Prepared by:
Piero Garofalo
Visiting Assistant Professor of Political Science
Trinity College, Hartford, CT 06106
860/297-2379
piero.garofalo@mail.trincoll.edu

Introduction

The purpose of this research project is to determine the impact on Connecticut of the use of out-of-state construction contractors in municipal, state and federally funded construction projects. To this end, I have quantified both the number of jobs being allocated to out-of-state workers for in-state construction work and the amount of income and tax revenue that the state has lost due to this hiring practice. In addition, this research project examines the relevant state statutes governing the selection of bidders in order to ascertain whether the statute language provides preferential treatment to in-state bidders or whether it requires acceptance of the lowest bid regardless of bidder’s in- or out-of-state status. Since the implications of the lowest bidder requirement are not limited to Connecticut, the actions that other states have taken are also assessed.

The Connecticut Department of Labor estimates that out-of-state workers comprise 2% of employment in publicly funded projects. A selective in-depth examination of several construction projects indicates that 4% - 7% is a more accurate estimate.

The out-of-state employment range of 4% - 7% is suggested by the following construction projects: the Brixton Street Maintenance Facility ($1,719,000) in West Hartford, the Braeburn School Expansion ($365,000) in West Hartford, the Thomas Jefferson School Additions and Renovations ($3,130,000) in New Britain, the South Windsor Public Library Expansion and Renovation ($4,500,000) in South Windsor, the Eastbury and Naubuc Elementary Schools Additions and Renovations ($4,000,000-$5,000,000) in Glastonbury, and the Lead Contaminated Soil Removal and Disposal ($199,173) in Hartford. Perhaps more significant, the wage distribution on these projects shows that out-of-state employees receive 5%-10% of the total wages. This discrepancy between the percentage of workers and the percentage of income would seem to indicate that the out-of-state employees being employed by contractors are specialized workers. A seventh project under examination, the Bradley International Airport Control Tower and Base Building ($8,180,000) in Windsor Locks is headquartered in Massachusetts. Since the project is under the auspices of the Federal Aviation Administration, federal regulations prohibit the release of information that would permit an accurate description of the makeup of the work force.

The case of the Bradley International Airport Control Tower and Base Building is instructive because it magnifies the difficulties in quantifying in-state employment practices. Although within Connecticut territorial jurisdiction, Bradley is an international airport with non-Connecticut zones. Also, the airport is shared with Massachusetts. So while the number of out-of-state employees on this construction project is in all likelihood quite high, this situation would seem to fall outside the parameters of attempts to restrict hiring practices. In addition, federal regulations prohibit the disclosure of information necessary for verifying employment trends.

Does this mean that 98% of the work force for publicly-funded construction projects is in-state? Not necessarily. Union employment is the easiest way to confirm hiring practices; however, only 60% of prevailing wage jobs are union. Examining non-union employment reveals practices which, though legal, distort the state-provenance makeup of the work force. Contractors and subcontractors will often employ a work force that will relocate in order to work. Legally, these employees reside in Connecticut; in practice, Connecticut is a temporary residence for the duration of the employment.

I examined the state statutes governing bid requirements to determine if the state were required to provide preferential treatment to in-state bidders and found that it is not. I also examined the statutes to determine if the state has any leeway in the awarding of contracts and found that it did. The final issue I address in this section is indirectly related to the residency status of contractors. New proposals to expedite the bidding process would eliminate the need to list subcontractors on the bid documents. This modification will make it more difficult to ascertain who is performing the work.

The relevant state statutes regarding bid requirements for publicly funded construction projects are in The General Statutes of Connecticut, v. 1, Chap. 60 (Sec. 4b:91-96). While quite specific, these statutes do not require that any sort of preferential treatment be granted to in-state bidders. The statute regulations clearly stipulate that the award of bids will be conducted on the basis of the lowest responsible and qualified bidder.

