DAR File No. 27610

Administrative Services, Facilities Construction and Management

R23-4

Suspension/Debarment and Contract Performance Review Committee

NOTICE OF PROPOSED RULE

DAR File No.: 27610
Filed: 12/23/2004, 03:18
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

In the 2004 general session, the Legislature passed H.B. 217. This removed provisions in Subsection 63A-5-208(6) relative to a Contract Performance Review Committee and required the Division of Facilities Construction and Management (DFCM) to develop rules for a new dispute resolution process. The rules for the new process are being filed in a separate filing as Rule R23-26. This amendment removes the current provisions for the Contract Performance Review Committee. It also provides for two additional causes for suspension/debarment that were requested by the construction industry during the development of the new dispute resolution process. (DAR NOTES: H.B. 217 is found at UT L 2004 Ch 347, and was effective 05/03/2004. The proposed new rule of R23-26 is under DAR No. 27614 in this issue.)

Summary of the rule or change:

The changes include: 1) removing the provisions relative to the Contract Performance Review Committee; 2) adding two causes for suspension/debarment: a) a pattern and practice by a state contractor to not properly pay its subcontractors, and b) a pattern and practice by a subcontractor to not honor its bids or proposals; and 3) some minor clarifications of other provisions.

State statutory or constitutional authorization for this rule:

Subsections 63A-5-208(6), 63A-5-103(1)(e), and 63-56-14(2)

Anticipated cost or savings to:

the state budget:

The Contract Performance Review Committee was appointed on an ad hoc basis to address individual disputes. The new process will replace this with the use of expert panels which will carry costs that are similar to the Review Committee. The cost of both approaches is not charged to state operating budgets. It is generally shared among the parties to the dispute with the State's share being a cost of the project that has the dispute. The new process is expected to resolve disputes more efficiently which will result in some savings in the projects that do have disputes. The amount of savings will vary and cannot be estimated.

local governments:

This rule does not affect local government. Therefore, there is no anticipated cost or savings to local government.

other persons:

The Contract Performance Review Committee was appointed on an ad hoc basis to address individual disputes. The new process will replace this with the use of expert panels which will carry costs that are similar to the Review Committee. The cost of both approaches is generally shared amont the parties to the dispute. The new process is expected to resolve disputes more efficiently which will result in some savings to persons that do have disputes. The amount of savings will vary and cannot be estimated.

Compliance costs for affected persons:

The Contract Performance Review Committee was an Alternative Dispute Resolution (ADR) process that provided an alternative to using litigation to resolve disputes. The new process identified in the proposed Rule R23-26 is also an ADR process. It is a better defined process that is expected to resolve disputes more efficiently than the old process. Both ADR processes are substantially less expensive to persons involved with disputes than the alternative of litigation. The costs and benefits will depend on the individual circumstances of the dispute and cannot be estimated.

Comments by the department head on the fiscal impact the rule may have on businesses:

The primary purpose of this amendment, in association with the filing of the new Rule R23-26, is to provide a more efficient and effective alternative dispute resolution process that will result in the resolution of disputes in a more timely and cost effective manner. This will provide a positive fiscal impact on businesses that may be party to a dispute with DFCM. The amount of this impact will depend on the individual circumstances of the dispute.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Kenneth Nye at the above address, by phone at 801-538-3284, by FAX at 801-538-3267, or by Internet E-mail at knye@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

02/14/2005

This rule may become effective on:

02/15/2005

Authorized by:

Keith Stepan, Director

RULE TEXT

R23. Administrative Services, Facilities Construction and Management.

R23-4. Suspension/Debarment[ and Contract Performance Review Committee].

R23-4-1. Purpose and Authority.

(1) This rule sets forth the [requirements regarding the Contract Performance Review Committee as well as ]the basis and guidelines for suspension or debarment from consideration for award of contracts by the division.

(2) This rule is authorized under [Subsection 63A-5-208(6), which allows for the creation of a contract Performance Review Committee, ]Subsection 63A-5-103(1), which directs the Building Board to make rules necessary for the discharge of the duties of the Division of Facilities Construction and Management, and Subsection 63-56-14(2), which authorizes the Building Board to make rules regarding the procurement of construction, architect-engineering services, and leases.

R23-4-2. Definitions.

[(1) "Committee" means a contract performance review committee established pursuant to Subsection 63A-5-208(6).

(2)](1) "Director" means the director of the division, including, unless otherwise stated, his duly authorized designee.

[(3)](2) "Division" means the Division of Facilities Construction and Management established pursuant to Section 63A-5-201.

