On an Arkansas county construction project, can the construction manager also serve as the general contractor without competitive bidding?

Plain-English summary

Representative Bob Ballinger asked, on behalf of a county judge, two related questions about a county construction project:

1. Under Ark. Code Ann. § 19-11-801, may the construction manager also serve as the general contractor for the underlying project?
2. Is competitive bidding required?

Attorney General Leslie Rutledge said the answers were a paired "no, no" with a structural explanation. Section 19-11-801 says competitive bidding "shall not be used" for procurement of certain professional services, including construction management. So the construction manager is selected through qualifications-based negotiation, not through competitive bidding. But the public works law at Ark. Code Ann. § 22-9-203 and Article 19, section 16 of the Arkansas Constitution require competitive bidding for the construction work itself when project costs exceed $35,000. The result: the same entity cannot fill both roles, because doing so would let the construction manager (selected without bidding) capture the general-contractor work (which must be competitively bid).

There is one narrow exception. Section 19-11-801(d)(2)(C) recognizes a "general contractor construction management" delivery method in which the construction manager serves as the general contractor. But, citing Ops. Att'y Gen. 2013-051, 2009-038, and 2009-033, the AG flagged that this provision applies only to school districts, not to counties.

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The $35,000 threshold in Ark. Code Ann. § 22-9-203(a) is set by statute and has been adjusted in past sessions. Section 19-11-801 has been amended multiple times. Anyone preparing a county construction procurement today should pull the current versions of §§ 19-11-801 and 22-9-203 and check for newer AG opinions on the construction-manager / general-contractor split, especially as state and local governments have increasingly used CM-at-Risk and design-build delivery methods.

Historical context

What the county wanted to do (as of 2019)

A county construction project. The county's procurement was apparently considering letting the construction manager (selected through the non-bid qualifications-based process) also serve as the project's general contractor without further competitive bidding. The county judge asked his state representative, who asked the AG, whether that combination was allowed.

Why "no" follows from the procurement rules

The construction-manager rule. Ark. Code Ann. § 19-11-801(b) prohibits competitive bidding for "construction management" services:

It is the policy of the State of Arkansas and its political subdivisions that political subdivisions shall follow the procedures stated in this section, except that competitive bidding shall not be used for the procurement of legal, financial advisory, architectural, engineering, construction management, and land surveying professional consultant services.

The procurement procedure for construction management uses a qualifications evaluation and a negotiated contract. §§ 19-11-803 through 19-11-805. "Construction management" is defined in § 19-11-801(d)(1) as a project delivery method in which the political subdivision acquires a series of services including design review, scheduling, cost control, value engineering, constructability evaluation, preparation and coordination of bid packages, and construction administration. In other words, the construction manager is a coordinator and adviser, not the entity that performs the underlying construction.

The public-works rule. When the construction work itself starts, a different rule kicks in. Ark. Code Ann. § 22-9-203(a) requires counties to use competitive bidding for "the making of major repairs or alterations, for the erection of buildings or other structures, or for making other permanent improvements ... in instances in which all estimated costs of the work exceed the sum of thirty five thousand dollars ($35,000)." Article 19, section 16 of the Arkansas Constitution reinforces this for "[a]ll contracts for erecting or repairing public buildings or bridges in any county, or for materials therefor ... under such regulations as may be provided by law."

The Supreme Court has applied Article 19, section 16 to county construction contracts. See Gatzke v. Weiss, 375 Ark. 207, 289 S.W.3d 455 (2008).

Why the construction manager cannot also be the general contractor

If a single entity both managed and built the project, the entity would have been chosen through the qualifications-and-negotiation process and would also be performing the construction work. That captures the construction work without competitive bidding, in violation of the public works law and Article 19, section 16. The AG concluded there is no waiver authority to bypass these requirements on a county project, so the two roles must be procured separately.

The narrow school-district exception

Section 19-11-801(d)(2)(C) describes "general contractor construction management" as a delivery method in which the construction manager "serves as the general contractor." That language might suggest competitive bidding can be skipped for the construction work in this single-entity model. But the AG, citing Ops. Att'y Gen. 2013-051, 2009-038, and 2009-033, concluded the (d)(2)(C) provision applies only to school districts. Counties do not get the school-district exception.

