ENGINEERING FIRMS DOING PUBLIC PROJECTS ENCOUNTER MANY GOVERNMENTAL REGULATIONS. “IN LAW NOTHING IS CERTAIN BUT THE EXPENSE,” SO SAID THE 17TH CENTURY POET SAMUEL BUTLER. IT IS STILL TRUE TODAY. WE HOPE TO ENLIGHTEN YOU ABOUT CERTAIN ASPECTS OF ILLINOIS LAW SO THAT YOU CAN MAKE INFORMED DECISIONS TO HELP YOUR BUSINESSES.
[…are the same:] THEY BOTH LOOK AT THE
THE NEXT PHASE OF PROCUREMENT IS [….Contract Negotiation]
[scope of services…] THEY ARE THE USUAL SUSPECTS, NAMELY [Design development…]
[…requirements:] THESE ARE STANDARD ITEMS SUCH AS […Statement of…]
GOVERNMENT PROCUREMENT STAFF DO CHECK REFERENCES; SO BE SURE TO VET YOUR REFERENCES BEOFE SUBMITTING THEM.
[…question] IN AN RFP PROCESS, CERTAIN PROJECTS WILL BE DRIVEN BY COSTS. OTHER PROJECTS WILL BE TIME DRIVEN – THINK ILLINOIS STATE TOLL HIGHWAY AUTHORITY’S OPEN TOLLS /I-PASS PROJECT BEFORE THE 2006 GUBERNATORIAL ELECTION.WE HAVE A FEW TOLLWAY AUTHORITY ENGINEERS IN THE AUDIENCE WHO CAN CORROBORATE THAT TIME WAS OF THE ESSENCE.
NEXT UP IS […Negotiation…]
YOU SHOULD [Note:…]
[…evaluation and selection process.] THIS STATEMENT BEARS REPEATING: EXPERIENCE AND TRACK RECORD OFTEN TRUMP LOWER PRICE.
ALSO [Note well:…][..a selection outcome.] IT HELPS TO SCHMOOZE WITH GOVERNMENTAL OFFICIALS WHO AFFECT THE PROCUREMENT PROCESS. PEOPLE LIKE DOING BUSINESS WITH KNOWN QUANTITIES.
LET’S LOOK AT ANOTHER EXAMPLE […E.G., Another…]
[…factors] AGAIN IN THE CHA PROCESS, ALTHOUGH PRICE IS IMPORTANT, THE CHA MAY RELY ON NON-PRICE FACTORS TO INFLUENCE ITS SELECTION.
ANOTHER PROCUREMENT TYPE IS [SMALL CONTRACTS][…$25,000.] YOU SHOULD KNOW THAT A GOVERNMENT AGENCY CANNOT HAVE A SERIES OF SMALL CONTRACTS WITH ONE FIRM TO EVADE COMPETITIVE PROCUREMENT. THIS IS CALLED CONTRACT STRINGING, WHICH IS A BIG NO-NO.
THE NEXT PROCUREMENT TYPE IS [EMERGENCY CONTRACTS]
ANOTHER PROCUREMENT CONCEPT IS SOLE SOURCE CONTRACTS. [SOLE SOURCE PROCUREMENT][…to engineering contracts] THAT’S BECAUSE ENGINEERING SERVICES ARE BASICIALLY FUNGIBLE. IF AN ENGINEERING FIRM HAD A PATENTED BUSINESS OR ENGINEERING METHOD OR PROCESS, THEN IT COULD BE A CANDIDATE FOR SOLE SOURCE.
[…economic disadvantage.] IT USUALLY INCLUDES RACIAL AND ETHNIC GROUPS AND WOMEN.
[…disadvantage.”] DBE DEFINITION CASTS A WIDE NET AND CAN INCLUDE, AMONG OTHERS, PEOPLE WITH DISABILITIES.
