PUBLIC WORKS CONTRACTS:
STREAMLINING A COMPLICATED PROCESS
St. Louis County Municipal League
Municipal Officials Training Academy
May 23, 2013
Ryan A. Moehlman
Cunningham, Vogel & Rost, P.C.
legal counselors to local government
333 S. Kirkwood Road, Suite 300
St. Louis, MO 63122
314.446.0800
www.municipalfirm.com
STATE LAW REQUIREMENTS
PUBLIC WORKS
Mandatory Requirements
• OSHA Training - § 292.675 RSMo.
• Participation in Work Authorization
Program § 285.530 RSMo.
• Proof of Lawful Presence - §
208.009 RSMo.
• Prompt Payment Act - § 34.057
RSMo.
• Bond-§ 107.170 RSMo.
• Prevailing Wage - § 290.210
RSMo., et seq .
• Excessive Unemployment - §§
290.550 - 290.580 RSMo.
• American Products -§ 34.353
RSMo.
See Exhibit 1 in Handouts
Contracts
RFPs &
Other
Calls for
Bids
A CONTRACT
§432.070 RSMO requires that …
No county, city, town, village . . . or
other municipal corporation shall make
any contract, unless
it is within the scope of its powers or
expressly authorized by law, and
the contract is made upon a promise to
perform AFTER making of the contract
includes the price term ($$$$$)
A CONTRACT
§432.070 RSMO requires that …
And unless the contract:
Is in writing
dated when made, and
signed by the parties thereto (or
their agents authorized by law and
duly appointed) and
authorized in writing
OSHA TRAINING
OSHA Training § 292.675 RSMo
All “on-site employees” of
contractors &
subcontractors working on
a public works project must
take the 10-hour, OSHAapproved construction
safety course provided by
their contractor or
subcontractor
TRAINING?
WE DON’T
NEED NO
STINKING
TRAINING
Ladder
Stacking
Te c h ni q ue s
OSHA Training under § 292.675 RSMo
What is it?
A one-time
requirement that onsite employees must
either:
• For each public works
project, statute’s
requirements must
appear in the:
• complete the
program within 60
days of beginning
work, or
• resolution/ordinance
• hold documentation
of prior completion
of the program
• contract
• call for bids for the
contract and
PROPER
BACKHOE
OPERATION
OSHA Training - Section 292.675 RSMo
 Enforcement by MoDOLIR
 Employee working without OSHA training has 20
days to complete the training before employee is
removed from project and penalties accrue.
 Penalties = $2,500.00 plus $100.00/day per
employee found on site without evidence of
training
 Penalties forfeited to city/county
 City/county must withhold penalty amounts
assessed by MoDOLIR from payments to
contractor.
 Notice of these penalty provisions must be
included in contract.
FORKLIFT
COMBOS
Fo r t h a t ex t r a
lift.
WORK AUTHORIZATION
IMMIGRATION
285.530.2 RSMO
 As a condition for the award of any contract or grant
in excess of $5,000 by a political subdivision to a
business entity:
 business entity shall, by sworn affidavit & provision of
documentation, affirm enrollment &participation in a
federal work authorization program with respect to
employees working on contracted services.
 Affidavit affirming that business entity does not
knowingly employ any person who is an unauthorized
alien in connection with the contracted services.
 See Exhibit 2
MoDOLIR REGULATIONS
15 CSR 60-15.020
Any bid or response to an RFP for the
award of any contract for services in
excess of $5,000 shall be accompanied by
an affidavit from business entity that:
1. Enrolled & participating in, E-Verify, or
other federal work authorization program
AND
2. Does not knowingly employ any person
who is an unauthorized alien in
conjunction with the contracted services.
Missouri Department of Labor regulations
implication –
City/County should require submittal of
affidavit & documentation of participation
in a federal work authorization program
(i.e. E-Verify) as part of the bid package
IMMIGRATION
285.530 RSMO
Emergency exception.
emergency = natural and manmade disasters:
major snow and ice storms, floods, tornadoes,
severe weather, earthquakes, hazardous
material incidents, nuclear power plant
accidents, other radiological hazards, and
major mechanical failures of a public utility
facility.