Practical takeaway for counties (at the time)

A county construction project subject to the public works law had to be procured in two tracks:

• Track 1: Construction manager. Negotiated and qualifications-based. Section 19-11-801 prohibits competitive bidding here.
• Track 2: General contractor / construction work. Competitively bid. Section 22-9-203 and Article 19, section 16 require it when costs exceed $35,000.

The same entity could not occupy both tracks on a county project. The county could not waive the bidding requirement.

Common questions

Q: Why can't a single entity both manage and build a county project?
A: Per the AG, because doing so would let the entity skip competitive bidding for the construction work. The entity is selected as construction manager through a non-bid process, and the construction work has to be bid under Ark. Code Ann. § 22-9-203 and Article 19, section 16. Combining the roles in one entity defeats the bid requirement.

Q: When does competitive bidding kick in for county construction?
A: When the estimated cost of the work exceeds $35,000, per Ark. Code Ann. § 22-9-203(a). Below that threshold, the public works law's bidding requirements do not apply. Article 19, section 16 of the constitution still governs, but its specifics are implemented through statute.

Q: Is the school-district exception available to counties?
A: No. The AG read § 19-11-801(d)(2)(C), the "general contractor construction management" provision, as applying only to school districts.

Q: How is a construction manager selected if not through bidding?
A: Through a qualifications-based selection and contract negotiation under §§ 19-11-803 through 19-11-805. The county evaluates the qualifications of interested firms and negotiates a contract with the most qualified.

Q: What happens if the county tries to award both roles to one entity?
A: The award could be challenged under the public works law and Article 19, section 16. A successful challenge could void the construction contract.

Background and statutory framework

Arkansas's procurement law uses a two-track structure for county construction. Track 1 covers professional services (legal, financial advisory, architectural, engineering, construction management, land surveying), all of which are exempt from competitive bidding under § 19-11-801(b). Track 2 covers the construction work itself, which is governed by the public works law at §§ 22-9-201 through 22-9-204 and reinforced by the constitutional bidding requirement at Article 19, section 16.

The two tracks reflect different policy concerns. For professional services, the legislature concluded that price-only competition produces poor outcomes; counties get better service by selecting on qualifications and negotiating fees. For construction, the legislature concluded that competitive bidding produces lower prices and reduces the risk of corruption or favoritism. The two-track structure works only if the two procurements stay separated.

The school-district exception in § 19-11-801(d)(2)(C) was created because school districts have somewhat different procurement dynamics, particularly around the size and complexity of K-12 facility construction. Counties were not given that exception.

Citations and references

Constitutional and statutory provisions:

• Ark. Const. art. 19, § 16 (competitive bidding for county public construction)
• Ark. Code Ann. § 19-11-801 (procurement of professional services)
• Ark. Code Ann. § 19-11-801(b) (competitive bidding excluded for listed services)
• Ark. Code Ann. § 19-11-801(d)(1) (definition of "construction management")
• Ark. Code Ann. § 19-11-801(d)(2)(C) (general contractor construction management; school districts only)
• Ark. Code Ann. §§ 19-11-803 to 19-11-805 (CM procurement procedures)
• Ark. Code Ann. §§ 22-9-201 to 22-9-204 (public works law)
• Ark. Code Ann. § 22-9-203(a) ($35,000 threshold for competitive bidding)

Cases:

• Gatzke v. Weiss, 375 Ark. 207, 289 S.W.3d 455 (2008), Ark. Supreme Court, Article 19, section 16 applies to county construction contracts

Related AG opinions:

• Op. Att'y Gen. 2013-051 (school-district CM/GC rule)
• Op. Att'y Gen. 2009-038 (school-district CM/GC rule)
• Op. Att'y Gen. 2009-033 (school-district CM/GC rule)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Opinion No. 2019-001
April 2, 2019

The Honorable Bob Ballinger
State Representative
508 Dr. Spurlin Circle
Berryville, AR 72616-3825

Dear Representative Ballinger:

This is in response to your request for an opinion on the following questions concerning Ark. Code Ann. § 19-11-801, which addresses the procurement of professional services by state agencies and political subdivisions:

1) Under this statute, may the construction manager also serve as general contractor of the underlying project?