[…MBE’S.] CITY HAD BASED ITS PROGRAM ON THE FACT THAT ALTHOUGH THE CITY POPULATION WAS 50% AFRICAN-AMERICAN, LESS THAN 1 % OF THE CONSTRUCTION CONTRACTS WENT TO MINORITY FIRMS, AND ALSO ON THE FACT THAT THE LOCAL CONTRACTOR ASSOCIATIONS HAD FEW OR NO MINORITY MEMBERS, AND FINALLY ON THE FACT THAT PERSONS HAD TESTIFIED ABOUT BEING DISCRIMINATED AGAINST IN THE LOCAL CONSTRUCTION INDUSTRY. THE PROGRAM ALSO COVERED THE SPANISH-SPEAKING, ORIENTALS, AMERICAN INDIANS AND ESKIMOS. YOU CAN SEE HOW DATED THIS PROGRAM WAS BY THE ANTIQUATED ETHNIC TERMINOLOGY – ORIENTAL, ESKIMO AND INDIAN. THE COURT NOTED 1)THAT THE CITY HAD NOT COMPARED THE NUMBER OF AVAILABLE MINORITY CONTRACTORS IN A GIVEN MARKET TO THE NUMBER OF AWARDED PUBLIC CONTRACTS TO MINORITY FIRMS IN THAT GIVEN MARKET AND 2)THAT THE CITY HAD NOT PRESENTED EVIDENCE OF DISCRIMINATION AGAINST THE SPANISH-SPEAKING, ORIENTAL, INDIAN, AND ESKIMO CONTRACTORS, ASSUMING ANY OF THESE ETHNIC CONTRACTORS EXISTED IN RICHMOND AT THAT TIME.THE SUPREME COURT HELD THE CITY OF RICHMOND’S PROGRAM VIOLATED THE EQUAL PROTECTION CLAUSE OF THE U.S. CONSTITUTION THAT REQUIRES STRICT SCRUTINY OF RACE BASED PROGRAMS BECAUSE 1) A COMPELLING GOVERNMENTAL INTEREST WAS NOT JUSTIFIED IN THAT THERE WAS NO ESTABLISHED RECORD OF THE CITY DISCRIMINATING AGAINST MINORITY CONTRACTORS AND 2) THE 30% SET ASIDE WAS NOT NARROWLY TAILORED TO REMEDY THE PAST DISCRIMINATION.THIS U.S. SUPREME COURT CASE HAS PUSHED GOVERNMENTS TO FOCUS ON RACE NEUTRAL MEASURES TO INCLUDE MORE MBES AND WBES IN GOVERNMENT CONTRACTS. NEUTRAL MEASURES INCREASINGLY BEING USED ARE THOSE THAT BENEFIT ALL SMALL BUSINESSES LIKE BREAKING LARGE PROJECTS INTO SMALLER PACKAGES, MORE FLEXIBLE INSURANCE REQUIREMENTS, LESS ONEROUS BONDING REQUIREMENTS, AND ENCOURAGING JOINT VENTURES AND TEAMING ARRANGEMENTS.LOCALLY, THE CITY OF CHICAGO WAS SUED BY THE BUILDERS ASSOCIATION OF GREATER CHICAGO FORCING IT TO REDO ITS AFFIRMATIVE ACTION ORDINANCE. LET’S LOOK AT THE CHICAGO ORDINANCE IN DETAIL. THE CITY LAID OUT A DETAILED FOUNDATION OF DISCRIMINATION BASED ON DISPARITY STUDIES, HEARINGS, TESTIMONY AND OTHER EVIDENCE, AND NARROWLY TAILORED ITS ORDINANCE TO PROVIDE A REMEDY TO ADDRESS THE DISCRIMINATION.
[…WBEs…] LOCALLY, THERE ARE MANY OTHER GOVERNMENTAL BODIES THAT HAVE MBE/WBE PROGRAMS, LIKE CHICAGO PARK DISTRICT, CHICAGO TRANSIT AUTHORITY, METROPOLITAN PIER & EXPOSITION AUTHORITY, THE BOARD OF EDUCATION, THE CHICAGO HOUSING AUTHORITY, ETC.
[..from future rewards.] CAVEAT:DO NOT PLAY FAST AND LOOSE WITH MBE/WBE PROGRAMS. THE LOCAL FBI OFFICE AND U.S. ATTORNEY’S OFFICE AGGRESSIVELY PROSECUTES MINORITY OR WOMEN OWNED FRONT FIRMS. THE CITY OF CHICAGO, BECAUSE OF SCANDALS IN ITS PROGRAMS, VIGOROUSLY INVESTIGATES MBE/WBE FIRMS DURING ITS CERTIFICATION PROCESS TO CONFIRM THAT THEY ARE INDEED OWNED, CONTROLLED, AND OPERATED BY MINORITIES OR WOMEN.
