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Consultant’s Competitive Negotiation Act (CCNA)

Adopted by the Florida Legislature in 1973, Florida Statute 287.055 CCNA requires state government agencies, municipalities or political subdivisions, school boards and school districts, to select a consulting firm based on qualifications rather than on a “lowest bid” basis. Qualification-based selection elevates this competitive process to its proper plane. The unscrupulous professional can find endless ways to cut their costs. Unjustified cost cutting may prove difficult to detect; is generally detrimental; undermines the quality of the finished product; may increase the total cost of the project; and essentially works against the client’s best interests.

Sales Tax on Services

As state officials and design professionals learned in 1987, the taxation of design services is very confusing and costly. It also results in pyramiding, layering, and duplication of taxes. Any attempt to promote this idea should be defeated.

Taxing Design Services is Confusing and Costly – A BAD IDEA

As state officials and design professionals learned in 1987, the taxation of design services is very confusing and costly. Any attempt to promote this idea should be defeated.

* Pyramiding of Taxes

Design services are typically provided through a contractual agreement between an architect, as the prime consultant, and the owner and multiple sub-consultant agreements between the architect and a variety of specialists including engineers, landscape architects, interior designers and others. The following diagram illustrates the pyramiding of taxes that can occur by taxing design services - leading to dramatically higher costs for housing, commercial and industrial structures built for Florida homeowners and businesses. Add to this the taxes applicable for blueprints prepared for the architect by a blueprint shop and you have a very costly, confusing sales tax.

(Pyramided Taxes) OWNER ARCHITECT

Structural Engineer Landscape Architect

Civil Engineer Interior Designer Tax Tax

Tax Tax

Tax

Mechanical Engineer

* In-State vs. Out-of-State Services

Any claim by proponents that application of a sales tax on in-state vs. out-of-state design services is "simple" is totally contradicted by the Department of Revenue's rules adopted to implement the 1987 tax on services. Those rules proved extremely complicated and universally misunderstood. For example, assume that an in-state corporation hires an in-state architect to perform design services for a commercial office building in Georgia. Under the 1987 rules, the services were taxed if they were not related to a specific parcel of property in Georgia, but, if related to a specific parcel of property, the services were not taxed. For a typical project in Georgia, this meant you could have initial feasibility and programming services which might be taxed, site-specific drawings for the building which would not be taxed, and site-specific construction administration services which probably would not be taxed. There are literally hundreds of such examples which kept design professionals and the state's taxing authorities in a constant quandary regarding taxable vs. non-taxable services.

Economic Stimulus

AIA Florida believes that the current economic crisis presents an opportunity not only to build, but to build better - greener buildings, vibrant communities, and a 21st century transportation network that is good for both the environment and the economy. We believe that funding for infrastructure projects, for business enterprises, and individuals should be prioritized with shovel-worthy projects and business incentives. The SunRail is the next important step in improving mass transit in the Central Florida region and beyond. Over time, the creation and interconnection of a number of regional commuter rail systems around the state will promote both economic development and sustainability.

481 - Reciprocity

The architect’s comprehensive education and training encompass the impact of design and technology on the health and well-being of the public and on the built and natural environments.

AIA Florida supports maintaining the current standards and requirements for architects in Florida Statutes 481. Any modifications should undergo a through review with all parties affected by changes, and could take longer than the 60-day session will allow.

F.S. 481 - Reciprocity

AIA Florida supports maintaining current standards for education and experience for architectural licensing with in F.S. 481

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SB 1542 filed by Sen. Bennett (Compare to HB 1303)

The Florida Legislature, in 1984, imposed a professional architectural degree as a minimum requirement for qualification to practice architecture in the state. Senate Bill 1542 would relax this requirement in Florida and provides certain persons the right to be licensed as architects in Florida without any minimum education. AIA Florida is in favor of maximizing reciprocal licensing to afford opportunities for all qualified architects to practice in our state, but not at the expense of accommodating persons who do not possess appropriate education and experience backgrounds to adequately protect the public.

HB 1303 filed by Rep. Troutman

HB 1303 attempts to address issues pertaining to commercial office supply companies and interior design practice, to which AIA Florida offers it assistance in attempting to address these issues. Another concern in HB 1303 is a reduction in the minimum education required for architects to be licensed in our state. AIA Florida is in favor of maximizing reciprocal licensing to afford opportunities for all qualified architects to practice in our state, but not at the expense of accommodating persons who do not possess appropriate education and experience backgrounds to adequately protect the public. AIA Florida encourages the removal of these provisions of the bill.

