Topic:
ADMINISTRATIVE SERVICES DEPARTMENT; HIGHWAYS; GOVERNMENT PURCHASING; TRANSPORTATION DEPARTMENT; CONTRACTS; BRIDGES; CONSTRUCTION INDUSTRIES;
Location:
CONSTRUCTION CONTRACTS; GOVERNMENT PURCHASING;

OLR Research Report


October 15, 2007

 

2007-R-0596

CONTRACTOR PREQUALIFICATION PROGRAM

By: Sandra Norman-Eady, Chief Attorney

You asked for the statutory requirements for prequalifying state contractors. Specifically, you wanted to know if (1) the administrative services, transportation, and economic and community development departments are required to review prequalification applications and (2) qualification forms can be consolidated.

SUMMARY

By law, only prequalified contractors are eligible to receive awards of certain state construction contracts. The Department of Administrative Services (DAS) administers the state building construction prequalification program. Under that program, prequalification is required for construction projects valued at $500,000 or more. The Department of Transportation (DOT) administers the state's highway and bridge construction prequalification program. Under that program, all contractors are prequalified except those awarded “public building projects” such as the construction of salt sheds, train stations, and DOT facilities, according to DOT's Paul Oushana. The Department of Economic and Community Development does not have a role in state contractor prequalification.

Contractors seeking to prequalify with DAS or DOT must complete an application. Any application to DAS must be accompanied by an application fee that is based on the contractor's aggregate work capacity (size of the job they are capable of handling). DOT does not charge an application fee.

The DAS commissioner bases her decision to prequalify an applicant on the application, including the contractor's relevant past experiences. A certificate of prequalification is effective for one year after the date of issuance; however, the commissioner may make the initial certificate effective for up to two years. The DOT commissioner prequalifies contractors based on the classifications of work they are approved to perform and their bidding capacity. DOT prequalification statements are effective for 16 months, beginning with the contractor's close-of-business date for the contractor's most recently completed fiscal year.

The legislature could require the DOT and DAS to use a uniform prequalification application; however, there are some differences between the two programs and consequently the form each uses. For example, DOT's application solicits information required by federal law from highway and bridge construction contractors that is not required from state building construction contractors. Having sections that apply to some applicants but not others may be confusing. Two, DOT does not charge an application fee but DAS charges a graduated fee based on aggregate work capacity. Three, there is a dollar threshold on state building construction contracts for which contractors must prequalify. There is no corollary threshold in the DOT prequalification program. Four, DOT solicits information on applicants' aggregate work capacity and the type of construction work for which they may prequalify. DAS does not consider the type of construction work for which an applicant may prequalify. Despite these differences, Peter Hunter, DAS Prequalification Contracting Analyst, reports that there are enough program similarities and contractors participating in both programs to warrant investigating consolidation.

DAS' PREQUALIFICATION PROGRAM

By law (CGS 4a-100), anyone may apply for DAS prequalification by submitting a signed application and a nonrefundable application fee. The application fee depends on the contractor's aggregate work capacity and ranges from $600 for contractors with a maximum job capability of $5 million or less to $2,500 for contractors with a maximum job capability of $40 million or more.

The application must include at a minimum:

1. how the applicant is organized;

2. the names of the applicants, key personnel, and any business names they used during the immediate past five years;

3. any legal or administrative proceedings pending against or concluded adversely to the applicant or his or her principals or key personnel in the previous five years concerning the procurement or performance of a construction contract;

4. his or her knowledge of any investigation pending against principals or key personnel in the firm;

5. any relationship, whether financial, personal, or familial, with the owner of any construction project he or she listed as construction experience;

6. whether (a) he or she has been disqualified from bidding on federal, state, or municipal construction contracts, including those in other states, (b) the Department of Consumer Protection has revoked or suspended his or her registration, and (c) the matters that gave rise to the disqualification, revocation, or suspension have been remedied or eliminated; and

7. any other information the commissioner deems relevant to determining the applicant's qualifications and responsibility.

The applicant must include in the application a statement of his or her financial condition prepared by an accountant that shows the applicant's assets and liabilities, plant and equipment, bank and credit references, bonding company and maximum bonding capacity, and any other information the commissioner deems relevant to the determination of the applicant's financial capacity and responsibility. Applicants must indicate the prequalification classifications and aggregate work capacity rating they are seeking. Once prequalified, a contractor can apply at any time for additional prequalification classifications or aggregate work capacity ratings by submitting the applicable fee, a complete update statement, and other information the commissioner requires.

