HVAC Projects Using ESSER Funds
By Eric E. Muñoz, Shareholder
Many school districts are utilizing ESSER III funds for HVAC projects. This is a good opportunity to look at common issues that can arise in the procurement process for these projects.
I’ve secured the funds. What’s next?
Design
After securing funding, the first step is to get your project designed. Hiring a licensed and qualified design professional (i.e., architect or engineer) can be both a practical and a legal requirement. On the practical side, having a qualified designer protects the district’s investment. It ensures that the District is relying on a qualified professional to specify the necessary and appropriate equipment, as well as the work that is involved in installing the equipment. An improper design job can lead to substantial problems down the road: roof leaks, incompatible components, cost overruns, etc.
On the legal side, the Engineering Practice Act requires that a district hire a licensed engineer for any project that involves electrical or mechanical engineering and is over $8,000.[1] The district must have the engineer prepare the plans/specifications and oversee the construction. Also, the statute that governs Competitive Sealed Proposals (a typical delivery method for this type of project), requires that a school district select an architect or engineer to prepare construction documents for the project. Finally, if you opt to purchase through a purchasing cooperative and your project exceeds $50,000, state law requires that the school district have someone certify that the plans/specs either (1) were prepared by a licensed designer, or (2) did not require the services of a licensed designer.
Remember that Texas law prohibits selecting an architect/engineer on the basis of price. The selection must be made on the basis of “demonstrated competence and qualifications.” Only after making a selection on the basis of qualifications may you ask for a price and begin negotiating price. If you cannot agree on a price, you must formally (in writing) end negotiations and move on to the next-highest-ranked entity.
Construction
Assuming your project will exceed $50,000, the next steps will, for the most part, mirror those of a typical construction project. You must use one of the “delivery methods” prescribed by statute.[2] For this type of project, the Competitive Sealed Proposals method is common. Remember that your board of trustees must formally select the delivery method.[3] The board must also do the following:
- Adopt the prevailing wage schedule that will apply to the project;
- Adopt a building code (if necessary);
- Formally delegate authority (if so desired) for certain steps along the way (e.g., ranking proposals, entering negotiations, etc.); and
- Approve the selection criteria and relative weights to be used (recommended).
After the necessary actions by the board, your designer will help you prepare a procurement document (i.e., a Request for Proposals (“RFP”) if using the CSP process). The project must be advertised in a local newspaper once a week for at least two weeks before the deadline. The district will then rank all proposals using the selection criteria and relative weights that were published in the RFP. The district may then negotiate with the top-ranked proposer (only) and attempt to agree on a contract. If you agree on a contract, then your project is off and running. If you cannot agree on a contract with the top-ranked proposer, you may formally (in writing) terminate negotiations and move on to the next-ranked proposer.
Federal Regulations
The federal component will require that school districts comply with both Texas law and federal regulations and follow the most restrictive rule or regulation in making procurements using ESSER funds. For example, the competitive-procurement statutes in Texas generally kick in at $50,000. But federal regulations impose requirements for amounts below the Texas threshold. The pendulum swings back at the $50,000 level, where Texas imposes stronger requirements than the federal regulations…but only up to the $250,000 level. At that amount and beyond, federal regulations impose requirements above and beyond those of Texas law, specifically requiring a cost/price analysis and independent estimates.
In addition, federal regulations require certain contract provisions be added to all contracts. For example, the regulations require that the federal Davis-Bacon (prevailing wage) law be made applicable to the contract. While Texas law requires payment of prevailing wages in accordance with a schedule adopted by the board of trustees, the federal statute and regulations impose additional requirements, such as certified payrolls, etc.
Conclusion
This article contains a general discussion of the issues we commonly discuss with clients. If you run into a specific issue, or need to discuss any item referenced above, we are more than happy to help.
Trainings
Legal Issues for School Secretaries
October 2021
Title IX Administrator Conference
October 2021
Design Phase Webinar Series
October 2021
Materials
Trustee Manual Set – 2021 Edition
Conducting Effective Investigations Manual
[1] Note that the threshold for projects that do not involve electrical/mechanical engineering is $20,000.
[2] The generally allowable delivery methods are the following: Competitive Bidding, Competitive Sealed Proposals, Construction Manager—at Risk, Construction Manager—Agent, Design-Build, and Job Order Contracts. Two important caveats: (1) the Job Order method is only allowed for recurring work where the type/quantity of the work is indefinite; thus, this method is not allowed for a specific project such as the installation of an HVAC system; and (2) Federal guidelines for use of ESSER funds may restrict use of certain delivery methods (e.g., cost-plus contracts are generally not allowed; also, purchasing cooperatives must meet federal requirements).
[3] If the board wants to use the Competitive Bidding method, it does not need to take separate action.