Missouri City/County Management Association 2010 Spring Conference
Paul V. Rost Cunningham, Vogel & Rost, P.C. legal counselors to local government
75 West Lockwood, Suite One St. Louis, MO 63119 314.446.0800
www.municipalfirm.com
Cunningham, Vogel & Rost, P.C.
STATE LAW REQUIREMENTS FOR PUBLIC WORKS PROJECTS
Mandatory Requirements for Public Works Contracts, RFPs & Other Calls for Bids ´ ´
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OSHA Training § 292.675 RSMo. Participation in Work Authorization Program § 285.530 RSMo. Proof of Lawful Presence - § 208.009
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RSMo. ´
Prompt Payment Act § 34.057 RSMo.
Payment Bond § 107.170 RSMo. Prevailing Wage § 290.210 RSMo., et seq. Excessive Unemployment - §§ 290.550 - 290.580 RSMo.
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American Products § 34.353 RSMo.
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§432.070 RSMO requires that … « No county, city, town, village . . . or other municipal corporation shall make any contract, unless ²it
is within the scope of its powers or expressly authorized by law, and ²the contract is made upon a consideration wholly to be performed or executed subsequent to the making of the contract ² AND…
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§432.070 RSMO requires that … « unless the contract: ²includes the price term $$$$$, ²Is in writing ²dated when made, and ²signed by the parties thereto (or their agents authorized by law and duly appointed) and ²authorized in writing
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OSHA Training; § 292.675 RSMo All “on-site employees” of contractors & subcontractors working on a public works project must take the 10-hour, OSHA-approved construction safety course provided by their contractor or subcontractor
OSHA Training under § 292.675 RSMo What is it? • For each public works A one-time requirement that on-site employees must either: • complete
the program within 60 days of beginning work, or
• hold
documentation of prior completion of the program
project, the statute’s requirements must appear in the: • resolution/ordinance • call
for bids for the contract and
• contract
OSHA Training - Section 292.675 RSMo ´ ´
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Enforcement by MoDOLIR Employee working without OSHA training has 20 days to complete the training before employee is removed from project and penalties accrue. Penalties = $2,500.00 plus $100.00/day per employee found on site without evidence of training Penalties forfeited to city/county City/county must withhold penalty amounts assessed by MoDOLIR from payments to contractor. Notice of these penalty provisions must be included in contract.
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As a condition for the award of any contract or grant in excess of $5000 by a political subdivision to a business entity, the business entity shall, by sworn affidavit and provision of documentation, affirm its enrollment and participation in a federal work authorization program with respect to the employees working in connection with the contracted services. Affidavit affirming that business entity does not knowingly employ any person who is an unauthorized alien in connection with the contracted services. Cunningham, Vogel & Rost, P.C.
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Any bid or response to an RFP for the award of any contract for services in excess of $5,000 shall be accompanied by an affidavit from business entity that: « Enrolled & participating in, E-Verify, or other federal work authorization program AND « Does not knowingly employ any person who is an unauthorized alien in conjunction with the contracted services. 15 CSR 60-15.020
Missouri Department of Labor regulations implication– ´ City/County should require submittal of affidavit & documentation of participation in a federal work authorization program (i.e. E-Verify) as part of the bid package
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Emergency exception. ´emergency
= natural and manmade disasters: major snow and ice storms, floods, tornadoes, severe weather, earthquakes, hazardous material incidents, nuclear power plant accidents, other radiological hazards, and major mechanical failures of a public utility facility. ´Suspends the requirements for 15 working
days (3 weeks)
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Illegal aliens prohibited from receiving any state or local public benefit
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Prohibits any illegal alien from receiving state or local "public benefits" benefits ´ Requires all applicants at time of application for public benefits to provide “affirmative proof that the applicant is a citizen or a permanent resident of the United States or is lawfully present in the United States.“ ´
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public benefit ´means any grant, contract, or loan provided by a … local government …
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affirmative proof required “at the time of application” ´Driver’s license or other document recognized by the federal government as proof of lawful presence
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Public Works
Excessive Unemployment – Sections 290.550 -580 RSMo Excessive Unemployment in Effect ´ Only Missouri laborers and laborers from “nonrestrictive” states are allowed to be employed on Missouri's public works projects when the unemployment rate exceeds 5% for 2 consecutive months ´
« Restrictive
states are as follows: AK, AZ, CA, CO, CT, DE, DC, FL, ID, IL, IA, ME, MA, MS, MT, NV, NJ, ND, OK, SD, U.S. Virgin Islands, WV and WY
American Products - §34.353 RSMo
Each contract made by a public agency for . . . any public works shall contain a provision that any manufactured goods/commodities used or supplied in performance of that contract or any subcontract thereto shall be manufactured or produced in the U.S.
