702 KAR 4:160. Capital construction process.

702 KAR 4:160. Capital construction process.

RELATES TO: KRS 156.160(1)(f) and (m), 157.420(4), 162.060, 162.065, 162.070, 160.160, 322.360(1)

STATUTORY AUTHORITY: KRS 156.070, 156.160, 157.420, 162.060, 162.065

NECESSITY, FUNCTION, AND CONFORMITY: KRS 156.160 requires the Kentucky Board of Education (KBE) to promulgate administrative regulations establishing standards that school districts shall meet in operational performance, including construction of public school buildings and the use of uniform forms. KRS 157.420 requires each school district's capital outlay to be utilized in accordance with the district's facility plan. KRS 162.060 requires approval of all school building plans and specifications by the chief state school officer. KRS 162.065 requires the KBE to prescribe administrative regulations governing construction managers. KRS 162.070 requires school construction contracts to be awarded to the lowest and best responsible bidder. KRS 322.360 requires a school district, when engaged in the construction of any public work involving engineering, to utilize an architect or engineer to directly supervise the preparation of plans and specifications, estimates, and the execution of construction. KRS 323.033 requires the services of an architect for new buildings and additions or alterations to existing buildings classified as educational use group, including the administration of construction contracts. This administrative regulation establishes the procedures and criteria for the construction of public school buildings.

Section 1. Definitions. (1) "AIA" means the American Institute of Architects.

(2) "Architect" means any design professional licensed in the Commonwealth of Kentucky under KRS Chapter 322, 323, or 323A, which includes architects, engineers, and landscape architects.

(3) "Board" means the local board of education.

(4) "Construction manager" or "CM" means a qualified and experienced contracting organization which provides the services of construction management and possesses a general trades workforce, staff and equipment, financial base, insurance coverage, bonding capability, a minimum of three (3) years' construction management experience on projects of $2,000,000 or more, and the ability to provide the services required.

(5) "Contract documents" means the owner-contractor agreement, conditions of the contract (general, supplementary, and other conditions), purchase orders, drawings, specifications, addenda issued prior to execution of the owner-contractor agreement, other documents listed in the owner-contractor agreement, and modifications issued after the execution of the agreement.

(6) "Division" means the Division of Facilities Management, Kentucky Department of Education (KDE).

(7) "Emergency" means the loss of use of physical facilities resulting from an unforeseen occurrence which requires prompt action.

(8) "Fixed equipment" means furnishings or equipment that:

(a) Are secured to the wall, floor, or ceiling to operate or function in the manner intended by the product manufacturer; and

(b) May include bleachers, student lockers, casework with sinks, or plumbing fixtures.

(9) "KERA" means Kentucky Education Reform Act.

(10) "Moveable equipment" means any furnishings or equipment not considered fixed equipment.

(11) "Owner" means the local board of education or financing corporation established for the purpose of financing school construction.

(12) "Record drawings" means a set of reproducible drawings revised to indicate significant changes in the work during construction, including addenda, change orders, and construction change directives.

(13) "Superintendent" means the superintendent of the local school district or the employee the superintendent has selected to represent the board regarding construction issues.

Section 2. Construction Project Application. (1) The board shall submit an application on Form BG-1, Project Application Form, to the division for approval of a proposed construction project.

(2) An application shall be submitted for any project that is:

(a) Funded by Support Education Excellence in Kentucky (SEEK) capital outlay, Facility Support Program of Kentucky (FSPK) funds as provided by KRS 157.620, School Facilities Construction Commission (SFCC) funds, or building funds as provided by KRS 160.476; or

(b) Proposing construction of a new building, addition, or alteration of an existing building that requires design by an architect for a building or building system.

(3) To initiate a project listed in its facility plan or a minor project permitted in subsection (8) of this section, a vote by the board approving the project shall be required.

(4)(a) If SFCC funds are included in the financing plan, projects shall be selected in prioritized order.

(b) If SFCC funding is not included in the financing plan, the board may select a project on its facility plan without regard to priority number.

(5) The Form BG-1 shall be accompanied by:

(a) A copy of the board's action, either by official board minutes or an unofficial excerpt signed by the board secretary verifying authenticity, approving the application; and

(b) A narrative justification of the construction project selection, including its priority over other projects relative to district goals and maximization of funding and benefits to students.

