Responsible Contracting

Policies to help public entities avoid using unscrupulous contractors

It is the duty of public officials to select the lowest bidder on construction projects.

However, unscrupulous contractors can underbid reputable contractors and perform a terrible job, costing taxpayers far more money than should be spent on a job. 

Responsible contracting policies can stop this from happening and save taxpayers money. 

They ensure only qualified contractors, with a proven track record of providing quality work are used on a project. Responsible contractor policies can also require a winning bidder to abide by fair contracting processes and pay their employees living wages and benefits.

Responsible contracting policies establish a basic set of qualifications that all firms must meet in order to bid on a construction project. These qualifications can include:

• Receive public funding
• Require public approval
• Benefit from public investment

Responsible contracting policies require contractors to demonstrate that they offer high-quality employment and work. Firms that meet responsible contractor standards are able to show that they:

• Are fully licensed and bonded
• Have had no wage/hour violations for the past three consecutive years
• Provide OSHA 10-hour safety training
• Participate in an ERISA or joint labor-management training program (e.g. certified apprenticeship program)
• Pay prevailing wages and offer health insurance
• Provide all benefits of employment to their workforce (including social security, Workers’ Compensation and unemployment insurance)
• Comply with all other federal and state regulations
• Have no history of violating this policy in previous public contracts
• Moreover, strong policies require general contractors to incorporate these components into their agreements with subcontractors.

These policies allow public officials to select a winning bidder who meets all the terms and conditions set forth in the bid package. 

In a sense, it gives them the ability to act in much the same way the private sector acts when picking a contractor. This allows them to avoid selecting a contractor who has a record of performing poor, unsafe work.

Responsible contracting policies can ensure a project is built by a contractor with a record of performing safe, high quality work because only those contractors who meet the bid standards qualify to bid on a project. 

In regions where few construction workers belong to unions, responsible contracting policies can also dissuade poor performing contractors from bidding on public contracts.

Lastly, by including responsible contractor language in construction contracts, entities make sure general contractors and subcontractors do not misclassify their workers as independent contractors, which render the employees ineligible for social security, unemployment insurance, health insurance and Workers’ Compensation.