Public Works Contractor Licensing Function Follow-up Report by jsq13914

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									                       Office of Performance Evaluations
                       Idaho Legislature
Report 06-01F                                                                                              August 2006


                Public Works Contractor Licensing Function
                             Follow-up Report

In November 2001, we issued a report about the                 expanding education efforts and compliance
public works contractor licensing function.                    monitoring, and strengthening enforcement of
Follow-up reviews in 2002 and 2004 found that                  licensing requirements. In our 2004 follow-up
the Division of Building Safety and the Public                 review, we found that six of the eight
Works Contractors License Board had addressed                  recommendations were implemented or resolved.
six of the report’s eight recommendations. This
follow-up report focuses on the remaining two
recommendations, which relate to licensing                     Current Status
requirements and complaint investigations. We
found the board has not implemented our                        This report focuses on two recommendations that
recommendation to establish clear criteria for                 remain open:
assessing the work experience of license
                                                                 •    The Public Works Contractors License
applicants, and the division has partially
addressed our recommendation to strengthen                            Board should adopt clear standards for
complaint handling.                                                   judging applicant work experience in its
                                                                      rules.
                                                                 •    The Division of Building Safety should take
Background                                                            steps to strengthen the complaint handling
                                                                      process.
Statutes require contractors and subcontractors
involved in public works projects costing $10,000              The Division of Building Safety’s self-assessment
or more to be licensed. As of May 2006, there                  of its implementation efforts is provided in
were approximately 2,800 licensed contractors                  appendix A. Our assessment of the department’s
statewide. Responsibility for regulation of public             progress is provided below.
works contractors is assigned to the Division of
Building Safety and the Public Works Contractors               Assessing Contractor Work Experience
License Board.
                                                               To obtain a public works contractor license,
The report’s eight recommendations were aimed                  applicants must meet certain financial
at improving the consistency of licensing                      requirements and demonstrate work experience in
decisions, minimizing potential conflicts of                   the areas they are seeking a license. In our
interest in licensing and complaint handling,                  original report, we found that adequate standards

 This report was completed at the request of the Joint Legislative Oversight Committee under the authority of Idaho Code
 § 67-457 through § 67-464. Questions about the report may be directed to the Office of Performance Evaluations
 through e-mail (opeinfo@ope.idaho.gov) or phone (208 334-3880).
Office of Performance Evaluations


had been developed to assess applicants’ financial        addition, we reported division representatives
qualifications for licensure. However, we also            believed they had insufficient statutory authority
found that clear criteria for evaluating contractor       to address complaints of unlicensed practice and
work experience had not been established and              agencies violating bidding requirements.
decisions regarding licensure were left to division
staff with little construction experience.                While the division has not strengthened its
                                                          investigative procedures, it has made the
At the time of the 2004 review, the board was             following improvements:
considering whether to establish testing                   •   The division and the board worked with
requirements to verify if applicants had the                   industry representatives to strengthen
expertise needed for licensure. Although the                   enforcement provisions in the public works
board continues to discuss this possibility, no                contractor licensing law. House Bill 263,
action has been taken to adopt formal criteria to              which was enacted during the 2005
assess applicant work experience. We therefore                 legislative session, made a number of
conclude that the board has not implemented this
                                                               important changes:
recommendation.
                                                                 ◊   Increased the maximum fines the
Although the board has not established formal                        Division of Building Safety can assess
standards for assessing the work experience of                       for violations of the public works
license applicants, it has taken two steps in the                    contractor licensing law from $5,000
right direction. First, the division hired a new                     to $20,000
manager, who has substantial construction                        ◊   Authorized the division to issue fines
management experience, to oversee the program.                       to unlicensed contractors (previously,
Second, as discussed in our 2004 review, the                         the division could only refer cases to
division began collecting and verifying more                         the Attorney General or county
detailed work history information from                               prosecutors for possible action by the
applicants. These two steps should improve the                       courts)
division’s ability to make sound decisions about
whether applicants qualify for licensure.                        ◊   Charged the division with
                                                                     investigating complaints about public
Responding to Complaints                                             agencies that contract for public works
                                                                     construction with an unlicensed or
The Division of Building Safety is charged with                      improperly licensed contractor
investigating complaints and enforcing the state’s
                                                           •   The division has stepped up enforcement
public works contractor licensing laws. In the
                                                               when violations of the state’s licensing laws
2004 review, we found the division had developed
                                                               are identified. In fiscal year 2006, the
general procedures for handling complaints, but
                                                               division fined seven contractors and issued
concluded the procedures were inadequate
                                                               warnings to eight others. Fines assessed by
because they did not specify required
                                                               the division have ranged from $250 to
investigative work, documentation standards for
                                                               $5,000.
investigations, or the steps to be followed when
closing complaint cases without disciplinary               •   The division recently began reviewing
action.                                                        information that contractors submit to the
                                                               Idaho Tax Commission to identify possible
Our 2004 review also found the division had not                licensing law violations (suggested in our
taken disciplinary action against any licensees                original report). This information can be
since the release of our report in 2001. In                    used to identify (1) unlicensed contractors or


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                                                                  Public Works Contractor Licensing Function


     subcontractors that perform work on public         Because of these changes, we conclude that this
     works projects, and (2) contractors who            recommendation has been partially
     exceed their bid limit when bidding on these       implemented.
     projects.


We appreciate the cooperation and assistance we received from the Division of Building Safety in
conducting this follow-up review. Ned Parrish of the Office of Performance Evaluations conducted the
review.




                         Joint Legislative Oversight Committee (JLOC)
               Sen. Shawn Keough, Co-chair              Rep. Margaret Henbest, Co-chair
               Sen. John Andreason                      Rep. Maxine Bell
               Sen. Bert Marley                         Rep. Debbie Field
               Sen. Kate Kelly                          Rep. Donna Boe

                                Office of Performance Evaluations
                                         Rakesh Mohan, Director




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                                                  Public Works Contractor Licensing Function




Appendix A
Division of Building Safety’s Self-assessment of Implementation Efforts




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