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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

New Mexico Environment Department

General Services Department

New Mexico State Highway and Transportation Department

Department of Labor

Attorney General

SUMMARY

Synopsis of Bill

Senate Bill 279 proposes to amend the statutory provision regarding the listing of subcontractors. The first change increases the listing threshold from $5,000 to $25,000 of work on a project. The second change mandates a bidding contractor shall submit his subcontractor list to the using agency not less than two hours prior to the deadline. Currently, the contractor submits the list of subcontractors by the bid deadline and to the central purchasing agent.

Significant Issues

The following discussion is in regard to the proposed increase to the subcontractor threshold. According to the Attorney General's (AG) staff, increasing the threshold will limit the applicability of the Subcontractors Fair Practices Act. Presently, the statute requires general contractors to disclose the identity of subcontractors who have contracted for any amount over $5,000. As proposed, Senate Bill 279 will increase the threshold to $25,000 thereby the general subcontractor will have to disclose fewer subcontractors and will be able to shop around for more of them after the acquisition of the public works contract. Further, the Act is designed to prevent general contractors from acquiring a public works contract and then subcontracting parts of the project. If the general contractor knows it has acquired the contract and the amount of the contract but has not disclosed its subcontractors, the general contractor can then base the acquisition of subcontracts primarily by consideration of cost rather than quality of work or financial soundness.

Staff from the General Services Department (GSD) has provided similar comments and further provides that instead of using the current to promote competition, general contractors use it as a mechanism to dispute bid results. Raising the work threshold would reduce the number of protests, delays and resources needed to resolve bid protests.

Pertaining to the proposed change to the timeliness of disclosing the list of subcontractors are the following comments. The AG staff presumes the change would facilitate the application of the statute allowing for the contracting agency to consider any bids without identification of subcontractors to be a nonconforming bid prior to the submission deadline.

The GSD staff believes the change will create more confusion and increase the opportunity for protest. GSD staff further states: "It also conflicts with the notion of 'competitive sealed bids'. How would the central purchasing office (who receives the bids) know if the subcontractor lists were submitted to the agency by two hours before bids are due?"

FISCAL IMPLICATIONS

Potential positive or negative impact should there be a change in number of protest proceedings.

ADMINISTRATIVE IMPLICATIONS

Potential positive or negative impact should there be a change in number of protest proceedings.

AMENDMENTS

The subcontractor listing should be submitted with the bid in lieu of submitting the listing "not less than two hours prior to the deadline for bid submission".

WJC/njw