The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Fiscal Policy
BILL: CS/CS/SB 656
INTRODUCER: Appropriations Committee on Agriculture, Environment, and General Government;
Governmental Oversight and Accountability Committee and Senator DiCeglie
SUBJECT: Continuing Contracts
DATE: February 20, 2024
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Harmsen McVaney GO Fav/CS
2. Davis Betta AEG Fav/CS
3. Harmsen Yeatman FP Favorable
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 656 amends the definition of “continuing contract” under the Consultants’
Competitive Negotiation Act (CCNA) to increase the maximum dollar amount for each
individual project and each individual study under the contract for construction projects. The
maximum dollar amount for each individual project is increased from $4 million to $7.5 million.
Beginning July 1, 2025, and annually thereafter, the Department of Management Services
(DMS) must adjust the maximum amount allowed on the preceding June 30 for each individual
project in a continuing contract based on the June-to-June Consumer Price Index issued by the
United States Department of Labor. The DMS must publish the adjusted amount on its website.
The bill makes similar revisions to s. 255.103(4), F.S., (authorizing local governmental entities
to use the CCNA selection process), increasing the maximum dollar amount for continuing
contracts of local governments from $4 million to $7.5 million. Beginning July 1, 2025, and
annually thereafter, the DMS must adjust the maximum amount allowed on the preceding June
30 for each individual project in a continuing contract based on the June-to-June Consumer Price
Index issued by the United States Department of Labor. The DMS must publish the adjusted
amount on its website.
There is an indeterminate fiscal impact on state and local government expenditures relating to the
administrative costs of competitive procurement and contract costs paid under a continuing
contract. See Section V., Fiscal Impact Statement.
REVISED: BILL: CS/CS/SB 656 Page 2
The bill takes effect July 1, 2024.
II. Present Situation:
The Department of Management Services (DMS) manages projects throughout the state,
including new construction, renovations, and consulting services for various public works
projects. The Bureau of Building Construction (Bureau), within the DMS, oversees public
building construction statewide. The Bureau is also responsible for managing fixed capital outlay
funds appropriated by the Legislature and for overseeing the repair and renovation of DMS-
managed facilities.
1
Generally, state projects must be competitively procured. Part I of ch. 287, F.S., provides “a
system of uniform procedures to be utilized by state agencies in managing and procuring
commodities and contractual services” to protect the public by promoting “fair and open
competition,” thereby reducing the appearance and opportunity for favoritism and misconduct.
2
These competitive procurement provisions apply to an agency, defined as “any of the various
state officers, departments, board commissions, divisions, bureaus, and councils and any other
unit of organization, however designated, of the executive boards of state government.
3
This
definition does not include municipalities and local governments. Additionally, university and
college boards of trustees, and the state universities and colleges are specifically excluded from
this definition.
4
State agencies may use a variety of procurement methods, depending on the cost and
characteristics of the needed good or service, the complexity of the procurement, and the number
of available vendors. These methods include the following:
Single source contracts,
5
used when an agency determines that only one vendor is available
to provide a commodity or service at the time of purchase;
Invitations to bid,
6
used when an agency determines that standard services or goods will meet
needs, wide competition is available and the vendor’s experience will not greatly influence
the agency’s results;
Requests for proposals,
7
used when the procurement requirements allow for consideration of
various solutions and the agency believes more than two or three vendors exist who can
provide the required goods or services; and
Invitations to negotiate,
8
used when negotiations are determined to be necessary to obtain the
best value and involve a request for highly complex, customized, mission-critical services, by
an agency dealing with a limited number of vendors.
1
DMS, Building Construction,
https://www.dms.myflorida.com/business_operations/real_estate_development_and_management/building_construction (last
visited Jan. 29, 2024).
2
Section 287.001, F.S
3
Section 287.012(1), F.S.
4
Id.
5
Section 287.057(3)(c), F.S.
6
Section 287.057(1)(a), F.S.
7
Section 287.057(1)(b), F.S.
8
Section 287.057(1)(c), F.S. BILL: CS/CS/SB 656 Page 3
For procurement of commodities or contractual services in excess of $35,000, agencies must use
a competitive solicitation process.
9
However, specified contractual services and commodities are
not subject to competitive solicitation requirements.
10
State contracts for construction projects that are projected to cost in excess of $200,000 must be
competitively bid.
11
A county, municipality, special district, or other political subdivision that
seeks to construct or improve a public building must competitively award each project estimated
to cost more than $300,000.