SB 2598 filed by Sen. Gaetz (Identical to HB 1413)HB 1413 filed by Rep. T. Williams

Florida’s licensing requirements have, since 1984, taken into consideration the need for formal, advanced education in order for a person to be adequately prepared to practice the specialized profession of architecture. These bills substantially undermine these educational standards by changing the license renewal date to four year cycles and reducing requirements to maintain knowledge in the updated technologies of today’s profession. Also, adding a blanketed licensure based on two years experience in another state does not prepare an achitect for Florida’s adverse climate and increasingly complex building codes.

Like many other professions model laws have been developed for continuity and uniformity. Changes to F.S. 481 will dilute the intent of these current standards. If there are inequities that do not lower the qualities of a person applying for Florida licensure, AIA Florida is willing to work with legislators to develop language that acheives goals for everyone.

Economic Stimulus

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Rebuild and Renew Florida Stimulus Plan Proposal

The Florida Association of the American Institute of Architects Plan for Restoring our Economy and Greening Our Communities in Florida

President Obama called the 2009 economic stimulus measure the most sweeping economic legislation passed in the nation’s history. He said the law will fund record investments in education, new energy research and new infrastructure - spending he said, that will lay the foundation for the nation’s economic future.

On June 28, 2008, at the “Serve to Preserve Summit” on Global Climate Change, Governor Crist said, “We must develop the talent and expertise in our people so they can fill the high-wage, high-demand jobs in the green tech field.”

AIA Florida believes that the economic crisis presents an opportunity not only to build, but to build better - greener buildings, vibrant communities, and a 21st century transportation network that is good for both the environment and the economy. Any funding for infrastructure projects or stimulus funding for business enterprises and individuals should be prioritized with these shovel-worthy and business incentive principles in mind. It is critically important to get the stimulus plan money into the hands of businesses and consumers that will properly reinvest the dollars back into the marketplace.

Examples of ways to begin this process include:Projects for which the design process can start within 6 months of

enactment and construction can commence within 24 months.Projects that rebuild and improve safety of existing infrastructure.Projects for new infrastructure that are more energy efficient, sustainable

and help create healthy, livable communities.Incentives for businesses and individuals to enhance sustainable

operations and lifestyles.Funding to help businesses lower operational costs and save existing jobs.

The AIA Florida believes that the best way to meet these goals is to ensure that any economic recovery spending provides funds for the planning and design process for new projects as well as for “shovel-ready” projects.

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Florida’s architects believe that the economic crisis presents an opportunity not only to create

jobs, but to build and to build better.

To achieve these goals, AIA Florida has developed policy ideas in six key areas that, if enacted now, would invigorate the design and construction industries, in turn providing an immediate stimulus to the economy.

21st Century Schools - Invest in, and direct school districts, universities and community colleges to repair, modernize and green existing facilities.

Green Building - Provide funding for energy efficiency retrofits to public, residential, commercial, industrial and healthcare facilities.

Transit and Livable Communities - Create compact, walkable communities focused on village live/work centers resulting in energy independence.

Historic Preservation - Provide grants for historic preservation projects involving historic infrastructure, school buildings for modern classroom use, and projects incorporating green building technology and methods into historic buildings and neighborhoods.

Alternative Energy Rebate Program for Home Owners and Businesses - Maintain and increase the funding for Florida’s current Solar Energy System Incentives Program as well as provide a property tax rebate for individuals who strengthen the structure of their home against hurricane/storm situations

Business Incentive/Assistance Programs - Provide low interest emergency loans or grants to businesses to avert the need to shut down operations or lay- off employees, as well as, provide rent rebates to who use sustainable methods.

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SunRail (SB 1212/HB 7009)

AIA Florida considers the completion of SunRail as the next important step in improving mass transit in the central Florida region and beyond. Over time, the creation and interconnection of a number of regional commuter rail systems around the state will promote both economic development and sustainability.

This project is in the best interest of short term economic recovery and long term

cultural evolution in the state of Florida. Orlando Mayor Buddy Dyer unveiled a new study that showed SunRail could generate 13,000 construction jobs and give Florida’s economy an immediate $350 million jolt.

