REFERENCE TITLE: public contracts; procurement

 

 

 

State of Arizona

House of Representatives

Fifty-third Legislature

First Regular Session

2017

 

 

HB 2143

 

Introduced by

Representatives Leach: Bowers, Finchem, Lawrence, Livingston, Payne, Rivero, Weninger

 

 

AN ACT

 

amending sections 28‑6713, 32‑1121 and 34‑201, Arizona Revised Statutes; relating to public contracts.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 


Be it enacted by the Legislature of the State of Arizona:

Section 1.  Section 28-6713, Arizona Revised Statutes, is amended to read:

START_STATUTE28-6713.  Bids for construction, reconstruction, equipment or supplies; procedure; bond; exceptions

A.  Except as provided in subsection G of this section, in a county with a population of two hundred fifty thousand persons or more as determined by the most recent United States decennial census or the most recent special census as provided in section 28‑6532, bids for all items of construction or reconstruction involving an expenditure equal to or greater than the amount determined pursuant to subsection B of this section, all purchases or other acquisition of equipment involving an expenditure of more than five thousand dollars and all purchases of supplies and materials involving an expenditure of two thousand five hundred dollars or more shall be called for by advertising in a newspaper of general circulation in the county for two consecutive publications if it is a weekly newspaper, or for two publications of at least six but not more than ten days apart if it is a daily newspaper. The advertisement shall state specifically the character of the work to be done and the kind and quality of materials or supplies to be furnished.

B.  Bids shall be called pursuant to subsection A of this section for all items of construction, or reconstruction involving or maintenance services, as defined in section 34‑101, of any street, road or bridge that involve an expenditure of

1.  In fiscal year 1985‑1986, thirty‑five thousand dollars.

2.  In fiscal year 1986‑1987 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41‑563 twenty‑five thousand dollars, including materials and equipment.

C.  If the board of supervisors receives a satisfactory bid, it shall contract with the lowest responsible bidder after the contractor or supplier gives any bond required by title 34, chapter 2, article 2, except that in counties with a population of more than one million persons according to the most recent United States decennial census, in determining the lowest responsible bidder under this section, the board may consider, for no more than five projects, the time of completion proposed by the bidder, the value over time of completed services and facilities and the value over time of interrupted services, if the board determines that this procedure will serve the public interest by providing a substantial fiscal benefit or that the use of the traditional awarding of contracts is not practicable for meeting desired construction standards or delivery schedules and if the formula for considering the time of completion is specifically stated in the bidding information.  The board may reject any or all bids and readvertise.

D.  The board of supervisors, a member of the board of supervisors or any other official or agent of a county affected by this section shall not segregate or divide into separate units a contiguous or continuous portion of highway construction or reconstruction or divide into separate portions an item of equipment or generally recognized unit of supplies or material to avoid the restrictions imposed by subsection A of this section.

E.  The board of supervisors, a member of the board of supervisors or any other official or agent of a county affected by this section shall make every effort to combine the following:

1.  Separate portions of highway construction or reconstruction projects.

2.  Items of equipment, supplies and materials.

F.  After a contract has been awarded, the board of supervisors' authorized representative may authorize change orders to the contract if necessary pursuant to guidelines set by the board of supervisors.  This authority does not permit the board of supervisors' authorized representative to act independently to award new contracts.

G.  A building, structure, addition or alteration may be constructed without complying with the bidding requirements of this section if the construction, including construction of buildings or structures on public or private property, is required as a condition of development of private property and is authorized by section 9‑463.01 or 11-822.  For the purposes of this subsection, building does not include any police, fire, school, library or other public building.

H.  Subsections A, B and C of this section do not apply to procurement of construction‑manager‑at‑risk, design‑build and job‑order‑contracting construction services pursuant to title 34, chapter 6. END_STATUTE

Sec. 2.  Section 32-1121, Arizona Revised Statutes, is amended to read:

START_STATUTE32-1121.  Persons not required to be licensed; penalties; applicability

A.  This chapter shall not be construed to apply to:

1.  An authorized representative of the United States government, this state or any county, incorporated city or town, reclamation district, irrigation district or other municipality or political subdivision of this state, except that for an authorized representative of a county, incorporated city or town the exemption applies only to construction projects or maintenance service projects that do not exceed the limits prescribed in section 28‑6713 or 34‑201.

2.  Trustees of an express trust that is not formed for the purpose of conducting business as a contractor or officers of a court, if they are acting within the terms of their trust or office.

