The Importance of Contractor Licensing Laws

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The Importance of Contractor Licensing Laws

by Michelle Tucker, Northern Regional Compliance Manager

Anyone who works within the public works construction industry knows the importance of the contractor licensing laws in California. Our State has some of the strictest rules in the nation, sometimes causing confusion and headaches while navigating through the bid and award process.

Although the annoyance factor is understandable, did you know that these laws might also be used to your advantage in certain circumstances.

Before we delve into how they may be used, let me quickly summarize the reasons behind them. Per State law, anyone in California who contracts to perform work on a project that is valued at $500 or more, including labor and material, must hold a current, valid license from the Contractors State License Board (CSLB). The CSLB provides licensure in contractor classifications (A) General Engineering Contractors, (B) General Building Contractors and (C) Specialty Contractors. The purpose of the law is to protect the public from incompetence, negligence and dishonesty in those who provide construction services and to safeguard the public against unskilled workmanship and deception.

The Contractor's State License Board is the state agency responsible for administering these license laws, which include reviewing and investigating complaints made against contractors and administering disciplinary action against contractors found to have violated any aspect of the licensing provisions.

With this knowledge, let us move on. Agencies are responsible for specifying the classification of contractor’s license required to perform work on a specific public project in their bid solicitations and ensure only appropriately licensed contractors are awarded the construction contract.

In recent cases, I’ve seen agencies request an incorrect classification and award contracts to improperly licensed firms.

For example, I was contacted regarding a $600,000 plumbing contract requiring a C-36 licensure but awarded to a contractor with an A license only. I was asked if the A licensure can perform the work and what ramifications if any, would apply. The agency required a C-36 license in the bid documents. Several C-36 licensures submitted bids, along with one A licensure. The agency awarded the contract to the A licensure and work commenced.Plumber Plumbing City of Stockton Story

It is important to note that the scope of work required no engineering or specialty work that typically would be performed by an A licensed contractor. The contractor was working outside of their classification, which subjected them to penalties imposed by the Contractors State License Board. The agency failed to do due diligence during the review of bids, as the licensing error should have been caught with the contractor being deemed non-responsive. In this case, I met with the agency staff to report the violation and request that all work stop immediately, with the project going to a rebid.

Among the obvious, I explained that the A licensure was afforded a bidder’s advantage as no other A licensed contractor was allowed to bid the work. A level playing field is crucial in our industry. If you are a contractor, I am sure this scenario would anger you if your work were taken away by another contractor who cannot legally perform it. If you are an agency, you want to ensure that the contracting party has the knowledge, experience and expertise to perform your project correctly.

I hope that you can now put two and two together. For contractors and industry agents, when reviewing bid results, make sure you check the license classifications of the low bid contractors who submitted bids and the subcontractors listed for each portion of work. If you see a discrepancy in the licensing of other bidders, you should bring that to the attention of the agency and the CSLB. It may benefit you if your firm is awarded the contract!City Of Stockton Logo City of Stockton Story

If you are wondering what the outcome was with the agency that awarded the contract to the A contractor; they agreed to stop the work and rebid the contract. The contractor was reported to the CSLB, who is currently reviewing the case. The end result is that $600,000 worth of work will be available for appropriately licensed contractors!


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