OUR NEXT SEMINAR TOPIC IS MISCELLANEOUS CONTRACT PROVISIONS. THIS IS A SAMPLING OF CONTRACT PROVISIONS THAT ONE WOULD FIND IN SOME PUBLIC CONTRACTS AND NOT IN PRIVATE CONTRACTS.
[…interest.] I DO FIND THE COOK COUNTY PROVISION IS PROBLEMATIC IN THAT IT IS TOO VAGUE AND DOES NOT DEFINE WHAT CONSTITUTES A CONFLICT.
[…the selected firm.] AN ACTUAL CONFLICT IS NOT THE SOLE STANDARD. AN APPARENT CONFLICT CAN TRIGGER A VIOLATION. THE CHA ETHICS POLICY GOES FURTHER AND PROHIBITS EVEN THE APPEARANCE OF IMPROPRIETY AND REQUIRES A CHA OFFICER WHO HAS AN ECONOMIC INTEREST IN ANY MATTER PENDING BEFORE THE CHA OR A BUSINESS RELATIONSHIP WITH A PERSON WITH A PENDING MATTER, TO PUBLICLY DISCLOSE THAT INTEREST.BEWARE: DO NOT HIRE A FORMER CHA EMPLOYEE WHO SELECTED YOUR FIRM OR ADMINISTERED YOUR CONTRACT WITHIN A YEAR OF SUCH SELECTION OR ADMINISTRATION OF YOUR CONTRACT – THAT WOULD BE A VIOLATION OF THE CHA ETHICS POLICY.
[or its sub-consultants.] THE CHA’S CONFLICT OF INTERESTS PROVISION DOES ALLOW THE CHA TO SET MINIMUM STANDARDS OF CONDUCT WHERE THE FINANCIAL INTEREST IS INSUBSTANTIAL OR THE GIFT IS OF NOMINAL VALUE. THESE STANDARDS ARE SET OUT IN THE CHA’S ETHICS POLICY.
[…granted.] IT IS IMPORTANT FOR THE ENGINEERING FIRM TO KNOW THE STATUS OF THE FUNDING SOURCES FOR ITS PARTICULAR PROJECT SO IT CAN PLAN, ANTICIPATE, AND PROTECT ITSELF ACCORDINGLY.
BECAUSE OF THE STRONG CONSTRUCTION UNIONS IN ILLINOIS, PREVAILING WAGE PROVISIONS ARE PREVALENT IN PUBLIC CONTRACTS.
[…record.] ANTIDISCRIMINATION PROVISIONS ARE ALSO COMMON IN PUBLIC CONTRACTS. THERE ARE MANY OTHER MISCELLANEOUS CONTRACT PROVISIONS THAT ARE PECULIAR TO SPECIFIC GOVERNMENT AGENCIES.]
OUR NEXT SUBJECT IS HOW TO GET PAID QUICKLY.
[…shall be paid.”] SO A DISPUTE OVER ONE ITEM IN A BILL CAN’T INVALIDATE THE WHOLE BILL, WHICH IS A VERY HELPFUL PROVISION.
THERE ARE SPECIAL RULES FOR [SUBCONTRACTORS] […material suppliers.] THIS PROVISION PROVIDES TRANSPARENCY OF PAYMENTS FOR SUBS AND SUPPLIERS SO THAT THEY CAN MONITOR PAYMENTS TO AND ENFORCE PAYMENTS FROM CONTRACTORS.
AFTER WRITTEN NOTICE OF FAILURE IS FILED, A [STATE ADMINISTRATIVE LAW JUDGE….]
UNDER THE [LOCAL GOVERNMENT ACT,][…invoice.] AGAIN,NOTE THE QUALIFIER “APPROVAL”; THE CLOCK ONLY RUNS AFTER APPROVAL OF THE INVOICE.
OUR NEXT TOPIC SHOWS US HOW TO ENFORCE PAYMENT.
[…lien.] THEREFORE, BEING EARLY AND TIMELY IN FILING A LIEN CLAIM ARE CRITICAL.
LOCAL GOVERNMENT LIEN REQUIREMENTS BEGIN WITH NOTICE. [Notice]
[…secretary.] NOTE WELL THAT NOTICE MUST GO TO THE CORRECT OFFICIAL OR ELSE IT IS DEFECTIVE NOTICE.