3.  Public utilities operating under regulation of the corporation commission or construction, repair or operation incidental to discovering or producing petroleum or gas, or the drilling, testing, abandoning or other operation of a petroleum or gas well, if performed by an owner or lessee.

4.  Any materialman, manufacturer or retailer who furnishes finished products, materials or articles of merchandise and who does not install or attach such items or installs or attaches such items if the total value of the sales contract or transaction involving such items and the cost of the installation or attachment of such items to a structure does not exceed one thousand dollars, including labor, materials and all other items, but excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two‑pronged or three‑pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure.  The materialman, manufacturer or retailer shall inform the purchaser that the installation may also be performed by a licensed contractor whose name and address the purchaser may request.

5.  Owners of property who improve such property or who build or improve structures or appurtenances on such property and who do the work themselves, with their own employees or with duly licensed contractors, if the structure, group of structures or appurtenances, including the improvements thereto, are intended for occupancy solely by the owner and are not intended for occupancy by members of the public as the owner's employees or business visitors and the structures or appurtenances are not intended for sale or for rent.  In all actions brought under this chapter, except an action against an owner-occupant as defined in section 33‑1002, proof of the sale or rent or the offering for sale or rent of any such structure by the owner‑builder within one year after completion or issuance of a certificate of occupancy is prima facie evidence that such project was undertaken for the purpose of sale or rent.  For the purposes of this paragraph, "sale" or "rent" includes any arrangement by which the owner receives compensation in money, provisions, chattels or labor from the occupancy or the transfer of the property or the structures on the property.

6.  Owners of property who are acting as developers and who build structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor licensed pursuant to this chapter and owners of property who are acting as developers, who improve structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor or specialty contractors licensed pursuant to this chapter.  To qualify for the exemption under this paragraph, the licensed contractors' names and license numbers shall be included in all sales documents.

7.  Architects or engineers who are engaging in their professional practice as defined in chapter 1 of this title and who hire or offer to hire the services of a contractor for preconstruction activities relating to investigation and discovery, including:

(a)  Subsurface utility location and designation services.

(b)  Potholing.

(c)  Drilling for any of the following:

(i)  Soil samples.

(ii)  Rock samples.

(iii)  Pavement samples.

(d)  Locating existing features of a building or structure, including existing electrical, mechanical, plumbing and structural members.

8.  A person licensed, certified or registered pursuant to title 3, chapter 20 or a person working under the direct supervision of a person certified or qualified pursuant to title 3, chapter 20 to the extent the person is engaged in pest management.

9.  The sale or installation of finished products, materials or articles of merchandise that are not fabricated into and do not become a permanent fixed part of the structure.  This exemption does not apply if a local building permit is required, if the total price of the finished product, material or article of merchandise, including labor but excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two‑pronged or three‑pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure, is more than one thousand dollars or if the removal of the finished product, material or article of merchandise causes damage to the structure or renders the structure unfit for its intended use.

10.  Employees of the owners of condominiums, townhouses, cooperative units or apartment complexes of four units or less or the owners' management agent or employees of the management agent repairing or maintaining structures owned by them.

11.  Any person who engages in the activities regulated by this chapter, as an employee of an exempt property owner or as an employee with wages as the person's sole compensation.

12.  A surety company or companies that are authorized to transact business in this state and that undertake to complete a contract on which they issued a performance or completion bond, provided all construction work is performed by duly licensed contractors.

13.  Insurance companies that are authorized to transact business in this state and that undertake to perform repairs resulting from casualty losses pursuant to the provisions of a policy, provided all construction work is performed by duly licensed contractors.

14.  Any person other than a licensed contractor engaging in any work or operation on one undertaking or project by one or more contracts, for which the aggregate contract price, including labor, materials and all other items, but excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two‑pronged or three‑pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure, is less than one thousand dollars.  The work or operations that are exempt under this paragraph shall be of a casual or minor nature.  This exemption does not apply:

(a)  In any case in which the performance of the work requires a local building permit.

(b)  In any case in which the work or construction is only a part of a larger or major operation, whether undertaken by the same or a different contractor, or in which a division of the operation is made in contracts of amounts less than one thousand dollars, excluding any electrical fixture or appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a common household electrical outlet utilizing a two‑pronged or three‑pronged electrical connector and that does not use any other form of energy, including natural gas, propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or foundation of any residential structure, for the purpose of evasion of this chapter or otherwise.

(c)  To a person who utilizes any form of advertising to the public in which the person's unlicensed status is not disclosed by including the words "not a licensed contractor" in the advertisement.

