DAR File No. 40772
This rule was published in the October 1, 2016, issue (Vol. 2016, No. 19) of the Utah State Bulletin.
Transportation, Operations, Construction
Health Reform -- Health Insurance Coverage in State Contracts -- Implementation
Notice of Proposed Rule
DAR File No.: 40772
Filed: 09/14/2016 02:48:14 PM
Purpose of the rule or reason for the change:
Subsection 72-6-107.5(6) requires the Utah Department of Transportation to adopt administrative rules which: 1) establish the procedure a contractor must follow to demonstrate that he will maintain an offer of qualified health insurance coverage for the contractor's employees for the duration of the state contract; 2) set penalties that may be imposed if a contractor intentionally violates the section; and 3) identify the website where a benchmark for qualified health insurance coverage can be found. H.B. 282 amended Subsection 72-6-107.5(6) during the 2016 General Session of the Legislature. This amendment makes the changes required by H.B. 282.
Summary of the rule or change:
This amendment: 1) raises the application threshold from $1,500,000 to $2,000,000 for prime contractors and $750,000 to $1,000,000 for subcontractors; 2) updates citations to the Utah code needed due to renumbering by the Legislature; 3) includes text that requires prime and subcontractors to certify to the Department that they have obtained and will maintain offers of qualified health insurance coverage to employees that comply with an actuarial equivalence determination that is bench-marked by the Department of Health; and 4) makes a number of grammatical corrections.
Statutory or constitutional authorization for this rule:
- Section 72-6-107.5
Anticipated cost or savings to:
the state budget:
The Department does not anticipate that this amendment will result in direct costs or savings to the state's budget because it does not require an allocation or payment of funds from or to the state or a subdivision of the state.
The Department does not anticipate that this amendment will result in direct costs or savings to the budgets of local governments because it does not require an allocation or payment of funds from or to local government or a subdivision of a local government.
This amendment may lead to savings by those small businesses that have been required to offer health care benefits to their employees due to the application thresholds included in the former rule and will no longer be required to offer health care benefits to their employees due to the higher thresholds included in this amendment.
persons other than small businesses, businesses, or local governmental entities:
The Department does not anticipate that this amendment will result in direct costs or savings to the budgets of persons other than small businesses, businesses, or local government entities because it does not require an allocation or payment of funds from or to persons other than small businesses, businesses, or local government entities.
Compliance costs for affected persons:
The Department does not anticipate this amendment will result in any additional compliance costs for affected persons because it does not require an allocation or payment of funds from or to persons other than small businesses, businesses, or local government entities.
Comments by the department head on the fiscal impact the rule may have on businesses:
This amendment may have a positive fiscal impact on business, but an exact measure of that impact is not known at this time.
Carlos Braceras, Executive Director
The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:Transportation
CALVIN L RAMPTON COMPLEX
4501 S 2700 W
SALT LAKE CITY, UT 84119-5998
Direct questions regarding this rule to:
- Christine Newman at the above address, by phone at 801-965-4026, by FAX at 801-965-4338, or by Internet E-mail at firstname.lastname@example.org
- James Palmer at the above address, by phone at 801-965-4000, by FAX at 801-965-4338, or by Internet E-mail at email@example.com
- Michelle Jeronimo at the above address, by phone at 801-965-3883, by FAX at , or by Internet E-mail at firstname.lastname@example.org
- Linda Hull at the above address, by phone at 801-965-4253, by FAX at , or by Internet E-mail at email@example.com
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
This rule may become effective on:
Carlos Braceras, Executive Director
R916. Transportation, Operations, Construction.
R916-5. Health Reform -- Health Insurance Coverage in State Contracts -- Implementation.
The purpose of this rule is to comply with Section 72-6-107.5 and establish the requirements and procedures a contractor, subcontractor, consultant and subconsultant must follow to demonstrate they will maintain an offer of health insurance as required by Section 72-6-107.5. This rule also establishes penalties for intentional violations of Section 72-6-107.5.
This rule is authorized under Section 72-6-107.5 which requires the Utah Department of Transportation to make rules related to health insurance in certain design and construction contracts.