12
The Consultants’ Competitive Negotiation Act
In 1973, the Florida Legislature enacted the Consultant’s Competitive Negotiation Act
(CCNA),
13
s. 287.055, F.S., which requires state and local government agencies to procure the
professional services of an architect, engineer, landscape architect, or registered surveyor and
mapper using a qualifications-based selection process. The qualifications-based selection
requires the selection of providers on the basis of their competency, qualifications, and
experience, rather than lowest-price.
14
The qualifications based selection process of the CCNA contemplates a three-step process:
Public announcement of the project;
Competitive selection of the professional firm based on its qualifications; and
Arms-length competitive negotiations with the most qualified firm or firms.
15
During the first phase, the public announcement, state and local agencies
16
publicly announce
and describe their need for professional services for one of the following:
17
A project when the basic construction cost of which is estimated by the agency to exceed
$325,000;
18
or
A planning or study activity for professional services that exceeds $35,000.
19
The public announcement must provide a general description of the project and describe how the
interested consultant firms may apply for consideration.
20
9
Section 287.057(1), F.S.
10
Section 287.057(3)(e), F.S.
11
Section 255.0525, F.S.
12
Section 255.20, F.S.
13
Ch. 73-19, Laws of Fla., codified as s. 287.055, F.S.
14
Section 287.055(3)-(5), F.S.
15
Id.
16
An “agency” under the CCNA is defined as “the state, a state agency, a municipality, a political subdivision, a school
district or a school board.” Section 287.055(2)(b), F.S. See Section 1.01(8), F.S., defining “political subdivision” to include
“counties, cities, towns, villages, special tax school districts, special road and bridge districts, bridge districts, and all other
districts in this state.”
17
Section 287.055(3), F.S.
18
The amount provided in Category Five from the purchasing categories in s. 287.017, F.S.
19
The amount provide in Category Two from the purchasing categories in s. 287.017, F.S.
20
Section 287.055(3)(a)1., F.S. BILL: CS/CS/SB 656 Page 4
A firm that wishes to provide professional services to an agency must first be certified by the
agency as qualified to provide the needed services pursuant to law and the agency’s
regulations.
21
In determining a firm or individual to be qualified, the agency must consider its
capabilities, adequacy of personnel, past record, experience, as well as whether the firm or
individual is a certified minority business enterprise.
22
During the second phase, competitive selection, the agency must evaluate the bidders’ current
statements of qualifications and performance data.
23
The agency must select and rank at least
three firms it deems to be the most highly qualified to perform the required services, based on the
following:
24
The ability of professional personnel;
Whether a firm is a certified minority business enterprise;
Past performance;
Willingness to meet time and budget requirements;
Location;
Recent, current, and projected workloads of the firms; and
The volume of work previously awarded to each firm by the agency, with the object of
effecting an equitable distribution of contracts among qualified firms, provided such
distribution does not violate the principle of selection of the most highly qualified firms.
25
During this qualifications phase, the agency cannot request, accept, or consider proposals for the
firm’s compensation.
26
Compensation is “the amount paid by the agency for professional
services regardless of whether stated as compensation or stated as hourly rates, overhead rates, or
other figures or formulas from which compensation can be calculated.”
27
During the third phase, competitive negotiation, the agency negotiates compensation to be paid
under the contract with the highest qualified of at least three selected firms.
28
Should the agency
be unable to negotiate a satisfactory contract with the top firm at a price the agency determines to
be fair, competitive, and reasonable, the agency may progress to negotiations with the second
most qualified firm, and if this fails,
29
with the third.
30
If the agency cannot negotiate a
satisfactory contract with any of the ranked firms, it must begin the qualifications-based selection
process again and continue negotiations until an agreement is reached.
31
21
Section 287.055(3)(c) F.S.
22
Section 287.055(3)(c)-(d), F.S.
23
Section 287.055(4)(a), F.S.
24
Section 287.055(4)(b), F.S.
25
Id.
26
Id. The CCNS did not prohibit discussion of compensation in the competitive selection phase until 1988, when the
Legislature enacted a provision that allows consideration of compensation only during the competitive negotiation phase. Ch.
88-108, Laws of Fla.
27
Section 287.055(2) (d), F.S.
28
Section 287.055(5)(a), F.S.
29
Section 287.055(5)(b), F.S.
30
Id.
31
Section 287.055(5)(c), F.S. BILL: CS/CS/SB 656 Page 5
Continuing Contracts Under the CCNA
The CCNA expressly allows agencies to use continuing contracts for professional services.
32
A
continuing contract is one for professional services entered into in accordance with the CCNA
between an agency and a firm whereby the firm provides professional services to the agency for
projects that do not exceed specific costs.
