Recipients of a grant under the Oregon School Capital Improvement Matching Program (OSCIM Program) must enter into a Grant Agreement with the State of Oregon. The Agreement includes several items that directly relate to the construction contracting process.

First, the Agreement requires the recipient of a grant to complete its construction project in “accordance with the Project plans, specifications and budget and, if applicable, to contract with competent, properly licensed and bonded contractors and professionals in accordance with the Oregon Public Contracting Code and all other applicable federal, state and local laws regulating projects of the same type and purpose.” This is pretty straightforward.

The Agreement also has a requirement that relates specifically to the plans and specifications: “If applicable, Grantee agrees to have plans and specifications for the Project prepared by a licensed architect or licensed engineer and to require that the Project meets applicable standards of survival in good condition.” That also is pretty straightforward; any plans and specifications should be prepared by licensed professionals and should be capable of withstanding naturally occurring events such as earthquakes.

The Agreement requires the general contractor to have a performance and payment bond in place until one year after the completion of construction “for the faithful performance and payment of all of the contractor’s obligations for the total cost of the Project.” This bonding requirement should be incorporated into the construction documents up front.

The recipient itself is required to “operate and maintain the Project in good repair and operating condition so as to preserve the public education benefits of the Project, including making all necessary and proper repairs, replacements, additions, and improvements.”

Finally, the Agreement requires lengthy record-keeping. Under the Agreement, the recipient is to keep all “books, documents, papers, and records that are directly related” to the grant and the project until three years after the bonds have matured or been retired.

Application forms, deadlines and additional information about the OSCIM Program, including a draft copy of the grant Agreement, can be found here. Michael Elliott, School Finance and School Facilities Program Analyst, is also available to answer questions about the OSCIM Program requirements.

School districts across Oregon have access to several types of state-funded grants. Two of these grant programs are administered by the Office of School Facilities (created by the Oregon Legislature in 2015): the Oregon School Capital Improvement Matching Program (OSCIM Program), and the Technical Assistance Program (TAP).

The OSCIM Program is the largest grant program for school construction and repairs. The OSCIM grants are “matching” grants intended to incentivize local voters to vote for school construction general obligation bonds. The funding for this program is split into two different funds. The first fund contains 60% of the money and is awarded to districts that have passed a bond, based on the Priority List established by the Office of School Facilities. The second fund contains 40% of the money and is awarded to districts that pass a local bond, based on a First in Time program.

Essentially, the OSCIM Program funds will match a local district’s local bond one-to-one up to $4 million, or the amount approved in the bond, whichever is less. After the $4 million, the Program may match a district’s local bond between $4 million and $8 million depending on the funding formula.

Since its inception, the OSCIM Program has awarded $125 million in grants. According to Michael Elliott, the School Facilities Coordinator, the OSCIM program “is providing safe and healthy schools to all of Oregon’s children by matching state dollars with local funds.” This year, Mr. Elliott reports that legislature has approved another $100 million in grant money spread out over the next two years. Twenty-five million dollars is available for each of the election cycles of November 2017, May 2018, November 2018, and May 2019.

In addition to the OSCIM Program, the Office of School Facilities manages the TAP. There are three types of grants under this program: (1) a facilities assessment grant, with a maximum award of $20,000; (2) a long-range facility plan grant with a maximum award of $25,000; and (3) a seismic assessment grant with a maximum award of $25,000.

Application forms, deadlines and additional information can be found at the Office of School Facilities link through the Department of Education’s website. Michael Elliott is also available to answer questions about these programs.

A third grant program also provides money for school construction and repairs. This is the Seismic Rehabilitation Grant Program (SRGP). This program is available through Business Oregon, an Oregon state agency. The SRGP is a competitive grant program that funds seismic rehabilitation. It is available to public K-12 school districts, community colleges, and education service districts.

The grants can be used to pay for improvements to existing structures, for architecture and engineering, and for project management. However, the grants cannot be used for buildings in a Tsunami Inundation Zone or for solely “non-structural” projects.

More information on the seismic rehabilitation grants can be found on the Business Oregon website. For those interested in applying for these grants now, there is training in Salem on September 14.

Many school districts are moving forward with capital projects large and small in the coming months. At both ends of the spectrum, many districts are hoping to gain financial and logistical benefits by engaging construction managers / general contractors (“CM/GC”) early in the process. This is a great time to discuss some good practices to keep in mind with these types of projects.

Procurement

If the district is involved in the procurement phase of a CM/GC process, you must keep in mind that different rules apply than in the traditional design-bid-build phase. First and foremost, the district should make sure to follow the requirements of Oregon Revised Statute (ORS) 279C.337 to the letter. This statute requires that the school district conduct certain investigations, and that the school board make certain express findings on the record, in order to prepare a CM/GC request for proposals for publication. These include establishing criteria for evaluating proposals, identifying the anticipated savings and efficiencies from employing the CM/GC process, and confirming the rules that the district will follow in the process.

Next, the district should familiarize itself with the model rules adopted by the Attorney General under ORS 279A.065. The district should confirm the rules under Oregon Administrative Rules (OAR) 137-049-0600 and following. Here, there is little room for improvisation. Generally, the district should simply make sure to work its way through all of the detailed requirements of the statutes and rules, and ensure compliance.

