In summary, it should be clear that the CM Agency method complies with the State law while the CM at risk method (the method currently being used for Hardin Valley Academy) does not. The significant difference is that a “CM at risk” both handles the money and holds the contracts with the contractors, which is in violation of TCA 49-2-203 as clarified by the State Comptroller.
The clarification clearly states that invoices “should be paid by the LEA” and “the construction manager should only be paid their fee.” This clearly indicates the intent of the law is for the money to flow directly from the LEA to the contractors and not through the construction manager. The CM method which clearly meets ALL the requirements of TCA 49-2-203 is CM Agency.
The statute was written to provide the schools with the type of CM service which has been proven to be the most beneficial to clients while protecting the transparency of public work still being bid, not negotiated. The purpose of the statute was to allow construction managers to be selected as a professional service the same as Architects and Engineers. This relationship clearly requires the CM not be a participant in the flowing of funds to avoid a conflict of interest.
This is the exact copy of the clarification by the State’s Comptroller’s office:
Construction manager activities on school construction projects are governed by Section 49-2-203 (a)(3)(C), TCA. This statute provides that construction management services that are provided for a fee and that involve pre-construction and construction administration and management services are deemed to be professional services and are to be procured for each project through a written request for proposals process. A construction manager is prohibited from undertaking actual construction work on a project over which such construction manager coordinates or oversees the planning, bid or construction phases of the project, except in the instances where bids have been solicited twice and no bids have been submitted. If the construction manager can document that a good faith effort was made in each bid solicitation to obtain bids, and no bids were received, then the construction manager may perform the construction work at a price agreed upon by the construction manager, the architect and the owner of the project.
This is the State comptroller’s exact response:
Based upon this statute it is our position that:
1. A Local Education Agency (LEA) should go through a request for proposals to hire a construction manager.
2. The statute makes it clear that construction work which is under the coordination and oversight of a construction manager shall be procured through competitive bids. The construction manager can assist the LEA in preparing bid requests and evaluating the bids, but the bids should be awarded by the LEA, not the construction manager.
3. The construction manager can assist the LEA in determining that invoices are proper and ready for payment. But the invoices should be paid by the LEA.
4. The construction manager should only be paid their fee as construction manager unless as noted in the statute contractors do not respond to bid request on two occasions and the construction manager then provides those services. Unless bidders fail to respond on two occasions the statute states that “A construction manager is prohibited from undertaking actual construction work on a project over which such construction manager coordinates or oversees the planning, bid or construction phases of the project…”
