February 27, 2024

Key Changes to Ohio Construction Law for Certain Public Entities Beginning October 3, 2023 - Update

Laura Bowman, Mark Evans, Brock Miskimen, Casey Rieth, Leah Thorsen

Bricker Graydon LLP

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Bricker Graydon LLP

Updated 02.20.2024 - Original Publication 08.20.2023

Effective October 3, 2023, the threshold amount for rejecting bids when they exceed the original construction estimate will increase for certain Ohio public entities. Previously, Ohio Revised Code (ORC)153.12 specified that no public owner, including the State of Ohio (State), could award a contract to a bidder whose bid exceeded 10% of the construction estimate. Effective October 3, 2023, only the State must reject bids that exceed 10% of the estimated contract amount, while a “county, township, municipal corporation, school district, special purpose district, or other political subdivision or a public board, commission, authority, or instrumentality of the political subdivision” must reject bids that exceed 20% of the estimated contract amount. This change in the law does not impact ORC Chapter 5525 regarding bids that exceed 5% for road improvements or the authority of the Director of the Department of Transportation.

Additionally, the competitive bidding threshold for certain Ohio political subdivisions including public libraries, counties, and townships will increase from $50,000 to $75,000 through 2024, and will then increase by 3% annually. House Bill 33 created ORC 9.17, which sets a uniform monetary threshold for competitive bidding for several types of political subdivisions. Instead of including a numerical amount, the applicable bidding statutes will now specify that the bidding threshold will be “the amount specified in section 9.17 of the Revised Code.” ORC 9.17 provides for a $75,000 bidding threshold through calendar year 2024 with an increase of 3% for each calendar year thereafter, as determined and published by the Director of Commerce. House Bill 33 also explicitly prohibits certain political subdivisions from dividing projects in order to avoid the competitive bidding requirements.

Following HB 33, park districts and legislative authorities of villages also became subject to ORC 9.17 through the enactment of HB 101, effective April 30, 2024.

Each type of political subdivision in Ohio has its own competitive bidding statute. The chart below summarizes the competitive bidding thresholds for various political subdivisions. However, this chart does not capture the full statutory requirements for each political subdivision, which are not the same. Additionally, there may be exceptions to competitive bidding requirements for specific political subdivisions. For example, the new law raises the estimated amount for when a county board of commissioners makes a determination that a real and present emergency exists from $100,000 to $125,000 as an exception to competitive bidding. Also note that different statutory procurement processes may be required to engage design professionals, construction managers at risk, and design-builders.

Political Subdivision	Competitive Bidding Threshold	ORC Citation
Cities and Villages*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§§ 735.05, 731.14, 731.141
Counties*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§ 307.86
County Sewer Districts	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§§ 6117.27, 307.86
Hospitals, County*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§§ 307.86, 307.92
Hospitals, Joint Township Hospital Districts	No threshold requirements are found in the Ohio Revised Code.
Hospitals, Municipal	$50,000 for construction projects subject to approval of the board of hospital trustees	§ 749.26
Public Libraries*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§ 3375.41
Metropolitan Housing Authorities	All projects, regardless of cost, are subject to competitive bidding.	§ 3735.36
Municipal Utilities (Water, Sewer, Gas and Electric)*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§ 735.05
Port Authorities	$150,000	§§ 4582.12(A), 4582.31(A)(18)(b)
Public School Districts	$50,000	§ 3313.46(A)
Regional Airport Authority*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§ 308.13(A)
Regional Sewer Districts	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§ 6119.10
Regional Transit Authority	$100,000	§ 306.43(E)(3)
Soil and Conservation Districts	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§§ 940.06(H)(1), 307.86
State of Ohio & its Agencies	$250,000 (effective 1/19/2023; to be reviewed and adjusted every five years)	§§ 153.01; 153.53
Townships*	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly) for most projects, but requirements vary depending on the purpose of the contract	§§ 505.37, 511.12, 515.01, 515.07,521.05, 505.35, 505.50
Park Districts	As defined by ORC 9.17 ($75,000 through 2024, increased 3% yearly)	§ 1545.07

* The law now explicitly prohibits this subdivision from dividing projects in order to avoid the competitive bidding requirements. However, it is an implied and recommended practice for all public entities to refrain from doing so as well.

Each political subdivision should review the applicable statutory requirements and its own internal policies in consultation with legal counsel to determine the proper procedures for procurement, including bidding for construction contracts and other types of purchases.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.