[(4)](3) "Person" [means any business, individual, union, committee, other organization, or group of individuals, not including a state agency]shall have the meaning provided in Section 63-56-5.

R23-4-3. Suspended and Debarred Persons Not Eligible for Consideration of Award.

No person who has been suspended or debarred by the division, will be allowed to bid or otherwise solicit work on division contracts until they have successfully completed the suspension or debarment period.

R23-4-4. Causes for Suspension/Debarment and Procedure.

(1)(a) The causes for debarment and procedures for suspension/debarment are found in Sections 63-56-48 through 63-56-50, as well as Section 63A-5-208(8)[,].

(b) Pursuant to subsection 63-56-48(2)(e), a pattern and practice by a state contractor to not properly pay its subcontractors may be determined by the Director to be so serious and compelling as to affect responsibility as a state contractor and therefore may be a cause for debarment.

(c) A pattern and practice by a subcontractor to not honor its bids or proposals may be a cause for debarment.

(2) The procedures for suspension/debarment are as follows:

(a) The director, after consultation with the using agency and the Attorney General, may suspend a person from consideration for award of contracts for a period not to exceed three months if there is probable cause to believe that the person has engaged in any activity which may lead to debarment. If an indictment has been issued for an offense which would be a cause for debarment, the suspension, at the request of the Attorney General, shall remain in effect until after the trial of the suspended person.

(b) The person involved in the suspension and possible debarment shall be given written notice of the division's intention to initiate a debarment proceeding. The using agency and the Attorney General will be consulted by the director and may attend any hearing.

(c) The person involved in the suspension and debarment will be provided the opportunity for a hearing where he may present relevant evidence and testimony. The director may establish a reasonable time limit for the hearing.

(d) The director, following the hearing on suspension and debarment shall promptly issue a written decision, if it is not settled by written agreement.

(e) The written decision shall state the specific reasons for the action taken, inform the person of his right to judicial or administrative review, and shall be mailed or delivered to the suspended or debarred person.

(f) The debarment shall be for a period as set by the Director, but shall not exceed three years.

(g) Notwithstanding any part of this rule, the Director may appoint a person or person(s) to review the issues regarding the suspension or debarment as a recommending authority to the Director.

[R23-4-5. Contract Performance Review Committee.

The Director may establish a Committee that shall be subject to the following:

(1) The Committee shall adjudicate complaints about contractor, subcontractor, and supplier performance by following the procedures of of this rule and applicable statute;

(2) The Committee shall, when appropriate, impose suspensions or debarments from bidding on state building contracts on contractors, subcontractors, and suppliers for cause; and

(3) The Director may request the Committee to hear other matters, such as any properly filed contract claims against the Division, issues regarding terminations of contracts or defective work, and any other matters that the Director determines will assist the Division in carrying out its responsibilities.

(4) In regard to (1) and (2) above, the Committee is acting as the chief procurement officer or the head of a purchasing agency for purposes of Section 63-56-48.

(5) In regard to (3) above, the Committee is acting as a recommending authority to the Director.

(6) The Committee shall consist of three members selected by the Director. At least two of the three members shall have expertise with the type of issues that are likely to appear before the Committee and they shall not be a member of any State Board or part of any state agency. One of the three members may be an employee or officer of a client agency that is not involved with the specific subject matter and person being reviewed.

(7) The Committee shall, to the extent permitted by law, compel the attendance of any witnesses or production of documents.

(8) The Committee shall meet at such times as designated by the Director.

(9) The Committee shall issue all decisions or recommendations in writing with a brief description of the grounds for the decision.

(10) Any member of the Committee that has a conflict of interest or appearance of impropriety shall not participate in the matter related thereto, and the director shall appoint a replacement member for the committee. The person being reviewed has a duty to promptly raise any objections regarding conflict of interest or appearance of impropriety and the Committee member may not participate further if the director or the committee determines that the person being reviewed has raised a reasonable and lawful objection.

(11) Members of the Committee shall not have any communication with the parties regarding the subject matter to be considered by the Committee unless such communication is within the context of the official proceedings, except as approved in advance by the Committee and where such communication is disclosed in the official proceedings.

(12) The Director may adopt policies regarding the Committee that are not inconsistent with this Rule.]

KEY: contracts, construction, construction disputes[*]

[February 4, 2003]2005

Notice of Continuation January 15, 2003

63A-5-103 et seq.

63-56-5

63-56-48

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Kenneth Nye at the above address, by phone at 801-538-3284, by FAX at 801-538-3267, or by Internet E-mail at knye@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.