Bill would punish outsourcing on state projects

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Democratic lawmakers on April 8 unveiled legislation aimed at promoting local hiring and putting in place penalties for contractors who outsource work involving state projects, when avoidable.

But, so far, the so-called Keep Jobs in Colorado Act has been met with uneasiness by representatives of the contracting field, who are expressing concern over key requirements of the legislation and worry that the bill could run up the cost of doing business with the state.

House Bill 1292 was announced at a Capitol press conference, where it was touted as a bill that will “reform state procurement,” the bidding process for state work projects.

Rep. Dan Pabon, D-Denver, said the legislation will “promote local hiring, domestic manufacturing, and will help stop the outsourcing of jobs with taxpayer money.”

“Our number one job is boosting our state’s economy and connecting more Coloradans to good jobs,” Pabon said. “One way to do that is to ensure that state funds, our taxpayer dollars, go to hire Colorado workers and support Colorado businesses.”

The bill would expand the state’s “best value” bidding process, to include factors beyond low bidding in awarding contracts, such as the availability of Colorado workers and whether domestic materials like iron and steel are being used for state-backed projects.

The bill also would put in place financial penalties for companies that do not meet a current legal threshold, which requires that 80 percent of all taxpayer-backed state project labor be conducted by Colorado workers.

Sen. Andy Kerr, D-Lakewood, said that the 80 percent requirement has been on the books since 1933, but that the jail penalty for company owners who do not abide by the law has not been enforced.

Kerr said the bill would replace jail time with financial penalties for companies that do not comply, with fees as high as $25,000 when violations are found.

“We are putting some teeth into a law that is already in existence,” Kerr said. “And we are making sure that it is feasible for it to be followed, as well.”

The bill takes a “three strikes and you’re out” approach to companies that do not comply with the law, which could result in a company no longer being able to do business with the state. Enforcement will be up to the state Department of Personnel and Administration and the state Department of Labor and Employment.

“If somebody violates those rules, there’s going to be consequences,” Pabon said.

But representatives of the contracting field were not exactly jumping out of their seats with excitement over the bill, during a legislative committee hearing that followed the press event.

Some had neutral positions on the bill, saying they just don’t know enough about the legislation or its cost to form an opinion at this time. But they did express concern over the 80 percent requirement, especially over how it’s enforced.

Some who testified said that, for example, it would be difficult for contractors to ensure they are working with Colorado-based materials.

“That’s a complicated process,” said Craig Clark of Dynaelectric, an electrical contracting company. “We have a tough enough time identifying a U.S. project.”

Republican members of the House State, Veterans and Military Affairs Committee also expressed concern that contractors would be penalized over things that would be difficult for them to control, such as whether those in the process are being honest about whether labor and materials are Colorado-based.

“There’s absolutely no way in this free market system that everyone is going to be truthful,” said Rep. Ray Scott, R-Grand Junction. “It gets into the weeds so deep and puts such a burden on a general contractor.”

The committee ran out of time during the hearing and will vote on the matter at another time.