An Act relating to construction contracts and subcontractors; relating to design-build construction contracts; and providing for an effective date.

Updated: April 28, 1999 by Annette Kreitzer, Staff Aide to Senator Leman.

Background/Legislative Intent

This bill was introduced on behalf of the Department of Transportation and Public Facilities and is intended to accomplish two things:

1. Excludes Design/Build contracts from the requirement to list subcontractors within five days after award of the contract.

Currently, AS 36.30.115 gives direction on listing and replacing subcontractors, and penalties that may apply when a bidder violates provisions of this statute. AS 36.30.115 was enacted in 1986 with the purpose of encouraging and stimulating competition, giving a fair and equal opportunity to all prospective subcontract vendors, assuring that all qualifying vendors have the opportunity to bid, and providing a deterrent to the practice of bid shopping.

The problem with AS 36.30.115 is the five-day contractor notice requirement that states:

(a) Within five working days after the identification of the apparent low bidder for a construction contract, the apparent low bidder shall submit a list of the subcontractors the bidder proposes to use in the performance of the construction contract.

The statute negates the ability to do design/build procurements and comply with the law at the same time.

The operating framework of design/build contracting is different from that of all other types of construction contracts. The contractor often does not know who his subcontractor(s) will be until he is well into the design and/or construction process - certainly past the five-day notification requirement.

The legislation changes the restrictive statutory language allowing design/build contracting without subcontractor selection notification as a condition of contract award.

2. Provides for the addition or replacement of a subcontractor when found to be in the state's best interest.

In certain circumstances, during the performance of a construction contract, it may be necessary to add or delete a subcontractor from the contract. The state needs specific authority to take such action, when shown to be in the state's best interest.

When a contract must be expanded or decreased due to changed conditions, the state's project manager may need to have the ability to add or release a subcontractor under the contract. Without the statutory authority to make these subcontractor additions or deletions, the contractor would be in violation of the law if they took this action, even if the state supported the change.

Under this legislation, the requirement of having each such request submitted and approved in writing before such an action is taken preserves the integrity of the procurement/contract process.

| Top | Senator Leman's Page |