Public Private Partnerships (“P3 Contracts”) create unique challenges for not only Missouri public entities but also for the contractors bidding on jobs that may fall in the grey area between a “public work” and a “private project.” In this posting, we focus on some of the key clauses that should be included in every P3 contract involving “public works.” Contractors unfamiliar with the statutory requirements outlined below should at a minimum review the statutes and determine what, if any, additional costs they may incur before putting to together their bid packages.
Competitive Bidding Requirements
There are numerous Missouri statutes that require competitive bidding on public works projects. A sample of those statutes include: § 8.250, RSMo (Cities over 500,000); § 50.660, RSMo (Counties); § 88.940, RSMo (Charter Cities 75,000 – 80,000); § 91.170, RSMo (Initial Construction of City Waterworks); § 177.086, RSMo (School Districts); § 182.270, RSMo (Public Libraries); and § 248.110, RSMo (Sanitation Districts). The contractor should also look to municipal ordinances for guidance on the competitive bidding requirements for each municipality or political subdivision where the project is located.
Missouri Prevailing Wage – § 292.675 RSMo
One of the key issues in any P3 contract is whether or not the work is being performed “by or on behalf of the political subdivision.” If the answer to this question is yes, then the requirements of Missouri’s prevailing wage law will be triggered. The municipality must request a determination from the Missouri Department of Labor for the prevailing wage rate for the different classifications of workmen on project and include such determination as specifications within the contract. This information should also be included in the bid package and in any resolution or ordinance approving the project.
The contract should include specific language requiring the contractor to pay prevailing wage and stating the penalties for failure to pay prevailing wage. Given these issues, both the contractor and the municipality would be well advised to revisit Missouri’s prevailing wage law prior to letting or entering into any contracts for public works.
OSHA Onsite Training Requirements – § 292.675 RSMo
One requirement for all contractors working on public works is that they must provide a ten-hour Occupational Safety and Health Administration (“OSHA”) construction safety program for their on-site employees. The program must include a course in construction safety and health approved by OSHA or a similar program approved by the department which is at least as stringent as an approved OSHA program. All employees who have not previously completed the program are required to complete the program within sixty days of beginning work on such construction project.
Most public works contracts contain a provision requiring an affidavit from the contractor that the contractor has complied with the OSHA training requirements. Best practices for contractors bidding on such projects is to make sure the majority of their crews have completed the training prior to the start of the project. This will ensure not only compliance but also safe guard against being understaffed while employees complete their training.
Public Works Payment Bond – § 107.170 RSMo
All public entities in Missouri must require contractors to post a payment bond for those projects where the estimated costs exceed $25,000. It is critical that public entities require contractors to post a bond on these types of projects as the failure to do so exposes public officials to personal liability should the contractor fail to pay its suppliers and subcontractors.
The above referenced statutes are just a few of the issues that are typically associated with P3 contracts in Missouri. In future postings we will address issues related to Prompt Payment, Bid Bonds, E-Verification and use of American Products.