(6) Within sixty (60) days of receiving the completed application documents, the Form BG-1 shall be approved by the division, if justified pursuant to the following criteria:

(a) The proposed project is on the facility plan or conforms to the minor project criteria established in subsection (8) of this section;

(b) The SFCC funding does not exceed the SFCC maximum budget established for the project;

(d) A board order was issued; and

(e) The narrative justification was submitted as required by subsection (5)(b) of this section.

(7) The Division of District Operations, KDE, may give tentative approval based on a review of the board's ability to support the financing plan for the proposed construction budget.

(8) The board may submit a Form BG-1 for minor projects not listed in the facility plan if the project meets the following criteria:

(a) Expansion of a permanent center or functional center to include a maximum of four (4) classrooms if documentation to support the request is provided for either student population growth or curriculum changes;

(b) Campus enlargement, minor renovation of buildings and building systems, or construction of an additional support space at permanent or functional centers if its need can be documented and justified; or

(9) If action is not taken by the board within one (1) year from the date of Form BG-1 approval, the approval shall no longer be effective.

(10) If the division considers the architect, CM, or board to be nonresponsive or causing undue delays in the design schedule, it may request the chief state school officer to revoke the Form BG-1 approval.

(11) If an emergency requiring the submission of a Form BG-1 occurs:

(a) The emergency shall be declared in accordance with KRS 424.260 or 45A.380, whichever is applicable; and

(b) The board shall:

1. Notify the division and request approval to proceed with the plans and corrective action;

2. Submit to the division:

a. Form BG-1;

b. Copy of the board order declaring the emergency; and

c. Copy of the written determination as required by KRS 45A.380 for those districts that have adopted the Model Procurement Code.

Section 3. Local Board Oversight Responsibilities. (1) Construction files and records shall be maintained by the superintendent in the central office and organized and accessible for review. Construction files and records shall include:

(a) Board actions;

(b) Proposals (bids);

(d) Correspondence; and

(e) Financial documents.

(2) During the design phases of a new school building project, the maximum gross area shall be limited using the Model Program Space established in 702 KAR 4:180, to:

(a) For an elementary school, 110 percent of the Total Gross Area of the Model Program Space; or

(b) For a middle or high school, 115 percent of the Total Gross Area of the Model Program Space.

(3) If the architect or the CM determines additional funding is justified or a reduction of physical scope of the project is needed, the local board may approve the action if it believes it is justified and forward it to the division.

(4) During the planning and bidding phase of the construction project, the board shall:

(a) Review bidding documents for compliance with statutes and administrative regulations, with particular attention to sales and use tax exemption when purchasing materials direct;

(b) Comply with all submission requirements resulting from the review of bidding documents by the division;

(d) Advertise in the newspaper having the largest circulation in the school district the following number of days prior to the date established to receive bids:

1. $1,000,000 or less project, a minimum of seven (7) days and a maximum of twenty-one (21) days; or

2. A project in excess of $1,000,000, a minimum of twenty-one (21) days;

(e) Hold the bid opening:

1. In a location accessible to the public;

2. Between 10 a.m. and 3 p.m. (local time); and

3. Monday through Friday, excluding holidays;

(f) Accept the architect's and CM's evaluation of the bids and approve or reject their recommendations, giving consideration during the review process to businesses owned by minorities and women;

(g) Ensure the CM completes the KDE Non-Collusion Affidavit;

(h) Hold possession of original bidding documents;

(i) Approve and submit the successful bidders' documents to the division for review and approval of each proposed contract and the financial plan; and

(j) Have in its possession prior to executing the construction contract:

1. Contractor's performance and payment bond;

2. Certificate of required insurance;

3. Property insurance policy;

4. Written approval from the division; and

5. Bids accepted for the bond sale, if applicable.

(5) During the construction administration of the project, the board shall:

(a) Name the superintendent or his or her representative, known as the owner's representative, to speak on behalf of the board as owner in the contract documents and set the parameters of that responsibility;

(b) Seek the superintendent's recommendation relative to proposed board actions;

(d) Seek SFCC approval of expenditures as applicable;

(e) At least once per month receive and review written on-site observation and progress reports provided by the architect;

(f) Review the need for changes to the contract;

(g) Assign partial or full responsibility to the proper party if additional costs are due to an oversight or omission;

(h) Monitor the administration of the project by its architect and CM to ensure no prepayment is made for their services;

(i) After notifying the division, hire a professional services firm experienced in architectural, engineering, accounting, or construction management services to provide an audit of the construction project if the board suspects nonfeasance or malfeasance;