[…provision.] THIS PROVISION GIVES CONTRACTOR A WAY TO PREVENT A SUB-CONTRACTOR FROM PLACING A CLOUD OVER CONTRACTOR’S RIGHT TO BE PAID.
[…contract.] NOTE WELL,AGAIN, THAT NOTICE MUST GO TO THE CORRECT OFFICIAL OR ELSE IT IS DEFECTIVE NOTICE.
[… not defined.] THEREFORE, LIEN CLAIMANT WOULD BE PRUDENT TO GIVE DETAILED BREAKDOWN AND ACCOUNTING OF MATERIALS FURNISHED, KIND OF LABOR PERFORMED, HOURS WORKED, ETC.
[…contractor.] THIS OPTION GIVES THE OFFICIAL A WAY TO WASH HIS HANDS OF THE LAWSUIT AND LET THE CONTRACTOR AND ITS SUB-CONTRACTOR FIGHT IT OUT. THE GOVERNMENT OFFICIAL CAN ALSLO FILE AN INTERPLEADER RESPONSE IN COURT ASKING A COURT TO DETERMINE WHICH PARTIES SHOULD GET THE FUNDS.
[…property.] I THINK THIS MEANS YOU CANNOT MAKE A FALSE RECORD, FOR EXAMPLE, TO AVOID LIABILITY LIKE A CONTRUCTION DEFECT, A SUBCONTRACTOR PAYMENT, OR CONTRACT DAMAGES.
[…perform.] DOES THIS MEAN THAT IF YOU ENGAGED IN SEXUAL HARASSMENT OR DISABILITY DISCRIMINATION, YOU HAVE COMMITTED BOTH A CIVIL OFFENSE AND A CRIMINAL OFFENSE?COULD BE.
[…responsibility.] OBVIOUSLY YOU CAN’T BUILD A PRIVATE SWIMMING POOL FOR THE SECRETARY OF IDOT TO GET A CONTRACT OR WHILE DOING A CONTRACT FOR IDOT. WHAT IF YOU BUY LUNCH FOR A GOVERNMENT OFFICIAL WITH WHOM YOU HAVE A CONTRACT, IS THAT AN EXCESS OVER YOUR CONTRACTURAL RESPONSIBILITY? WHO KNOWS?
[…law] NOT SURE WHAT THIS IS AIMED AT. IS THIS DIRECTED TO A CONTRACTOR SEEKING PAYMENTS UNEARNED OR SEEKING UNOWED PAYMENTS FROM OFFICIALS OR SUBCONTRACTORS? WHO KNOWS?STATUTE SEEMS TO BE PILING ON CRIMINAL OFFENSES WHEN THERE ARE ALREADY EXISTING LAWS TO COVER BRIBERY, FRAUD, ETC.
[…five years] AWOULD-BE PUBLIC CONTRACTOR MUST BE CAREFUL ABOUT ITS ENTERTAINMENT AND GOODWILL GESTURES INVOLVING PUBLIC OFFICIALS. USING COMMON SENSE MAY NOT BE ENOUGH FOR A PUBLIC CONTRACTOR.
