On January 8, 2021, ODOT held a hearing to notify the public of its intent to change its rules regarding contractor prequalification.
Notice and copies of that rule change can be found here.
Essentially, ODOT modified 5501:2-3-03 and 05 to “lower” the amount a contractor can bid on ODOT construction projects by lowering the dollar amount a contractor can be prequalified. The previous version of the rule maximized the prequalified dollar amount by a multiplying factor of ten. The new number maximizes the multiplying factor by eight. An example would be that if a contractor’s net worth (as determined by ODOT’s rules and law) is $1M, their new prequalified amount would be $8M (instead of $10M). ODOT indicated their intent was to reduce the risk for a newer contractor to overextend itself. That may be one impact, but another effect could be to limit the ability of a small or mid-sized contractor to bid on larger jobs; especially if they already have work in their pipeline that is impacting their prequalification dollar limits.
The second part of the rule change increases the amount of work a subcontractor can perform from $800,000 to $1,000,000. This is good news for smaller companies who are trying to grow and get experience on ODOT jobs, but are not yet able to be fully prequalified to bid. Companies of this size should pay special attention to ODOT’s SBA projects. Once prequalified, they can bid on SBA projects, which have trended higher than the engineer’s estimate according to ODOT’s letting reports.
Finally, the change to OAC 5501:2-3-10 makes it easier for ODOT to revoke a contractor’s certificate of qualification. The old rule required a full hearing under Chapter 119 of the Ohio Revised Code if ODOT sought to revoke a contractor’s prequalification for violating their rules and regulations. Now, if a contractor’s prequalification is revoked, they may only appeal internally to ODOT under its Prequalification Review Board. That Board is governed by ORC 5525.07 and allows appeals of that Board’s decisions to the Franklin County Court of Common Pleas, but only under a claim of “fraud or abuse of discretion.”
If you have any questions, the professionals at Kegler Brown can assist you in navigating these rule changes and how they may impact your company or bidding with ODOT.