(j) Secure all required inspections and close out documents for submittal to the appropriate agencies;

(k) Receive a certificate of occupancy from the Department of Housing, Buildings, and Construction or local building code authority having expanded jurisdiction prior to occupying the facility;

(l) Retain a minimum five (5) percent retainage of the construction contract until substantial completion of the work as defined in AIA Document A201-2007, General Conditions of the Contract for Construction, and the KDE Amendment to AIA A201-2007;

(m) Require the superintendent or the owner's representative to participate in the year-end inspection and report results of the inspection to the board;

(n) Contact the contractor's bonding company each month if the contractor is more than two (2) weeks behind schedule or is not performing in accordance with the contract; and

(o) Not hire additional architectural services outside the architect's contract without approval from the division.

(6) If federal funds or federal agencies are involved, the board may request approval from the chief state school officer to waive or condense procedures to expedite the construction design process.

(7) If a lien is filed with a court and the board is given notice of the lien, the board shall stop partial payments on the contract in the amount of the lien and contact the division. Payments shall begin after:

(a) The lien has been released;

(b) The division has approved a payment schedule which provides for retaining the lien amount being contested; or

Section 4. Architectural Services. (1)(a) The board and architect shall negotiate a contract for services required.

(b) The board shall either advertise for architectural services or select a minimum of three (3) architectural firms that shall be evaluated through the request for proposal (RFP) process, giving consideration during the review process to businesses owned by minorities and women.

1. The total construction cost of the project is estimated at less than $1,000,000;

2. The project is the continuation of phased construction at the same site.

(2) The architectural services shall be negotiated using the following documents:

(a) Request for Proposals for Architectural/Engineering Services; if utilized;

(b)1. AIA Document B101-2007, Standard Form of Agreement Between Owner and Architect, with the KDE Amendment to AIA B101-2007; or

2. AIA B141/Cma, Standard Form of Agreement Between Owner and Architect, Construction Manager - Adviser Edition, with the KDE Amendment to AIA B141/Cma-1992;

(d) Architect/Engineer Fee Guidelines as a percentage of the cost of construction, or a lump sum fee.

(3) A letter of agreement stating services, terms, and conditions that have been approved by the board shall be acceptable in lieu of the AIA B101- 2007 for projects with an estimated construction cost of less than $50,000.

(4) The division shall review and approve the proposed architect's contract based on the following criteria:

(a) Copy of the board action approving the terms of the proposed contract;

(b) Scope and fee conforms to Form BG-1; and

(5) The division shall advise the board of:

(a) Apparent deficiencies in completion of the contract;

(b) Discrepancies related to the scope of work and anticipated cost approved on the Form BG-1;

(d) Concerns regarding modifications to the contract.

(6) The architect shall:

(a) Provide on-site visitation and shall report on the construction project to the board;

(b) Certify, to the best of his ability, professional judgment, and with due diligence, that all phases of the project have been completed in conformance with the approved plans and specifications and any authorized changes by signing the BG-4 Project Closeout Form;

1. If the project is $1,000,000 or less, $500,000 per claim and $1,000,000 aggregate per annum; or

2. If the project exceeds $1,000,000, per claim and $2,000,000 aggregate per annum;

(d) Require his consultants to retain professional liability insurance in the minimum amount of $250,000 aggregate, except structural design and mechanical-electrical-plumbing consultants shall carry a minimum amount of $1,000,000 aggregate for projects $1,000,000 or less, and $2,000,000 aggregate for projects exceeding $1,000,000;

(e) Provide copies of certificates of insurance to the division;

(f) Assist in preparing the bid advertisement for the board;

(g) List projects estimated in excess of $1,000,000 with a minimum of two (2) Kentucky construction reporting services;

(h) Submit to the board a written report that includes a status of the project, dates and times architect was on site, conditions of the job, problems, delays, and concerns at least monthly after construction begins;

(i) Request payment of construction administration phase fee at the same proportionate percentage as the construction's completion;

(j) Request approval by the owner's representative for any reimbursement or additional service prior to the service being rendered or expenditure being made;

(k) If requesting reimbursements or additional service fees, provide a detailed listing of each charge on the payment request;

(l) Request additional payment for construction time or services extending beyond the scheduled completion date, if the additional costs were incurred through no fault of the architectural firm and are documented due to the delay of the contractor, subcontractors, material suppliers, or vendors;

(m) Utilize his consultants listed on the contract form for design, construction administration and observation of the work;

(n) Pay his consultants the same percentage proportion of their fee as he has received from the board;

(o) Pay his consultants eighty (80) percent of the architect's fee based on the construction cost of the consultant's work. If the architect's fee is a lump sum, the consultant shall receive the same proportionate amount;

(p) If a joint venture, list on the contract form the prime architectural firm accountable to the board and provide the board with a copy of the joint venture contract indicating each party's responsibilities and fees; and

(q) Provide independent contract administration over construction contracts awarded to the project's CM.