Working On Public Construction Projects Primer for Engineers in Illinois
PUBLIC BIDDINGFour Types of Procurements Concerning Engineering Contracts<br />Request for Qualifications (RFQS)<br />Request for Proposals (RFPS)<br />Small Procurements<br />Emergency Procurements<br />
OTHER KINDS OF CONSTRUCTION PROCUREMENTS NOT USUALLY INVOLVE ENGINEERING FIRMS<br />SOLE SOURCE <br />COMPETITIVE SEALED BIDS<br />
RFQ<br />RFQ probably used the most<br />Two statutes govern RFQs In Illinois<br />
State Government: Architectural, Engineering and Land Surveying Qualifications Based Selection Act (30 ILCS 535/1)<br />
Local Government: Local Government Professional Services Selection Act (50 ILCS 510/0.01)<br />Statutes have many similar provisions and a few differences. <br />
Notice<br />State and local governments must publish notice<br />
Notice<br />State issues at least a 14-day advance notice published in a bulletin or advertised in official state newspapers the services to be procured and directs firms to send a letter of interest and/or statement of qualifications.<br />
Notice<br />Local Government allows firms to file an annual statement of qualifications. <br /> -- If there is no existing satisfactory relationship with one or more firms, then local government must mail notice to firms whose names are on file or place an ad in a newspaper:<br />
requesting letter of interest;<br />b) requesting qualifications statement; and, if applicable,<br />c) requesting performance data of the firms.<br />
Evaluation Procedure<br />State requires state agency to set up selection committee which may have public member.<br />
Evaluation Procedure<br />Local government statute does not have evaluation committee requirement; local governments typically have an internal committee made up of procurement, construction, user department, and legal personnel to evaluate firms.<br />
State and local government evaluation criteria are the same:<br />Ability of professional personnel<br />Past record and experience<br />Performance data on file<br />Willingness to meet time requirements<br />Location of firm<br />Workload of firm<br />Any other applicable qualification set out in writing <br />
Selection Procedure<br /> Both State and local governments use evaluations, discussions, and presentations to select at least three qualified firms and rank them in order to provide services to a particular project.<br />
Contract Negotiation<br /> The State agency or local government must then prepare “a written description of the scope of the proposed services to be used as a basis for negotiations and shall negotiate a contract with the highest qualified firm the government entity determines to be fair and reasonable.” <br />
Contract Negotiation<br /> In making its decision on compensation to the selected firm, the State agency or local government must take into account:<br />Estimated value<br />Scope<br />Complexity<br />Professional nature of services to be rendered <br />
Contract Negotiation<br />If negotiations break down with preferred firm, then government entity goes to the next preferred firm to negotiate, and so on.<br />If can’t negotiate a contract, then it must re-evaluate the services requested including, again, <br />
Contract Negotiation<br /> estimated value,<br /> scope,<br /> complexity,<br /> and fee requirements,<br /> and then compile a top three list of qualified firms and then begin negotiations again.<br />
RFP<br />A public agency will publish notice or send solicitations to a list of firms asking for proposals for a particular project<br /> E.G., Will County Forest Preserve RFP for Professional Engineering Services as a model<br />
RFP<br />This Project was the Messenger Marsh Development in Homer Township. <br /> Messenger Marsh is a recreational area.<br />
RFP<br /> The Project involved an expansion and upgade of automobile and/or trailer parking, shelters, limestone screening trail, off leash dog area, latrines, walkways, drinking fountains, signage, primitive camp sites, wetland overlook, etc. <br />
The RFP sets outscope of services<br />Design development <br />Construction documentation preparation and bidding<br />Construction observation<br />As-built drawings<br />and the RFP sets out<br />
proposal submittals requirements :<br />Statement of qualifications<br />References<br />Identification of project manager & staff<br />insurance<br />
Presentation of costs (having not exceed amounts)<br />Hourly rates<br />Cost for reimbursable items<br />Statement of work and schedule<br />
The Will County RFP’s stated evaluation criteria are <br />the perceived competence and expertise of the firm’s proposed project manager and team<br /> references<br />
The Will County RFP’s stated evaluation criteria are <br />past record in performing similar work<br />ability to work with forest preserve district staff, and <br />location of the firm<br />
The criteria of past record in performing similar work and ability to work with governmental staff really are critical drivers in the selection process. <br />
Experience in similar work is an objective criterion. <br /> Ability to get along with staff is a subjective standard – Does the staff like and respect the project team ? -is the real question<br />
