S.B. 66

1

PROCUREMENT CODE BIDDING AND
2 CONTRACTUAL AMENDMENTS
3 2005 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Ed Mayne
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Utah Procurement Code's bidding procedures and contractual
10 requirements.
11 Highlighted Provisions:
12 This bill:
13 . modifies the Utah Procurement Code to require that all contracts awarded by
14 competitive sealed bidding be issued to the second lowest bid;
15 . modifies the Utah Procurement Code by providing a 5% preference for any bid
16 offering Utah products that constitute at least 80% of the total cost of all products
17 required under the contract or invitation for bids;
18 . modifies the Utah Procurement Code by providing a 5% preference for any bid
19 submitted by a business that participates in an apprenticeship program that is
20 certified by the U.S. Department of Labor's Bureau of Apprenticeship;
21 . modifies the Utah Procurement Code by requiring certain businesses to provide
22 qualified health care coverage to employees as a condition for contracting with the
23 state;
24 . modifies the Utah Procurement Code by requiring certain businesses to pay
25 employees time and 1/2 for all hours of overtime worked under the contract in
26 excess of an eight hour day and 40 hour week as a condition for contracting with the
27 state;

28 . modifies the Utah Procurement Code by requiring certain businesses to employ
29 Utah residents for at least 80% of each type or class of labor provided under a
30 contract as a condition for contracting with the state; and
31 . permits public procurement units to terminate contracts with or to debar businesses
32 that do not comply with the health care, overtime, and Utah labor requirements.
33 Monies Appropriated in this Bill:
34 None
35 Other Special Clauses:
36 None
37 Utah Code Sections Affected:
38 AMENDS:
39 63-56-20, as last amended by Chapter 142, Laws of Utah 1998
40 63-56-20.5, as last amended by Chapter 2, Laws of Utah 1988, Second Special Session
41 63-56-20.6, as enacted by Chapter 2, Laws of Utah 1988, Second Special Session
42 63-56-20.7, as last amended by Chapter 13, Laws of Utah 1998
43 63-56-20.8, as enacted by Chapter 114, Laws of Utah 1996
44 63-56-40, as enacted by Chapter 75, Laws of Utah 1980
45 63-56-48, as enacted by Chapter 75, Laws of Utah 1980
46 ENACTS:
47 63-56-20.9, Utah Code Annotated 1953
48 63-56-40.2, Utah Code Annotated 1953
49 63-56-40.3, Utah Code Annotated 1953
50 63-56-40.4, Utah Code Annotated 1953
51
52 Be it enacted by the Legislature of the state of Utah:
53 Section 1. Section 63-56-20 is amended to read:
54 63-56-20. Contracts awarded by sealed bidding -- Procedure.
55 (1) Contracts shall be awarded by competitive sealed bidding except as otherwise
56 provided by this chapter.
57 (2) (a) An invitation for bids shall be issued when a contract is to be awarded by
58 competitive sealed bidding.

59 (b) The invitation shall include a purchase description and all contractual terms and
60 conditions applicable to the procurement.
61 (3) (a) Public notice of the invitation for bids shall be given a reasonable time before
62 the date set forth in the invitation for the opening of bids, in accordance with rules.
63 (b) The notice may include publication in a newspaper of general circulation a
64 reasonable time before bid opening.
65 (4) (a) Bids shall be opened publicly in the presence of one or more witnesses at the
66 time and place designated in the invitation for bids.
67 (b) The amount of each bid and any other relevant information specified by rules,
68 together with the name of each bidder, shall be recorded.
69 (c) The record and each bid shall be open to public inspection.
70 (5) (a) Bids shall be unconditionally accepted without alteration or correction, except
71 as authorized in this chapter.
72 (b) (i) Bids shall be evaluated based on the requirements set forth in the invitation for
73 bids, which may include criteria to determine acceptability such as inspection, testing, quality,
74 workmanship, delivery, and suitability for a particular purpose.
75 (ii) Those criteria that will affect the bid price and be considered in evaluation for
76 award shall be objectively measurable.
77 (iii) The criteria may include discounts, transportation costs, and total or life cycle
78 costs.
79 (c) No criteria may be used in bid evaluation that are not set forth in the invitation for
80 bids.
81 (6) (a) Correction or withdrawal of inadvertently erroneous bids before or after award,
82 or cancellation of awards or contracts based on the bid mistakes, shall be permitted in
83 accordance with rules.
84 (b) After bid opening, no changes in bid prices or other provisions of bids prejudicial
85 to the interest of the state or fair competition may be permitted.
86 (c) Except as otherwise provided by rule, all decisions to permit the correction or
87 withdrawal of bids or to cancel awards or contracts based on bid mistakes shall be supported by
88 a written determination made by the chief procurement officer or the head of a purchasing
89 agency.