(7) The board shall provide oversight of the architectural services in the following manner:

(a) The architect's proposed contract shall be reviewed by the board's attorney for compliance with the law; and

(b) The board shall submit to the division for approval:

1. The proposed architect contract;

2. A copy of the board order approving the contract;

3. A narrative of the selection and evaluation process;

4. A copy of each certificate of required liability insurance; and

5. A copy of each KDE Non-Collusion Affidavit.

Section 5. Construction Management Services. (1) A CM shall not be employed on any project estimated at less than $2,000,000 or without the approval of the division if the number of work categories negate the need for full-time, on-site supervision for projects in excess of $2,000,000. The division may approve exceptions as follows:

(a) If the project is a phase of a phased project and the CM is to be employed on all subsequent phases; or

(b) If the project's complexity or fiscal soundness requires it.

(2) In hiring a CM, the board shall either advertise for CM services or select a minimum of three (3) construction management firms that shall be evaluated through the RFP process. Advertisement or RFP evaluation of three (3) firms shall not be required if the project is the continuation of phased construction at the same site.

(3) The board shall negotiate a contract using the following:

(a) Request for Proposals for Construction Management Services, if utilized;

(b) AIA Document B801/Cma Standard Form of Agreement Between Owner and Construction Manager, and the KDE Amendment to AIA B801/Cma-1992; or

(d) KDE Non-Collusion Affidavit;

(e) Projected number of months construction;

(f) On-site services fee per month; and

(g) Fee scale for additional construction cost and months.

(4) The number of months in the CM contract for the construction phase shall not be altered unless:

(a) There is a change in the scope of the work; and

(b) The owner, architect, and CM agree to the revised number of months during the evaluation of construction bids.

(5) The preconstruction phase payment shall be a maximum of ten (10) percent of the total proposed fee.

(6) The CM shall:

(a) Provide a 100 percent performance and payment bond prior to the construction contracts being executed by the board in the amount of the CM fee from an insurance firm authorized to do business in Kentucky and listed in and written within the terms and limits established in 31 C.F.R. 223;

(b) Provide professional liability insurance in the following minimum amounts:

1. Projects of $10,000,000 or less, insurance in the amount of $500,000; or

2. For projects in excess of $10,000,000, insurance in the amount of $1,000,000;

(d) Not transport any bidder's proposal to the bid opening;

(e) Complete a KDE Non-Collusion Affidavit relative to both the superintendent and local board members and the apparent low bidders;

(f) Request approval by the owner's representative for any reimbursement or additional service fee prior to the service being rendered or expenditure being made;

(g) If requesting reimbursements or additional service fees, provide a detailed listing of each charge on the payment request;

(h) Request additional payment for construction time or services extending beyond the scheduled completion date, by the additional costs were incurred through no fault of the construction management firm and are documented due to the delay of a contractor, material supplier, or vendor; and

(i) Request payment of the construction phase fee at the same proportionate percentage as the construction's completion.

(7) The board shall provide oversight of the CM services by:

(a) Retaining an attorney to:

1. Review the contract as negotiated to ensure compliance with the law;

2. Request modifications to the contract as needed; and

3. Sign the contract form attesting to review;

(b) Taking action approving the contract terms and conditions; and

1. A copy of proposed contract;

2. The board order;

3. A narrative of the selection and evaluation process;

4. The certificate of required liability insurance; and

5. The KDE Non-Collusion Affidavit.

(8) The CM contract shall be reviewed and approved by the division based on the following criteria:

(a) A copy of board order of approval;

(b) The fee is based on a lump sum amount or fee guideline established in the document titled Construction Manager Fee Guidelines;

(d) Submission of required forms is made in a timely fashion.

Section 6. Plans and Specifications. (1) After approval of the Form BG-1 application by the division, the division shall provide a procedural checklist to the board that indicates required submissions for the project.

(a) The architect shall prepare schematic plans of the proposed construction from written educational program specifications supplied by the board.