(1) Except as otherwise stated in this rule, terms used in this rule are defined in Section 72-6-107.5
(2) In addition:
(a) "Executive Director" means the Executive Director of the Department of Transportation, including, unless otherwise stated, the Executive Director's duly authorized designee.
(b) "Department" means the Department of Transportation established pursuant to Section 72-1-201.
(c) "Employee(s)" is as defined in 72-6-107.5 and includes only those employees that live and/or work in the State of Utah along with their dependents. "Employee" for purposes of this rule, shall not be construed as to be broader than that the use of the term employee for purposes of State of Utah Workers' Compensation laws.
(d) "State" means the State of Utah.
R916-5-4. Applicability of Rule.
(1) Except as provided in Subsection (2)
below, this rule applies to all contracts entered into by the
Department on or after July 1, 2009, and is applicable to a prime
contractor if its contract is in the amount of $[
1,500,000] or greater
, and to a
subcontractor if its subcontract is in the amount of $[ 750,000] or greater
(2) This rule does not apply if:
(a) the application of this rule jeopardizes the receipt of federal funds;
(b) the contract is a sole source contract; or
(c) the contract is an emergency procurement; or
(d) the ule is in conflict with federal law.
(3) This rule does not apply to a change order as defined in Section 63G-6-103, or a modification to a contract, when the contract does not meet the initial threshold required by Subsection R916-5-4(1).
(4) A person who intentionally uses change orders or contract modifications to circumvent the requirements of subsection (1) is guilty of an infraction.
R916-5-5. Contractors or Consultants to Comply with Section 72-6-107.5.
All contractors, subcontractors, consultants or subconsultants that are subject to the requirements of Section 72-6-107.5 shall comply with all the requirements, and be subject to the penalties and liabilities of Section 72-6-107.5.
R916-5-6. Not Basis for Protest, Suspension, Disruption, or Termination Design or Construction.
(1) The failure of contractors, subcontractors, consultants, or subconsultants to comply with Section 72-6-107.5:
(a) may not be the basis for a protest or
other action from a prospective bidder, offeror, or contractor or
consultant under Section 63G-[
6-801] or any other provision in Title 63G, Chapter 6, Part [ 8] , Legal and Contractual Remedies; and
(b) may not be used by the procurement entity or a prospective bidder, offeror, or contractor or consultant as a basis for any action or suit that would suspend, disrupt or terminate the design or construction.
(2) A contractor who is unable to demonstrate compliance upon submission of the executed contract, signed by the successful bidder, may be declared non-responsive and the Department may award the contract to the next lowest responsive bidder.
(3) A consultant who is unable to
demonstrate compliance within 14 calendar days of being ranked
first during the consultant selection process[
,] may be declared non-responsive and the
Department may enter negotiations with the new first-ranked
R916-5-7. Requirements and Procedures a Contractor or Consultant Must Follow.
(1) A contractor, or consultant, subcontractors or subconsultants must comply with the following requirements and procedures, and demonstrate, no later than the time of execution of the contract, compliance with Section 72-6-107.5:
b]y providing a written certification to the Executive
Director that the contractor, consultants, subcontractors, and
subconsultants have and will maintain for the duration of the
contract an offer of qualified health insurance coverage for the
employees who live and/or work within the State, along with their
(b) the contractor or consultant shall also provide such written certification prior to the execution of the contract, in regard to all subcontractors or subconsultants at any tier that are subject to the requirements of this rule.
(2) Recertification. The Executive Director shall have the right to request a recertification by the contractor or consultant by submitting a written request to the contractor or consultant, and the contractor or consultant shall so comply with the written request within ten (10) working days of receipt of the written request; however, in no case may the contractor or consultant be required to demonstrate such compliance more than twice in any 12-month period.
(3) Demonstrating Compliance with Actuarially Equivalent Determination. The actuarially equivalent determination required by Subsection (1) of 72-6-107.5 is met by the contractor or consultant if the contractor or consultant provides the Executive Director with a written statement of actuarial equivalency from either the Utah Insurance Department, an actuary selected by the contractor or the contractor's insurer, an actuary selected by the consultant or the consultant's insurer, or an underwriter who is responsible for developing the employer groups premium rates.
