{"id":4714,"date":"2023-06-28T14:48:21","date_gmt":"2023-06-28T14:48:21","guid":{"rendered":"https:\/\/www.fwhtlaw.com\/blog\/?p=4714"},"modified":"2023-06-28T19:23:07","modified_gmt":"2023-06-28T19:23:07","slug":"municipal-cmar-contracting-comes-to-minnesota","status":"publish","type":"post","link":"https:\/\/www.fwhtlaw.com\/blog\/2023\/06\/28\/municipal-cmar-contracting-comes-to-minnesota\/","title":{"rendered":"Municipal CMAR Contracting Comes to Minnesota"},"content":{"rendered":"

<\/a><\/strong><\/p>\n

Nathan is a member of the firm\u2019s Construction Law Department.  He can be reached at 612.359.7606 or nsellers@fwhtlaw.com.<\/a>          <\/strong><\/p>\n

            The 2023 Minnesota Legislative Session wrapped up in late May with a flurry of consequential new laws. Among the bills that passed during the last week of the session was an amendment that will allow municipalities to use Construction Manager At-Risk contracting on many public works projects. This briefing paper explores the new law.<\/p>\n

Existing law<\/strong><\/p>\n

            Municipal contracting in Minnesota is governed by the Uniform Municipal Contracting Act, Minn. Stat. \u00a7 471.345. The Act defines municipalities to include any \u201ccounty, town, city, school district or other municipal corporation or political subdivision of the state authorized by law to enter into contracts.\u201d In other words, any non-state entity.<\/p>\n

Minnesota municipalities currently have just two options for contracting construction work: low bid and best value. Under the traditional, low-bid option, municipalities may solicit sealed bids based on complete design documents and award the contract to the lowest responsive, responsible bidder. Under the best-value option, municipalities may solicit proposals based and award the contract to the proposer offering the \u201cBest Value.\u201d For purposes of determining \u201cBest Value,\u201d the Municipal Contracting Act cross-references the state agency best-value contracting act, Minn. Stat. \u00a7 16C.28.<\/p>\n

New law: CMAR alternative<\/strong><\/p>\n

            This spring, the Legislature passed and Governor Walz signed a bill amending the Municipal Contracting Act. Specifically, the Act was amended to offer municipalities a third option for contracting construction work: Construction Manager At-Risk (CMAR). The new municipal CMAR law will be codified at Minn. Stat. \u00a7 471.345, subd. 3b, and Minn. Stat. \u00a7 471.463 and will become effective on August 1, 2023, meaning all municipal construction contracts awarded after that day may utilize CMAR. The law brings Minnesota generally in line with neighbors to the south and west as Iowa, North Dakota, and South Dakota have recently adopted municipal CMAR contracting.[1]<\/a><\/p>\n

The law will cover all municipalities, including any county, town, city, school district, or other municipal corporation or political subdivision of the state. And the law will apply to most contracts over $175,000; specifically, the law will apply to any \u201cundertaking to construct, alter, or enlarge a building, structure, other improvement, except a street, road, highway, or bridge.\u201d[2]<\/a><\/p>\n

The language of the new law closely tracks and is very similar to the state agency CMAR contracting act, Minn. Stat. \u00a7 16C.34. In general, the new law gives municipal owners broad authority to award contracts to a CMAR through a robust solicitation and selection process. After selection, municipalities may then enter into a cost-plus GMP construction contract with the CMAR. The law generally calls for the CMAR to competitively bid all trade work, but allows the CMAR to submit bids to self-perform trade work at the owner\u2019s discretion.<\/p>\n

The details<\/strong><\/p>\n

            The new municipal CMAR law defines a CMAR as one who \u201cis selected by a municipality to act as a construction manager to manage the construction process, including but not limited to responsibility for the price, schedule, and workmanship of the construction performed.\u201d[3]<\/a> A CMAR contract is defined as \u201ca contract for construction of a project between a [CMAR] and a municipality, which shall include a [GMP], construction schedule, and workmanship of the construction performed.\u201d[4]<\/a> GMP, in turn, is defined as \u201cthe maximum amount that a [CMAR] is paid pursuant to a contract to perform a defined scope of work.\u201d[5]<\/a> And GMP contract means \u201ca contract under which a [CMAR] or subcontractor is paid on the basis of the actual cost to perform the work specified in the contract plus an amount for overhead and profit, the sum of which must not exceed\u201d the contract\u2019s GMP.[6]<\/a><\/p>\n

The law requires a municipality to prepare a \u201crequest for qualifications\u201d for each CMAR contract.[7]<\/a> The RFQ must contain, at a minimum, the following elements:<\/p>\n