The entire route would consist of 61 miles of service to DeLand, through Orlando and downtown Kissimmee to Poinciana. Phase 1 is 31-miles and will connect DeBary to Sand Lake Road in Orange County. The corridor would provide a higher speed transportation option for commuters traveling from as far as Daytona Beach on the northern end and from Polk County on the southern end.

Traffic congestion is a growing concern for The Citizens who live, work and visit Central Florida. The region continues to grow everyday at a staggering pace and that congestion will only get worse.

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The 31-mile first phase of SunRail would serve 12 stations, linking DeBary to Orlando. Phase II would serve five additional stations, north to DeLand and south to Poinciana. Service is expected to begin in 2011 - just as FDOT is expected to start a major I-4 reconstruction project through the heart of Central Florida. In addition to providing Central Florida with a vital new transportation option, SunRail also offers us a new foothold on the future - providing thousands of new jobs and pumping millions of new dollars into our state and local economies.

Support SB 1212/HB 7009 and support the economic and sustainable growth of our great state.

At a press conference in Tallahassee to unveil the results of the SunRail Economic Impact Study, Gov. Crist enthusiastically described SunRail as a “wonderful, thought-out project that will help our economy and our transportation.”

“It is the most significant transportation project to come along in Central Florida in a couple of decades,” Dyer said.

“He pegs the price of SunRail at close to $1billion. But that is a bargain, SunRail enthusiasts say, when compared to the estimated $7 billion it would cost to add one lane in either direction to Interstate 4 for the 61.5 miles covered by the train.”

* Sources include: The Orlando Sentinel - SunRail pulls into Florida Senate once again on March 4, 2009 Channel 13 Central Florida News - SunRail Supporters Take Fight To Tallahassee on February 5, 2009

NO Sales Tax on Services (SB 2576/HB 1163)

Taxing Design Services is Confusing and Costly – A BAD IDEA

As state officials and design professionals learned in 1987, the taxation of design services is very confusing and costly. Any attempt to promote this idea should be defeated.

* Pyramiding of Taxes

Design services are typically provided through a contractual agreement between an architect, as the prime consultant, and the owner and multiple sub-consultant agreements between the architect and a variety of specialists including engineers, landscape architects, interior designers and others. The following diagram illustrates the pyramiding of taxes that can occur by taxing design services - leading to dramatically higher costs for housing, commercial and industrial structures built for Florida homeowners and businesses. Add to this the taxes applicable for blueprints prepared for the architect by a blueprint shop and you have a very costly, confusing sales tax.

(Pyramided Taxes) OWNER ARCHITECT

Structural Engineer Landscape Architect

Civil Engineer Interior Designer Tax Tax

Tax Tax

Tax

Mechanical Engineer

* In-State vs. Out-of-State Services

Any claim by proponents that application of a sales tax on in-state vs. out-of-state design services is "simple" is totally contradicted by the Department of Revenue's rules adopted to implement the 1987 tax on services. Those rules proved extremely complicated and universally misunderstood. For example, assume that an in-state corporation hires an in-state architect to perform design services for a commercial office building in Georgia. Under the 1987 rules, the services were taxed if they were not related to a specific parcel of property in Georgia, but, if related to a specific parcel of property, the services were not taxed. For a typical project in Georgia, this meant you could have initial feasibility and programming services which might be taxed, site-specific drawings for the building which would not be taxed, and site-specific construction administration services which probably would not be taxed. There are literally hundreds of such examples which kept design professionals and the state's taxing authorities in a constant quandary regarding taxable vs. non-taxable services.

Pyramiding of TaxesDesign services are typically provided through a contractual agreement between an architect, as the prime consultant, and the owner and multiple sub-consultant agreements between the architect and a variety of specialists including engineers, landscape architects, interior designers and others. The following diagram illustrates the pyramiding of taxes that can occur by taxing design services - leading to dramatically higher costs for housing, commercial and industrial structures built for Florida homeowners and businesses. Add to this the taxes applicable for blueprints prepared for the architect by a blueprint shop and you have a very costly, confusing sales tax.

Taxing Design Services is Confusing and Costly –A BAD IDEA

As state officials and design professionals learned in 1987, the taxation of design services is very confusing and costly. Any attempt to promote this idea should be defeated.

