DAR File No. 42690

Transportation, Operations, Construction

Rule R916-2

Prequalification of Contractors

Notice of Proposed Rule

(Amendment)

DAR File No.: 42690
Filed: 03/14/2018 05:26:35 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

These proposed rule amendment make technical changes to the existing rule and the procedures it delineates.

Summary of the rule or change:

In addition to the technical changes, these proposed rule amendments make, these amendments attempt to clarify the requirements for contractors seeming to pre-qualify to compete for contracts with the Department of Transportation (Department). The amendments also add a requirement that contractors seeking prequalification have an average contractor rating over the past 5 projects of 70% or higher, and restate the requirements for bidding as a one-time joint venture and a continuing joint venture.

Statutory or constitutional authorization for this rule:

• Section 72-1-201
• Subsection 63G-6a-106(3)(a)

Anticipated cost or savings to:

the state budget:

The Department does not anticipate any costs to the state budget. These changes do not require the Department to do anything that requires an additional expenditure. The Department is proposing these amendments in hope of making its prequalification process more efficient and effective. Any savings to the Departments budget these proposed amendments may cause are prospective and speculative.

local governments:

The Department does not anticipate any costs to local governments. These changes do not require local governments to do anything that requires an additional expenditure, and they do not provide any presently tangible benefits to local governments.

small businesses:

The Department does not anticipate any costs to small businesses. These changes do not require small businesses to do anything that requires an additional expenditure, and they do not provide any presently tangible benefits to small businesses. These proposed amendments attempt to clarify and streamline requirements in the existing rule.

persons other than small businesses, businesses, or local governmental entities:

The Department does not anticipate any costs to persons other than small businesses, businesses, or local government entities. These changes do not require persons other than small businesses, businesses, or local government entities to do anything that requires an additional expenditure, and they do not provide any presently tangible benefits to persons other than small businesses, businesses, or local government entities.

Compliance costs for affected persons:

There are no compliance costs for affected persons, nor will there be compliance costs for affected persons. These proposed amendments change existing procedures to provide additional opportunities to affected persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

This rule change will not have any fiscal impact on businesses.

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
Operations, Construction
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 cwnewman@utah.gov
• James Palmer at the above address, by phone at 801-965-4000, by FAX at 801-965-4338, or by Internet E-mail at jimpalmer@utah.gov
• Linda Hull at the above address, by phone at 801-965-4253, by FAX at , or by Internet E-mail at lhull@utah.gov

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:

05/01/2018

This rule may become effective on:

05/08/2018

Authorized by:

Carlos Braceras, Executive Director

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs	FY 2018	FY 2019	FY 2020
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Person	$0	$0	$0
Total Fiscal Costs:	$0	$0	$0
Fiscal Benefits
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Persons	$0	$0	$0
Total Fiscal Benefits:	$0	$0	$0
Net Fiscal Benefits:	$0	$0	$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described above. Inestimable impacts for Non - Small Businesses are described below.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

In addition to the technical changes this proposed amendment makes, it attempts to clarify the requirements for contractors seeking to pre-qualify to compete for contracts with the Department. It adds a requirement that contractors seeking prequalification must have an average contractor rating over the past 5 UDOT projects of 70% or higher, and it restates the requirements for bidding as a one-time joint venture and a continuing joint venture. This proposed amendment also adds the applicants' safety record to the list of activities that serve as a basis for the prequalification rating.

 

The industry that will be affected by this proposed amendment is Highway, Street, and Bridge Construction. The Department of Workforce Services' Firm Find database lists 176 firms under NCAIS No. 237310, Highway, Street, and Bridge Construction category. Of these, 155 reported having 0 to 49 employees and are considered small businesses, which leaves 21 firms that report employing 50 to 499 employees and are, by definition, large businesses.

 

This rule only applies to firms wanting to compete for contracts valued at more than $3,000,000. These firms may be small businesses or non-small businesses. These are also the firms that may be affected by this proposed amendment. Firms most likely to be affected are those firms that fail to achieve an average contractor rating over their past 5 UDOT projects of 70% or higher and those that have a poor safety record. These are under-performing firms that the Department cannot have working on larger public road projects unless they improve. However, these under-performing firms will not be able to compete for contracts valued at $3,000,000 or higher but may still compete for smaller contracts. If an underperforming firm can maintain an average contractor rating of 70% or higher for 5 consecutive UDOT projects valued at less than $3,000,000, the Department will allow it to apply for prequalification to compete for the larger contracts. If the affected contractors are also able to improve their safety records they will receive a higher prequalification rating.

 

The Department does not know which firms might ultimately become underperforming firms, and thus affected by this proposed amendment. The Department also has no way of quantifying or estimating the fiscal impact these firms may experience. For firms that are fiscally impacted by this proposed amendment the impact will not necessarily be continuing. The impacted firms can perform their way out of the fiscal impact by scoring over 70% on smaller projects until they are again eligible to prequalify for larger projects.

 

The Department has made other changes in this proposed amendment to clarify requirements included in the existing rule. The Department does not anticipate these changes will have any fiscal impact on firms to which this rule applies. The Department does not anticipate this proposed amendment will have a fiscal impact on local governments because nothing in it applies to a function of local governments.

 

The executive director of the Department of Transportation, Carlos E. Braceras, has reviewed and approved this fiscal analysis.

 

 

R916. Transportation, Operations, Construction.

R916-2. Prequalification of Contractors.

R916-2-1. Authority and Purpose.

