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Davis Brown Construction Law Blog

Competitive Bidding Requirements for Certain Lease-Purchase Projects - May 30, 2018

House File 2253 is an Act making amendments to various Chapters of Iowa regarding competitive bidding requirements for certain lease-purchase construction projects. This bill was signed into law over objections from most construction associations. Many have stated that this bill was introduced in response to Linn County supervisors’ use of a lease-purchase agreement, rather than a traditional competitive-bidding process on a public health building.

Under this Act, similar amendments were made to Chapters 8 (state agencies), 26 (public construction), 260C (community colleges), 262 (Board of Regents), 278 (public schools), 298 (public school corporation), 331 (counties), and 364 (cities) of the Iowa Code.

In short, the law provides that a contract for construction by a private party of property to be lease-purchased by a state agency, city, county or other governmental entity is, in fact , a contract for a public improvement as defined in section 26.2, and thus, “if the estimated cost of the property to be lease-purchased that is renovated, repaired, or involves new construction exceeds the competitive bid threshold in section 26.3, the [governmental] agency shall comply with the competitive bidding requirements under Iowa Code Chapter 26.”

Likewise, the law amends the definition of “public improvement” to mean: “any building or construction work which is constructed under the control of a governmental entity and for which either of the following applies: (1) Has been paid for in whole or in part with funds of the governmental entity, [or] (2) A commitment has been made prior to construction by the governmental entity to pay for the building or construction work in whole or in part with funds of the governmental entity.” Numerous exclusions continue to exist in the law for certain types of projects. The law also clarifies that “under the control of a governmental entity” includes “determining the construction work to be performed or establishing the specifications for a building or construction work to be occupied by the governmental entity.”

If you have questions, do not hesitate to give me a call.

Jodie McDougal