As a contractor you are probably aware that governments pay well. Often publicly funded or publicly operated projects provide strong mechanisms for getting paid. These jobs often seek the tireless and qualified contractor to provide work of a high standard to ease public pressures for safety, environmental sustainability and liability protection.
It’s important for contractors to understand the basics of the Public Works bidding process and the mechanisms required to secure and perfect your claim to payment. By the end of our information period, we hope to provide you as contractors, suppliers and lessors, an avenue to find remediation of your unpaid claims.
As an introduction, take a look at the Louisiana Public Works Act. This is a section of the Louisiana Revised Statutes, located at Title 38, Article 2241, and following. (La. R. S. 38:2241, et seq.). This Act enables all contractors, subcontractors, suppliers, lessors and even designers to make a claim against the project, as long as certain notice provisions are met. An entry outlining the notice procedures will follow shortly.
For the most part, the Public Works Act is similar to the more familiar Private Works Act, which grants a privilege against the title to the land improved. However, under the Public Works Act, the land cannot be liened. Instead, the prime contractor is required to obtain a bond in the amount of no less than 50% of the total project costs (for all projects over $25,000.00).
A claimant brings its claim against the surety of the bond. Louisiana requires that the prime contractor secure a bond with a licensed and registered surety. The claimant will make a Sworn Statement of Amount Due against the surety, securing its privilege against the bond. This claim must be made within the parameters and time expectations contemplated by the law. If made correctly, a claimant should secure a right to payment from the surety.
The Public Works Act is filled with quirky governmental fodder. The State is able to set an agenda by controlling the methods by which contractors obtain the right to do public work. For instance, a favorite is found under La. R.S. 38:2212.3. That statute enables the State, and its agencies, to purposely discriminate against the bids of Communist countries. The statute specifically reads, “any public entity is authorized to reject the lowest bid if received from a bidder domiciled in a Communist country, or if the materials or supplies are manufactured in a Communist country, including but not limited to the Soviet Union, China, North Korea, and Vietnam.” (emphasis added) This is one of the few permissive discriminatory statutes Louisiana has enacted – but with a political policy agenda and a mountain of public funds, Louisiana is able to keep control on who works on its projects.