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

* Subdivision 1 defines a lowest responsible bidder to mean a bidder who submits the lowest bid and is not disqualified because its contractors or subcontractors failed to meet certain responsibility standards.

* Subdivision 2 requires each contractor and subcontractor for a contract over $100,000 to electronically submit a responsibility questionnaire to the contracting entity and State Comptroller who must maintain the information for review by contracting officials prior to awarding a contract.

* Subdivision 3 requires the questionnaire to identify the contractor's or subcontractor's principals, owners, officers and shareholders with 50 or more of the firm's stock, parent company and subsidiaries; 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 required by law and workers' compensation.

* Subdivision 4 requires affirmation as to the truthfulness of the questionnaire.

* Subdivision 5 requires contractors and subcontractors to update the information in their questionnaires prior to being considered for another contract.

* Subdivision 6 disqualifies a bidder whose contractors or subcontractors have had a final determination rendered within the past ten years for non-payment of prevailing wages or unemployment tax, failure to secure workers' compensation, employee misclassification, or a criminal conviction for business-related activity; or fail to provide apprenticeship training; or fail to provide proof of a required surety bond and workers' compensation insurance. Bidders may also be disqualified who lack adequate expertise or fiscal resources. use unsafe equipment, submit bids 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 capability 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 for local public work contracts.

Section 3 establishes the effective date.

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 responsible bidder, but do not define the term "responsible."

Justification

Although state and local public work contracts above a certain value are required to be awarded to the lowest responsible bidder, the law does not define who is a responsible bidder. As a result, public work contracts are awarded using different standards throughout the State. While contracting officials may understand that contractors who fail to pay prevailing wages and payroll taxes or fail to provide workers' compensation are not responsible employers, award decisions are often driven by cost savings.

Under a 1993 Executive Order that is still current, state contracting agencies are required to use responsibility standards in selecting bidders and subcontractors for public work contracts (9 NYCRR 4.170). Agencies must consider a contractor's and subcontractor's past or current record of criminal conduct in business-related activity, compliance with labor and workers' compensation laws, use of registered apprenticeship training programs, good faith compliance with state and federal requirements to use minority and women-owned businesses, and adequacy of expertise and financial resources, among other factors. Currently, the State Comptroller uses an electronic vendor responsibility system that requires bidders to submit questionnaires with information relating to these responsibility standards in order to bid on state public work projects. In 1987, the New York City Council passed legislation establishing similar responsibility standards for local bidders which requires use of a computerized database that receives electronic questionnaires from bidders and their principals. New York City's VENDEX system is used by the City's agencies to determine the responsibility of bidders prior to awarding public work contracts. (NYC Administrative Code 6-116 . 2).

Many local jurisdictions in New York and elsewhere require contractors to use apprenticeship training programs to be eligible for a public work contract, including Rochester, the New York City School Construction Authority, and localities in Massachusetts. Illinois, Ohio and California. Apprenticeship training ensures a safer workplace and reduces injuries to unskilled workers which can create new costs and delays for public owners. The bill allows contractors and subcontractors to participate in either a federal or state registered apprenticeship program. New York has 867 registered programs for 56

trades: including 600 independent individual programs The federal program includes 14 additional trades. Between these two programs, New York's contractors and subcontractors have diverse opportunities to satisfy their responsibility requirement to participate in an apprenticeship program.

The law's lack of responsibility standards creates an unlevel playing field for law-abiding contractors who submit higher bids because they rightly pay prevailing wages and provide apprenticeship training. The welfare and safety of employees are also at risk since they do not receive prevailing wages or workers' compensation benefits if injured on the job, and often lack necessary training because their employers do not participate in apprenticeship training programs. State and local governments are also impacted when workers bring home insufficient paychecks to support local businesses and pay taxes. Injured employees without workers' compensation or disability coverage may turn to public assistance. 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 New York. In 2009, a joint legislative hearing was held to study these problems and determine whether the law should be changed. State and local officials, employee and employer organizations, and others with first-hand knowledge of the economic, social, and brick-and-mortar implications testified regarding best practices of responsible bidding for public work used in New York and elsewhere. Responsibility standards would also help reduce the frequency of litigation by unsuccessful bidders who often challenge the award decisions of local contracting officials. Responsibility requirements may also expand opportunities for qualified minority and women-owned businesses to perform public work contracts. The Senate Labor Committee reported these findings in a report on the hearing, "Responsible Bidding on Public Work: Improving New York's Lowest Responsible Bidder Law," January 2010.

The reforms in this bill 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.

Prior legislative history

New bill.

Fiscal implications

Modifications to existing state computerized vendor responsibility program expected to he

Effective date

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