As the new year begins, so do state legislative sessions. The 2021 Virginia General Assembly has three pieces of legislation that are currently being considered that would affect contractors working within the state.
There are two bills that would affect the contracting requirements under Virginia’s Public Procurement Act, and one that would provide general contractors some relief from liability for wage violation claims from subcontractors’ employees. Here’s a quick breakdown of the changes that would be enacted if these three bills pass.
Proposed changes to the Virginia Public Procurement Act
Submission of subcontractor list
- Title: HB 2288 – Va. Public Procurement Act; construction contracts, requirement to submit list of subcontractors
- Primary sponsor(s): Del. Angelia Williams Graves & Del. Paul Krizek
- Date introduced: January 15, 2021
If enacted, would add a new section (2.2-4303.02) under the Virginia Public Procurement Act. The requirements under this bill would apply to all public works contracts of $250,000 or more. Specifically, such contracts in localities with a population of 50,000 or more. For localities with a population of less, this requirement is optional and at the discretion of the awarding entity.
List of subcontractor requirements
The list must be submitted along with the bid or offer and include all of the subcontractors, suppliers, and/or laborers (regardless of tier) they plan to use on the project who will perform at least $50K worth of work or more. This list must include:
- Each subcontractor, supplier, and/or laborer’s name and address
- A brief description of the work to be performed or materials to be furnished by each
- The party’s license number, if a license is required to perform the work in Virginia
Statement of qualifications & performance history
In addition to this list of subcontractors the bidder/offeror must also submit a statement declaring that they have:
- Reviewed the qualifications and performance history of each listed subcontractor and found such qualifications and performance history of each sub is sufficient to qualify the sub to perform the work
- Submitted a statement to the bidder/offeror that they (a) have not defaulted on any project in the past three years, (b) not currently suspended or disbarred by any public body, and (c) not currently in bankruptcy
The public body will review the statements and may choose to disqualify certain subs pursuant to the information provided. If so, they will notify the bidder within a reasonable time to find a qualified replacement.
Failure to provide either the list of subcontractors or the required statement can result in the bid/proposal for the contract being disqualified. Furthermore, anyone who knowingly provides false information can be debarred from public contracting for up to one year.
Subcontractor workforce requirements
- Title: SB1305– Va. Public Procurement Act; construction contracts; subcontractor workforce requirements
- Sponsor(s): Sen. Jeremy McPike
- Date introduced: January 12, 2021
This bill, if enacted, would also be codified under a new section (2.2-4303.02) under the Virginia Public Procurement Act.
The legislative requirements under this bill would apply to all public works projects that are valued at $500,000 in localities with a population over 25,000. On these types of projects, contractors must agree to utilize subcontractors that certify in writing that they will only subcontract out no more than 10% of the cost of the work they subcontracted for (excluding the provision of materials).
A subcontractor may request authorization to subcontract more than 10% if the work subcontracted if still in compliance with applicable state and federal labor laws, and the work fits one or more of the following:
- Is of a specialized nature
- Cannot be performed by the subcontractor’s own workforce
- Is necessary to meet procurement goals to subcontract to certified small, women-owned, or minority-owned businesses
GC liability of sub employee wages
- Title: SB1209 – Subcontractor’s employees; liability of general contractor for wages
- Sponsor: Sen. John Petersen
- Date introduced: January 11, 2021
This last piece of the proposed legislation would add an additional provision to Va. Code §11-4.6. This statute requires construction contracts to include a provision that makes a general contractor and a subcontractor jointly and severally liable for wage violations for payments to the sub’s employees.
For more on this statute, see Virginia Can Now Hold Contractors Liable If Sub Fails to Pay Employees.
This amendment would provide some relief from liability for GCs. Under these changes, a GC can submit as evidence a written certification under oath from the direct subcontractor stating:
- The sub and each of their sub-subs have paid all employees wages due for the period during which the wages are claimed
- To the sub’s best knowledge, all sub-subs below the sub (regardless of tier) have similarly paid their employees all such wages
Knowingly false statements by subs will be personally liable to the GC for fraud and any other damages the GC may incur.
All of these bills are in various preliminary stages of the legislative process, and could wind up either dying or being amended.
You can read the full text of these bills in the links provided, as well as monitor their progress.