33
Current law allows an agency to use a continuing contract for: construction projects in which the
estimated construction cost of each individual project under the contract does not exceed $4
million; for study activity, if the fee for professional services for each individual study under the
contract does not exceed $500,000; or for work of a specified nature as outlined in the agency
contract, if the contract is for a fixed term or with a termination clause.
34
The maximum per-project and per-study limits were implemented in 1988
35
at $500,000 and
$25,000, respectively, and subsequently increased three times. In 2002, the limits were increased
to $1 million and $50,000.
36
In 2009, the limits were increased to $2 million and $200,000;
37
and
in 2020, the limits were increased to $4 million and $500,000.
38
Construction and Program Management Entities
A governmental entity
39
may choose to use a construction management entity or program
management entity, which it must select using the CCNA’s competitive solicitation process.
40
A
construction management entity is responsible for construction project scheduling and
coordination in both the preconstruction and construction phases, and is generally responsible for
the successful, timely, and economical completion of a construction project.
41
A program
management entity is responsible for schedule and cost control, and coordination in the
procurement of planning, design, and construction services.
42
The governmental entity may use a continuing contract
43
to procure the services of a construction
management or program management entity for work on construction projects.
44
However, a
“continuing contract” entered into subject to ch. 255, F.S., is distinct from that in ch. 287, F.S.
Specifically, the governmental entity may only use a continuing contract under ch. 255, F.S., to
32
Section 287.055(4)(d), F.S.
33
Section 287.055(2)(g), F.S.
34
Id. An entity may not use a continuing contract for work of a specified nature to exceed the monetary limits placed on
construction projects and study activities. Op. Fla. Att’y. Gen. 2013-28 (2013).
35
Ch. 88-108, Laws of Fla.
36
Ch. 2002-20, Laws of Fla.
37
Ch. 2009-227, Laws of Fla.
38
Ch. 2020-127, Laws of Fla.
39
Section 255.103(1), F.S. defines the term “governmental entity” to mean “a county, municipality, school district, special
district, special district as defined in chapter 189, or political subdivision of the state.”
40
Section 255.103, F.S.
41
Section 255.103(2), F.S.
42
Section 255.103(3), F.S.
43
Section 255.103(4), F.S., defines a continuing contract as “a contract with a construction management or program
management entity for work during a defined period on construction projects described by type which may or may not be
identified at the time of entering into the contract.”
44
Section 255.103(4), F.S. BILL: CS/CS/SB 656 Page 6
procure construction management or program management entity services. A continuing contract
under ch. 255, F.S., must also be for a defined period of time (whereas ch. 287, F.S., allows
continuing contracts without a time limitation in certain circumstances).
The governmental entity may also choose to require that the construction management or
program management entity offer a guaranteed maximum price or a guaranteed completion
date.
45
If a project includes a grouping of substantially similar construction, rehabilitation, or
renovation activities, the governmental entity may require a separate guaranteed maximum price
and a separate guaranteed completion date for each grouping of substantially similar
construction, rehabilitation, or renovation activities.
46
Department of Transportation
Chapter 337, F.S., governs contracts entered into by the Florida Department of Transportation
(FDOT). The FDOT has authority to enter into contracts for the construction and maintenance of
all State Highway or State Park systems’ roads, rest areas, weigh stations, parking areas,
supporting facilities, and any associated building.
47
The FDOT must certify as qualified any
bidders for a construction contract, road, bridge, or public construction project that exceeds
$250,000 in cost.
48
The certification process ensures that the bidders have professional and
financial competence by evaluating them “with respect to the equipment, past record, experience,
financial resources, and organizational personnel of the applicant necessary to perform the
specific class of work for which the person seeks certification.
49
Consumer Price Index and Producer Price Index
The Consumer Price Index for all Urban Consumers (CPI-U) is a measure of the average change
over time in the prices paid by urban consumers for a market basket of consumer goods and
services, as measured by the U.S. Bureau of Labor Statistics.
50
The U.S. Bureau of Labor
Statistics issues the CPI monthly, and develops the metric from surveys of businesses’ and
households’ reporting of their costs for food, housing, clothing, medical care, and
transportation.
51
While the CPI-U is the most often-cited index, the BLS also publishes several
other consumer price indexes, e.g., those based on geographic area, CPI for Urban Wage Earners
and Clerical Workers (CPI-W), Chained CPI for all Urban Consumers (C-CPI-U), and an
average prices index.