(b) The schematic plans and a copy of the educational program specifications, approved by board action with a copy of the minutes, shall be submitted by the board to the division for review and approval.

1. Site plan: proper siting of the building footprint provides appropriate access, vehicular and pedestrian circulation, separation of bus loading area from other vehicular traffic, parking, service, play and athletic areas, utility connections and drainage;

2. Floor plan: number, type, and size of the planned spaces, including support spaces, agree with the programmed spaces listed on the Form BG-1, the educational specifications, and are in compliance with 702 KAR 4:180 and 702 KAR 4:170;

3. Functional aspects: review of the distribution of functions, or program space and the appropriateness for the needs of the facility;

4. Compliance with the Model Program Space requirements established in 702 KAR 4:180, with the maximum gross area of:

a. An elementary school limited to 110 percent of the Total Gross Area of the Model Program Space; or

b. A middle or high school limited to 115 percent of the Total Gross Area of the Model Program Space;

5. Building efficiency: review of the percent of net program area to gross building area to meet or exceed the guidelines of 702 KAR 4:180; and

6. Budget: review of the estimated construction cost (gross area multiplied by the cost per square foot, plus site development costs) in relation to the Form BG-1 Total Construction Cost. If the estimated construction cost exceeds the Form BG-1 Total Construction Cost, an increase in the budget or a decrease in the physical scope of the project shall be approved by the board.

(2) After written approval of the schematic plans is received from the division, the architect shall prepare the design development plans.

(a) The board shall submit to the division for review and approval:

1. Design development plans;

2. Board order approving plans;

3. BG-2, Outline Specification; and

4. BG-3, Statement of Probably Cost.

(b) The division shall review and approve design development plans submittals based on:

1. Site plan: proper siting of the building with respect to vehicular and pedestrian circulation, separation of bus loading area, student play areas, athletic fields, utility construction and site drainage, with details appropriately developed;

2. Floor plan: number, type, and size of the planned spaces consistent with the schematic plan;

3. Enlarged plans and details: appropriate to describe the design intention;

4. Compliance with the Model Program Space requirements established in 702 KAR 4:180, with the maximum gross area of:

a. An elementary school limited to 110 percent of the Total Gross Area of the Model Program Space; or

b. A middle or high school limited to 115 percent of the Total Gross Area of the Model Program Space;

5. Building efficiency: the percent of net program area to gross building area meets or exceeds the guidelines of 702 KAR 4:180;

6. Budget: the Grand Total Cost on the Statement of Probable Cost, Form BG-3, is within the approved Form BG-1 Total Estimated Cost budget. If the Grand Total Cost exceeds the BG #1 Total Estimated Cost, an increase in the budget or a decrease in the physical scope of the project shall be approved by the board;

7. Form BG-2, Outline Specifications form is properly completed and conforms to the educational program specifications; and

8. Design development plans incorporate all previous schematic design review comments.

(3) After written approval of design development plans is received from the division, the completed plans and specifications and project manual shall be prepared by the architect and, if applicable, CM, for bidding.

(a) The board shall submit to the division for review and approval:

1. Completed plans and specifications and project manual;

2. Board order approving plans and specifications;

3. Revised BG-3, Statement of Probably Cost; and

4. Proof of submission of completed plans to other agencies having jurisdiction.

(b) The division shall review and approve the completed plans and specifications and project manual submittals based on:

1. Compliance with 702 KAR 4:170, with special concern to reduce change orders during construction;

2. Compliance with state law regarding the seal, signature, and date of the documents by architects and engineers;

3. Documents are of sufficient detail and complexity that they may be used:

a. To obtain a building permit;

b. As instruments in the competitive bidding process; and

c. By a general contractor to construct the project;

4. BG-3 Grand Total Cost does not exceed by ten (10) percent the approved Form BG-1 Total Estimated Cost budget;

5. Deed, certificate of title insurance to the property, deed of easements for all utilities, and proof of road and utility access for the project are filed with the division;

6. Proposed floor elevation is a minimum of one (1) foot above the 100-year flood plain elevation for new construction and no state funds are proposed for renovation below the 100-year flood plain elevation;