The commissioner must determine whether to prequalify an applicant based on the application and relevant past performance. At a minimum, she must consider (1) applicants' past performance records, including written evaluations of their performance on public or private projects in at least the previous three years; (2) their experience on projects of various sizes and types; (3) their supervisory personnel's experience and qualifications; (4) their maximum work capacity as demonstrated by their financial condition, bonding capacity, size, or past projects, and present and anticipated work commitments; (5) the skill, ability, and integrity, of the applicant and any subcontractors they have used; and (6) any other relevant information the commissioner prescribes.

DOT'S PREQUALIFICATION PROGRAM

By law (CGS 13a-95), the DOT commissioner can award highway and bridge construction projects to contractors able to perform the work. On this basis, the DOT commissioner implemented a prequalification program to expedite his determination of contractors' qualifications to complete work on projects. The June 5, 2007 edition of the department's Construction Contract Bidding and Award Manual contains the elements of the prequalification program. The manual is available on the department's website: www.ct.gov/dot.

With one exception, only bona fide construction companies are eligible for prequalification. The exception is for heavy highway construction contractors who enter a joint venture with at least one of their wholly-owned subsidiaries to complete a project. Generally, prequalification applicants must have been actively engaged in business as a construction contractor for a minimum of one year under the name of the firm applying for prequalification and must provide a current one-year financial statement for that business.

Applications must include:

1. a statement of the contractor's financial condition and resources, including his or her current assets and liabilities and a third-party's verification of any unsecured lines of credit extended to the contractor by banks or other financial institutions;

2. a certified audited financial statement or a certified public accountant's review of the financial statements;

3. a description of the contractor's plant and equipment, including complete details of the identity, age, condition, cost, and current book value of each piece of construction equipment;

4. the value of any outstanding loans for any identified equipment;

5. a statement describing the contractor's organization, setting forth the identity of the contractor's officers, principals, and owners, and the qualifications and prior experience of the firm and each of its officers, principals, and other key personnel;

6. a statement of the contractor's prior construction experience that indicates how long the contractor has been in the construction business and the nature of the contractor's construction experience during that period;

7. a complete record of all construction work completed in the five prior years; the type of work performed; the project location; the contract price for work actually performed by the applicant firm; and the name, address, and current telephone number of the owner's project engineer or project manager in charge of each listed project;

8. a statement describing any financial interest the contractor has in any other construction-related business and any financial interest the contractor's officers, directors, or principal shareholders have in any other construction-related business;

9. a statement describing, for the five previous calendar years, the circumstances of (a) any criminal violation, indictment, or conviction of the contractor or any of its officers or affiliates, or of any officer of such an affiliate; (b) any civil debarment or suspension of the contractor or any of its officers or affiliates, or of any officer of such an affiliate by a governmental entity in any jurisdiction; (c) any finding by a governmental entity that the contractor or one of his or her affiliates was nonresponsible as a low bidder; (d) any formal charge or proceeding concerning the possibility of any such debarment, suspension, or finding of nonresponsibility; and (e) any agreement with any governmental entity not to bid for its contracts for a given period of time;

10. a statement identifying any liens, default notices, or claims by or against, or any penalties or liquidated damages assessed against, the contractor with regard to any project performed within the previous five calendar years;

11. a statement disclosing the details of any formal complaints by or against the contractor with respect to its alleged noncompliance with any federal or state labor laws; and

12. a statement of the DOT work classifications the contractor is seeking and a detailed description of the contractor's experience and its key personnel in performing such types of work.

Applicants must also submit an affidavit listing all outstanding private and public work.

The manager reviews the contractor's prequalification application and determines, in consultation with the department's construction division, the classification or classifications of work the contractor is qualified to undertake, based upon its record of construction work, the experience and expertise of its personnel, the adequacy of its plant and equipment, its past performance, and such other factors the department determines pertinent. DOT's manager of contracts prequalifies each contractor that submits an application according to the classifications of work the contractor is approved to perform and his or her bidding capacity (Agency Manual IV).

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