SB290INTRODUCED
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4S0M3I-1
By Senator Givhan
RFD: Fiscal Responsibility and Economic Development
First Read: 03-May-23
2023 Regular Session
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6 4S0M3I-1 04/12/2023 CMH (L)bm 2023-1061
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SYNOPSIS:
Under existing law, contracts for public works
involving an amount in excess of $50,000 are subject to
the public works competitive bid procedures.
This bill would increase the threshold amount to
$100,000 and would authorize an additional increase to
the amount based on increases in the Consumer Price
Index.
This bill would authorize the use of electronic
means to provide certain required notices.
This bill would also authorize the use of
electronic sealed bids.
Section 111.05 of the Constitution of Alabama of
2022, prohibits a general law whose purpose or effect
would be to require a new or increased expenditure of
local funds from becoming effective with regard to a
local governmental entity without enactment by a 2/3
vote unless: it comes within one of a number of
specified exceptions; it is approved by the affected
entity; or the Legislature appropriates funds, or
provides a local source of revenue, to the entity for
the purpose.
The purpose or effect of this bill would be to
require a new or increased expenditure of local funds
within the meaning of the amendment. However, the bill
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does not require approval of a local governmental
entity or enactment by a 2/3 vote to become effective
because it comes within one of the specified exceptions
contained in the amendment.
A BILL
TO BE ENTITLED
AN ACT
Relating to public works contracts; to amend Sections
39-1-1, 39-2-1, 39-2-2, and 39-2-6, Code of Alabama 1975, to
increase the threshold dollar amount for which competitive
bidding is generally required; to further provide for certain
notice procedures; to authorize the publication of notice by
electronic means; to authorize the use of electronic sealed
bids; to authorize certain statutory dollar amounts to be
increased based on increases in the Consumer Price Index; and
in connection therewith would have as its purpose or effect
the requirement of a new or increased expenditure of local
funds within the meaning of Section 111.05 of the Constitution
of Alabama of 2022.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 39-1-1, 39-2-1, 39-2-2, and 39-2-6,
Code of Alabama 1975, are amended to read as follows:
"§39-1-1
(a) Any person entering into a contract with an
awarding authority in this state for the prosecution of any
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public works shall, before commencing the work, shall execute
a performance bond, with penalty equal to 100 percent of the
amount of the contract price. In addition, another bond,
payable to the awarding authority letting the contract, shall
be executed in an amount not less than 50 percent of the
contract price, with the obligation that the contractor or
contractors shall promptly make payments to all persons
supplying labor, materials, or supplies for or in the
prosecution of the work provided in the contract and for the
payment of reasonable attorneys'attorney fees incurred by
successful claimants or plaintiffs in civil actions on the
bond.
(b) Any person that has furnished labor, materials, or
supplies for or in the prosecution of a public work and
payment has not been made may institute a civil action upon
the payment bond and have their rights and claims adjudicated
in a civil action and judgment entered thereon.
Notwithstanding the foregoing, a civil action shall not be
instituted on the bond until 45 days after written notice to
the surety of the amount claimed to be due and the nature of
the claim. The civil action shall be commenced not later than
one year from the date of final settlement of the contract.
The giving of notice by registered or certified mail, postage
prepaid, addressed to the surety at any of its places of
business or offices shall be deemed sufficient under this
section. In the event the surety or contractor fails to pay
the claim in full within 45 days from the mailing of the
notice, then the person or persons may recover from the
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contractor and surety, in addition to the amount of the claim,
a reasonable attorney'sattorney fee based on the result,
together with interest on the claim from the date of the
notice.
(c) Every person having a right of action on the last
described bond as provided in this section shall, upon written
application to the authority under the direction of whom the
work has been prosecuted, indicating that labor, material,
foodstuffs, or supplies for the work have been supplied and
that payment has not been made, shall be promptly furnished a
certified copy of the additional bond and contract. The
claimant may bring a civil action in the claimant's name on
the bond against the contractor and the surety, or either of
them, in the county in which the work is to be or has been
performed or in any other county where venue is otherwise
allowed by law.