(a) For purposes of this rule, actuarial
equivalency, or greater is achieved by meeting or exceeding the
requirements of qualified health insurance coverage as defined in
Subsection 72-6-107.5(1)(c). The
plan ]referred to in Subsection 72-6-107.5(1)(c),
may be found at:
(4) The health insurance must be available upon the first day of the calendar month following the initial 90 days from the date of hire.
(5) Consultant Compliance Process. Consultants who are subject to this rule must demonstrate compliance with this rule in their initial Financial Screening Application. The consultant's will then be required to demonstrate the offer of health insurance that meets the requirements outlined in Section 72-6-107.5. During the procurement process and no later than the execution of the contract with the consultant, the consultant will confirm the prime is still in compliance with this rule and the subconsultants of the consultant will certify through their prime consultant they meet the requirements of this rule. The written contract will contain a provision where the consultant confirms compliance with this rule by both the consultant and applicable subconsultants.
(6) Contractor Compliance Process. Contractors who are subject to this rule must demonstrate compliance with this rule. When a contract is written, contractors will confirm the prime contractor is in compliance with this rule and their subcontractors will certify through their contractor that they meet the requirements of this rule. The written contract shall contain a provision where the contractor confirms compliance with this rule by both the contractor and applicable subcontractors.
M]ust be in [ C]ompliance at the [ T]ime the [ C]ontract is executed. Notwithstanding any prequalification
of a contractor, subcontractor, consultant or subconsultant that is
subject to this rule, the contractor subcontractor, consultant or
subconsultant must agree to the language in the executed contract
that requires the contractor to be in compliance with this rule at
the time of the execution of the contract and throughout the
duration of the
R916-5-8. Department Hearing and Penalties.
(1) Hearing. Any hearing regarding the
failure to comply with this rule shall be held in accordance with
the Utah Administrative Procedures Act and [
907-1 unless specifically stated otherwise in a governing
(2) Penalties. The penalties that may be imposed if a contractor, consultant, subcontractor or subconsultant, at any tier intentionally violates this rule include:
(a) a three-month suspension of the contractor or subcontractor from entering into future contracts with the state upon the first violation, regardless of which tier the contractor or subcontractor is involved;
(b) a six-month suspension of the contractor, subcontractor, consultant or subconsultant from entering into future contracts with the state upon the second violation, regardless of which tier the contractor or subcontractor is involved;
(c) an action for debarment of the
contractor, subcontractor, consultant or subconsultant in
accordance with Section 63G-[
6-804] upon the third or subsequent violation; and
(d) monetary penalties which may not exceed 50% of the amount necessary to purchase qualified health insurance coverage for an employee and the dependents of an employee of the contractor, subcontractor, consultant or subconsultant who was not offered qualified health insurance coverage during the duration of the contract.
(e) A prime contractor or consultant will not be subject to penalties for the failure of a subcontractor or subconsultant to meet the requirement of maintaining their offer of qualified health care coverage.
R916-5-9. Does Not Create Any Contractual Relationship With Any Subcontractor or Subconsultant.
Nothing in this rule shall be construed as to create any contractual relationship whatsoever between the Department or the State with any subcontractor or subconsultant at any tier.
KEY: contracts, health insurance, health insurance in state contracts, health reform
Date of Enactment or Last Substantive Amendment: [
October 11, 2011]
Notice of Continuation: September 12, 2014
Authorizing, and Implemented or Interpreted Law: 72-6-107.5
More information about a Notice of Proposed Rule is available online.
The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull-pdf/2016/b20161001.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.
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For questions regarding the content or application of this rule, please contact Christine Newman at the above address, by phone at 801-965-4026, by FAX at 801-965-4338, or by Internet E-mail at firstname.lastname@example.org; James Palmer at the above address, by phone at 801-965-4000, by FAX at 801-965-4338, or by Internet E-mail at email@example.com; Michelle Jeronimo at the above address, by phone at 801-965-3883, by FAX at , or by Internet E-mail at firstname.lastname@example.org; Linda Hull at the above address, by phone at 801-965-4253, by FAX at , or by Internet E-mail at email@example.com. For questions about the rulemaking process, please contact the Office of Administrative Rules.