Construction Industry Force Account Council

Promoting Transparency Through Public Agency Compliance

Agency Complacency Leads to Award to Non-Registered Contractor

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By Patricia Rascon, Southern Regional Compliance Manager

One of the most critical aspects of the role of the CIFAC Regional Compliance Manager is regularly reading numerous documents related to a project. While the task can be mind-numbing, our attention to detail determines how an RCM will proceed with an investigation.

High expectations? Absolutely! We take our responsibility to hold agencies accountable very seriously. We don’t just rely on the Public Contract Code; we frequently research other California Codes that can and WILL apply to agencies bending the rules.

Often, the staff reports that follow governing board agenda items are routine………. until they are not. The expectation is that an agency will guarantee its due diligence in the vetting process of contractors and award a project to a responsible and responsive contractor.

In a recent scenario, Rascon found one example of staff complacency regarding a contract extension to a contractor not registered with the Department of Industrial Relations (DIR). In 2019, records show that three proposals were received and evaluated by an internal review panel of staff from several city departments. Oddly enough, the contractor’s name, “in part,” was called Qualified. Well, “qualified” was quite a stretch. In fact, at the time of the bid submission, the contractor was not registered with the DIR, and its registration had lapsed during the contract!

In November 2022, city staff proposed a one-year contract extension with the option of an additional three years. Due to violations of the Labor Code, Rascon immediately contacted our labor compliance partner. Together, they alerted the Public Works Director, City Manager, and City Council with a concise outline of why said “qualified” contractor could not be awarded the contract renewal due to its violations of Labor Codes Section 1771.1 and 1725.5. Internal email correspondence reflected that staff believed the DIR could fix the registration by issuing an extension.

Labor Code section 1725.5 explicitly states that a contractor shall be registered according to this section to be qualified to bid on, be listed in a bid proposal, subject to the requirements of 4104 of the Public Contract Code or engage in the performance of any public work. While the city was reviewing the bids, a cursory check with the DIR would have confirmed that said contractor was not responsible and, therefore, ineligible (not qualified) to receive the contract award.

Additionally, the signed contract documents explicitly outlined the Labor Code requirements applicable to the entire duration of the agreement, not a portion thereof. While the contractor ultimately renewed its DIR registration, and the city moved forward with a renewed contract, the Labor Code violations are not going away. CIFAC is working with its labor compliance partner to initiate a formal complaint with the DIR.

CIFAC and its partners will continue its mission to enforce the laws protecting competitive bidding requirements, and qualified bidders.

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