52
The CPI is used as a measure of U.S. consumer inflation, and to escalate
Social Security payments, adjust tax brackets, convert nominal dollars to real dollars, and to
adjust wages or escalate rents and other payments.
53
45
Section 255.103(2), F.S.
46
Id.
47
Section 337.11, F.S. See also, s. 334.044, F.S.
48
Section 337.14(1), F.S.
49
Id.
50
U.S. Bureau of Labor Statistics, Consumer Price Index: Overview (Sep. 6, 2023),
https://www.bls.gov/opub/hom/cpi/home.htm (last visited Jan. 26, 2024).
51
Id.
52
U.S. Bureau of Labor Statistics, Consumer Price Index: Presentation (Sep. 6, 2023),
https://www.bls.gov/opub/hom/cpi/presentation.htm (last visited Jan. 29, 2024).
53
U.S. Bureau of Labor Statistics, Consumer Price Index: Concepts (Sep. 6, 2023),
https://www.bls.gov/opub/hom/cpi/concepts.htm (last visited Jan. 29, 2024). BILL: CS/CS/SB 656 Page 7
The last five years of the CPI have varied, as reflect in the table below:
54
Year Annual Average CPI(-U) Annual Percent Change (Rate of
Inflation)
2019 255.7 1.8%
2020 258.8 1.2%
2021 271.0 4.7%
2022 292.7 8.0%
2023 302.9 3.5%
The Producer Price Index (PPI) is a measurement of the average change in selling prices that are
received by domestic producers of goods and services. PPI measures the price change from the
seller’s perspective, and can be used as a tool for the adjustment of purchase and sales contract
prices, an indicator of overall price movement at the producer’s level, or a comparison of
industry-based price data.
55
The PPI includes indexes based on commodities, including consumer
goods, energy, services, transportation and warehousing services, and construction.
56
The following chart shows the percent change to certain construction input and commodity
prices as of October 2023:
57
54
Federal Reserve Bank of Minneapolis, Consumer Price Index, 1913-; Historical Data from the era of the Modern U.S.
Consumer Price Index (CPI) https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-
index-1913- (last visited Jan. 29, 2024).
55
U.S. Bureau of Labor Statistics, Producer Price Index (Mar. 16, 2023), https://www.bls.gov/ppi/overview.htm (last visited
Jan. 29, 2024).
56
See, e.g., U.S. Bureau of Labor Statistics, PPI Detailed Report, 11 (Nov. 2023), https://www.bls.gov/web/ppi/ppi_dr.pdf
(last visited Jan. 29, 2024).
57
See U.S. Bureau of Labor Statistics, Producer Price Index Detailed Reports for February 2020 and October 2023,
https://www.bls.gov/ppi/detailed-report/#2023 (last visited Jan. 29, 2023). BILL: CS/CS/SB 656 Page 8
1-month 12-month
Since Feb.
2020
Inputs to Industries
Inputs to construction -1.2% -1.1% 33.1%
Inputs to multifamily construction -0.9% 0.8% 32.4%
Inputs to nonresidential construction -1.1% -0.7% 33.6%
Inputs to commercial construction -0.7% -0.3% 33.6%
Inputs to healthcare construction -0.7% -0.2% 33.4%
Inputs to industrial construction -0.9% 1.1% 30.7%
Inputs to other nonresidential construction -1.2% -0.9% 33.7%
Inputs to maintenance and repair construction -1.3% -2.0% 31.8%
Inputs to highway and street construction -1.2% 0.0% 31.4%
Commodities
Adhesives and sealants 0.1% 1.8% 28.9%
Concrete products 0.7% 9.7% 30.5%
Construction machinery and equipment 0.0% 6.0% 23.6%
Copper wire and cable -1.3% 2.7% 24.2%
Crude petroleum -2.9% -3.0% 56.9%
Fabricated structural metal products 0.8% -0.7% 42.3%
Insulation materials -0.3% 1.6% 31.0%
Iron and Steel -2.3% -6.1% 40.79%
Lumber and wood products -0.3% -6.5% 22.3%
Natural gas 10.9% -54.9% 40.8%
Plumbing fixtures and brass fittings 0.5% 1.4% 16.1%
Prepared asphalt, tar roofing, and siding products 0.7% 3.9% 34.4%
Steel mill products -2.5% -9.9% 47.0%
Switchgear, switchboard, industrial controls
equipment
0.2% 6.3% 32.0%
Unprocessed energy materials -0.3% -16.2% 60.2%
III. Effect of Proposed Changes:
The bill revises the maximum dollar amount for continuing contracts for construction projects.
