HB 823-FN – AS INTRODUCED
2007 SESSION
05/04
HOUSE BILL 823-FN
AN ACT relative to state and municipal contracting practices for public works.
COMMITTEE: Public Works and Highways
This bill establishes certain criteria for state contractors engaged in public construction works or building projects over $100,000 and permits municipalities to adopt similar requirements. The bill also establishes a private right of action for noncompliance.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
07-1071
05/04
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seven
AN ACT relative to state and municipal contracting practices for public works.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; Department of Administrative Services; Contracting Practices for Public Works. Amend RSA 21-I by inserting after section 86 the following new subdivision:
Contracting Practices for Public Works
21-1:87 Contracting Practices for Public Works. The state of New Hampshire, its agencies, and instrumentalities thereof, but excluding all cities or towns and their agencies or instrumentalities thereof, when engaged in contracting for the procurement of construction services of public construction works or buildings projects exceeding $100,000 in total procurement cost and on which labor will be performed, shall ensure that bid specifications, project agreements, or other controlling documents required or subject to the approval of the state, agency, or instrumentality binding construction managers, general contractors, subcontractors, or sub-subcontractors, regardless of tier, award contracts, where the contractor employs employees, shall comply with all of the following conditions:
I. The employer shall:
(a) Provide, at the employer’s sole expense, all employees at least basic medical and hospital health care coverage at least comparable in value to the medical and hospital benefits provided by the health and welfare plans in the applicable craft recognized by United States Department of Labor for wage rate setting pursuant to Title 40 of the U.S.C. sections 3141 and 3142, commonly known as the federal Davis Bacon Act for the most recent project performed in area in which the project will be performed, or next closest area having the higher portion of such rate, provided however, that any medical or hospital health care provision required in accord with this section shall not necessarily require that it be a health plan or benefit governed by any federal agency, statute, or regulation. Payment in cash or wages in lieu of such coverage shall not be considered as complying with this section;
(b) Have in place at the time of bid submission a bona fide training program, for each apprenticeable trade or occupation performed, certified by the Federal Bureau of Apprenticeship Training or the department of labor in accord with RSA 278 and the contractor shall have, or belong to, an employer plan that has at the time of general bid submission at least one registered individual actively engaged in said program at that time, though the apprentice need not be employed on the project; and
(c) Exhibit at the time of bid submission to the public contracting entity by affidavit that no substantial evidence exists showing by a probability that the bidder violated, within the 3-year period preceding the date for the general bid, any state laws governing public works or contracting, workers’ compensation insurance, state tax laws, or state wage law. Any person may submit evidence showing any such violations did occur.
II. The public contracting entity may, but need not, also require the adherence to a state or local resident hiring plan, but only where allowed by law.
III. Any contractor contracting with any employer that commits any breach of this section shall have committed a material breach of the contract and liquated damages shall be paid by the entity with whom the contracting authority had directly contracted at a rate of $1,000 per day for each day the breaching contractor is found not complying with this section while it performed or furnished labor on the project. Each contractor, regardless of tier, that is not in compliance shall constitute one separate and distinct violation of contract.
IV. In the event a contractor, regardless of tier, is found not to be in compliance with this section, the contracting authority shall be prohibited from paying any money to the entity with whom it directly contracted, unless liquidated damages have been paid in full. Liquidated damages shall be $1,000 per day for each day a contractor is found to be in violation of this section while it performed or furnished labor on the project.
V. The state, its agencies, and instrumentalities may, but shall not be required, to expend resources to enforce any part of this section, but nothing contained in this section shall be waved by conduct or contract, and any New Hampshire based organization that represents construction industry persons or entities having at least 10 members who are domiciled or operating in New Hampshire and who are primarily employed or engaged in the New Hampshire construction industry may file an action to enforce this section to recover liquidated damages that might be owed. Any money collected as liquidated damages shall be placed into the general fund, regardless of who seeks to enforce this section. No litigation brought under this section, however, shall seek to enjoin the construction process or progress of the project in any manner whatsoever.
