Alternates in Specifications of Materials in Construction Contracts

November 01, 2002

As we explained in our previous Legal Update, the General Assembly has recently revised N.C. Gen. Stat. § 133-3, entitled “Specifications to carry competitive items; substitution of materials.” Effective 6 September 2002, the legislature has deleted the following sentence from the statute:

If an architect, engineer, designer, draftsman or owner prefers a particular brand of material, then such brand shall be bid as an alternate to the base bid and in such case the base bid shall cite three or more examples of items of equal or equivalent design, which would establish an acceptable range for items of equal or equivalent design.

Because of this deletion, an owner in a bidding process for a construction contract can no longer seek bids on a specific product as an alternate to the base bid on a public project. This procedure had been utilized by school systems in order to address compatibility and quality concerns.

As it turns out, this change will be in effect for only four months, between 6 September 2002 through 31 December 2002. Due to concerns expressed by local boards of education and other public bodies, the legislature revised the statute again on the last day of this year’s session to add the following language:

Specifications may list one or more preferred brands as an alternate to the base bid in limited circumstances. Specifications containing a preferred brand alternate under this section must identify the performance standards that support the preference. Performance standards for the preference must be approved in advance by the owner in an open meeting. Any alternate approved by the owner shall be approved only where (i) the preferred alternate will provide cost savings, maintain or improve the functioning of any process or system affected by the preferred item or items, or both, and (ii) a justification identifying these criteria is made available in writing to the public.

Senate Bill 1217 (Technical Corrections Bill). Unfortunately, the added language does not take effect until 1 January 2003. The added language is intended to provide a more workable and open process for the parties involved in public building projects. The new language should allow school systems to secure products and resources they need to maintain and operate their facilities most efficiently. In the meantime, an owner in a bidding process for a construction contract cannot seek bids on a specific product as an alternate to the base bid in the four-month period from 6 September 2002 through 31 December 2002.

We thank you for the opportunity to provide ongoing legal services to the school system.

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