American Products - §34.353 RSMo ´
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Exceptions « Contracts under $25,000 « Limited availability of certain American products « Acquisition would impose cost increases above a certain percentage May opt by having “executive head” certify in writing that political subdivision has adopted a formal written policy to encourage purchase of products manufactured or produced in the USA « Must retain copy of certification for 3 years « May want to consider including notice of policy in bid documents
§ 34.057 RSMo.
Prompt Payment Act
§34.057.1. … all public works contracts made and awarded by … any municipality, county …, for construction, reconstruction or alteration of any public works project, shall provide for prompt payment by the public owner to the contractor
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Must “make progress payments to the contractor on at least a monthly basis as the work progresses, or, on a lump sum basis according to the terms of the lump sum contract” §34.057.1(1) RSMo.
Retention ´“shall
not exceed 5% of the value of the contract …unless the public owner and the architect or engineer determine that a higher rate of retainage is required to ensure performance of the contract” ´but never more than 10%
Retention ´Must pay the retainage, less any offsets/deductions authorized in the contract or otherwise authorized by law, after substantial completion of the work and acceptance by the public owner's authorized contract representative
Must be paid within 30 days of the first of the following to occur: 1.Completion of the project and complete filing of all documents required by contract 2.Architect/Engineer certification of completion 3.Certification of completion by the contracting authority Payment “made” when placed in US Mail
If payment is not made within the 30 days AND NO GOOD FAITH and Reasonable Cause to withhold payment: ´Interest at 1½% per month
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Liquidated damages Unsatisfactory job progress Defective construction work/material not remedied Disputed work Failure to comply with any material contract provision Third party claims filed or reasonable evidence that a claim will be filed; Failure to make timely payments for labor, equipment or materials; Damage to a contractor, subcontractor or material supplier; Reasonable evidence that a subcontractor or material supplier cannot be fully compensated under its contract with the contractor for the unpaid balance of the contract sum; Citation of contractor or subcontractor for failure to comply with material provision of contract and which result in violation of any federal, state or local law, regulation or ordinance applicable to project causing additional costs or damages to the owner.
Payment Bond; § 107.170 ´
On every project with estimated costs in excess of $25,000.00 « Must require a payment bond from a contractor « Generally equal to contract amount « Provides same protection on public projects as provided by mechanics lien laws
Prevailing Wage; § 290.210 et seq. Public Policy of State of Missouri ´Workers employed by or on behalf of a public body are to be paid no less than the prevailing wage on public works projects ´The prevailing wage rate differs by county and for different types of work.
Filed with Division of Labor Standards
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Prior to beginning any work on such public works project, each public body which is awarding a contract for a public works project shall notify the department, on a form prescribed by the department, of the scope of the work to be done, the various types of craftsmen who will be needed on the project, and the date work will commence on the project.
Filed with Division of Labor Standards
Prevailing Wage; § 290.210 et seq. ´
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Wage rates must be attached to and made part of the specifications for the work Must “specify in the resolution or ordinance and in the call for bids for the contract what is the prevailing hourly rate”
Prevailing Wage; § 290.210 et seq. Required Ordinance or Resolution Provisions ´Must specify in the resolution or ordinance and in the call for bids for the contract what is the prevailing hourly rate of wages in the locality for each type of workman needed to execute the contract and also the general prevailing rate for legal holiday and overtime work. 290.262. 10
Prevailing Wage; § 290.210 et seq. Required contract provisions: ´The public body awarding the contract shall cause to be inserted in the contract a stipulation to the effect that not less than the prevailing hourly rate of wages shall be paid to all workmen performing work under the contract. 290.250. 1.
