Bill approved to overhaul procurement laws

The Colorado Statesman

The Democratic-controlled House on Friday night gave preliminary approval to an aggressive jobs bill that seeks a significant overhaul to state contracting procurement laws.

House Bill 1292, sponsored by Reps. Dan Pabon, D-Denver, and Pete Lee, D-Colorado Springs, would require state agencies to weigh overall “best value” in their consideration of competitive bids on state contracts. The measure would move away from a strictly price analysis.

Under the legislation, agencies would be required to consider the use of Colorado workers and Colorado products to complete contracts, as well as wages, health care and other benefits paid to workers.

The overhaul takes aim at a 1930s-era Colorado law, which requires any state contractor to use Coloradans as at least 80 percent of its workforce.

Sponsors unveiled the legislation at a news conference on April 8, flanked by union leaders and workers. They hailed the measure as centerpiece legislation in the Democrats’ jobs agenda. The legislation is the only bill this year — aside from same-sex civil unions — to carry every Democrat in the House and Senate as a co-sponsor.

Sponsors point out that there is little enforcement of current Colorado law, as it requires jail time for contractors, which is an unreasonable penalty. Instead, HB 1292 would require the Department of Labor and Employment to investigate and fine violators.

“We felt, the contracting community felt, that these criminal penalties were not the right punishment to fit the violation, so we worked with them,” Pabon said from the House floor.

With the help of the AFL-CIO, sponsors worked with contractors across the state to reach a compromise on the enforcement mechanism in the bill.

“The ‘Keep Jobs in Colorado Act’ creates opportunities for working families across the state,” said Mike Cerbo, executive director of the Colorado AFL-CIO. “Encouraging state bid preferences, limiting outsourcing and simplifying the 80 percent hiring rule — enforcement will only serve to strengthen our state economy and keep jobs growing.”

The bill was amended Monday in the House State, Veterans and Military Affairs Committee to limit the time for state investigations on complaints to 90 days.

The measure was also amended to ensure that only 80 percent of all workforces on a contract are Coloradans. It was originally written so that 80 percent of the workforce working on each phase of a project contains Colorado residents.

On Friday, Rep. Cheri Gerou, R-Evergreen, offered a friendly amendment to require scores from the bidding process to be transparent and open to the public.

“Then the state doesn’t have to defend its selection because it’s all out there,” she said, before the House agreed to add the amendment to the bill.

But not all Republicans were as friendly. One after the other they attacked Democrats on the bill, arguing that it does nothing to create or keep jobs in Colorado.

“Two words. Just two words: at last…” Rep. Spencer Swalm, R-Centennial, addressed his colleagues, suggesting that it took Democrats nearly the entire session to push jobs-related bills. “Look at your calendars, the 101st day of the session, at last… If this is the centerpiece of a session that was supposed to be focused on good jobs and a better economy, give me a break.”

State departments raise concerns

Republicans aren’t the only ones raising concerns. State departments are also fearful of fiscal impacts. Department heads spoke to those concerns Monday during the House State, Veterans and Military Affairs Committee.

The committee backed the measure on a 7-4 party-line vote, despite the worries. Testimony was given from three state departments that the measure would likely increase their costs. Similar arguments have been made over the years on other bills that dealt with preferences on state contracts.

Kurt Morrison, government liaison for the Colorado Department of Transportation, pointed out that stringent verification requirements would raise the price of bids by anywhere from 1 to 5 percent. He pulled his statistics from Colorado Legislative Council.

The state’s transportation department would spend between $5 million and $25 million more per year on the cost of contracts, thereby forcing it to make fewer bids, which could actually limit the number of Colorado workers finding projects. Morrison did not have specifics, but said the result could be “hundreds” of less private construction jobs on state projects.

“Any time that additional requirements are placed on the contracting industry, those compliance costs are typically returned upon CDOT in the form of higher bid costs, and that in turn has the result of lowering the number of overall projects we can complete in a year,” testified Morrison.

Next up was Chad Marturano, director of legislative affairs for the Colorado Department of Higher Education, who echoed similar concerns. Marturano estimated that universities would spend anywhere from $10 million to $50 million more in the coming years because project costs would increase. As a result, his department would also have to limit contracts, he told lawmakers.

“Our purpose here today is primarily to point out an aspect that was identified in the fiscal note… about potential impacts and costs…” explained Marturano. “There’s anticipated to be a cost that is passed on to the contractors and providers of the building.”

Finally, Dara Hessee, chief of staff for the Governor’s Office of Information Technology, raised a separate concern with a possible ban on state contracts with overseas vendors. Hessee said that would tie the department’s hands by limiting the number of companies that can do technical computer work.

Requirements for hiring in-state workers would not include computer work because so few of those jobs are domestic, Lee pointed out. But Hessee still raised fears over the measure resulting in some U.S. companies not bidding on Colorado contracts.

“We’re just concerned that vendors would not submit proposals if they had to do this certification when it would cost them so much, and they would think that they would be excluded from the process,” she advised the legislative panel. “While I’m fully behind the goals of the bill, we’re concerned with the unintended consequences that it could have on our operations…”

Rep. Tim Dore, R-Elizabeth, took notice of the issues raised by state departments. He also pointed out that because most state departments receive federal dollars, the legislation might not have teeth.

“CDOT’s participation in this legislation is really not existent from a perspective of having to follow it because there really is no purely state funded project right now that doesn’t have federal money,” he said.

Rep. Ray Scott, R-Grand Junction, attempted to offer some additional assistance to contractors by moving an amendment in committee that would have eliminated a reporting procedure, which requires a breakdown of foreign and domestic goods. He believes that is an unfair liability placed on contractors.

“I have a lot of concerns that if we don’t make some adjustments in this… you have a general contractor at the top of that list who is then the most liable individual,” he said, before Democrats shot down his amendment.

Pabon and Lee said they would continue working with state departments and stakeholders on further compromise. But they believe they have drafted a fair and balanced bill with the ultimate goal of creating jobs.
“This bill will ensure that state funds — our taxpayer dollars — go to hire Colorado workers and support Colorado businesses,” Lee said following the vote. “We want to put food on the tables of Colorado families.”

“Colorado companies do not provide every product and every service under the sun, and this legislation does not pretend otherwise,” added Pabon. “But outsourcing of jobs on state contracts should be the exception rather than the rule.”