Contract stage

After a provider is identified, the district has greater leeway to customize the terms of the work and the relationship between the construction manager / general contractor, as well as the rest of the project team, which may consist of the district, and owner’s representative, an architect, and perhaps other professionals. Here, the district’s priority should be to clearly delineate the responsibilities of each party, and the specific cycle for a project. By taking the time to negotiate a workflow among all of the project team members who guide design and planning squarely through the process, from one professional to the next and back again through the cycle, the district will make sure no party steps on another party’s toes. This not only ensures the orderly flow of feedback and integration into the next iteration of the process, but also ensures that each team member gets to have their rightful say on their respective parts of the project.

Once the dust has settled after a remodel or new construction is completed, it is tempting to put the project in the rear-view mirror and move on. However, that can lead to problems down the road if the construction project has not been properly documented. At the end of the process the owner should be in possession of all documents related to the project, from start to finish.

The owner should obtain and preserve all documents related to the project. These documents typically include contracts, change orders, architect or designer communications, photos and videos, samples and other physical objects, warranty and instruction information, notes from meetings, and correspondence. It is easy to overlook items like emails and text messages but it is important to collect and retain these as well. When a project involves an owner’s representative or project manager, all documents related to the project should be turned over from the representative or manager to the owner.

The owner should have a clear policy on how and where the documentation is to be retained. It may be best to print emails and text messages and file them with the other paper documentation. Keeping the documents in a safe location is equally important, as we have seen several instances where construction documents were ruined by flooding or a fire.

Finally, it is important to retain documents for a proper length of time. It won’t be helpful to an owner trying to sort out a construction issue or question if the documents are gone. Clients sometimes ask how long documents should be retained. Given that claims and questions can arise for years after a project is completed, the best course of action is to retain the documentation for at least 12 years.

In Oregon, there is a time limit for a school district, or any property owner, to raise concerns with its contractors about potentially faulty construction workmanship. Pursuant to Oregon Revised Statutes 12.135(2), a school district as a public body has 10 years from “substantial completion” of a construction project to file a claim against a contractor for faulty construction workmanship. This is an absolute outlier date, called a statute of repose. No claims may be brought beyond that date, unless a contractor or product manufacturer agrees to an extended warranty.

Within those 10 years, other deadlines apply. Recently, the Oregon Supreme Court made important decisions which affect those other deadlines, called statutes of limitations. In Goodwin v. Kingsmen Plastering, Inc., 359 Or 694 (2016), the Supreme Court ruled that a school district has just two years to file a claim against a contractor for negligent or faulty construction workmanship, measured from when it “knew or should have known” of “the injuries or damage that form the basis of their claims.” In the complicated field of building performance, two years is not a lot of time for facilities professionals to recognize and diagnose performance issues. Compounding the difficulty, the Supreme Court’s decision may start the clock from when the District’s facilities professionals first start noticing problems, for example problems with a buoyant gymnasium floor, an underperforming HVAC system, or leaking windows. Even with outside assistance, it can take a lot of investigation to determine who may be at fault for a problem, and therefore what contractor may be the subject of a claim. In the meantime, potentially, the clock may be ticking under Goodwin while investigations are underway.

An unfortunate side effect of the Goodwin decision is that it increases the pressure on school districts to investigate and make claims against contractors. To protect themselves, school districts should advise their facilities professionals to be diligent in reporting concerns. If a concern is reported, school districts should reach out to contractors who may potentially be involved and ideally sign “tolling agreements,” stopping the clock on claims while investigations continue. If contractors are not amendable to this, they may put themselves in the position of forcing a claim process with the school district.

This issue of “discovering” a claim may also come up with respect to claims for breach of contract. Currently, the safe bet is that a school district has six years from the date a contract obligation is breached to raise a claim. That is typically understood to be the date of performance, i.e. the date of faulty work itself, not the date any damage or fault is discovered (when the district discovers symptoms of a problem). In the months ahead, the Oregon Supreme Court may consider expanding the concept of “discovery” to contract claims, which may provide some relief to school districts already under increasing pressure to investigate problems and pursue contractors who may be at fault.

Over the next few years, school districts across the state will spend millions on construction and renovations. It is an exciting time; schools are testing new products, new building control systems, and new methods and components. Since facilities managers are responsible for operating these systems for years to come, they have several things to consider if called on to help select or operate a new system. Facilities managers should make sure that any problems are quickly addressed by the manufacturer, design team, or construction team, so that those responsible will be accountable for the continued performance of the property.

What is the product history?

New roofing materials, energy efficient materials, and window systems are coming to market every year. Have project team members used them before? Has the architect met with the manufacturer, or any other school that has used the materials, to determine if this product is a good fit? The right roof for the Bend-La Pine School District may not be the right roof for the Salem-Keizer School District. If your District is going to be the guinea pig when evaluating a new product or system, at least make sure everyone knows that, and takes all reasonable precautions.

What is the expectation for maintenance and tune-ups?

If other project members have prior experience with the system, what have they learned? Facilities managers should be sure to document operation recommendations they receive, and establish a checklist for following them. Likewise, facilities managers should be sure to review operations manuals for new construction.

What if you see a problem?

If a system is not performing, document the problem and contact the manufacturer and installer. If you are not satisfied with their response, you can also reach out to the original design and installation team for support. Often, the problem may not be with the product or system itself, but how it is used with related products or systems. Document your efforts.

If the problem is still unresolved, talk with your administrators about the District’s rights under its warranties and contracts. Ultimately, everyone’s job is to keep the school facility up and running to support the faculty, staff, and students. Most often, the strength of a claim is established by the actions of facilities managers and school administrators long before a dispute or claim arises. With advanced planning and frank talk with project team members, Districts will enjoy their new investments for decades to come.