(d) In the event a civil action is instituted on the
payment bond, at any time more than 15 days before the trial
begins, any party may serve upon the adverse party an offer to
accept judgment in favor of the offeror or to allow judgment
to be entered in favor of the offeree for the money or as
otherwise specified in the offer. If within 10 days after the
service of the offer, the adverse party serves written notice
that the offer is accepted, either party may then file the
offer and notice of acceptance together with proof of service
and the clerk of the court shall enter judgment. An offer not
accepted shall be deemed withdrawn and evidence of the offer
shall not be admissible. If the judgment finally obtained by
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the offeree is less favorable than the offer, the offeree
shall pay the reasonable attorney'sattorney fees and costs
incurred by the offeror after the making of the offer. An
offer that is made but not accepted does not preclude a
subsequent offer. When the liability of one party to another
party has been determined by verdict, order, or judgment, but
the amount or extent of the liability remains to be determined
by further proceedings, any party may make an offer of
judgment, which shall have the same effect as an offer made
before trial if the offer is made no less than 10 days prior
to the commencement of hearings to determine the amount or
extent of liability.
(e) This section shall not require the taking of a bond
to secure contracts in an amount less than fifty thousand
dollars ($50,000) one hundred thousand dollars ($100,000) .
(f)(1) The contractor shall, immediately after the
completion of the contract, shall give notice of the
completion by an advertisement in a newspaper of general
circulation published within the city or county in which the
work has been done, for a period of four successive
weeks.publishing the notice for a minimum of three weeks using
one or more of the following methods:
a. In a newspaper of general circulation in the county
or counties in which the work, or some portion thereof, has
been done.
b. On a website that is maintained by a newspaper of
general circulation in the county or counties in which the
work, or some portion thereof, has been done.
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c. On a website utilized by the awarding authority for
publishing notices.
(2) If no newspaper is published in the county in which
the work was done, and if the awarding authority does not
utilize a website for the purpose of publishing notices, the
notice may be given by posting at the courthouse for 30 days,
and proof of the posting of the notice shall be given by the
judge of probate, the sheriff, and the contractor.
(3) A final settlement shall not be made upon the
contract until the expiration of 30 days after the completion
of the notice. Proof of publication of the notice shall be
made by the contractor to the authority by whom the contract
was made by affidavit of the publisher or website owner and a
printed copy of the notice published. If no newspaper is
published in the county in which the work is done, the notice
may be given by posting at the courthouse for 30 days, and
proof of same shall be made by the judge of probate, sheriff,
and the contractor.
(4) For contracts for road resurfacing materials that
are awarded on an annual basis, where the bid specifications
include options such as a unit price for materials, a unit
price for the delivery of materials, or a unit price for
materials to be laid in place by the bidder, notice of
completion pursuant to this subsection may be given on an
annual basis upon completion of the project as a whole, rather
than at the completion of each proceed order.
(g) Subsection (f) shall not apply to contractors
performing contracts of less than fifty thousand dollars
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($50,000)one hundred thousand dollars ($100,000) in amount. In
such cases, the governing body of the contracting agency, to
expedite final payment, shall cause notice of final completion
of the contract to be published one time in a newspaper of
general circulation, published in the county of the
contracting agency and shall post notice of final completion
on the agency's bulletin board for one week, and shall require
the contractor to certify under oath that all bills have been
paid in full. Final settlement with the contractor may be made
at any time after the notice has been posted for one entire
week."
"§39-2-1
As used in this title, the following words shall have
the meanings ascribed to them as follows:
(1) AWARDING AUTHORITY. Any governmental board,
commission, agency, body, authority, instrumentality,
department, or subdivision of the state, its counties and
municipalities. This term includes, but shall not be limited
to, the Department of Transportation, the State Building
Commission the Division of Real Property Management of the
Department of Finance , the State Board of Education, and any
other entity contracting for public works. This term shall
exclude the State Docks Department and any entity exempted
from the competitive bid laws of the state by statute.
(2) FORCE ACCOUNT WORK. Work paid for by reimbursing
for the actual costs for labor, materials, and equipment usage
incurred in the performance of the work, as directed,
including a percentage for overhead and profit, where
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appropriate.