Negotiation<br />Based on “responsiveness of proposal,” the Will County Forest Preserve District selects one or more firms to negotiate an acceptable agreement. The District can request written clarification and additional supporting materials.<br />
The District can reject any, some, or all proposals.<br />
Note: qualifications are critical, of course; as important are the pricing and creativity of the firm responding to the proposal. <br />
Price is not necessarily paramount as in a sealed competitive bid model used in other construction procurement.<br /> Under an RFP process, experience and track record often trump lower price in the evaluation and selection process. <br />
Note well:<br />Certain subjective, unspoken criteria such as professional/personal relationships and familiarity with the firm undoubtedly can influence a selection outcome. <br />
E.G., Another RFP Model<br /> CHA has a two –step evaluation process in its RFP selection:<br /> First round of evaluations to establish those firms within a “competitive range” <br />
Those firms making the first cut then may be required to provide additional information, make presentations and conduct negotiations.<br />
CHAthenselects respondent whose proposal: <br />conforms to solicitation <br />is most advantageous to CHA <br />has best value in cost, price and other factors<br />
SMALL CONTRACTS<br />Both the state and local governments exempt from their competition requirements, those engineering contracts with estimated professional fees of less than $25,000. <br />
EMERGENCY CONRACTS<br />State and local governments also exempt from competition requirements those engineering contracts that are deemed emergency contracts.<br />
An emergency is when there is no time to go through the normal procurement process, like the Loop flood or Hurricane Katrina or the initial occupation of Iraq.<br />
The Illinois State statute sets out criteria for “emergency services”:<br />--Determination that it is in best interest of State to proceed with immediate selection of a firm<br />-- Or emergencies requiring immediate services to protect public health and safety such as, but not exclusively<br />
SOLE SOURCE PROCUREMENT<br />Service or product is unique<br />Only one available firm can provide it <br />Mostly used in supply contracts<br />Not ordinarily applicable to engineering contracts<br />
COMPETITVE SEALED BIDS<br />Most familiar procurement concept<br /> Determined by lowest price from a responsible bidder<br />
A “responsible bidder” is one that has the financial resources and basic skill sets to complete the performance for a locked-in price<br />
Not used typically with professional engineering services<br /> An engineering firm that is part of general contractor joint venture making a lump sum bid would encounter this type of procurement.<br />
MBE/WBE/DBE<br />MINORITY OWNED BUSINESS ENTERPRISE <br /> Definition usually includes a business with at least a 51% majority ownership by one of the following racial and ethnic groups: African-American, African, Hispanic, Asian, Native American, Eskimos/Inuit <br />
WOMAN OWNED BUSINESS ENTERPRISE<br />Obviously defined by gender<br />Also requires at least 51% female ownership<br />
DISADVANTAGED BUSINESS ENTERPRISE<br />More often used by federal government and usually defined by social and economic disadvantage.<br />
For example the U.S. Dept. of Transportation <br />“presumes certain groups are disadvantaged, including women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian-Pacific Americans, or other minorities found to be disadvantaged by the U.S. Small Business Administration (SBA). Persons who are not members of one of the above groups and own and control their business may also be eligible if they establish their "social" and "economic" disadvantage.” <br />
CONSTITUTIONALITY OF SET ASIDE PROGRAMS<br />The 1989 Supreme Court Case of City of Richmond v. J. A. Croson Co. set out the constitutional standards for affirmative action in public construction contracts.<br /> Court invalidated a City of Richmond ordinance that required prime contractors who are awarded city contracts to subcontract at least 30% of the contract $ amount to MBE’s.<br />
Key features of Chicago Ordinance:<br />Minorities defined as African-American and Hispanic racial/ethnic groups, and individual members of Asian-American, Arab-American, and Native American groups found to be socially disadvantaged by having suffered racial or ethnic prejudice or cultural bias.<br />
MBEs and WBEs must respectively be at least 51% minority or female owned and such owners must be economically disadvantaged. <br />
Economically disadvantaged” means having a net worth of less than $750,000.<br /> The “aspirational goals” are 24% of the annual dollar value of all construction contracts to MBEs and 4% to WBEs.<br />
The programs ordinarily have a waiver provision when the contractor cannot find sufficient MBEs and WBEs to meet its goals.<br />
Penalties<br />The Penalities for non-compliance with MBE/WBE commitments range from suspension to termination to liquidated damages to disqualification of the bidder/proposer from future awards. <br />
MISCELLANEOUS CONTRACT PROVISIONS<br /> PUBLIC VS. PRIVATE CONTRACT PROVISIONS<br />
TERMINATION FOR CONVENIENCE<br />Frequently found in public contracts and allows public contracts to be terminated at any time for no reason at all by a governmental agency. <br />
