state construction projects;
bonds; insurance.
DPA |
Committee on Retirement and Government Operations |
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X |
Committee on Financial Institutions and Insurance |
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Caucus and COW |
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Third Read |
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As Passed the House |
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HB 2584 authorizes the Arizona Department of Administration (DOA) and the state agencies or institutions that are exempt from the Procurement Code (Title 41, Chapter 23) to enter into a contract with an insurance producer to assist historically underutilized and small businesses in obtaining bonds and/or insurance to qualify for contracts or subcontracts on state projects.
HB 2584 was amended in the Retirement and Government Operations Committee to clarify that DOA, state agencies or institutions cannot require bonds and insurance to be obtained from a specific insurance producer and eliminates historically underutilized businesses from the assistance required by this bill.
The DOA provides support to government agencies, state employees and the public in order to achieve goals. This is accomplished through the administration of data processing, payroll, procurement, insurance, employment, and employee benefits for state agencies. The DOA also manages state-owned or leased buildings and oversees many public service programs.
Arizona Procurement Code is outlined in ARS §41, Chapter 23 and in rules AAC R2-7-101. Certain state agencies and institutions are exempt from the Procurement Code for the purpose of procuring construction, including universities, the legislature and the courts.
Currently, ARS §41-2574 requires payment and performance bonds for any state government construction contract with at least a $35,000 value. Payment bonds guarantee payments by a general contractor to all suppliers and subcontractors hired for a job. Performance bonds guarantee a contract’s completion. The agents who supply these bonds (usually sureties or insurance providers) evaluate financial capacity, past performance, experience, assets, credit history and other factors to determine the risk of supplying a firm with bonds. Higher risk firms, which usually include small and historically underutilized businesses, are less likely to be supplied with bonds or pay higher fees. Historically underutilized businesses are not defined in statute but small businesses are defined in ARS §41-1001 as firms with gross revenues of $4 million or less or 100 or fewer employees.
· Stipulates that DOA and each state agency or institution, which is exempt from the Procurement Code (Title 41, Chapter 23), for the purpose of procuring construction, to jointly or separately contract competitively with an insurance producer that has experience in surety bond support services.
· Authorizes the contracted insurance producer to assist historically underutilized and small businesses in obtaining bonds and/or insurance required to qualify for contracts or subcontracts on state projects.
· Requires these contracts to be renewed each state fiscal biennium; that insurance producers take aggressive steps towards assisting underutilized and small businesses in obtaining bonds and/or insurance and that evaluations conducted on contracted insurance producers be based on the numbers of bonds and/or insurance obtained for historically underutilized and small businesses.
· Mandates that all departments, state agencies and state institutions that are under these contracts conduct annual audits and performance reviews.
HB 2584 was amended in the Retirement and Government Operations Committee as follows:
§ Prohibits DOA, state agencies or institutions from mandating that bonds and insurance be obtained from a specific insurance producer.
§ Eliminates historically underutilized businesses from the assistance required by this bill.
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45th Legislature
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Second Regular Session 2 March
20, 2002
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