(3) LIFE CYCLE COSTS. The total cost of ownership over
the extended life of a public works project, taking into
consideration the costs of construction, operation, and
maintenance, less any value obtained from salvage and
quantifiable environmental benefits, or the sum of all
recurring and one-time (non-recurring) costs over the full
life span or a specified period of a good, service, structure,
or system, including purchase price, installation costs,
operating costs, maintenance and upgrade costs, and remaining
(residual or salvage) value at the end of ownership or its
useful life.
(4) PERSON. Natural persons, partnerships, limited
liability companies, corporations, and other legal entities.
(5) PUBLIC PROPERTY. Real property which the state,
county, municipality, or awarding authority thereof owns or
has a contractual right to own or purchase, including
easements, rights-of-way, or otherwise.
(6) PUBLIC WORKS. The construction, installation,
repair, renovation, or maintenance of public buildings,
structures, sewers, waterworks, roads, curbs, gutters, side
walls, bridges, docks, underpasses, and viaducts as well as
any other improvement to be constructed, installed, repaired,
renovated, or maintained on public property and to be paid, in
whole or in part, with public funds or with financing to be
retired with public funds in the form of lease payments or
otherwise."
"§39-2-2
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(a)(1) Before entering into any contract for a public
works involving an amount in excess of fifty thousand dollars
($50,000) one hundred thousand dollars ($100,000) , the
awarding authority shall advertise for sealed bids, except as
provided in subsection (j).
(2)a. If the awarding authority is the state ,or a
county, or municipality, or an instrumentality thereof, it
shall advertise for sealed bids at least once each week for
three consecutive weeks in a newspaper of general circulation
in the county or counties in which the improvement, or some
part thereof, is to be made. for a minimum of three weeks
prior to any submission deadline using one or more of the
following methods:
1. Publication in a newspaper of general publication in
the county or counties in which the work is to be done.
2. Publication on a website that is maintained by a
newspaper of general circulation in the county or counties in
which the work is to be done.
3. Publication on a website utilized by the awarding
authority for publishing notices.
b. If the awarding authority is a municipality, or an
instrumentality thereof, it shall advertise for sealed bids at
least once in a newspaper of general circulation published in
the municipality where the awarding authority is located. If
no newspaper is published in the municipality, the awarding
authority shall advertise by posting notice thereof on a
bulletin board maintained outside the purchasing office and in
any other manner and for the length of time as may be
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determined. In addition to bulletin board notice, sealed bids
shall also be solicited by sending notice by mail to all
persons who have filed a request in writing with the official
designated by the awarding authority that they be listed for
solicitation on bids for the public works contracts indicated
in the request. If any person whose name is listed fails to
respond to any solicitation for bids after the receipt of
three such solicitations, the listing may be canceled. If no
newspaper is published in the county in which the work is
done, and if the awarding authority does not utilize a website
for the purposes of publishing the notices, the notice may be
given by posting at the courthouse for 30 days, and proof of
the same shall be made by the judge of probate, sheriff, and
the awarding authority.
(3) With the exception of the Department of
Transportation, for all public works contracts involving an
estimated amount in excess of five hundred thousand dollars
($500,000), awarding authorities shall also advertise for
sealed bids at least once in three newspapers of general
circulation throughout the state.
(4)(3) The advertisements shall briefly describe the
improvement, state that plans and specifications for the
improvement are on file for examination in a designated office
of the awarding authority, state the procedure for obtaining
plans and specifications, state the time and place in which
bids shall be received and opened, and identify whether
prequalification is required and where all written
prequalification information is available for review.
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(5)(4) All bids shall be opened publicly at the
advertised time and place.
(6)(5) No public work, as defined in this chapter,
involving a sum in excess of fifty thousand dollars ($50,000)
one hundred thousand dollars ($100,000) shall be split into
parts involving sums of fifty thousand dollars ($50,000) one
hundred thousand dollars ($100,000) or less for the purpose of
evading the requirements of this section.
(b)(1) An awarding authority may let contracts for
public works involving fifty thousand dollars ($50,000) one
hundred thousand dollars ($100,000) or less with or without
advertising or sealed bids.