Suspends the requirements for
15 working days (3 weeks)
IMMIGRATION
285.530 RSMO
Does NOT apply to:
Permits or licenses issued by
the City
Purchase of goods or products
PROOF OF LAWFUL
PRESENCE
Illegal aliens
prohibited
from
receiving
any state or
local public
benefit
§208.009 RSMO
Prohibits any illegal alien from receiving state or
local "public benefits"
Requires all applicants at time of application for
public benefits to provide “affirmative proof that
the applicant is a citizen or a permanent resident
of the United States or is lawfully present in the
United States.”
PUBLIC BENEFITS 208.009 RSMO
“public benefit”
means any grant, contract, or
loan provided by a … local
government …
PUBLIC BENEFITS 208.009 RSMO
affirmative proof required
“at the time of application”
Driver’s license or other
document recognized by
the federal government as
proof of lawful presence
PUBLIC BENEFITS 208.009 RSMO
NO AFFIDAVIT REQUIRED unless
applicant cannot supply
documentation, then can request
“temporary public benefits” upon
affidavit
Affidavit only good for 90 days
See Exhibit 3
OTHER CONTRACT
REQUIREMENTS
H T TP : / / WWW.LAB OR .MO.GOV/PU B LI C_ BODIES_ GU IDEBO OK
E xh ib it 4
Prompt Payment Act
§ 34.057
RSMo.
PROMPT
PAYMENT
ACT
§34.057.1. ... all public works
contracts made and awarded
by...any municipality,
county..., for construction,
reconstruction or alteration of
any public works project,
shall provide for prompt
payment by the public owner
to the contractor
Must “make progress
payments to the
contractor on at least a
monthly basis as the
work progresses, or, on
a lump sum basis
according to the terms of
the lump sum contract”
§34.057.1(1) RSMo.
PROMPT
PAYMENT
ACT
Retention
“shall not exceed 5% of the
value of the contract
…unless the public owner
and the architect or
engineer determine that a
higher rate of retainage is
required to ensure
performance of the contract”
But never more than 10%
 Only if public owner and the
architect or engineer determine
that a higher rate of retainage is
required to ensure performance
of the contract
 Include determination in bid
documents
PROMPT
PAYMENT
ACT
Retention
Must pay the retainage, less
any offsets/deductions
authorized in the contract
or otherwise authorized by
law, after substantial
completion of the work and
acceptance by the public
owner's authorized contract
representative
PROMPT
PAYMENT
ACT
Must be paid within 30 days of the
first of the following to occur:
1. Completion of the project and
complete filing of all documents
required by contract
2. Architect/Engineer certification
of completion
3. Certification of completion by
the contracting authority
Payment “made” when placed in US
Mail
PROMPT
PAYMENT
ACT
FINAL
PAYMENT
If payment is not made
within the 30 days & NO
GOOD FAITH and
Reasonable Cause to
withhold payment:
Interest at 1½% per month
PROMPT
PAYMENT
ACT
FINAL
PAYMENT
REASONS
TO
WITHHOLD
FINAL
PAYMENT
What constitutes
“reasonable cause”
& “good faith”:
PROMPT PAYMENT ACT
§34.057.5
 Liquidated damages
 Unsatisfactory job progress
 Defective construction work/material not
remedied
 Disputed work
 Failure to comply with any material
contract provision
 Third party claims filed or reasonable
evidence that a claim will be filed;
 Failure to make timely payments for
labor, equipment or materials;
 Damage to a contractor, subcontractor or
material supplier;
 Reasonable evidence that a subcontractor
or material supplier cannot be fully
compensated under its contract with the
contractor for the unpaid balance of the
contract sum;
 Citation of contractor or subcontractor
for failure to comply with material
provision of contract and which result in
violation of any federal, state or local
law, regulation or ordinance applicable to
project causing additional costs or
damages to the owner.