90 (7) (a) The contract shall be awarded with reasonable promptness by written notice to
91 the second lowest [responsive and responsible] bidder whose bid meets the requirements and
92 criteria set forth in the invitation for bids.
93 (b) [(i)] If all bids for a construction project exceed available funds as certified by the
94 appropriate fiscal officer, and the [low responsive and responsible] second lowest bid does not
95 exceed those funds by more than 5%, the chief procurement officer or the head of a purchasing
96 agency may, in situations where time or economic considerations preclude resolicitation of
97 work of a reduced scope, negotiate an adjustment of the bid price, including changes in the bid
98 requirements, with the [low responsive and responsible] second lowest bidder in order to bring
99 the bid within the amount of available funds.
100 [(ii) If the State Building Board establishes alternative procedures by rule under
101 Section 63A-5-103 , the Division of Facilities Construction and Management need not comply
102 with the provisions of Subsection (7) when a bid meets the requirements of the State Building
103 Board's rule.]
104 (8) When it is considered impractical to prepare initially a purchase description to
105 support an award based on price, an invitation for bids may be issued requesting the
106 submission of unpriced offers to be followed by an invitation for bids limited to those bidders
107 whose offers have been qualified under the criteria set forth in the first solicitation.
108 Section 2. Section 63-56-20.5 is amended to read:
109 63-56-20.5. Preference for providers of state products.
110 (1) As used in this section, "Utah products" means goods, supplies, equipment,
111 materials, or printing produced, manufactured, mined, grown, or performed in Utah.
112 [(1)] (2) (a) All public procurement units shall, in all purchases of goods, supplies,
113 equipment, materials, and printing, give a [reciprocal] 5% preference to those [bidders] bids
114 offering [goods, supplies, equipment, materials, or printing produced, manufactured, mined,
115 grown, or performed in Utah as against those bidders offering goods, supplies, equipment,
116 materials, or printing produced, manufactured, mined, grown, or performed in any state that
117 gives or requires a preference to goods, supplies, equipment, materials, or printing produced,
118 manufactured, mined, grown, or performed in that state] to use Utah products that constitute at
119 least 80% of the total cost of all goods, supplies, equipment, material, or printing that is
120 required to be furnished under the bid.

121 [(b) The amount of reciprocal preference shall be equal to the amount of the preference
122 applied by the other state for that particular good, supply, equipment, material, or printing.]
123 [(c) (i) The bidder] (b) A bidder seeking a preference for providing Utah products
124 shall certify on the bid that:
125 (i) the goods, supplies, equipment, materials, or printing offered are produced,
126 manufactured, mined, grown, or performed in Utah[.]; and
127 [(ii) The reciprocal preference is waived if that certification does not appear on the
128 bid.]
129 (ii) the cost of the Utah products is at least 80% of the total cost of all goods, supplies,
130 equipment, material, or printing to be furnished under the bid.
131 [(2)] (3) (a) If the bidder submitting the second lowest [responsive and responsible bid
132 offers goods, supplies, equipment, materials, or printing produced, manufactured, mined,
133 grown, or performed in a state that gives or requires a preference, and if another bidder has
134 submitted a responsive and responsible bid offering goods, supplies, equipment, materials, or
135 printing produced, manufactured, mined, grown, or performed in Utah, and] bid does not
136 qualify for a preference under Subsection (2) and if another bidder has submitted a bid that
137 qualifies for the preference and, with the benefit of the [reciprocal] 5% preference, [his bid] is
138 equal to or less than the original second lowest bid, the procurement officer shall:
139 (i) give [notice to the bidder offering goods, supplies, equipment, materials, or printing
140 produced, manufactured, mined, grown, or performed in Utah] the bidder that qualifies for the
141 preference notice that he qualifies as a preferred bidder; and
142 (ii) make the purchase from the preferred bidder if[,]:
143 (A) the Utah products offered in the bid are reasonably available;
144 (B) the Utah products offered in the bid meet the requirements or criteria set forth in
145 the contract or invitation for bids; and
146 (C) within 72 hours after notification to him that he is a preferred bidder, [he] the
147 preferred bidder agrees, in writing, to meet the [low] original second lowest bid.
148 (b) The procurement officer shall include the exact price submitted by the original
149 second lowest bidder in the notice he submits to the preferred bidder.
150 (c) The procurement officer may not enter into a contract with any other bidder for the
151 purchase until 72 hours have elapsed after notification to the preferred bidder.

