Responsible contracting policies help municipalities reduce the risk of contract failure by ensuring that only qualified contractors who have a proven track record of providing quality work are used. Responsible contractors are also required to abide by fair contracting processes and provide their employees with living wages and benefits.
Responsible contracting policies establish a basic set of qualifications that all firms must meet in order to bid on construction projects that:
- Receive public funding
- Require public approval
- Benefit from public investment
Responsible contracting policies require contractors to demonstrate that they offer high-quality employment and work. Firms that meet responsible contractor standards are able to show that they:
- Are fully licensed and bonded
- Have had no wage/hour violations for the past three consecutive years
- Provide OSHA 10-hour safety training
- Participate in an ERISA or joint labor-management training program (e.g. certified apprenticeship program)
- Pay prevailing wages and offer health insurance
- Provide all benefits of employment to their workforce (including social security, Workers’ Compensation and unemployment insurance)
- Comply with all other federal and state regulations
- Have no history of violating this policy in previous public contracts
Moreover, strong policies require general contractors to incorporate these components into their agreements with subcontractors.
Responsible contracting policies can help create a higher quality construction industry by making sure public policy and public funding support only those contractors who meet these critical job quality standards. In regions where few construction workers belong to unions, responsible contracting policies can dissuade poor performing contractors from bidding on public contracts.
By including responsible contractor language in construction contracts, entities make sure general contractors and subcontractors do not misclassify their workers as independent contractors, which render the employees ineligible for social security, unemployment insurance, health insurance and Workers’ Compensation.