The construction and alterations of state buildings falls under the jurisdiction of the Commissioner of Public Works. The statute states:

Every contract for the construction, reconstruction, alteration, remodeling, repair or demolition of any public building for work by the state, which is estimated to cost more than two hundred fifty thousand dollars...shall be awarded to the lowest responsible and qualified general bidder on the basis of competitive bids.

(Sec. 4b:91a)

In the statute no distinction is made between in- and out-of-state bidders. The only proviso entertained is in the case of the lowest responsible and qualified bid exceeding the allocated budget for the project:

If the lowest responsible and qualified bidder’s price submitted is in excess of funds available to make and award, the Commissioner of Public Works, the Joint Committee on Legislative Management or the constituent unit, as the case may be, is empowered to negotiate with such bidder and award the contract on the basis of funds available, without change in the contract specifications, plans and other requirements. If the award of a contract on said basis is refused by such bidder, the Commissioner of Public Works, the Joint Committee on Legislative Management or the constituent unit, as the case may be, may, if he or it deems it advisable, negotiate with other contractors who submitted bids in ascending order of bid prices without change in the contract, specifications, plans and other requirements.

(Sec. 4b:91a)

Based on these stipulations, the overseeing agency has no discretionary power in awarding bids. Since the Commissioner of Public Works, the Joint Committee on Legislative Management or the constituent unit must accept the "lowest responsible and qualified bidder," any effort to promote in-state bids would have to entail bidding restrictions. The statutes define the "lowest responsible and qualified bidder" thus:

[T]he words "lowest responsible and qualified bidder" shall mean the bidder whose bid is the lowest of those bidders possessing the skill, ability and integrity necessary to faithful performance of the work based on objective criteria considering past performance and financial responsibility.

(Sec. 4b-92)

Although there does appear to be some leeway in determining the criteria to which bidders must conform, these criteria do not extend to residency requirements. In addition, even though the difference in the top bids may be negligible, the awarding authority must accept the lowest bid (assuming all qualifying criteria hold). Bid documents do carry restrictions, but the specifications they contain do not pertain to issues beyond the bidders’ skill, ability and integrity:

Essential information in regard to such qualifications shall be submitted with the bid in such form as the awarding authority may require by specification in the bid documents and on the bid form.

(Sec. 4b-92)

The awarding authority does have the right to reject bids; however, this prerogative does not extend to bidder residency requirements. The relevant statute states:

In inviting bids, the awarding authority shall reserve the right to reject any or all such general bids, if (1) the awarding authority determines that the general bidder or bidders involved are not competent to perform the work as specified, based on objective criteria established for making such determinations, including past performance and financial responsibility, (2) the low bid price exceeds the amount of money available for the project, (3) the awarding authority determines that the project shall not go forward or (4) the awarding authority finds cause to reject such bids. If the awarding authority rejects any or all bids pursuant to this section, it shall notify each affected bidder, in writing, of the reasons for such rejection.

(Sec. 4b-94)

These four criteria preclude rejection of bidders on the basis of state residency.

Also, the general bid form requirements contain no provisos for in-state hiring. However, the general bid form requirements do have some leeway in stipulating the awarding of subcontracts. Although there are no specific statutes promoting in-state bidders over out-of-state competition, the general bid form requirements include provisions for the employment of minority business enterprises:

[T]he undersigned agrees and warrants that he has made good faith efforts to employ minority business enterprises as subcontractors and suppliers of materials under such information as is requested by the commission concerning his employment practices and procedures as they relate to the provisions of the general statutes governing contract requirements.

(Sec. 4b-95b)

Despite this stipulation, the state’s efforts to create a business-friendly environment have resulted in a very lax enforcement of this aspect of the statute. This neglect is in violation of the same statute which requires that the awarding authority insure compliance of bid form provisions.

Connecticut’s neighboring states have not addressed the issue of out-of-state workers being employed for publicly funded construction projects in any systematic manner. Groups that have attempted to examine this employment practice have failed to arrive at concrete conclusions. The reason for this neglect lies in the difficulty of assessing and monitoring this hiring practice.