Published by MoASBO, July 2012
Regardless of the size, construction and maintenance projects can cause tremendous headaches for school administrators. In addition to making aesthetic and financially conscientious decisions, administrators must also be mindful of several fairly complicated legal issues. For example, school officials must be aware of prevailing wage laws, job-bidding requirements, and which municipal regulations require compliance. Of course, the type of task that the school needs done will determine the issues of which the administrator must be aware. That said, even small jobs can raise thorny legal questions. Throughout the next three subsections, this article will briefly explain some issues that school administrators should consider when they are commencing construction projects.
II. Prevailing Wage
Under Missouri’s prevailing wage law, school districts are required to pay all contracted workmen engaged in the “construction” of public works the prevailing hourly wage. Simply put, school districts must pay their contracted construction workers the same wage that would be paid for work of a similar character in the locality in which that work is performed. Administrators can find their county’s wage rates at www.labor.mo.gov/DLS/PrevailingWage/awo.asp. While the problem for administrators has not been determining what the appropriate rates are; it has been deciding whether the school must pay the prevailing wage for the particular type of work being done. This is because the statute does not require school districts to pay prevailing wage for any work that is “maintenance work.”
According to the statute, “construction” means reconstruction, improvement, enlargement, alteration, painting and decorating, or any other major repair. Mo. Rev. Stat. § 290.210. Furthermore, “construction” includes excavating, clearing, landscaping, altering, remodeling, demolishing existing structures, and transporting materials to or from the site of the construction by the employees of the construction contractor or construction subcontractor. 8 C.F.R. 30-3.020. Also, within the meaning of the Prevailing Wage Law, the manufacture or furnishing of materials, articles, supplies or equipment is not construction of public works unless conducted in connection with and at the site of construction. Id. In contrast, “maintenance work” is the repair, but not the replacement, of existing facilities when the size, type or extent of the existing facilities is not thereby changed or increased. Mo. Rev. Stat. § 290.210. Nevertheless, despite these fairly explicit definitions, courts across Missouri have struggled to clearly draw a distinction between the two.
Last year, the Missouri Supreme Court attempted to reduce the confusion when it defined the term “maintenance work” very narrowly. The Court said that any work that is within the plain meaning of the language defining “construction” is work that requires payment of prevailing wages, regardless of whether the work changes the size, type, or extent of an existing facility. For example, the Court said that because the contract at issue called for the complete repainting of the public facility, the work was “construction” and not “maintenance.” In fact, the Court would not explicitly say that minor touch-up work would be considered “maintenance.” Thus, in the future, school administrators should be weary of paying less than the prevailing wage to any contracted workers, no matter how small the project may be. Any school official that willfully violates this law by not paying the prevailing wage may face up to a $500.00 fine. Therefore, if administrators have any doubt, they should confer with legal counsel.
Although the Supreme Court’s decision probably comes as a great surprise to many, school administrators need not panic. The statute only refers to workmen that are directly employed by contractors or subcontractors engaged in actual construction work on the site of the building. This means that district employee, including the maintenance staff or custodians, may do the work at their regular hourly rate. A school district is not required to pay its employees prevailing wages. See State ex rel. Kraemer v. New Haven Sch. Dist., 813 S.W.2d 45 (1991). However, school administrators should be cautious about asking their employees to perform certain construction related tasks. Many building projects require workmen with highly specialized skills beyond those of a district’s staff. Administrators may think that they are saving money by not paying prevailing wage, only to find out that the job needs to be redone by someone more qualified.
III. Bidding Requirements
According to the law, before school districts can start any construction projects that cost over $15,000.00, they must entertain outside bids to do the work. To do this, districts must first publicly advertise in a newspaper of general circulation once a week, for two consecutive weeks. Then, all bidders must submit sealed bids in writing. Once the bidding period is over, the school district is required to open the bids publicly at a time and place of the district’s choosing. Finally, the statute states that the district “shall” award the construction contract to the “lowest responsible bidder” complying with the specifications furnished by the school district, provided that “the district shall have the right to reject any and all bids.” Mo. Rev. Stat. 177.086. But what does this mean? Does the school district really have to take the lowest bid? This is where the matter gets a little more complicated.
The “lowest responsible bidder” requirement is not as restricting as it may seem. First of all, school districts control what specifications they include in their requests for bids and the law does not require districts to entertain any bids that are not made in accordance with the terms supplied by the district. Id. Thus, if administrators want to avoid an excessive amount of bids or want to narrow the field of bidders, administrators should take time to carefully draft the district’s requests. For example, it is fine for a district to say that it will give preference to local businesses, companies that the district has worked with in the past, or companies that have a reputation of doing quality work. By including such conditions, the district gives itself more discretion in deciding which company fits its needs the most, without worrying about who is cheapest.
Secondly, the statute explicitly says that school districts have the right to reject any and all bids. Consequently, Missouri courts have held that unsuccessful low bidders do not have a cause of action when school districts provide as a term in the specifications that “the said school district shall have the right to reject any and all bids.” See State ex rel. Page v. Reorganized Sch. Dist. R-VI, 765 S.W.2d 317 (Mo. App. S.D. 1989). Thus, district administrators should be sure to include this disclaimer in their requests for bids in order to avoid any problems with disgruntled low bidders. That said, interested taxpayers may still have standing to bring suit if the district rejects the lowest bid fraudulently, corruptly, capriciously or without reason. School officials must exercise and observe good faith and accord all bidders just consideration, avoiding favoritism and corruption. An excellent way for a school district to demonstrate good faith is to select a construction contract that fulfills the specifications demanded in its request for bids.
School officials should also be mindful of how the prevailing wage law reconciles with the bidding procedures. The prevailing wage law states that before a public body can advertise for bids or award construction contracts, that public body must first determine the prevailing rates of wages. In the end, it is the school district’s responsibility to pay the workmen the accurate amount proscribed by the law; thus, as a proactive measure, school officials should demand that bid proposals reflect the appropriate prevailing wages for the different work that will be done.
IV. Municipal Building Codes
As a political subdivision of the state, school districts are only required to comply with a limited number of municipal building codes. Since 1957, Missouri courts have generally held that a city’s authority cannot extend to restrict or limit the use of public property for public purposes. Nonetheless, the courts have recognized a limited right of cities, in the exercise of the police power of the State, to regulate certain aspects of the operation of public school facilities. Municipalities may only enforce regulations that bear a substantial and rational relation to the promotion of public health, safety and general welfare. For example, all school buildings must comply with the local fire code because, as one court stated, it is clear “that the legislature has subjugated the school district’s general power to construct buildings to the fire district’s specific power to regulate the construction of buildings in the furtherance of fire prevention.”