By Bricker Graydon Construction Law Group
The Ohio General Assembly has appropriated $200 million to establish a program to provide financial assistance to career-technical education districts with facilities construction projects. The program is administered by the Ohio Facilities Construction Commission (OFCC), which has published a policy establishing guidelines for the program. Awards have not yet been officially announced by the Governor’s office, but early indications are that approximately half of the applicants will receive awards. For those awaiting confirmation of award, here are a few items to think about.
Project Agreement The OFCC is requiring a project agreement for each award recipient, or “beneficiary,” that will specify the terms and conditions of the award. Under the agreement, the project must comply with the Ohio School Design Manual (OSDM), which is a document published by the OFCC that sets forth minimum design criteria for school construction projects in Ohio. The agreement also requires evidence that the beneficiary has sufficient local funds to cover budgeted costs that exceed the proposed award amount. 25% of the award amount will be released to the beneficiary at the time the agreement is executed.
Project Budget The OFCC has published an FAQ document related to the program that speaks to the budget requirements. As to be expected, the budget is required to include site costs, construction costs, equipment costs, soft costs (such as architectural fees, survey, construction testing, permits, etc.), and utility costs for any necessary utility upgrades. The budget is additionally required to carry 10% for an owner’s contingency to act as “insurance” against rising or unanticipated costs. This owner’s contingency needs to be a standalone line item in the budget separate from any design, contractor or construction manager contingency, which will make the project budget look more expensive.
Procurement of Project Vendors Funds are coming from the state’s award from Treasury under the federal Ameri- can Rescue Plan Act (ARPA). As a result, beneficiaries must comply with both state procurement laws and federal Uniform Guidance. Since the source of funding is from Treasury rather than the Department of Education, however, the Davis-Bacon Act for prevailing wage does not apply as it did with Elementary and Secondary School Relief Fund (ESSER) funding.
Project Administration The OFCC’s policy indicates that the projects are to be administered solely by the beneficiaries. Thus, the design, bidding, construction contract award, construction management, claims resolution, and project closeout are the responsibility of the beneficiary. The project agreement does, however, require OFCC approval of two design- phase stages to ensure OSDM, budget and schedule compliance, the latter of which will also serve as the approval for release of the remaining 75% of the award. Additionally, during the project’s bidding and construction phases, beneficiaries must submit quarterly reports for the OFCC to track costs and progress. To facilitate this oversight, the OFCC will assign a regional program consultant, who will visit the project to document progress and review reports.
Timeline The timeline from the OFCC for these projects is a compressed schedule as funds must be obligated by September 30, 2024 and construction must be completed by September 30, 2026. Accordingly, the procurement of project vendors and project administration will have to be timely managed to meet these deadlines.
Audits The last section of the OFCC policy goes into significant detail as to what governmental entities may perform audits of the project and requires retention of project documents for five years. Specifically, audits or investigations for the program can come from State of Ohio entities such as the OFCC, Office of Budget and Management, Auditor of State, and the Ohio Inspector General and from the federal government via the Treasury Office of Inspector General and the Government Accountability Office. To that end, construction counsel can assist with all aspects of the project agreement and procurements, and assistance from an owner’s representative can prove invaluable in navigating the project administration, documentation and reporting obligations associated with the program.