One of the most frequent calls we get at the CIFAC office is from a contractor wondering what the requirements are to be able to bid on public works projects. As money's raining down from SB1, the November 2014 Prop.1 water bond and another bond issue on the ballot June 5th, we’re sure we are going to be getting a lot more of these calls.
To help these contractors, we are offering this simplified list of requirements for bidding and performing any construction project in the state that includes taxpayer funding. The fundamental requirement leads to a host of more complicated questions but the basics are the basics everywhere.
It all starts with the Public Contract Code, the section of California law that establishes the rules of the road for public works contractors and their customers. Public Contract Code (PCC) applies in one respect or another to virtually all-public entities in California.
Public Contract Code §1100 contains an express declaration of legislative intent, stating that the purpose of the Code is to:
- To clarify the law with respect to competitive bidding requirements.
- To ensure full compliance with competitive bidding statutes as a means of protecting the public from misuse of public funds.
- To provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices.
- To eliminate favoritism, fraud, and corruption in the awarding of public contracts.
The importance of competitive bidding stems from the California Constitution and more than 140 years of California Supreme Court precedents.
First Things First
Therefore, if you want to bid public works in California, there are, as you might expect a bunch of rules.
The first rule is that you must be a licensed contractor, meeting the requirements of the Contractors State License Board (CSLB). In California, anyone who contracts to perform construction work that is valued at $500 or more in combined labor and materials costs must hold a current, valid license from the CSLB.
Your license will not say “Public Works,” of course but, instead, cover one of the two big categories; General Engineering (A) or Building (B) for general contractors or one of the 40+ specialty trade licenses (C) and the more exotic hazardous materials categories allowing you to perform work as a subcontractor in your specialty.
We hear you now saying “I’ve already got a license, so I’m good to go!” but the question is, do you have the correct license, as specified in the Request For Proposals (RFP) issued by the agency for whom you want to work. In either case, your work starts at the licensing website www.cslb.ca.gov and for more specialized information visit http://www.cslb.ca.gov/About_Us/Library/Licensing_Classifications/.
CSLB is more than a licensing agency, they are also an enforcement agency and here are the two big areas where CSLB is concerned with public works.
- Bids that don’t include all work needed
- Failure of contractors to complete work in a timely fashion
First, it is imperative that contractors provide awarding agencies bids that reflect the entire known work at the time of the bid. It is not appropriate for a contractor to low-ball a bid to get a job, and then try to increase the contract amount later with change orders. Disciplinary action has been taken in this area.
Second, CSLB is seeing an increasing number of public works jobs that are not being finished on time. Business &Professions Code §7119 requires that a contractor show due diligence in completing contracted work. Not doing so also gives CSLB a cause to take disciplinary action against a license.
No Rest for the Weary
After acquiring the proper license, your next step will be registration as a Public Works Contractor with the state Department of Industrial Relations (DIR) for any work performed that costs at least $15,000.
That means your next stop is at https://www.dir.ca.gov/public-works/contractors.html where the state labor agency runs you through the gauntlet of registration, paying a $400 fee for the privilege and learning the mandatory steps you must meet after you’ve registered.
The simple list is pay prevailing wages, follow apprenticeship requirements, maintain, and submit certified payroll records, but none of these requirements are simple. If you are signatory with any of the basic construction trade unions this will be familiar ground, but make sure you are following the DIR guidance.
Finally, the work is performed for a local agency/government/special district and the rules vary from town to school board to publically owned utility, etc., so the “Know Thy Customer” requirement for every business applies.
There have been many lawsuits filed over the years to determine what “public funds” means, but in essence, it is any job that has a cent of tax money in the funding, from a parking lot of a movie theater in the Mohave Desert to the massive bridge replacement in the Long Beach harbor; all are “publically funded.
If you have completed all the necessary CSLB and DIR steps, you still face challenges at the local level, starting with “prequalification.” All large public agencies and many smaller ones have prequalification requirements for their work. It has been in the PCC since 1999 for agency work and school districts.
Over the years, these criteria have morphed into a tangled web of differing standards so it is the contractor’s job to make sure they understand the local requirements in each jurisdiction.
This is an area where CIFAC does a lot of work, making sure that cities and other agencies follow the law. One area of major concern is in the actions of charter cities that often try to subvert the spirit if not the letter of the code.
Friends in the Business
Our final word of advice for contractors interested in bidding public works is that they join a trade association in their area, one of the many specialty groups that gather like-oriented contractors (plumbers, electricians, etc.) or one of the larger, broader groups that represent contractors across a broad array of interests.
Trade associations are more than a social club. Many are your representatives in union negotiations. Many will stand in your place regarding disagreements about the bidding and other practices of public works agencies. All of them concentrate the political power of your industry in Sacramento, county courthouses and city halls around the state to deliver collective efforts to improve the lot of contractors. Most of them provide educational programs about changes in laws and regulations that affect your business and share that information through their communications programs.
CIFAC works with many of the trade associations to help their members with these issues. If you are not a member, you should be. Become a member today.