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Upon completion of work and prior to final payment, each contractor and subcontractor shall file with the contracting public body an affidavit of full compliance with the Prevailing Wage Law ´ City/County cannot make final payment until affidavit is filed in proper form and order.
Applies when federal assistance (grants, loans, etc.) used to pay for project over $2,000 and where law under which federal assistance is provided requires it. ´ Required contract language in 29 CFR 5.5 ´
These laws require competitive bidding for construction projects to be awarded by counties, cities, and other political subdivisions: 49.420, RSMo (county buildings) ´§ 50.660, RSMo (county public works and buildings) ´§ 68.055, RSMo (port authority projects)
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88.700, RSMo (public street
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improvement contracts by 4th class cities using special tax) ´§
88.940, RSMo (constitutional charter cities with populations of 75,000-80,000) ´§ 91.170, RSMo (initial city water works) ´§ 100.170, RSMo (projects financed by revenue bonds where municipality undertakes, obligation)
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§ 177.086, RSMo (school district facilities costing more than $15,000) § 177.161, RSMo (metropolitan school districts including repairs, alterations, and additions) § 204.350, RSMo (common sewer districts) § 205.080, RSMo (county public health centers) § 229.050, RSMo (construction, improvement, or repair of roads, bridges, and culverts by county commissions, township boards, and road districts) § 231.250, RSMo (road districts) § 233.405, RSMo (incorporated road districts) § 245.150, RSMo (levee districts) § 248.110, RSMo (sanitary drainage districts) §§ 249.330, 249.340, and 249.510, RSMo (sewer districts)
Liquidated Damages Clause ´ Generally
enforceable unless they are deemed a “penalty” rather than an estimation (i.e., a reasonable forecast) of the damages an owner will face for failure to complete project on time ´ “time is of the essence”
Liquidated Damages In public contracts, a liquidated damage clause will be enforced regardless of whether there is a showing of any actual harm, but rather just on the showing that the contract was breached. Sides Constr. Co. v. City of Scott City, 581 S.W.2d 443, 447 (Mo. App. S.D. 1979)
Liquidated Damages THINK FIRST… Liquidated damage clause will limit the damages to the amount stated in the contract regardless of whether actual damages far exceed that amount (so long as they are not unreasonably disproportionate).
In determining who is the “lowest and best bidder” on a public works contract, a public authority is vested with wide discretion, and its decision, when made honestly and in good faith, will not be interfered with by the court, even if erroneous. KAT Excavation, Inc. v. City of Belton, 996 S.W.2d 649 (Mo.App. W.D. 1999)
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“May reject any and all bids, waive technicalities or deficiencies, … may negotiate with any or all bidders or others for more favorable terms or prices, … may award contract to other than bidder submitting the lowest cost bid proposal”
REMEMBER each public works contract is unique and public officials should consult legal counsel to ensure that each contract and set of bid documents comply with all statutory requirements
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While the information in this presentation concerns legal matters, it is not, nor is it intended to be, legal advice; neither is it meant to contradict any legal advice you might have previously received, nor is it a substitute for the particularized advice of your own legal counsel. The information provided is merely for educational purposes and you should not act or rely on such information without seeking the advice of an attorney. Individuals seeking specific legal advice or assistance should contact a licensed attorney.
Cunningham, Vogel & Rost, P.C.
CONTACT:
Paul V. Rost Cunningham, Vogel & Rost, P.C. legal counselors to local government
75 W. Lockwood, Suite One St. Louis, Missouri 63119
[email protected] Phone: 314.446.0800 Fax: 314.446.0801 www.municipalfirm.com