Section 1 amends s. 255.103, F.S., to increase the maximum dollar amount for a continuing
contract for construction projects from $4 million to $7.5 million. Beginning July 1, 2025, and
annually thereafter, the Department of Management Services (DMS) must adjust the maximum
amount allowed on the preceding June 30 for each individual project in a continuing contract
based on the June-to-June Consumer Price Index for all Urban Consumers (CPI-U) issued by the
United States Department of Labor. The DMS must publish the adjusted amount on its website.
Section 2 amends s. 287.055, F.S., to increase the maximum dollar amount for a continuing
contract for professional services from $4 million to $7.5 million. Beginning July 1, 2025, and
annually thereafter, the DMS must adjust the maximum amount allowed on the preceding June
30 for each individual project in a continuing contract based on the June-to-June CPI-U issued
by the United States Department of Labor. The DMS must publish the adjusted amount on its
website.
BILL: CS/CS/SB 656 Page 9
Section 3 provides that the bill takes effect on July 1, 2024.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Not applicable. The bill does not require counties and municipalities to spend funds,
reduce the counties’ or municipalities’ ability to raise revenue, or reduce the percentage
of state tax shared with counties or municipalities.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
The bill may have an indeterminate, positive fiscal impact on the private sector,
especially contractors with capacity for larger (up to $7.5 million projects). The increased
maximum dollar amount for continuing contracts for construction projects could allow
more projects to be covered under a continuing contract, and would reduce the
competitive solicitations a firm would undergo to become qualified under the
Consultant’s Competitive Negotiation Act (CCNA).
C. Government Sector Impact:
Governmental entities that use continuing contracts incur costs related to the competitive
selection and negotiation process. The bill, by increasing the maximum dollar amount for
continuing contracts, captures more related services and construction projects, and may
reduce the need for solicitations and their related administrative costs. Thus, the bill may
have an indeterminate positive fiscal impact on the government sector. However, the
increase of the cap for projects grouped under a continuing contract may provide less BILL: CS/CS/SB 656 Page 10
oversight on the total project cost, which may result in higher-than-necessary costs to the
government.
The Department of Management Services may incur a cost related to the annual
calculation of, and posting of the CPI-adjusted contract amount on its website.
VI. Technical Deficiencies:
None.
VII. Related Issues:
The chart below illustrates the impact of a CPI growth factor on the maximum cost per project.
Column 1 is the current consumer price index percentage change December over December.
58
Column 3 illustrates the maximum thresholds if the current law maximum ($4 million) per
project is grown annually by the CPI percentage increase. Column 4 illustrates the maximum
thresholds if the maximum is set at $7.5 million beginning July 1, 2024. Likewise, Column 5
illustrates the same assuming the $10 million threshold set in this bill.
Column 1 Column 2 Column 3 Column 4 Column 5
CPI Year Beginning
July 1
Current Law
adjusted annually
by CPI
$7.5 million
adjusted annually
by CPI
$10 million
adjusted
annually by CPI
2020 4,000,000
1.3% 2021 4,052,000
4.7% 2022 4,242,444
8.0% 2023 4,581,840
4.1% 2024 4,769,695 7,500,000 10,000,000
2.7% 2025 4,898,477 7,702,500 10,270,000
2.6% 2026 5,025,837 7,902,765 10,537,020
2.3% 2027 5,141,431 8,084,529 10,779,371
2.3% 2028 5,259,684 8,270,473 11,027,297
2.2% 2029 5,375,397 8,452,423 11,269,898
2.1% 2030 5,488,281 8,629,924 11,506,565
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 255.103 and
287.055.
58
Florida EDR, National Economic Estimating Conference Long Run Tables—FINAL, at 11 (Dec. 18, 2023)
http://edr.state.fl.us/Content/conferences/useconomic/index.cfm (last visited Jan. 29, 2024). BILL: CS/CS/SB 656 Page 11
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Appropriations Committee on Agriculture, Environment, and General
Government on February 13, 2024:
The committee substitute applies the annual CPI adjustment to local governmental
entities under s. 255.103, F.S., to make the maximum dollar amount for a project
consistent with that calculated for state projects under s. 287.055, F.S.
CS by Governmental Oversight and Accountability on January 29, 2024:
Decreases the maximum cost of each individual agency project that may be
conducted under a continuing contract from $10 million (in the bill) to $7.5 million.
Clarifies the method used to calculate the CPI-adjusted maximum project cost, and
requires the Department of Management Services to post that annually updated
number on its website.
Deletes language applicable to the Department of Transportation’s use of continuing
contracts for specific services.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.