152 [(3)] (4) (a) If there is more than one preferred bidder, the procurement officer shall
153 award the contract to the willing preferred bidder who was the lowest preferred bidder
154 originally.
155 (b) If there were two or more equally low preferred bidders, the procurement officer
156 shall comply with the rules adopted by the Procurement Policy Board to determine which
157 bidder should be awarded the contract.
158 [(4)] (5) The provisions of this section do not apply if application of this section might
159 jeopardize the receipt of federal funds.
160 Section 3. Section 63-56-20.6 is amended to read:
161 63-56-20.6. Preference for resident contractors.
162 (1) As used in this section, "resident contractor" means a person, partnership,
163 corporation, or other business entity that:
164 (a) either has its principal place of business in Utah or that employs workers who are
165 residents of this state when available; and
166 (b) was transacting business on the date when bids for the public contract were first
167 solicited.
168 (2) (a) When awarding contracts for construction, a public procurement unit shall grant
169 a resident contractor a reciprocal preference as against a nonresident contractor from any state
170 that gives or requires a preference to contractors from that state.
171 (b) The amount of the reciprocal preference shall be equal to the amount of the
172 preference applied by the state of the nonresident contractor.
173 (3) (a) The bidder shall certify on the bid that he qualifies as a resident contractor.
174 (b) The reciprocal preference is waived if that certification does not appear on the bid.
175 (4) (a) If the contractor submitting the second lowest [responsive and responsible] bid
176 is not a resident contractor and has his principal place of business in any state that gives or
177 requires a preference to contractors from that state, and if a resident contractor has also
178 submitted a responsive and responsible bid, and, with the benefit of the reciprocal preference,
179 the resident contractor's bid is equal to or less than the original second lowest bid, the
180 procurement officer shall:
181 (i) give notice to the resident contractor that he qualifies as a preferred resident
182 contractor; and

183 (ii) issue the contract to the resident contractor if, within 72 hours after notification to
184 him that he is a preferred resident contractor, he agrees, in writing, to meet the [low] original
185 second lowest bid.
186 (b) The procurement officer shall include the exact price submitted by the second
187 lowest bidder in the notice he submits to the preferred resident contractor.
188 (c) The procurement officer may not enter into a contract with any other bidder for the
189 construction until 72 hours have elapsed after notification to the preferred resident contractor.
190 (5) (a) If there is more than one preferred resident contractor, the procurement officer
191 shall award the contract to the willing preferred resident contractor who was the lowest
192 preferred resident contractor originally.
193 (b) If there were two or more equally low preferred resident contractors, the
194 procurement officer shall comply with the rules adopted by the Procurement Policy Board to
195 determine which bidder should be awarded the contract.
196 (6) The provisions of this section do not apply if application of this section might
197 jeopardize the receipt of federal funds.
198 Section 4. Section 63-56-20.7 is amended to read:
199 63-56-20.7. Preference for recycled paper and paper products.
200 (1) As used in this section:
201 (a) "Chief procurement officer" is the chief procurement officer appointed under
202 Section 63-56-8 .
203 (b) "Paper" means any newspaper, high-grade office paper, fine paper, bond paper,
204 offset paper, xerographic paper, mimeographic paper, duplicator paper, and related types of
205 cellulosic material containing not more than 10% by weight or volume of noncellulosic
206 material such as laminates, binders, coatings, or saturants.
207 (c) "Paper product" means any paper items or commodities, including paper napkins,
208 towels, corrugated and other cardboard, toilet tissue, paper and related types of cellulosic
209 products containing not more than 10% by weight or volume of noncellulosic material such as
210 laminates, binders, coatings, or saturants. "Paper product" does not include preprinted
211 cellulosic products such as books, newspapers, calendars, and magazines.
212 (d) "Postconsumer waste," "recycled paper," "recycled paper product," and "secondary
213 waste paper material" are defined by rule made by the Division of Purchasing, Department of

