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 entities that bid on a contract worth more than $750.
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.
H.B. 2498 prohibits the Registrar from issuing a license for one year to unlicensed entities that make bids on contracts worth more than $750. The measure also requires the Registrar to issue a written warning to entities that bid on contracts with aggregate worth between $750 and $20,000 without a license. Therefore, allowing them one unlicensed bid before being denied a contractor's license for one year.
There is no anticipated fiscal impact to the state general fund associated with this measure.
Provisions
1. Prohibits the Registrar from licensing an unlicensed entity that bids on a contract worth more than an aggregate of $750 for one year after the date of the bid.
2. Exempts Department of Transportation projects and projects subject to federal acquisition regulation from licensure denial by the Registrar for contract bids worth more than an aggregate of $750 by unlicensed entities.
3. States that such licensure denial by the Registrar for contract bids does not affect current licensing exemptions.
4. Requires the Registrar to issue a written warning to entities that bid on contracts with aggregate worth between $750 and $20,000 without a license if the Registrar has not previously issued the entity a warning.
5. Provides for a general effective date.
Amendments Adopted by Committee
1. Decreases the aggregate amount limit of a contract from $200,000 to $5,000 for purposes of licensure denial by the Registrar.
2. Restores current law by removing the proposed increase to the allowable dollar 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.
Amendments Adopted by Committee of the Whole
1. Removes the requirement that the Registrar deny licensure for one year to a licensed contractor who bids on a contract in violation of the scope of their license.
2. Changes "person" to "entity" with respect to whom the Registrar licenses.
Amendments Adopted
by the Free Conference Committee
1. Changes the bid aggregate worth level from $5,000 to $750.
2. Further exempts projects that are subject to federal acquisition regulations.
3. States this section of law does not affect the current exemptions.
4. Allows for one unlicensed bid before being denied a license for one–year by way of a written warning.
5. Makes technical changes.
3rd Read 4/08/02 35-15-10-0 3rd Read 4/25/02 28-0-2-0
Final Read 5/16/02 44-12-4-0 Final Read 5/16/02 27-2-1-0
Signed by the Governor 5/23/02
Chapter 305
Prepared by Senate Staff
April 26, 2002