7. Construction documents include the following forms to the extent applicable with KDE amendments appropriate for general construction or construction management:

a. AIA Document A201-2007, General Conditions of the Contract for Construction;

b. KDE Amendment to AIA A201-2007;

c. AIA Document A201/CMa, General Conditions of the Contract for Construction, 1992 Construction Manager-Adviser Edition;

d. KDE Amendment to AIA A201/CMa-1992;

e. AIA Document A101-2007, Standard Form of Agreement Between Owner and Contractor;

f. KDE Amendment to AIA A101-2007;

g. AIA Document A101/CMa, Standard Form of Agreement Between Owner and Contractor, 1992 Construction Manager-Adviser edition;

h. KDE Amendment to AIA A101/CMa-1992;

i. AIA Document A701-1997, Instructions to Bidders;

j. KDE Amendment to AIA A701-1997;

k. KDE Form of Proposal;

l. AIA Document A310, Bid Bond;

m. AIA Document A312, Performance Bond and Payment Bond;

n. KDE Amendment to AIA A312-1984;

o. AIA G702-1992, Application and Certification for Payment;

p. AIA Document G702/CMa, Application and Certificate for Payment, 1992 Construction Manager-Adviser edition;

q. AIA Document G701-2000, Change Order;

r. KDE Change Order Supplemental Information Form;

s. AIA Document G701/CMa, Change Order, 1992 Construction Manager-Adviser edition;

t. AIA Document G704-2000, Certificate of Substantial Completion;

u. AIA Document G704/CMa, Certificate of Substantial Completion, 1992 Construction Manager-Adviser edition;

v. AIA Document G706, Contractor’s Affidavit of Payment of Debts and Claims;

w. AIA Document G706A, Contractor’s Affidavit of Release of Liens;

x. AIA Document G707, Consent of Surety to Final Payment; and

y. AIA Document G707A, Consent of Surety to Reduction in or Partial Release of Retainage;

8. A 100 percent performance and payment bond shall be required for any contract in excess of $25,000 and on all contracts using the CM process from an insurance firm authorized to do business in Kentucky. The insurance firm shall be listed in and the performance and payment bond shall be written within the terms and limits established by the United States Department of the Treasury, Financial Management Service, and available at http://fms.treas.gov/c570/c570.htm;

9. A contractor shall carry all insurance required by law and by contract to hold the board safe from loss until the project is completed or an occupancy permit is received by the board. Unless otherwise provided in the bidding documents, the board shall purchase and maintain property insurance written on a builder's risk "all-risk" or equivalent policy in the amount of the initial Total Construction Cost, plus value of subsequent contract modifications and the cost of materials supplied and installed by others, comprising total value for the entire project at the site on a replacement cost basis without optional deductibles; and

10. Notification of other state and local agencies having jurisdiction, including:

a. Department of Housing, Buildings and Construction;

b. Division of Building Codes Enforcement;

c. Division of Plumbing;

d. Division of Water;

e. Division of Air Quality;

f. Local health department; and

g. Local building inspector.

(4) The board shall receive written approval of the construction bidding documents and authorization to bid from the division prior to advertisement for bids.

(5) Performance specification procedures may be used by the board for proposed capital construction projects. The proposed performance specifications as prepared by the board shall be approved in writing by the division prior to advertisement for bids.

(6) Leases, lease purchases, or leases with an option to purchase by a board for fixed equipment, capital construction, or alterations to existing buildings and building systems shall require the submittal of plans and specifications and lease documents to the division for review and approval.

Section 7. Construction Bidding, Bond Sale, and Contracting. (1) A minimum of ten (10) working days prior to the scheduled bond sale date, the board shall submit to KDE for review and approval:

(a) To the division:

1. Each bid tabulation;

2. Bid security;

3. The proposal form for each successful bidder;

4. Each proposed contract or purchase order (unsigned);

5. The revised financial form (Form BG-1, page 3) to coincide with the proposed construction costs; and

6. The architect’s written recommendation regarding the awarding of the contract; and

(b) To the Division of District Operations, KDE:

1. Preliminary official statement;

2. Notice of bond sale;

3. Official terms and conditions; and

4. Plans of financing.

(2) If the submitted documents are not in an approvable form at least five (5) working days before the scheduled bond sale, the sale date shall be postponed.

(3) The board shall contract with a fiscal agent to assist in meeting all reporting, filing, and selling requirements for securing the financial approval of KDE when school revenue bonds are proposed for sale.

(4)(a) Bids for school revenue bond sales shall be received in Frankfort, Kentucky, at:

1. Kentucky Department of Education, Office of District Support Services, 15th Floor, Capital Plaza Tower; or

2. SFCC, 229 W. Main St., Suite 102, Frankfort, Kentucky 40601, if SFCC funds are involved.

(b) A KDE or SFCC staff member shall be present to receive the bids.

