Relates to requirements for selecting the lowest responsible bidder for certain public works contracts

* Subdivision 1 defines a responsible bidder to mean a bidder who is not disqualified from receiving a public work contract because its contrac- tors or subcontractors failed to meet certain responsibility standards. * Subdivision 2 requires each contractor and subcontractor for public work to complete a responsibility questionnaire. The State Comptroller would maintain the information in a database, which state and local contracting officials would be required to review before awarding a contract. * Subdivision 3 lists the contents of the questionnaire which include identification of principals, owners, officers and shareholders with 5% or more of the firm's stock; type of business entity; identification of subcontractors; use of apprenticeship training; violations of state or federal prevailing wage, unemployment insurance, workers' compensation, environmental and other labor laws; failure to file tax returns or any tax liabilities or judgments; criminal history of business-related activity; contract sanction history including debarments; expertise; fiscal resources; and proof of surety bonding and workers' compensation. * Subdivision 4 requires affirmation of the questionnaire for truth, accuracy and completeness. * Subdivision 5 disqualifies a bidder whose contractors or subcontrac- tors lack workers' compensation coverage; violated prevailing wage, workers' compensation, unemployment insurance or other laws within spec- ified periods; or failed to provide apprenticeship training. Bidders may also be disqualified who lack adequate expertise or fiscal resources, use unsafe equipment, submit bids that are disproportionately lower than the agency's estimate or are mathematically or materially unbalanced; fail to comply with state or federal requirements for using minority- owned, women-owned or disadvantaged businesses; present false or misleading information; or present other cause to question the capabili- ty and responsibility of the contractor and subcontractors.

Section 2 adds a new section 100-b to the general municipal law to establish similar responsibility standards and requirements to award local public work contracts.

Existing law

State finance law section 135, general municipal law section 103 and other sections of state law require various state and local agencies and

public authorities to award public work contracts to the lowest respon- sible bidder but do not define the term "responsible."

Justification

State and local public work contracts above certain dollar amounts are required to be awarded to the lowest responsible bidder. There are no standards in the law, however, for contracting officials to use in determining who is a responsible bidder. As a result, public work contracts are awarded using different standards throughout New York. Many contracting officials understand that contractors who fail to pay prevailing wages and payroll taxes, tail to provide workers' compen- sation, or who possess a criminal record related to business activity are not responsible bidders. In the end though, since the law also allows agencies to consider the lowest bid, award decisions are often driven by cost savings.

This gap in the law has serious consequences for law-abiding employers and workers alike. The lack of responsibility standards allows unscrupu- lous contractors to win bids even though they misclassify workers as independent contractors to avoid paying unemployment taxes, prevailing wages, workers' compensation and disability insurance. This creates an unlevel playing field for employers who submit higher bids because they rightly pay prevailing wages and provide apprenticeship training. The welfare and safety of employees are also placed at risk. Workers do not receive prevailing wages, or workers' compensation benefits if injured on the job. They also often lack needed training because their employers do not participate in apprenticeship training programs.

Irresponsible contractors and subcontractors create additional costs for local and state governments. Municipalities are hurt when local workers bring home insufficient paychecks to support local businesses and local taxes. Injured employees without workers' compensation or disability coverage can turn to public assistance. Poorly built projects generate new costs in terms of needed repairs, delay and enforcement actions. For the State, millions of dollars in uncollected revenues from unemployment and other payroll taxes are siphoned off into New York's underground economy.

The problems caused by irresponsible bidders have existed for decades in the New York State. In April 2009, a legislative hearing was held to study the problems under the current law and determine whether the law should be changed. Testimony was presented by state and local government officials, employee and employer organizations, and others with first- hand knowledge of the economic, social, and brick-and-mortar impli- cations from irresponsible bidding. Among the best practices used today by many jurisdictions in New York and elsewhere is a responsibility questionnaire that public work contractors and subcontractors must complete and agencies must review prior to awarding a public work contract. The questionnaires determine whether potential contractors and subcontractors for public work comply with prevailing wage and other labor laws, maintain unemployment and workers' compensation coverage,

use apprenticeship training programs, have not been involved in busi- ness-related criminal activity, possess adequate expertise and fiscal resources, and meet other responsibility standards. The use of standards also helps reduce the frequency of litigation brought by unsuccessful bidders who often challenge the objectivity of public work awards by contracting officials.

These reforms to the State's lowest responsible bidding law will bring much-needed and long overdue reform to the way state and local agencies use public money to award public work contracts. The legislation will also expand opportunities for qualified minority and women-owned busi- nesses to perform public work contracts.

Prior legislative history

New bill.

Fiscal implications

Modifications to the existing computerized database for state public work contracts is expected to be minimal.

Effective date

This bill would take effect 90 days after its enactment into law.