15.  A person who is licensed, certified or registered pursuant to title 41, chapter 37, article 4 and who is not otherwise required to be licensed under this chapter or an employee of such person.

16.  A person who functions as a gardener by performing lawn, garden, shrub and tree maintenance.

17.  Alarm agents as defined in section 32‑101.

B.  A person who is licensed to perform work in a particular trade pursuant to this chapter shall not be required to obtain and maintain a separate license for mechanical or structural service work performed within the scope of such trade by such person.

C.  Any person who does not have an exemption from licensure pursuant to subsection A, paragraph 14, subdivision (c) of this section is subject to prosecution for a violation of section 44‑1522.  The attorney general may investigate the act or practice and take appropriate action pursuant to title 44, chapter 10, article 7.

D.  The exemptions from licensure pursuant to subsection A, paragraphs 4, 9 and 14 of this section do not apply to either of the following:

1.  All fire safety and mechanical, electrical and plumbing work that is done in connection with fire safety installation and fire safety maintenance and repair.  For the purposes of this paragraph, "fire safety installation" means hardwired or interconnected smoke alarms and fire sprinklers and does not include an individual device that is attached by a nail, screw or other fastening device to the frame or foundation of any residential unit.  For the purposes of this paragraph, fire safety maintenance and repair does not include routine work that is conducted by an employee of an apartment or condominium complex and that is incidental to the fire safety equipment.

2.  All work that is done, including the installation, maintenance and repair of devices, appliances or equipment, that involves the connecting to any supply of natural gas, propane or other petroleum or gaseous fuel.  Nothing in this paragraph impacts the effect of section 36‑1624.01. END_STATUTE

Sec. 3.  Section 34-201, Arizona Revised Statutes, is amended to read:

START_STATUTE34-201.  Notice of intention to receive bids and enter contract; procedure; doing work without advertising for bids; county compliance; enforcement

A.  Except as provided in subsections B through G and L of this section, every agent, on acceptance and approval of the working drawings and specifications, shall publish a notice to contractors of intention to receive bids and contract for the proposed work.  This notice shall be published by advertising in a newspaper of general circulation in the county in which the agent is located for two consecutive publications if it is a weekly newspaper or for two publications that are at least six but no more than ten days apart if it is a daily newspaper.  The notice shall state:

1.  The nature of the work required, the type, purpose and location of the proposed building and where the plans, specifications and full information as to the proposed work may be obtained.

2.  That contractors desiring to submit proposals may obtain copies of full or partial sets of plans and specifications for estimate on request or by appointment.  The return of such plans and specifications shall be guaranteed by a deposit of a designated amount which that shall be refunded on return of the plans and specifications in good order.

3.  That every proposal shall be accompanied by a certified check, cashier's check or surety bond for ten per cent percent of the amount of the bid included in the proposal as a guarantee that the contractor will enter into a contract to perform the proposal in accordance with the plans and specifications.  Notwithstanding any other statute, the surety bond shall be executed solely by a surety company or companies holding a certificate of authority to transact surety business in this state issued by the director of the department of insurance pursuant to title 20, chapter 2, article 1.  The surety bond shall not be executed by an individual surety or sureties, even if the requirements of section 7‑101 are satisfied.  The certified check, cashier's check or surety bond shall be returned to the contractors whose proposals are not accepted, and to the successful contractor on the execution of a satisfactory bond and contract as provided in this article.  The conditions and provisions of the surety bid bond regarding the surety's obligations shall follow the following form:

Now, therefore, if the obligee accepts the proposal of the principal and the principal enters into a contract with the obligee in accordance with the terms of the proposal and gives the bonds and certificates of insurance as specified in the standard specifications with good and sufficient surety for the faithful performance of the contract and for the prompt payment of labor and materials furnished in the prosecution of the contract, or in the event of the failure of the principal to enter into the contract and give the bonds and certificates of insurance, if the principal pays to the obligee the difference not to exceed the penalty of the bond between the amount specified in the proposal and such larger amount for which the obligee may in good faith contract with another party to perform the work covered by the proposal then this obligation is void. Otherwise it remains in full force and effect provided, however, that this bond is executed pursuant to the provisions of section 34‑201, Arizona Revised Statutes, and all liabilities on this bond shall be determined in accordance with the provisions of the section to the extent as if it were copied at length herein.

4.  That the right is reserved to reject any or all proposals or to withhold the award for any reason the agent determines.

B.  If the agent believes that any construction, building addition or alteration contemplated at a public institution can be advantageously done by the inmates of the public institution and regularly employed help, the agent may cause the work to be done without advertising for bids.