PAYMENT BOND
Payment Bond; § 107.170
On every project with estimated costs in
excess of $25,000.00
Must require a payment bond from a
contractor
Generally equal to contract amount
Provides equivalent protection on
public projects as provided by
mechanics lien laws
Payment Bond; § 107.170
 WARNING : Officials Charged with requiring
Payment Bond may incur personal liability for
failing to comply with statute.
 Union Pacific R. Co. v. St. Louis Marketplace, Ltd.
Partnership , 212 F.3d 386, 390-91 (8th Cir. 2000) (Official
immunity did not protect city officials, Mayor and
Comptroller, who were charged with performing ministerial
duty of requiring payment bond from a contractor.)
 A public entity may defend, save harmless and indemnify
any of its officers and employees, whether elective or
appointive…arising out of an alleged act or omission
occurring in the performance of a duty under this section.
 IF IN DOUBT, REQUIRE PAYMENT BOND
PREVAILING WAGE
Prevailing Wage; § 290.210 et seq .
Public Policy of State of Missouri
Workers employed by or on
behalf of a public body are to be
paid no less than the prevailing
wage on public works projects
The prevailing wage rate differs
by county and for different types
of work.
Prevailing Wage; § 290.210 et seq .
Wage rates must be
attached to and made
part of the
specifications for the
work
Must “specify in the
resolution or ordinance
and in the call for bids
for the contract what is
the prevailing hourly
rate”
REQUEST FOR WAGE DETERMINATION FORM PW -3
Sent to Division of Labor Standards before project is bid
PREVAILING WAGE
NOTICE TO MoDOLIR
Prior to beginning any work on a public
works project, public body awarding a
contract shall notify the Department of
Labor, on a form prescribed by the
department, of the scope of the work to be
done, the various types of craftsmen who
will be needed on the project, & the date
work will commence on the project.
Submit PW-3 for Every Project
Typical turnaround by MoDOLIR: 2-3 Days
PROJECT NOTIFICATION FORM PW -2
Filed with Division of Labor Standards when project is awarded
Prevailing Wage; § 290.210 et seq .
Required Ordinance or Resolution
Provisions
Must specify in the resolution or
ordinance and in the call for bids for the
contract what is the prevailing hourly rate
of wages in the locality for each type of
workman needed to execute the contract
and also the general prevailing rate for
legal holiday and overtime
work. 290.262.10
Prevailing Wage; § 290.210 et seq .
REQUIRED CONTRACT PROVISIONS:
The public body awarding the
contract shall cause to be
inserted in the contract a
stipulation to the effect that
not less than the prevailing
hourly rate of wages shall be
paid to all workmen
performing work under the
contract.
290.250.1.
§290.290.2. Upon completion of
work and prior to final payment,
each contractor and subcontractor
shall file with the contracting public
body an affidavit of full compliance
with the Prevailing Wage Law
City/County cannot make final
payment until affidavit is filed in
proper form and order.
DAVIS-BACON (FEDERAL)
40 USC §3141
Applies when federal assistance (grants,
loans, loan guarantees) used to pay for
project over $2,000 and where law under
which federal assistance is provided
requires it.
Required contract language in 29 CFR 5.5
FEDERAL DAVIS-BACON
V.
STATE PREVAILING WAGE
Which Applies to My Federal Funded
Project?
BOTH – Frank Bros. v. Wisc. DOT,
409 F.3d 880 (7 th Cir. 2005)
 (1) Davis-Bacon Act did not implicitly preempt
application of state's prevailing wage law, and
 (2) there was no conflict between federal and state
statutory schemes.
