November 15, 2004		2004-R-0866
LEGISLATIVE HISTORY OF CONTRACTOR PREQUALIFICATION LAW
By: Sandra Norman-Eady, Chief Attorney

You wanted to know why contractors are charged a minimum application fee of $ 600 to prequalify to bid on state construction contracts.

Legislators set the fee for contractor prequalification to bid on state contracts in 2003. Public Act 03-215 established a range of fees based on contractors’ aggregated work capacity rating (i. e. , the maximum amount of work the contractor is capable of undertaking). Under the act, the graduated annual application fee ranges from $ 600 to $ 2,500. A contractor can renew the application annually by paying one-half of his initial application fee. PA 04-141, which took effect on October 1, 2004, permits the Department of Administrative Services commissioner to issue a two-year initial certification to applicants who pay the application fee for one and one-half years. According to Pete Hunter, DAS program analyst, the department has not yet certified anyone for two years. Table 1 shows the fees.

TABLE 1: PREQUALIFICATION APPLICATION FEES

Aggregate Work Capacity Rating	Fee
$ 5,000,000. 00 or less	$ 600
$ 5,000,000. 01 to $ 8,000,000. 00	$ 750
$ 8,000,000. 01 to $ 10,000,000. 00	$ 850

Aggregate Work Capacity Rating	Fee
$ 10,000,000. 01 to $ 15,000,000. 00	$ 1,000
$ 15,000,000. 01 to $ 20,000,000. 00	$ 1,500
$ 20,000,000. 01 to $ 40,000,000. 00	$ 2,000
$ 40,000,000. 01 or more	$ 2,500

The legislative history of HB 6417 (the bill that became PA 03-215) is silent on why the minimum fee was set at $ 600. The House referred HB 6417 to the Government Administration and Elections (GAE) Committee, which held a public hearing on it February 10, 2003. However, the original bill did not reform construction contracting, instead it required a study of government administration statutes. It was not until later that House Speaker Moira Lyons asked the GAE Committee chairs to investigate the process for awarding state contracts.

The chairs convened the hearing. Based on their findings, they subsequently replaced the original language in HB 6417 with contracting reform provisions, including a fee for prequalifying contractors. The GAE Committee unanimously voted the bill; which set a $ 1,500 nonrefundable application fee for contractors to prequalify to work on state projects.

The bill was amended in the House. House Amendment A, offered by Senator Donald DeFronzo and Representatives James O’Rourke and James Spallone, made numerous changes, including replacing the single fee with the graduated fee that became law. Although the House debated the bill, there was no discussion of the fees. Unlike the House, the Senate did not debate the bill but instead voted it on consent.

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