ARIZONA STATE SENATE
Phoenix, Arizona
unlicensed
contractors; bidding
Purpose
Prohibits the Registrar of Contractors (Registrar) from issuing licenses for one year after the date of a bid to unlicensed contractors or licensed contractors beyond the scope of their current licensure who bid on a contract worth more than $200,000 and increases, from $750 to $1,000, the contracted amount an individual may complete without licensure.
Current law requires contractors to be licensed in order to contract for an amount greater than $750. A violation of this law constitutes a class 1 misdemeanor (up to six months in jail and up to $2,500 in fines, plus 77 percent in surcharges). The Registrar issues licenses to assure that large-scale construction projects are overseen properly and individual contractors are held to minimum standards to ensure public safety.
A problem arises when unlicensed contractors, including out-of-state contracting companies, make bids for contracts greater than $750 and attempt to obtain licensure before beginning the contracted work. In most cases, the Registrar can process and issue a license within 30 days, but there is no guarantee that a prospective licensee’s application will be accepted. According to the Registrar, application denials frequently leave contractors with contracts that cannot legally be fulfilled and building owners with potentially expensive change orders. The Registrar also notes that a similar situation exists for licensed contractors who bid on contracts that are unrelated to their field of licensure. Currently, these contractors must obtain a work-specific license before completing the contracted work but are not required to obtain licensure prior to bidding on the project. Again, there is no guarantee a contractor’s application will be accepted and often times a successful contract bid cannot be fulfilled.
H.B. 2498 increases the contract limit for unlicensed individuals from $750 to $1,000 and prohibits the Registrar from issuing a license to unlicensed individuals who make bids on contracts worth more than $200,000. H.B. 2498 also prohibits the Registrar from issuing a license to a licensed contractor who has made a bid on a contract not within the scope of their current license and the contract is worth more than $200,000. The measure makes an exemption for the Arizona Department of Transportation (ADOT) so that it does not contradict federal laws allowing out-of-state contractors bidding on federal highway projects to obtain licensure after bidding.
There is no anticipated fiscal impact to the state general fund associated with this measure.
Provisions
1. Increases, from $750 to $1,000, the contracted amount a material man, manufacturer, retailer or handy man who installs finished products, materials, merchandise or articles of merchandise may undertake without having to be licensed.
2. Prohibits the Registrar from licensing an unlicensed person who bids on a contract worth more than an aggregate of $200,000 for one year after the date of the bid.
3. Prohibits the Registrar from licensing a licensed person who bids in violation of the scope of the person’s license and the contract is worth more than an aggregate of $200,000 for one year after the date of the bid.
4. Exempts ADOT from licensure denial by the Registrar for contract bids worth more than an aggregate of $200,000 by unlicensed individuals or licensees making bids beyond the scope of their license.
5. Provides for a general effective date.
3rd Read 4/08/02 35-15-10-0
Prepared by Senate Staff
April 15, 2002