[co-author: Anthony Sugar]
Overview
The Ohio General Assembly made several changes to Ohio law that will impact public construction projects through House Bill 96 (“HB 96”), which is the state’s biennial operating budget. The new law becomes effective on September 30, 2025. The changes range from streamlined construction manager at risk (“CMR”) and design-build procurements for projects under $4 million to updated retainage requirements. Below are highlights of some of the key changes in HB 96 that impact public construction in Ohio.
Streamlined CMR and Design-Build Selection for Projects Under $4 Million
Ohio Revised Code (“RC”) Section 9.334 introduces a simplified procurement process for a CMR for projects under $4 million. Under this new process, a public authority may request both a qualifications statement and a pricing proposal at the outset. Public authorities must hold a pre-proposal meeting to provide detailed project information and potential technical approaches. An initial ranking of CMRs must be performed by the public authority based on qualifications. Then once this shortlist is chosen, the authority evaluates pricing proposals from the selected firms and continues the best value ranking/selection process accordingly.
Similar to the CMR delivery model, a streamlined process was added in RC Section 153.693 for small design-build (DB) projects under $4 million, allowing public authorities to require both a statement of qualifications and a pricing proposal up front. A pre-proposal meeting is required to help firms understand the project scope and expectations. An initial ranking of DB firms must be performed by the public authority based on qualifications. After this shortlist is selected, the public authority evaluates pricing proposals and continues the best value ranking/selection process.
Updated Public Improvement Notice Requirements
The General Assembly updated the public notice requirement for procurement of a construction manager (“CM”) and CMR in RC Section 9.331 by making electronic notice mandatory and permitting additional notice through any news media available in the county, rather than limiting notice to a newspaper of general circulation. In addition, the minimum publication period for the CM and CMR notices has been shortened from 30 to 14 calendar days before the proposal deadline.
Additionally, the Generally Assembly updated public notice statute in RC Section 153.07, which applies to state and Ohio Facilities Construction Commission (OFCC) projects. It now requires public bid notices to be published electronically at least 14 days before the bid opening with the option to additionally publish through other news media, replacing the old requirement for print publication in newspapers for three weeks. Copies of the plans, details, estimates of cost, and specifications must be made available electronically and open for public inspection during regular business hours up to the bid opening. Additionally, if a contract is not awarded to the lowest responsive and responsible bidder, the state and OFCC may now re-advertise for bids using electronic media, instead of being limited to newspaper ads under RC Section 153.09.
Under RC Section 9.312, where the standard of award for a project undertaken by any state agency or political subdivision is “lowest responsive and responsible” except for contracts awarded by the Ohio Department of Administrative Services under RC Section 125.11, apparent low bidders found not to be responsive and responsible will now be required to be primarily notified by an internet identifier (e-mail) associated with the bidder and only by certified mail if no internet identifier of record is available. This minor procedural change adjusts the notification requirement from a certified mail notification to an e-mail notification.
Revised Retainage and Elimination of Escrow Requirements
Contractors performing public work must now receive partial payments of not less than 96% of their approved labor estimates throughout the project (rather than 92% through the first 50% of the completed work and 100% payment thereafter) under RC Section 153.12. Additionally, subcontractors can no longer be paid at a lower rate than the contractor receives from the public authority. Retainage on material is unchanged and remains at 92% of the cost of the material delivered to the site or other approved storage area until the material is incorporated into the project at which point the balance cost is due.
In RC Section 153.13, retainage is now required to be released “within thirty days of substantial completion of, occupation of, use of, or acceptance of the project.” Reasonably necessary amounts can be withheld to assure final completion of the project. Any remaining withheld funds and accrued interest must be paid to the primary contractor within 30 days of final completion.
Finally, the escrow requirements in the retainage provisions in RC Sections 153.13 and 153.14 were deleted.
Certain Affirmative Action Requirements Changed
HB 96 removes the requirements in RC Section 153.59 that capital improvement funds be spent only on projects with an affirmative action plan for hiring disadvantaged persons. Under RC Section 153.08, a bidder is no longer required to possess a valid certificate of compliance with affirmative action programs pursuant to RC Section 9.47.
The revised law in RC Section 153.502 no longer allows public authorities to eliminate a CMR or DB subcontractor bidder as unqualified based upon failure to participate in an affirmative action, diversity, equity, or inclusion program, unless permitted under a specific exception in RC Section 307.921. However, this change does not affect existing set-aside programs for minority-owned or EDGE-certified business enterprises as defined in RC Sections 122.921 and 122.922.
Clarified Rules for Self-Performance by CMR and Design-Build Firms
RC Section 153.501 was amended to clarify that if a construction manager or design-builder plans to self-perform work, they must submit a sealed bid to the public authority prior to accepting and opening any bids for that portion of work, unless the public authority requests a guaranteed maximum price proposal due at the time of CMR/DB selection. Previously the statute was silent as to who the sealed bid was to be submitted for self-performed work prior to accepting other bids for the same work.
Electronic Bid Guaranty Option Added
If the state or any political subdivision accepts bids electronically pursuant to RC Section 153.08, a third option was added to RC Section 153.54 for bid guaranties. Contractors can now submit an electronic verification through a recognized electronic verification and security system as described in ORC Section 153.08, but only if the public authority accepts bids electronically pursuant to RC Section 153.08.
New Building Information Model (“BIM”) Option for State and OFCC Projects
RC Section 153.01 now allows the state and the OFCC to require their architects or engineers to use a BIM system when they prepare plans, specs, cost estimates, analyses, or any other project data. The BIM system must follow a nationally recognized standard.
Public Records Law Pertaining to Procurements Updated
RC Section 9.28 was revised to clarify that all materials relating to a solicitation through a competitive selection are not public records until after the award of the contract. In addition, where a public authority rejects all bids or proposals and concurrently announces the intent to re-issue the competitive solicitation, the original submittals as well as the submissions in response to the re-procurement are not considered public records until the award of a contract.
Clarifies Bidding Requirements for Public School Construction
RC Section 3313.46 was amended to clarify that contractor bidding requirements for a board of education of a school district apply not to just a “school building”, but to “any building or other property” that the board wants “to build, repair, enlarge, improve, or demolish” if the cost is over the amount specified in RC Section 9.17, ($77,250 for the 2025 calendar year) and no other exception applies.
Key Takeaway
Overall, the changes in HB 96 for public entities undertaking construction projects are likely the most significant updates to construction law since the major construction reform legislation in 2011 and 2012. Public entities should consult with legal counsel to ensure compliance with the new requirements.
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