2) Pursuant to this statute and as it relates to the underlying situation, is competitive bidding required?

You state that these questions are asked on behalf of a county judge, so I presume they relate to a county construction project.

RESPONSE

I gather you are aware that pursuant to section 19-11-801, competitive bidding may not be used when selecting a construction manager for a county construction project. So when you ask whether "the construction manager" may "also serve as general contractor," I surmise that the county would not use competitive bidding for the construction work on the project. With that understanding, the answer to your first question is "no," if the estimated cost of the project exceeds $35,000. Competitive bidding is required, pursuant to Ark. Code Ann. § 22-9-203 (the so-called "public works law") and Ark. Const. article 19, section 16, for the construction work on such a project.

In response to your second question, therefore, competitive bidding is prohibited when selecting a construction manager for a county construction project, but it is required for the construction work when the estimated cost of the project exceeds $35,000.

DISCUSSION

Question 1: Under this statute, may the construction manager also serve as general contractor of the underlying project?

The statute you have asked about, Ark. Code Ann. § 19-11-801, prohibits counties (along with other political subdivisions and the State) from using competitive bidding in the procurement of "construction management" services:

It is the policy of the State of Arkansas and its political subdivisions that political subdivisions shall follow the procedures stated in this section, except that competitive bidding shall not be used for the procurement of legal, financial advisory, architectural, engineering, construction management, and land surveying professional consultant services.

Ark. Code Ann. § 19-11-801(b) (Repl. 2016) (emphasis added). The procedures for securing the services of a construction manager involve evaluating the entity's qualifications and negotiating a contract. Ark. Code Ann. §§ 19-11-803 through 19-11-805 (Repl. 2016). "Construction management" is defined in relevant part as "a project delivery method based on an agreement in which a ... political subdivision ... acquires from a construction entity a series of services that include, but are not limited to, design review, scheduling, cost control, value engineering, constructability evaluation, preparation and coordination of bid packages, and construction administration." Id. at § 19-11-801(d)(1).

At the same time, the so-called "public works law" requires counties to use competitive bidding to select a contractor when the estimated costs exceed $35,000. Ark. Code Ann. §§ 22-9-201 through 22-9-204 (Repl. 2016 and Supp. 2017). The competitive bidding requirements under the public works law apply to county contracts "for the making of major repairs or alterations, for the erection of buildings or other structures, or for making other permanent improvements ... in instances in which all estimated costs of the work exceed the sum of thirty five thousand dollars ($35,000) ...." Ark. Code Ann. § 22-9-203(a) (Supp. 2017). Whether that provision applies depends on the underlying circumstances.

The Arkansas Constitution similarly requires the use of competitive bidding on "[a]ll contracts for erecting or repairing public buildings or bridges in any county, or for materials therefor ... under such regulations as may be provided by law." Ark. Const. art. 19, § 16. See Gatzke v. Weiss, 375 Ark. 207, 289 S.W.3d 455 (2008) (confirming art. 19, § 16's application to county construction contracts). I am unaware of any authority for waiving the competitive bidding requirements on a county construction project that is subject to the public works law.

Section 19-11-801 authorizes a project delivery method called "general contractor construction management" in which the construction manager "serves as the general contractor," suggesting competitive bidding would not be required to procure the construction contract. Ark. Code Ann. § 19-11-801(d)(2)(C). This provision only applies to school districts. See Ops. Att'y Gen. 2013-051, 2009-038, 2009-033.

With regard to your particular question, I gather you are aware that construction management services must be negotiated rather than competitively bid. So when you ask whether "the construction manager" may "also serve as general contractor," I surmise that competitive bidding would not be used to secure a contractor for the project. With that understanding, the answer to your question is "no," if the project's estimated cost exceeds $35,000 as required by the public works law.

Question 2: Pursuant to this statute and as it relates to the underlying situation, is competitive bidding required?

As you can see from my response to Question 1, different requirements come into play in connection with a county's procurement of construction-related services. Competitive bidding is prohibited when selecting a construction manager, but it is required for the construction work when the estimated costs of the project exceed $35,000. Accordingly, a county must procure a construction manager separately from a general contractor on such a county construction project.

Sincerely,

Leslie Rutledge
Attorney General