(2) An awarding authority may enter into a contract for
public works if an advertisement for sealed bids for the
contract was submitted by the awarding authority to a
newspaper and the newspaper only published the advertisement
for two weeks if the authority can provide proof that it, in
good faith, submitted the advertisement to the newspaper with
instructions to publish the notice in accordance with the
provisions of this section.
(c) All contracts for public works entered into in
violation of this title shall be void and violative of public
policy. Anyone who willfully violates this article concerning
public works shall be guilty of a Class C felony.
(d)(1) Excluded from the operation of this title shall
be contracts with persons who shall perform only
architectural, engineering, construction management, program
management, or project management services in support of the
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public works and who shall not engage in actual construction,
repair, renovation, or maintenance of the public works with
their own forces, by contract, subcontract, purchase order,
lease, or otherwise.
(2) Excluded from operation of the bidding requirements
in this title are contracts for the purchase of any heating or
air conditioning units or systems by any awarding authority
subject to Chapter 13B of Title 16, or Article 3, commencing
with Section 41-16-50, of Chapter 16 of Title 41, provided the
contract is entered into with an Alabama vendor who has been
granted approved vendor status for the sale of heating or air
conditioning units or systems as a part of a purchasing
cooperative, and each of the following occur:
a. The heating or air conditioning unit or system being
purchased is available as a result of a competitive bid
process conducted by a governmental entity which has been
approved by the Department of Examiners of Public Accounts.
b. The purchase of the heating or air conditioning unit
or system is not available on the state purchasing program at
the time or the purchase under the purchasing cooperative is
available at a price that is equal to or less than that
available through the state purchasing program.
c. The entity entering into the contract for the
purchase of the heating or air conditioning unit or system has
been notified by the Department of Examiners of Public
Accounts that the competitive bid process utilized by the
cooperative program offering the goods complies with this
subdivision.
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d. Upon request, the vendor has provided the purchasing
entity with a report of sales made under this subdivision
during the previous 12-month period, to include a general
description of the heating or air conditioning units and
systems sold, the number of units sold per entity, and the
purchase price of the units.
e. The exemption from the requirement to utilize sealed
bids for the purchase of heating or air conditioning units or
systems authorized by this section shall not serve to exempt
any public works project from the remaining provisions of this
article, including, but not limited to, design, installation,
and review requirements, compliance with all applicable codes,
laws, specifications, and standards, and the compensation of
engineers, architects, or others as mandated by state law or
rule.
(e)(1) In case of an emergency affecting public health,
safety, or convenience, as declared in writing by the awarding
authority, setting forth the nature of the danger to the
public health, safety, or convenience which would result from
delay, contracts may be let to the extent necessary to meet
the emergency without public advertisement. The action and the
reasons for the action taken shall immediately be made public
by the awarding authority upon request. In case of an
emergency for which a delay in remedying would cause
additional harm to a person or public property, contracts may
be let to the extent necessary to meet the emergency without
public advertisement or bidding.
(2) In case of an emergency affecting public health,
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safety, or convenience, as declared in writing by the awarding
authority, setting forth the nature of the danger to the
public health, safety, or convenience which would result from
delay, contracts may be let to the extent necessary to meet
the emergency without public advertisement.
(3) Any action taken under subdivision (1) or (2), and
the reasons for the action taken, shall immediately be made
public by the awarding authority upon request.
(f) No awarding authority may specify in the plans and
specifications for the improvement the use of materials,
products, systems, or services by a sole source unless all of
the following requirements are met:
(1) Except for contracts involving the construction,
reconstruction, renovation, or replacement of public roads,
bridges, and water and sewer facilities, the awarding
authority can document to the satisfaction of the Division of
Construction Management Division of Real Property Management
of the Department of Finance, or in the case of an educational
institution or state educational institution as provided
pursuant to Sections 41-4-353 and 41-4-400, to the
satisfaction of its governing board, that the sole source
product, material, system, or service is of an indispensable
nature for the improvement, that there are no other viable
alternatives, and that only this particular product, material,
system, or service fulfills the function for which it is
needed.
(2) The sole source specification has been recommended
by the architect or engineer of record as an indispensable
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item for which there is no other viable alternative.
