cooperative can be a good solution for school districts, as the cooperative will have already procured the contract, with language requiring the vendor to comply with the wage rates specified by members. Choice Partners cooperative, a division of Harris County Department of Education, is such a cooperative. HCDE uses their own Choice Partners cooperative contracts, which is said to be the gold standard in cooperative purchasing.
See more information about IDIQ Construction contracts procured through Job Order Contracting or see the IDIQ Construction contracts offered through Choice Partners.
Download the interlocal to become a member, so your district can immediately take advantage of the more than 600 contracts that have been legally procured through a competitive bidding process. For more information, call 877-696-2122.