E.G., The Cook County Professional Architectural/Engineering Contract allows the County to<br />terminate for convenience the entire agreement<br />terminate a portion of the services or <br />
reduce the scope of the Project<br />reduce the firm’s services, or <br />reduce both the firm’s services and the scope of the Project.<br />
The Cook County provisions do compensate the engineering firm for work already performed and for authorized reimbursable expenses already incurred. <br />
The Chicago Housing Authority provides a more liberal compensation clause and will pay the Engineering firm for services completed and the cost of settling or otherwise liquidating any claims arising out of the termination of any subcontracts or orders for materials. <br />
CONFLICT OF INTERESTS<br />Government contracts ordinarily contain a conflict of interests provision.<br />
The Cook County conflicts provision requires representations by the Engineering Firm that it has no or will not acquire any direct or indirect interest that would affect the performance or its services or employ anyone having an interest.<br />
The CHA provision conflict of interests provison is dictated by federal regulations (24 CFR 85.36(b)) and is more stringent:<br />No employee, officer or agent of the CHA shall participate in the selection of a contractor, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved.<br />
The conflict arises when the employee, officer or agent, any member of his family, his or her partner, or any organization that is about to employ the employee, officer, agent or member of his family, has a financial interest in the selected firm. <br />
Also the CHA conflict of interests provision prohibits any CHA employee or officers from soliciting or accepting gratuities, favors or anything of monetary value from the Engineering Firm or its sub-consultants. <br />
AVAILABILITY OF FUNDING/NON-APPROPRIATION<br />Some government contracts expressly provide that commencement or continuation of a contract is contingent upon the funding for the project being appropriated or granted.<br />
PREVAILING WAGES<br />Because of federal funding, the CHA requires the Engineering firm not to pay less than the prevailing wages in the locality, as determined by HUD, to all architects, technical engineers, draftsmen, and technicians. <br />
CERTIFICATE OF QUALIFICATION<br />Cook County requires the Engineering Firm to certify that it, as a person or business entity, has not been convicted of bribery or attempting to bribe a government official or made an admission of guilt of such conduct which is a matter of record.<br />
STATE ACT<br />Approved bills must be paid within 60 days of receipt of proper invoice<br />Interest penalty of 1% per month and any fraction of a month until paid<br />
For construction-related invoices, a Notice of defective invoice must be given no later than 30 days after first submittal.<br />
Notice must include<br />nature of defect and<br />additional information needed to remedy defect<br />
Importantly: <br />“If one or more items on a construction related invoice are disapproved, but not the entire bill or invoice, the portion that is not disapproved shall be paid.”<br />
Note well: <br />A State official may not request a contractor to waive its rights under the Prompt Payment Act to recover interest penalty for late payments as a condition to enter into a State contract. <br />
Subcontractors<br />When an agency submits a voucher for payment to a contractor, the agency shall promptly make available electronically the voucher information to subcontractors and material suppliers.<br />
When a contractor receives a payment, the contractor is required to pay each sub or supplier in proportion to work completed by each, plus interest received under the Act, less any retention<br />
Where contractor received reduced payment, then contractor must disburse funds on a pro rata basis amongst the contractor, subcontractors and suppliers.<br />
Where State official is not releasing full payment because contractor has rejected work of certain subs and suppliers,<br /> then those rejected subs and suppliers shall not be paid for work rejected, <br /> and all other compliant subs and suppliers shall be paid in full with interest under the Act.<br />
Where contractor delays payment to its subs and suppliers by 15 days, then contractor must pay interest in the amount of 2% a month.<br />
Subs have the same interest obligations to their sub-subcontractors and suppliers.<br />
Where contractor fails to pay his subs and suppliers within 15 days of receipt of payment, the subs and suppliers may file written notice of failure with the State official. <br />
StateAdministrative Law Judge shall have a hearing and if the Judge finds no reasonable cause for failure to pay, then State official must direct Contractor to pay within 15 days.<br />
If contractor does not pay, then contactor shall be barred from State public construction contracts for one year.<br />
LOCAL GOVERNMENT ACT<br /> Local official must approve or disapprove an invoice within 30 days after receipt of the invoice or after receipt of goods or services.<br /> If one or more items on a constructed-related invoice is disapproved, then the portion that is not disapproved shall be paid.<br /> Local official has 30 days after approval to pay invoice. <br />