    \n
  1. \n
      \n
    1. \n
        \n
      1. Procedures for submitting qualifications, the criteria for evaluating the qualifications, and the relative weight for each criteria and subcriteria.<\/span><\/li>\n
      2. Procedures for making awards in an open, competitive, and objective manner, \u201capplying a scoring or trade-off evaluation method.\u201d<\/span><\/li>\n
      3. Proposed terms and conditions for the contract.<\/span><\/li>\n
      4. Desired CMAR qualifications.<\/span><\/li>\n
      5. Schedule for commencement and completion of the project.<\/span><\/li>\n
      6. Requirements for insurance and payment and performance bonds.<\/span><\/li>\n
      7. Material information in the municipality\u2019s control, including surveys, soil reports, drawings, environmental studies; etc.[8]<\/a><\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

        In addition, the RFQ may<\/em> include a requirement that the proposer include the cost for the proposer\u2019s services. But, in order to ensure maximum participation in the RFQ process, the RFQ may not impose unnecessary or unreasonable requirements.[9]<\/a><\/p>\n

        After receiving and ranking RFQs, the municipality will \u201cconduct contract negotiations with the highest-ranked proposer to reach an agreement on the cost and terms of the contract.\u201d[10]<\/a> If agreement cannot be reached with the highest ranked proposer, the municipality may negotiate with the next highest ranked proposer, and so on.[11]<\/a><\/p>\n

        The chosen CMAR \u201cshall competitively bid all trade contract work for the project from a list of qualified firms.\u201d[12]<\/a> The municipality and the CMAR will \u201cjointly determine the composition of the list of qualified firms.\u201d[13]<\/a> The list \u201cmust be based on an open, competitive, and objective prequalification process.\u201d[14]<\/a> And a municipality and CMAR may, but are not required to, limit their list of qualified firms to qualified SBE or DBE firms, subject to availability.[15]<\/a> The law further provides that with the municipality\u2019s approval, the CMAR \u201cmay submit bids for trade contract work if the CMAR does not participate in the municipality\u2019s review of the bids or selection decision.\u201d[16]<\/a><\/p>\n

        Finally, the CMAR and the municipality \u201cshall enter into a [GMP] contract for the project.\u201d[17]<\/a><\/p>\n

        [1]<\/a>           Iowa Code ch. 26A; NDCC ch. 48-01.2; SDCL ch. 5-18B.
        \n        [2]<\/a>           Minn. Stat. \u00a7 471.463, subd. 1(i).
        \n        [3]<\/a>           Id.<\/em>, subd. 1(b).
        \n        [4]<\/a>           Id.<\/em>, subd. 1(c).
        \n        [5]<\/a>           Id.<\/em>, subd. 1(d).
        \n        [6]<\/a>           Id.<\/em>, subd. 1(e).
        \n        [7]<\/a>           Id.<\/em>, subd. 3(a).
        \n        [8]<\/a>           Id.<\/em>
        \n        [9]<\/a>           Id.<\/em>, subd. 3(b), (c).
        \n        [10]<\/a>          Id.<\/em>, subd. 5(a).
        \n        [11]<\/a>          Id.<\/em>
        \n        [12]<\/a>          Id.<\/em>, subd. 5(b).
        \n        [13]<\/a>          Id.<\/em>
        \n        [14]<\/a>          Id.<\/em>
        \n        [15]<\/a>          Id.<\/em>
        \n        [16]<\/a>          Id.<\/em>
        \n        [17]<\/a>          Id.<\/em>, subd. 5(c)<\/p>\n

        \n

        Announcements<\/strong><\/p>\n

        Fabyanske, Westra, Hart & Thomson, P.A. <\/strong>recognized as one of \u201cThe Top 50 Construction Law Firms<\/strong>\u201d in 2023 by Construction Executive Magazine<\/strong>, a leading construction industry magazine for construction firms. For more information click here.<\/a><\/strong><\/p>\n

        Fabyanske, Westra, Hart & Thomson, P.A. <\/strong>has been ranked as a Band 1 Construction Law Firm in Minnesota <\/strong>by the well-recognized Chambers <\/strong>professional rating service. For more information click here.<\/a><\/strong><\/p>\n

        Mark Becker<\/a> <\/strong>was inducted as a Fellow into the American College of Construction Lawyers<\/strong>, an organization of nationally recognized construction lawyers. Dean Thomson<\/a> <\/strong>was elected as the College\u2019s President Elect. For more information click here.<\/a><\/strong><\/p>\n

        \n

        <\/a><\/p>\n

        <\/a><\/p>\n

        This discussion is generalized in nature and should not be considered a substitute for professional advice. \u00a9 2023 FWH&T<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

        Nathan is a member of the firm\u2019s Construction Law Department.  He can be reached at 612.359.7606 or nsellers@fwhtlaw.com.                       The 2023 Minnesota Legislative Session wrapped up in late May with a flurry of\u2026<\/p>\n","protected":false},"author":8,"featured_media":4690,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7,50],"tags":[],"class_list":["post-4714","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefing-papers","category-nathan-r-sellers"],"acf":[],"yoast_head":"\nMunicipal CMAR Contracting Comes to Minnesota - Fabyanske, Westra, Hart & Thomson<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fwhtlaw.com\/blog\/2023\/06\/28\/municipal-cmar-contracting-comes-to-minnesota\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Municipal CMAR Contracting Comes to Minnesota - 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