(3) All information substantiating the use of a sole
source specification, including the recommendation of the
architect or engineer of record, shall be documented and made
available for examination in the office of the awarding
authority at the time of advertisement for sealed bids.
(g) In the event of a proposed public works project,
acknowledged in writing by the Alabama Homeland Security
Department as: (1) having a direct impact on the security or
safety of persons or facilities; and (2) requiring
confidential handling for the protection of such persons or
facilities, contracts may be let without public advertisement
but with the taking of informal bids otherwise consistent with
the requirements of this title and the requirements of
maintaining confidentiality. Records of bidding and award
shall not be disclosed to the public and shall remain
confidential.
(h) If a pre-bid meeting is held, the pre-bid meeting
shall be held at least seven days prior to the bid opening
except when the project has been declared an emergency in
accordance with subsection (e).
(i) The awarding authority may not offer a contract for
bidding unless confirmation of any applicable grant has been
received and any required matching funds have been secured by
or are available to the awarding authority.
(j) Notwithstanding subsection (a), the Department of
Transportation may enter into contracts for road construction
or road maintenance projects that do not involve more than two
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hundred fifty thousand dollars ($250,000) without advertising
for sealed bids, provided the project is listed on the
department website for at least seven calendar days before
entering into the contract. The total cost of all projects not
subject to advertising and sealed bids pursuant to this
subsection may not exceed one million dollars ($1,000,000) in
the aggregate per year.
(k) For the purposes of this chapter, sealed bids may
also be solicited and submitted through electronic means
including, but not limited to, electrical, digital, magnetic,
optical, electromagnetic, or any other similar technology,
provided that the awarding authority adopts rules and policies
to ensure that all electronic submissions are transmitted
securely and bids remained sealed until bid opening.
(l)(1) Notwithstanding any other provision of law, a
county or municipality, or instrumentality thereof, that is an
awarding authority of a contract for public works, by
resolution, may purchase materials or equipment pursuant to
subdivisions (14), (16), 17), (18), or (19) of Section
41-16-51(a), even when those materials or equipment are
otherwise part of the contract for public works subject to
the requirements of this title.
(2) Except for those materials or equipment described
in subdivision (1), the remaining portion of the public works
project shall be subject to the requirements of this title,
even if the remaining portion would involve an amount less
than one hundred thousand dollars ($100,000) as a result of
the exclusion of the purchase of the materials or equipment as
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described in subdivision (1).
(m) The dollar amounts specified in this chapter shall
be adjusted beginning October 1, 2027, and every three years
thereafter. The adjustment to the dollar amounts shall be made
based on the percentage increase in the Consumer Price Index
for all urban consumers, as published by the U.S. Department
of Labor, Bureau of Labor Statistics, and then rounded to the
nearest thousand dollars. The Department of Examiners of
Public Accounts shall notify the public of the adjusted dollar
amounts by July 1 before the fiscal year in which the changes
shall take effect. "
"§39-2-6
(a) The contract shall be awarded to the lowest
responsible and responsive bidder, unless the awarding
authority finds that all the bids are unreasonable or that it
is not toin the interest of the awarding authority to accept
any of the bids. A responsible bidder is one who, among other
qualities determined necessary for performance, is competent,
experienced, and financially able to perform the contract. A
responsive bidder is one who submits a bid that complies with
the terms and conditions of the invitation for bids. Minor
irregularities in the bid shall not defeat responsiveness. The
bidder to whom the award is made shall be notified by
telegram, confirmed facsimile, electronic mail, or letter at
the earliest possible date. If the successful bidder fails or
refuses to sign the contract, to make bond as provided in this
chapter, or to provide evidence of insurance as required by
the bid documents, the awarding authority may award the
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contract to the second lowest responsible and responsive
bidder. If the second lowest bidder fails or refuses to sign
the contract, make bond as provided in this chapter, or to
provide evidence of insurance as required by the bid
documents, the awarding authority may award the contract to
the third lowest responsible and responsive bidder.