VI. Notwithstanding the provisions of this section, the public contracting entity may set aside 10 percent of the total procurement amount, but not to exceed $1,000,000 dollars, for the purposes of awarding small contractors small contracts to perform work or labor on the project.
VII. Cities and towns engaged in procurement may consider instituting similar procurement requirements, as it is hereby declared the policy of the state that such procurement practices tend to reduce overall taxpayers’ burdens elsewhere.
VIII. This section shall not apply to projects that do not use state or federal funds or projects approved and sent out for bids before the effective date of this section.
IX. Should a court deem any language unlawful or unenforceable then the remaining language shall remain effective, where practical.
2 Applicability. Section 1 of this act shall not apply to any project underway prior to the effective date of this act.
3 Effective Date. This act shall take effect 120 days after its passage.
LBAO
07-1071
01/26/07
HB 823-FN - FISCAL NOTE
AN ACT relative to state and municipal contracting practices for public works.
FISCAL IMPACT:
The Department of Transportation, Department of Administrative Services, and New Hampshire Municipal Association state this bill may increase state and local expenditures and revenue by an indeterminable amount in FY 2007 and each year thereafter. There is no fiscal impact on county expenditures or revenue.
METHODOLOGY:
The Department of Transportation states this bill establishes criteria for contractors engaged with contracting with the state or municipalities for public construction works or building projects over $100,000 to provide at least basic medical and hospital health care coverage and training programs for each apprenticeable trade or occupation performed and certified by the Federal Bureau of Apprenticeship Training or the Department of Labor. The bill also establishes civil penalties for noncompliance with these requirements. The Department of Transportation states the proof of compliance rests with the contractor, thereby creating minimal additional administrative workload for the Department, which could be absorbed by the Department’s existing budget. The Department states there is no fiscal impact on the Department’s expenditures and state revenue may increase by an indeterminable amount.
The Department of Administrative Services states this bill may increase state and county expenditures. The Department assumes an average of $750 per employee for a bona fide apprenticeship program, there are approximately 10,000 contractors in the state, and 50 percent of the cost would be passed onto the state and municipalities when entering into contracts ($750 per employee * 10,000 contractors in state * 50% of cost passed on to State and municipalities). The Department assumes 2/3 of the 10,000 contractors do not have medical insurance, insurance costs of $475 per person per month for 12 months, 50 percent of contractor’s construction work is performed for state and municipal contracts, and the state and municipal each receive 50 percent of the contracts (2/3 of 10,000 contractors without insurance * $475 per person per month * 12 months * 50% of contractor’s contracts with state and municipalities * 50% split of contracts between state and municipality). Finally, the Department assumes an approximate 5 percent increase per year for inflation. Below is a table showing the estimated costs that contractors may pass on through contracts with the state and municipalities.
FY 2008 |
FY 2009 |
FY 2010 |
FY 2011 | |
State |
||||
Apprentice Program Costs |
$ 3,750,000 |
$ 3,937,500 |
$ 4,134,375 |
$ 4,341,094 |
Medical Coverage Costs |
9,500,000 |
9,975,000 |
10,473,750 |
10,997,438 |
State Total |
$13,250,000 |
$13,912,500 |
$14,608,125 |
$15,338,532 |
Municipalities |
||||
Apprentice Program Costs |
$ 3,750,000 |
$ 3,937,500 |
$ 4,134,375 |
$ 4,341,094 |
Medical Coverage Costs |
9,500,000 |
9,975,000 |
10,473,750 |
10,997,438 |
Municipalities Total |
$13,250,000 |
$13,912,500 |
$14,608,125 |
$15,338,532 |
The New Hampshire Municipal Association states this bill may increase municipalities’ contract costs by an indeterminable amount. Municipal revenue may increase by an indeterminable amount by providing damages to municipalities if a contractor does not comply with the provisions of this bill.