Public construction projects in Minnesota are awarded to the “lowest responsible bidder,” according to state law. But how do public agencies distinguish which bidders are responsible?
It’s a question the state’s Building Trades unions want answered during the 2014 legislative session.
With lawmakers likely to pass a bonding bill containing roughly $1 billion in infrastructure investments, they also could act on a measure that would establish criteria for determining which contractors are “responsible” enough to bid on those projects.
The “Responsible Contractor Bill” (House File 1984/Senate File 1919) would require any vendor awarded a public construction contract valued at more than $50,000 meet certain criteria – including, most notably, a track record of obeying the law.
During a rally staged by Minnesota Building and Construction Trades Council at the Capitol on March 5, Speaker of the House Paul Thissen called the measure, which has bipartisan backing, a matter of common sense.
“If you’re going to work for the State of Minnesota, you ought to obey the law,” he said.
Too often, though, that isn’t the case.
Case study on campus
In 2012 state taxpayers backed a major construction project on the North Hennepin Community College campus in Brooklyn Park. The project was rife with wage-and-hour violations, according to the Minnesota Department of Labor and Industry.
The agency collected $6,847 in back wages for five employees of B & D Plumbing and Heating after the contractor violated apprenticeship rules. Marbella, another contractor on the project, paid the DLI $54,000 after misclassifying its workers and underreporting their hours. And Beck Drywall paid $14,731 in back wages owed to eight employees not paid for their overtime hours.
In all DLI retrieved $77,000 in back wages and lost labor costs from five firms awarded work on the NHCC campus. While that’s a shocking amount of wage theft on a single construction project, it’s not surprising to observers familiar with the track record of firms like Beck Drywall.
Before the ink had dried on its contract to work on the NHCC campus, Beck already was the prime focus of a federal investigation into wage theft on taxpayer-funded projects in Woodbury and St. Michael. The investigation found Beck owed $430,000 in back wages for 59 employees.
But the federal investigation did not prohibit Beck from bidding for work on the NHCC campus. In fact, the contractor remains “responsible” enough under current law to bid for the next taxpayer-funded construction job, on equal footing with contractors that pay their workers in full and play by the rules.
That’s why the Trades are pushing the Responsible Contractor Bill – “to protect the taxpayers from hiring contractors who violate the state laws, particularly laws that govern the way they pay their employees,” said Kyle Makarios, political director for the North Central States Regional Council of Carpenters.
The bill would require any outfit awarded a construction contract by a public agency valued at more than $50,000 meet certain criteria, including:
- Compliance with the state’s workers compensation and unemployment insurance requirements.
- Proof the contractor has not violated state or federal employment laws – including minimum wage, prevailing wage, overtime and employee classification – over the previous three years.
- No existing tax liens or delinquencies.
The bill also would put general contractors on the hook for ensuring any subcontractor they retain meets the same criteria.
“Too often we have found contractors who commit significant prevailing wage violations or other violations of state law continue to be awarded projects that are paid for by the taxpayers,” Makarios said. “The Responsible Contractor Bill would say we are only going to award taxpayer funded contracts to contractors who follow the law and have not had serious violations in recent history.”