(c) Bids shall be delivered by mail, in person, by telephone, electronically or by facsimile (fax) machine. If the apparent winning bid is telephoned, the bid shall be reaffirmed by fax within thirty (30) minutes after the bid opening.

(5) The division shall approve a proposed construction contract based on:

(a) Submission of tabulation of bids, form of proposal, bid security and proposed contract;

(b) The board order indicating that the low bid was accepted or written justification if other than the low bid is proposed;

(d) The form of proposal is completed in accordance with the instructions to bidders.

(6)(a) Any discrepancies between the proposed contract and bidding documents shall be remedied prior to approval.

(b) The board's desire to waive irregularities and informalities as to a bid shall be reviewed and final judgment made by the division prior to approval of the contract and financing plan.

(c) Approval of the proposed contract by the division shall not indicate the contract is the best or the most reasonable.

(7) The Division of District Operations, KDE, shall issue the final approval for the financing plan, authorize the bond sale, and prepare the approval letter for the chief state school officer or his or her designee.

(8) A negotiation of the bid price shall not be allowed, except in accordance with KRS 45A.375 for those districts under the Model Procurement Code.

(9) Construction account expenditures that are subject to bidding shall be approved by the division, except for expenditures for moveable equipment.

(10) The board shall submit to the division:

(a) A copy of each executed contract and purchase order;

(b) Each insurance certificate and a copy of the property insurance policy; and

Section 8. Contract Change Orders. (1)(a) All change orders shall be submitted to the division, and shall be accompanied with the following:

1. Copy of local board action approving the change order;

2. Properly completed KDE Change Order Supplemental Information Form; and

3. Cost breakdown which separates labor, material, profit and overhead. If unit prices are utilized, this cost breakdown shall not be necessary.

(b) Changes in the contract which do not substantially alter the nature of the contract, or may be regarded as incidental to or which relate to an integral part of the original contract and specifications, may be approved by the division.

(c) A copy of any change order using the forms AIA Document G701-2000 or AIA Document G701/CMa issued in connection with the project shall be signed by the appropriate parties as a recommendation and shall be subject to approval by the board.

(2) Any additive or deductive change order proposal in excess of $7,500 shall be subject to approval by the division prior to execution.

(3) Approval of proposed change orders over $7,500 shall be based upon:

(a) Completed supplemental information form, board order, and cost breakdown;

(b) Cost calculated according to contract unit prices or alternative method with documentation provided to support cost;

(d) Cumulative cost of contract and all change orders are within the approved budget.

(4) The division approval shall not indicate the change order cost is the best cost or the requested change order is the most appropriate action.

Section 9. Construction Contract Retainage. (1)(a) The board shall retain ten (10) percent from each application for payment up to fifty (50) percent completion of the work. If the work is on schedule and satisfactory, and upon written request of the contractor together with written consent of surety and the recommendation of the architect, the board shall approve a reduction in retainage to five (5) percent of the current contract sum.

(b) No part of the five (5) percent retainage shall be paid until after substantial completion of the work, as defined in AIA A201-2007, General Conditions of the Contract for Construction, and the KDE Amendment to AIA A201-2007.

(c) After substantial completion of the work, if reasons for reduction of the retainage are certified in writing by the architect, a reduction to a lump sum amount less than the five (5) percent retainage shall be approved by the board. The minimum lump sum retainage shall be twice the estimated cost to correct the deficient or incomplete work.

(2) The investment earnings resulting from any agreement entered into by a board involving the construction account, including the construction contract retainage for an approved project, shall be invested in such a manner that any additional income from the investment shall accrue only to the board.

Section 10. Construction Dispute Resolution. (1) Unresolved claims between parties arising out of or relating to any contract subject to this administrative regulation shall not utilize arbitration or the American Arbitration Association unless agreed to by all parties.

(2) Prior to the initiation of legal proceedings, unresolved claims arising out of or relating to any contract shall be subject to mediation, which shall be in accordance with the Construction Industry Mediation Procedures of the American Arbitration Association in effect on the date of the contract and, if the parties fail to resolve their disputes through mediation, to binding dispute resolution.

(3) Mediation may be initiated by written request filed by any party.

Section 11. Construction Contract Closeout Process. (1) The architect shall furnish the board a completed BG-4, Project Closeout Form, with applicable information requesting final approval.