If approved bill is not paid, then there is an interest penalty of 1% of any amount approved and unpaid that shall be added for each month of delay.<br /> Local official and contractor can agree to a longer time period for calculating the commencement of the penalty for late payment. (50 ILCS 505/6)<br /> The Local Government Act provision for payment to subcontractors is like the State.<br />
PUBLIC LIENS<br />Section 23 of the Mechanics Lien Act (770 ILCS 60/23) governs liens concerning public projects.<br />
ON WHAT<br />Lien on money, bonds, or warrants due or to become due the contractor<br />
CANNOT LIEN IMPROVEMENTS OWNED BY GOVERNMENT<br />
Private liens attach to the improvement themselves<br />Important distinctions between Public & Private Liens and different procedure <br />
Lien is for value of what lien claimant furnished to project<br />
Lien attaches to that portion of the public funds against which no voucher or other evidence of indebtedness has been issued and delivered to the contactor by or on behalf of the entity<br />
If project funds have been fully paid to the contractor or the appropriated funds have lapsed, then there are no funds to attach the lien.<br />
BY WHOM AND AGAINST WHOM<br />Who can file a lien?<br />“Any person who shall furnish material, apparatus, fixtures, machinery or labor to any contractor having a contract for public improvement…”<br />
Under the public lien section of the Mechanics Lien Act, “Contractor” includes any sub-contractor and does not include general contractor.<br />
Person filing lien could be an engineering firm who is a sub-contractor, sub-sub-contractor, sub-consultant, or sub-sub-consultant.<br />
Conversely, an engineering firm contractor having a public contract, could have a lien filed against it by a sub-contractor. <br />
ON WHOM<br />Section 23 (b) of the Act allows a lien against local governments:<br /><ul><li> County
Municipal Corporations </li></ul>LOCAL GOVERNMENT LIEN REQUIREMENTS<br />
Notice<br /> Subcontractor must provide written notification to clerk or secretary of local government before payment is made to the Contractor having the public contract.<br />
Notice must be sent to the local government clerk or secretary by certified/registered mail return receipt requested with delivery limited to addressee only or delivered to the clerk or secretary<br />
Copy of notice must be sent or delivered in the same manner to Contractor having the public contract<br />
Law Suit<br />A lawsuit called a Complaint for an accounting must be brought within 90 days of notice of lien<br />The clerk or secretary of the local government must be served with a copy of the complaint.<br />Failure to commence law suit within 90 days results in NO LIEN<br />
Delay by Lien Claimant<br />Contractor does not have to wait to be paid because of possible lien claim.<br />Contractor can serve written demand upon potential lien claimant and send a copy to the public official.<br />
Potential lien claimant then has 30 days to file written notice of lien claim and a sworn statement. <br />Failure to file lien within 30 days results in forfeiture of the lien.<br />The State lien section has a similar provision.<br />
STATE LIEN REQUIREMENTS<br /> A lien is created by giving notice of the lien claim to the director or official whose duty it is to let the contract. <br />
State has two further requirements:<br />written notice must contain a sworn statement of the claim<br />statement of the claim must show with particularity the several items and the amount owed on each<br />--“particularity” is not defined<br />
Lapsed Funds<br />Where appropriations funding a state construction project are about to lapse, a lien claimant must initiate suit and deliver a copy of the complaint at least 15 days prior to time of lapse.<br />
Lapsed funds means the appropriated money is zeroed in the particular project account and the funds are no longer available<br />
Official’s Duty & Option<br />Under both the local government and state public lien provisions, the officials who are notified of the lien must withhold from the contractor funds in the amount of the claim for a 90-day period and afterward when a suit has been filed.<br />
Both the local government and State provisions allow the official to pay the lien claim money to the clerk of the court upon the filing of the law suit. <br />Amounts paid to the clerk of the court become a credit on the balance owed to the contractor<br />
PUBLIC CONTRACTOR MISCONDUCT STATUTE<br /> Applies to businesses who perform or seeks to perform public contracts in Illinois<br /> These are new provisions in the Illinois Criminal Code pertaining to misconduct by contractors.<br />
“Public Contractor Misconduct” includes:<br /> Intentionally or knowingly making, using or causing to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property <br />
Knowingly performs an act that he or she knows he or she is forbidden to perform <br />
With intent to obtain a personal advantage for himself or another, he performs an act in excess of his contractual responsibility <br />
Solicits or knowingly accepts for the performance of any act a fee or reward that he or she knows is not authorized by law <br />
Note well: <br /> A violation of this Section concerning Public Contractor Misconduct constitutes a Class 3 felony under Illinois law <br /> -- carries a sentence of penitentiary imprisonment of not less than two years and not more than five years<br />