In-State vs. Out-of-State ServicesAny claim by proponents that application of a sales tax on in-state vs. out-of-state design services is “simple” is totally contradicted by the Department of Revenue’s rules adopted to implement the 1987 tax on services. Those rules proved extremely complicated and universally misunderstood. For example, assume that an in-state corporation hires an in-state architect to perform design services for a commercial office building in Georgia. Under the 1987 rules, the services were taxed if they were not related to a specific parcel of property in Georgia, but, if related to a specific parcel of property, the services were not taxed. For a typical project in Georgia, this meant you could have initial feasibility and programming services which might be taxed, site-specific drawings for the building which would not be taxed, and site-specific

construction administration services which probably would not be taxed. There are literally hundreds of such examples which kept design professionals and the state’s taxing authorities in a constant quandary regarding taxable vs. non-taxable services.

Taxation of Reimbursable CostsIn the delivery of design services, there are always costs incurred by design professionals which are reimbursable by the client. In 1987, these reimbursable costs had to be added to the professional’s fees before application of the tax unless the professional collected monies in advance from the client for direct payment of the costs. In other words, in order to avoid taxation - actually double taxation — of cost items, design professionals had to establish individual escrow accounts for each client and the client had to fund such accounts from which costs were directly paid.

Design/Build ServicesOne of the design and construction techniques that is frequently offered to homeowners and commercial building owners is a combined design/build service provided by a firm or a combination of firms. The owner contracts with a firm or joint venture to perform both design and construction services. Oftentimes, such services are delivered on a fixed fee arrangement. Again, the experience of owners, design professionals and construction professionals in dealing with the application of Florida’s 1987 sales tax to these services was, universally, BAD.

ConclusionThe AIA Florida encourages you to carefully review this state’s own history in taxing design professional’s services. The 1987 services tax was a nightmare for architects and other design professionals, their clients - as well as regulators. The tax increased infrastructure costs throughout Florida (“taxing” our own citizens) while not producing any meaningful revenues from outside the state. This type of tax will also jeopardize the ability of small architectural firms to compete due to the fact that such firms utilize outside (vs. in-house) engineers, etc., and will be taxed for such services while larger competitors may avoid these taxes.

AIA Florida opposes any proposal to tax services; are NOT opposed to a systematic review of sales tax exemptions; but are opposed any automatic sunset of sales tax exemptions.

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The architects of Florida ask you not to repeat the 1987 mistake.

Consultant’s Competitive Negotiation Act (CCNA)

The CCNA applies to the public procurement of professional services within the scope of the practices of architects, landscape architects, professional engineers, and registered surveyors or mappers, and applies to the State of Florida and it’s agencies, municipalities, counties and other political subdivisions (taxing districts, etc.) and school districts or schools boards.

When selecting a design professional a public owner’s primary concerns are to get the best available design services for the taxpayer’s money and to conduct a fair and equitable selection process. The design professional’s performance influences the entire course of the project—financial, feasibility, design, function, construction operation and maintenance during the facility’s life cycle. The CCNA provides an equitable, rational and efficient method of selecting professional design services based on an evaluation of qualifications and competence as they relate to the demands of specific public projects. The CCNA has met the test of time in providing quality and cost effective design for Florida’s public entities and assuring and equitable distribution of work among Florida’s design professionals.

In 1971, the Florida Legislature enacted Legislation creating qualifications based public procurement system for the acquisition of professional design and other services. This law is the “Consultant’s Competitive Negotiation Act” (CCNA). The intent of CCNA is to establish a procedure wherein public agencies in the State of Florida are required to: (a) give public notice of projects; (b) select the most qualified firm for the identifies project by considering pertinent criteria other than compensation; and (c) negotiate a fair and reasonable contract with the selected firm.

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Qualifications-based selection elevates the competitive process to its proper plane and allows for:

An objective and fair process to select architects based on real experience and qualifications as related to the project

Maintaining architectural standards for the health, safety and welfare of Floridians

Creating accurate and relevant drawings/designsHiring of qualified staff paid at competitive wagesConsideration of the longevity and sustainability of the structures

Bidding professional consulting services causes disadvantages to the owner as the firm attempts to make a profit despite their “lowest bid” fee. This may cause:

Inadequate drawings and indefinite specificationsDelayed construction due to design adjustments and complete redesignsIncreased construction costs and project durationsReduction in health, safety, welfare adherence to meet low bidsLoss of aesthetic value

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It is important that the Florida Legislature keep the CCNA laws intact to continue to provide the best facilities for our citizens. Their health, safety and welfare are what matter the most.