(2) If the board agrees the construction contract is complete, it shall approve the BG #4 and forward it to the division for review and approval.

Section 12. Penalties for Malfeasance or Nonfeasance. (1) A determination by the board or the division of malfeasance or nonfeasance by the architect or CM shall be forwarded to the chief state school officer.

(2) The chief state school officer may make a recommendation to the KBE to determine that the offending firm is ineligible to provide professional services on school construction projects for a period not to exceed five (5) years.

(3) The KBE may prescribe alternative penalties.

(4) If the principals of the offending firm become associated with another firm during the penalty period, upon recommendation by the chief state school officer, the KBE may determine that the penalty invoked shall also apply to that firm.

Section 13. Incorporation By Reference. (1) The following material is incorporated by reference:

(a) BG-1, Project Application Form, 2008;

(b) Non-Collusion Affidavit, December 2008;

(d) Architect/Engineer Fee Guidelines, May 1993;

(e) AIA Document B101–2007, Standard Form of Agreement Between Owner and Architect;

(f) KDE Amendment to AIA B101-2007, December 2008;

(g) AIA Document B141/CMa, Standard Form of Agreement Between Owner and Architect, 1992 Construction Manager-Adviser Edition;

(h) KDE Amendment to AIA B141/CMa-1992, May 1993;

(i) Request for Proposals for Construction Management Services, May 1993;

(j) AIA Document B801/CMa, Standard Form of Agreement Between Owner and Construction Manager, 1992 edition;

(k) KDE Amendment to AIA B801/CMa-1992, May 1993;

(l) AIA Document A201-2007, General Conditions of the Contract for Construction;

(m) KDE Amendment to AIA A201-2007, December 2008;

(n) AIA Document A201/CMa, General Conditions of the Contract for Construction, 1992 Construction Manager-Adviser Edition;

(o) KDE Amendment to AIA A201/CMa-1992, May 1993;

(p) AIA Document A101-2007, Standard Form of Agreement Between Owner and Contractor;

(q) KDE Amendment to AIA A101-2007, December 2008;

(r) AIA Document A101/CMa, Standard Form of Agreement Between Owner and Contractor, 1992 Construction Manager-Adviser edition;

(s) KDE Amendment to AIA A101/CMa-1992, May 1993;

(t) AIA Document A701-1997, Instructions to Bidders;

(u) KDE Amendment to AIA A701-1997, April 2000;

(v) KDE Form of Proposal, April 2000;

(w) AIA Document A310, Bid Bond, 1970;

(x) AIA Document A312, Performance Bond and Payment Bond, 1984;

(y) KDE Amendment to AIA A312-1984, May 1993;

(z) KDE Purchase Order, May 1993;

(aa) KDE Material Supplier Authorization, May 1993;

(bb) AIA Document G702/CMa, Application and Certificate for Payment, 1992 Construction Manager-Adviser edition;

(cc) KDE Change Order Supplemental Information Form, April 2000;

(dd) AIA Document G701-2000, Change Order;

(ee) AIA Document G701/CMa, Change Order, 1992 Construction Manager-Adviser edition;

(ff) AIA Document G704-2000, Certificate of Substantial Completion;

(gg) AIA Document G704/CMa, Certificate of Substantial Completion, 1992 Construction Manager-Adviser edition;

(hh) AIA Document G706, Contractor’s Affidavit of Payment of Debts and Claims, 1994;

(ii) AIA Document G706A, Contractor’s Affidavit of Release of Liens, 1994;

(jj) AIA Document G707, Consent of Surety to Final Payment, 1994;

(kk) AIA Document G707A, Consent of Surety to Reduction in or Partial Release of Retainage, 1994.

(ll) KDE CM Fee Guideline, May 1993;

(mm) BG #2, 2008, Outline Specifications;

(nn) BG #3, 2008, Statement of Probable Construction Cost;

(oo) AIA G702-1992, Application and Certificate for Payment; and

(pp) BG #4, 2008, Project Closeout Form.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Division of Facilities Management, Department of Education, 15th Floor, Capital Plaza Tower, 500 Mero Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.

(3) The AIA documents may be purchased from the American Institute of Architects by calling 1-800-365-2724. (20 Ky.R. 1732; Am. 2626; eff. 3-9-94; 21 Ky.R. 1784; eff. 3-2-95; 27 Ky.R. 848; 1254; eff. 11-17-2000; 35 Ky.R. 2142; 36 Ky.R. 56; eff. 7-13-2009.)