 Include both Federal and State Wage Determination in
Bids Documents for Federally Funded Projects
 Federal Wage Determinations available at:
http://www.wdol.gov/dba.aspx
Excessive Unemployment –
Sections 290.550 -580 RSMo
Excessive Unemployment in Effect Only
Missouri laborers & laborers from
“nonrestrictive” states allowed to be
employed on Missouri public works projects
when unemployment rate exceeds 5% for 2
consecutive months
 Restrictive states:
AK, AZ, CA, CO, CT, DE, DC, FL, ID, IL,
IA, ME, MA, MS, MT, NV, NJ, ND, OK,
SD, U.S. Virgin Islands, WV and WY
Excessive Unemployment –
Sections 290.550 -580 RSMo
See Lakeside Roofing Co. v. Nixon
(EDMo. 2012)
Mo. Excessive Unemployment Law held
unconstitutional under the Privileges
and Immunities and Equal Protection
Clauses
Problem:
 Law Still on the Books, but is Unenforceable
DO NOT Deny Contracts based on Worker
Residence
American Products - §34.353 RSMo
Each contract made by a public
agency for . . . any public works
shall contain a provision that any
manufactured goods/commodities
used or supplied in performance
of that contract or any
subcontract thereto shall be
manufactured or produced in the
U.S.
American Products - §34.353 RSMo
Exceptions
 Contracts under $25,000
 Limited availability of certain American products
 Acquisition would impose cost increases above a certain
percentage
May opt out by having “executive
head” certify in writing that political
subdivision has adopted a formal
written policy to encourage purchase
of products manufactured or produced
in the USA
 Must retain copy of policy for 3 years
 May want to consider including notice of policy in bid
documents
American Products - §34.353 RSMo
Alternative to Opting Out
 Include American Product requirements in Contract
 Provide that American Product requirement shall
not apply if statutory exceptions do apply




<$25,000;
Only one line of a particular good or product made in USA;
Not made in USA in sufficient quantities;
USA Product raise price by >10%.
 If one of these exceptions apply, contractor must
provide City information sufficient to make
necessary certifications.
OTHER CONTRACT/BID
ISSUES
COMPETITIVE BIDDING
The #1 Question:
Do I Have to Bid this Project
Out?
The #1 Answer:
Depends.
COMPETITIVE BIDDING
 § 1 7 7 . 0 86 , R S M o ( s c h o ol d i s t r i c t
f a c i l i ti es c o s t i n g m o r e t h a n $ 15, 000)
 § 177. 161, R S M o ( m e t r opo li tan
s c h o ol d i s t r i ct s i n c l u di ng r e p a i r s,
a l t e r ati on s, a n d a d d i t i o ns)
§ 49. 420, R S M o ( c o u nt y b u i l d i ng s)
 § 2 0 4 . 3 50 , R S M o ( c o mmo n s e w e r
§ 50. 660, R S M o ( c o u nt y p u b l i c
d i s t r i c ts)
w o r k s a n d b u i l d i n gs)
 § 2 0 5 . 0 80 , R S M o ( c o u n ty p u b l i c
§ 68. 055, R S M o ( p o r t a u t h o ri t y
h e a l th c e n t er s)
p r o j e cts)
 § 2 2 9 . 0 50 , R S M o ( c o n st ru cti o n,
§ 88.700, R SMo ( public street
i m p r o v ement , o r r e p a i r o f r o a d s ,
th
improvement contracts by 4
b r i d g e s, a n d c u l v e rt s b y c o u n t y
class cities using special tax)
c o m mi ssi o ns, t o w n s hi p b o a r d s, a n d
r o a d d i s t r i ct s)
§ 88.940, R SMo ( constitutional
c harter c i ties wi th p opulations o f
 § 2 3 1 . 2 50 , R S M o ( r o a d d i s t r i c ts)
75,000-80,000)
 § 2 3 3 . 4 05 , R S M o ( i n c o r po r ated r o a d
§ 91.170, R SMo ( i nitial c i ty water
d i s t r i c ts)
works)
 § 2 4 5 . 1 50 , R S M o ( l e v e e d i s t r i c ts)
§ 100.170, R SMo ( p rojects f i nanced  § 2 4 8 . 1 10 , R S M o ( s a n i ta ry d r a i n a ge
b y r e venue b onds where
d i s t r i c ts)
municipality u ndertakes, o bligation )
 § § 249. 330, 249. 340, a n d 249. 510,
R S M o ( s e w e r d i s t r i ct s)
These laws require competitive
bidding for construction projects
to be awarded by counties, cities,
and other political subdivisions:







COMPETITIVE BIDDING
Look at your Ordinances:
Some Ordinances require competitive
bidding
Often include thresholds (example):
 >$5,000 = Competitive Bidding required
 Between $5,000-$2,500 = No bidding, but
Board Approval required
 <$2,500 = City Administrator can purchase
Must determine what is right for your
City
Liquidated Damages Clause
Generally enforceable
unless they are deemed a
“penalty” rather than an
estimation ( i.e. , a
reasonable forecast ) of
the damages an owner
will face for failure to
complete project on time
“ time is of the essence ”
Liquidated Damages
In public contracts, a liquidated damage
clause will be enforced regardless of
whether there is a showing of any actual
harm, but rather just on the showing that the
contract was breached.