C.  Any building, structure, addition or alteration may be constructed either with or without the use of the agent's regularly employed personnel without advertising for bids, provided that if the total cost of the work, excluding materials and equipment previously acquired by bid, does not exceed:

1.  in fiscal year 1994‑1995, fourteen thousand dollars.

2.  In fiscal year 1995‑1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41‑563.

D.  Notwithstanding subsection C of this section, the construction, reconstruction or maintenance of any street, road, bridge, water or sewer work, other than a water or sewer treatment plant or building, may be constructed performed either with or without the use of the agent's regularly employed personnel without advertising for bids, provided that if the total cost of the work does not exceed

1.  In fiscal year 1994‑1995, one hundred fifty thousand dollars.

2.  In fiscal year 1995‑1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41‑563 twenty‑five thousand dollars, including materials and equipment.

E.  For the purposes of subsection D of this section:

1.  The total cost of water or sewer work does not include services provided by volunteers or donations made for the water or sewer project.

2.  Projects may not be artificially divided or fragmented to circumvent the prescribed limits.

F.  Notwithstanding this section, an agent may:

1.  Construct, reconstruct, install or repair a natural gas or electric utility and distribution system, owned or operated by such agent, with regularly employed personnel of the agent without advertising for bids, unless otherwise prohibited by charter or ordinance.

2.  Construct recreational projects, including trails, playgrounds, ballparks and other similar facilities and excluding buildings, structures, building additions and alterations to buildings, structures and building additions, with volunteer workers or workers provided by a nonprofit organization without advertising for bids for labor and materials, provided that if the total cost of the work does not exceed:

(a)  In fiscal year 2001‑2002, one hundred fifty thousand dollars.

(b)  In fiscal year 2002‑2003 and each fiscal year thereafter, the amount provided in subdivision (a) adjusted by the annual percentage change in the GDP price deflator as defined in section 41‑563.

G.  A contribution by an agent for the financing of public infrastructure made pursuant to a development agreement is exempt from this section if such contribution for any single development does not exceed:

1.  In fiscal year 1994‑1995, one hundred thousand dollars.

2.  In fiscal year 1995‑1996 and each fiscal year thereafter, the amount provided in paragraph 1 of this subsection adjusted by the annual percentage change in the GDP price deflator as defined in section 41‑563.

H.  In addition to other state or local requirements relating to the publication of bids, each agent shall provide at least one set of all plans and specifications to any construction news reporting service that files an annual request with the agent.  For the purposes of this subsection, "construction news reporting service" means a service that researches, gathers and disseminates news and reports either in print or electronically, on at least a weekly basis for building projects, construction bids, the purchasing of materials, supplies or services and other construction bidding or planned activity to the allied construction industry.  The allied construction industry includes both general and specialty contractors, builders, material and service suppliers, architects and engineers, owners, developers and government agencies.

I.  Any construction by a county under this section shall comply with the uniform accounting system prescribed for counties by the auditor general under section 41‑1279.21.  Any construction by a city or town under this section shall comply with generally accepted accounting principles.

J.  Any construction, building addition or alteration project that is financed by monies of this state or its political subdivisions shall not use endangered wood species unless an exemption is granted by the director of the department of administration.  The director shall only grant an exemption if the use of endangered wood species is deemed necessary for historical restoration or to repair existing facilities and the use of any substitute material is not practical.  Any lease‑purchase agreement entered into by this state or its political subdivisions for construction shall specify that no endangered wood species may be used in the construction unless an exemption is granted by the director.  For the purposes of this subsection, "endangered wood species" includes those listed in appendix I of the convention on international trade in endangered species of wild flora and fauna.

K.  All bonds given by a contractor and surety pursuant to this article, regardless of their actual form, will be deemed by law to be the form required and set forth in this article and no other.

L.  Any building, structure, addition or alteration may be constructed without complying with this article if the construction, including construction of buildings or structures on public or private property, is required as a condition of development of private property and is authorized by section 9‑463.01 or 11-822.  For the purposes of this subsection, building does not include police, fire, school, library or other public buildings.

M.  Notwithstanding section 34‑221, any agent may enter into a guaranteed energy cost savings contract with a qualified provider for the purchase of energy cost savings measures without complying with this article and may procure a guaranteed energy cost savings contract through the competitive sealed proposal process prescribed in title 41, chapter 23 or any similar competitive proposal process adopted by the agent.

N.  A violation of subsection C or subsection E, paragraph 2 of this section may be enforced pursuant to section 41‑194.01. END_STATUTE