(b) If no bids or only one bid is received at the time
stated in the advertisement for bids, the awarding authority
may advertise for and seek other competitive bids, or the
awarding authority may direct that the work shall be done by
force account under its direction and control or, with the
exception of the Department of Transportation, the awarding
authority may negotiate for the work through the receipt of
informal bids not subject to the requirements of this section.
Where only one responsible and responsive bid has been
received, any negotiation for the work shall be for a price
lower than that bid.
(c) When With the exception of the Department of
Transportation, when two or more bids are received, and all
bids exceed available funding for the contract, a local board
of education or a public two-year or four-year institution of
higher education the awarding authority may negotiate for the
work with the lowest responsible and responsive bidder ,
provided that the local board of education or public two-year
or four-year institution of higher education awarding
authority can document the shortage of funding, that time is
of the essence, and that the negotiated changes are in the
public interest and do not materially alter the scope and
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nature of the project.
(d) If the awarding authority finds that all bids
received are unreasonable or that it is not to the interest of
the awarding authority to accept any of the bids, the awarding
authority may direct that the work shall be done by force
account under its direction and control.
(e) On any construction project on which the awarding
authority has prepared plans and specifications, has received
bids, and has determined to do by force account or by
negotiation, the awarding authority shall make available the
plans and specifications, an itemized estimate of cost, and
any informal bids for review by the Department of Examiners of
Public Accounts and, upon completion of the project by an
awarding authority, the final total costs together with an
itemized list of cost of any and all changes made in the
original plans and specifications shall also be made available
for review by the Department of Examiners of Public Accounts.
Furthermore, the above described information shall be made
public by the awarding authority upon request. Upon the
approval of the awarding authority, its duly authorized
officer or officers, when proceeding upon the basis of force
account, may let any subdivision or unit of work by contract
on informal bids.
(f) No provision of this section shall be interpreted
as precluding the use of convict labor by the awarding
authority. This section shall not apply to routine maintenance
and repair jobs done by maintenance personnel who are regular
employees of the awarding authority, nor shall it apply to
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road or bridge construction work performed by an awarding
authority's regular employees and own equipment.
(g) No contract awarded to the lowest responsible and
responsive bidder shall be assignable by the successful bidder
without written consent of the awarding authority, and in no
event shall a contract be assigned to an unsuccessful bidder
whose bid was rejected because he or she was not a responsible
or responsive bidder.
(h) Any agreement or collusion among bidders or
prospective bidders in restraint of freedom of competition to
bid at a fixed price or to refrain from bidding or otherwise
shall render the bids void and shall cause the bidders or
prospective bidders to be disqualified from submitting further
bids to the awarding authority on future lettings. Any bidder
or prospective bidder who willfully participates in any
agreement or collusion in restraint of freedom of competition
shall be guilty of a felony and, on conviction thereof, shall
be fined not less than five thousand dollars ($5,000) nor more
than fifty thousand dollars ($50,000) or, at the discretion of
the jury, shall be imprisoned in the penitentiary for not less
than one nor more than three years.
(i) Any disclosure in advance of the terms of a bid
submitted in response to an advertisement for bids shall
render the proceedings void and require advertisement and
award anew.
(j) The lowest responsible and responsive bidder on a
public works project may be determined to be the bidder
offering the lowest life cycle costs. The lowest responsible
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and responsive bidder shall otherwise meet all of the
conditions and specifications contained in the invitation to
bid, except that a bidder may still be considered responsive
if he or she responds with a bid using different construction
materials than those specified in the invitation to bid if the
materials' use would result in lower life cycle costs for the
public works project. To utilize this provision to determine
the lowest responsible and responsive bidder, the awarding
authority must include a notice in the invitation to bid that
the lowest responsible and responsive bidder may be determined
by using life cycle costs, and must also include in the
invitation to bid the criteria under which it shall evaluate
the life cycle costs."
Section 2. Although this bill would have as its purpose
or effect the requirement of a new or increased expenditure of
local funds, the bill is excluded from further requirements
and application under Section 111.05 of the Constitution of
Alabama of 2022, because the bill defines a new crime or
amends the definition of an existing crime.
Section 3. This act shall become effective on the first
day of the third month following its passage and approval by
the Governor, or its otherwise becoming law.
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