This rule establishes procedures for prequalifying contractors desiring to submit bids and proposals for Utah Department of Transportation construction projects. This rule is authorized under Utah Code Ann. Sections 72-1-201 and 63G-6a-106(3)(a).

 

R916-2-2. Definitions.

(1) Terms used in this rule are defined in Section 72-1-102.

(2) "Board" means the prequalification board, consisting of 4 positions: Department of Transportation Comptroller, Director of Construction and Materials, an engineer for construction, and the Prequalification Specialist, or designees.

(3) "Applicant" means any person who submits an application for prequalification.

 

R916-2-3. Prequalification.

(1) Contractors desiring to submit bids or proposals for construction contracts shall be prequalified by the Department to ensure they have the resources and capability to successfully complete awarded contracts. Prequalification is not required for projects that have an advertised estimate of $3,000,000 or [under]less.

(a) Prequalification information is due at least [1]20 calendar days before submitting a proposal or bid on projects of more than $3,000,000.

(b) The Department may change an Applicant's prequalification status at any time if the Department receives favorable or unfavorable information about the Applicant's job work performance or financial performance.

(c) The prequalification amount limits the size of individual contracts and type of work for which a prequalified contractor may submit proposals or bids.

(2) Qualification ratings establish the type of construction work contractors may be permitted to perform and the maximum total dollar value of contracts [they] contractors are allowed to undertake at any one time if not classified as unlimited.

(3) Applicants who attain a total prequalification of $50,000,000 [shall]will be classified as unlimited. The Department will audit or review[E]each Applicant's prequalification [shall be reviewed ]at least annually; more often if circumstances [so ]warrant , as determined by the Department or the Applicant.

(4) The Department will base an Applicant's [Q]prequalification ratings [shall be based ]on [evaluation of ]the Applicant's:

(a) experience;

(b) past performance and safety record;

(c) personnel; and

(d) analysis of certified audited or reviewed financial statements, including balance sheet, income statements, assets including equipment , cash flow, and changes in financial condition.

(e) If current financial statements on file are reviewed and not audited, the Department may accept financial statements for the same [time ]period [may be accepted ]in lieu of the required certified audited financial statements ;[,] however, providing [these documents shall]reviewed financial statements will result in a [lower ]prequalification rating [of]based on one-half[of] the financial factor allowed if the applicant provides audited financial statements[under the usual procedure].

(5) An applicant may submit a guaranty of financial support provided by an affiliated but independent entity. The Department [shall]will provide applicants a guarantee agreement form for this purpose. Applicants that submit a guaranty of financial support must submit the Department's guarantee agreement form with their applications. The guarantee may increase an applicant's adjusted equity by a maximum of 50% of the applicant's calculated adjusted equity in the formula , as determined by the Department.

(6) The applicant may[shall] only provide the experience and past performance of the applicant[,] and must submit financial reports[documents] that accurately represent the past financial performance and present financial condition of the applicant.

(7) The Department may reject an application and not pre-qualify an Applicant if the Applicant:

(a) fails to provide all requested information;

(b) provides false, misleading, or incorrect information;

(c) has now or in the past had an officer, member or owner who was convicted of a felony;

(d) is now or has been suspended or debarred by any governmental entity;

(e) has failed to complete a construction contract as the prime contractor;

(f) has an average contractor rating over the past 5 projects that falls below 70%;

([f]g) has been convicted or held liable for any crime or civil offense that involved collusive or deceptive activity related to a procurement process; or

([g]h) otherwise fails to meet the Department's requirements.

(8) This rule shall be administered to ensure that Applicants possess adequate financial resources to provide complete performance of contracts awarded to them by the Department, and to foster and protect competition in the Department's bidding processes.

(9) The Department will not accept any pledges.

 

R916-2-4. Joint Venture.

(1) Joint ventures must submit a letter of intent to the Department's Prequalification Board Specialist [that states the exact name of the joint venture and identifies the joint venture's designated administrative partner before submitting a joint proposal on a project. Joint ventures must submit their joint proposals at least four working days before the scheduled bid opening. The Department will consolidate individual prequalification amounts for joint venture bids or proposals.]prior to bidding as a joint venture. The letter must state whether the joint venture partners intend to bid on a single project, or on multiple projects. If the intent is to bid on a single project, the letter of intent must identify the project by the Departments project number. If the intent is to bid on multiple projects, the letter must request approval to bid as a continuing joint venture. Approval to bid as a continuing joint venture will expire one year after the date the Department grants approval. Joint ventures must submit their letter of intent together with an executed copy of their joint venture agreement at least 20 working days before the scheduled bid opening, or the first scheduled bid opening a continuing joint venture intends to bid. The Department will consolidate individual prequalification amounts for joint venture bids or proposals.

(2) Applicants must[shall] obtain the following under the joint venture designation before bid openings:

(a) Bid bond; and

(b) UDOT Contractor identification and password.

 

R916-2-5. Prequalification Board.

(1) The Prequalification board is established to:

(a) direct the prequalification of contractors;

(b) review and analyze prequalification applications; and

(c) establish the amount and type of prequalification work classifications to be granted to contractors.

 

KEY: bids, contracts, prequalification, contractor rating

Date of Enactment or Last Substantive Amendment: [December 8, 2014]2018

Notice of Continuation: August 3, 2016

Authorizing, and Implemented or Interpreted Law: 72-1-102; 72-1-201; 63G-6a-106(3)(a)