Sides Constr. Co. v. City of Scott City, 581 S.W.2d
443, 447 (Mo. App. S.D. 1979)
Liquidated Damages
THINK FIRST…
Liquidated damage
clause will limit the
damages to the amount
stated in the contract
regardless of whether
actual damages far
exceed that amount (so
long as they are not
unreasonably
disproportionate ).
Performance Bond
Payment Bond
Performance Bond
Discretionary (but
very good idea)
Benefits City
Ensures
Completion &
Maintenance
v.
Payment Bond
Statutory
Benefits
Subcontractors
Ensures Payment
(mechanic lien
replacement)
Because of Different Beneficiaries and Different Uses
of funds from Bonds, generally, Performance Bonds
and Payment Bonds should not be combined; require
each separately. See Exhibits 5 & 6
“May reject any and all bids,
waive technicalities or
deficiencies, … may
negotiate with any or all
bidders or others for more
favorable terms or prices, …
may award contract to other
than bidder submitting the
lowest cost bid proposal”
WATCH OUT:
Negotiation After Bid Opening
not allowed under some
federally-funded projects
(CDBG)
NEGOTIATION
AFTER BID
OPENING
SEE EX. 7 –
NOTICE
Discretion in Bid Awards
In determining who is the “lowest and
best bidder” on a public works contract,
a public authority is vested with wide
discretion, and its decision, when made
honestly and in good faith, will not be
interfered with by the court, even if
erroneous.
KAT Excavation, Inc. v. City of Belton ,
996 S.W.2d 649 (Mo.App. W.D. 1999)
REMEMBER
Each public works contract is unique and
public officials should consult legal
counsel to ensure that each contract and
set of bid documents comply with all
statutory requirements
Successful Public Works Bidding and Contracting Will Require Input from
and Coordination with:
•Public Works Director
•City Clerk
•City Engineer
•Finance Director
•City Attorney
•Private Architects/Engineers
•City Administrator
•Other Stakeholders
See Exhibit 7 – Checklist for Public Works Bidding/Contracts
Cunningham, Vogel & Rost, P.C.
While the information in this presentation concerns
legal matters, it is not, nor is it intended to be, legal
advice; neither is it meant to contradict any legal
advice you might have previously received, nor is it a
substitute for the particularized advice of your own
legal counsel. The information provided is merely for
educational purposes and you should not act or rely
on such information without seeking the advice of an
attorney.
Individuals seeking specific legal advice or assistance
should contact a licensed attorney.
Cunningham, Vogel & Rost, P.C.
CONTACT:
Paul V. Rost
Cunningham, Vogel & Rost, P.C.
legal counselors to local government
75 W. Lockwood, Suite One
St. Louis, Missouri 63119
QUESTIONS?
[email protected]
Phone: 314.446.0800
Fax:
314.446.0801
www.municipalfirm.com