214 Administrative Services. The division rules shall be based on current definitions and standards
215 employed by national procurement, product recycling, and other relevant organizations such as
216 the federal Environmental Protection Agency.
217 (2) Notwithstanding Section 63-56-20 , which requires public procurement units to
218 purchase products from the second lowest [responsible] bidder, and subject to Subsection (3),
219 every public procurement unit shall give preference to the purchase of paper and paper
220 products which are manufactured or produced from recycled materials.
221 (3) A public procurement unit shall give preference to purchasing recycled paper and
222 recycled paper products unless:
223 (a) the bid or purchase price for recycled paper or paper products exceeds by more than
224 5% the second lowest [responsive and responsible] bidder whose bid meets the requirements
225 and criteria set forth in the invitation for bids;
226 (b) there is no recycled paper or paper product reasonably available that meets the
227 requirements and criteria set forth in the invitation for bids; or
228 (c) the public procurement unit has purchased at least the minimum percentage
229 purchase requirement of recycled paper or recycled paper products as provided in Subsection
230 (4).
231 (4) (a) The minimum percentage purchase requirement for fiscal year 1990-91 is 10%
232 of the public procurement unit's projected annual paper and paper product purchases.
233 (b) The minimum percentage purchase requirement shall be increased by 5% each
234 fiscal year until the minimum percentage purchase requirement is 50%.
235 (5) Each public procurement unit shall provide the chief procurement officer with a
236 report at the end of each fiscal year documenting:
237 (a) the dollar amounts of paper and paper products purchased;
238 (b) the dollar amounts of recycled paper and recycled paper products purchased; and
239 (c) any additional costs resulting from purchasing recycled paper or recycled paper
240 products.
241 (6) The chief procurement officer shall provide a written report of the information
242 received under Subsection (5) to the Natural Resources, Agriculture, and Environment Interim
243 Committee prior to November 30 of each year.
244 (7) (a) Each state agency shall separate and collect all types of recyclable paper for

245 recycling, except under Subsection (7)(b). The chief procurement officer shall maintain an
246 updated list of which papers are recyclable.
247 (b) If the state agency conducts an evaluation under Subsection (8) and determines the
248 cost of recycling a certain type of recyclable paper is more than 10% greater than the cost of the
249 current disposal method, the entity is exempt from the requirements of Subsection (7)(a)
250 regarding that type of paper.
251 (8) A state agency's evaluation shall:
252 (a) determine the types and quantities of recyclable paper in the state agency's current
253 waste stream;
254 (b) determine the market value of the recyclable paper;
255 (c) determine and describe the alternatives for separating recyclable paper from the
256 waste stream;
257 (d) for each type of paper and for each method of separation, determine the cost of
258 separating and collecting the recyclable paper for recycling;
259 (e) determine the cost of the current disposal method for each type of recyclable paper;
260 (f) for each type of paper, compare the cost of the current disposal method with the cost
261 of separating and collecting the paper for recycling; and
262 (g) determine the cost of producing the report required under Subsection (13)(b).
263 (9) Each evaluation conducted under Subsection (8) shall:
264 (a) be in writing;
265 (b) justify all estimates;
266 (c) be retained by the state agency;
267 (d) be accessible to the public for review; and
268 (e) be submitted to the chief procurement officer.
269 (10) Each state agency conducting an evaluation shall revise the evaluation as
270 necessary, at least every 30 months.
271 (11) A state agency that is required to separate paper for recycling shall:
272 (a) designate an existing employee as a recycling coordinator to organize and
273 coordinate the state agency's recycling program;
274 (b) establish procedures for separating each type of paper required to be separated for
275 recycling;

276 (c) establish a system for separating and collecting each type of paper to be recycled,
277 which assures the recyclable paper is sold to appropriate industries for reuse or recycling; and
278 (d) make participation in the recycling program as easy as practicable for state agency
279 personnel by establishing clear policies.
280 (12) The monies received from the sale of recyclable paper shall be retained by the
281 agency for:
282 (a) reimbursement to the state agency for program administration costs incurred as a
283 result of recycling, if any; and
284 (b) funding recycling incentives programs.
285 (13) (a) The recycling coordinator designated in Subsection (11) shall keep records of:
286 (i) the quantity of paper recycled by the state agency;
287 (ii) the costs incurred by the state agency in recycling paper; and
288 (iii) the monies received from the sale of recyclable paper.
289 (b) Each recycling coordinator shall provide a written report of the state agency's
290 recycling activities including the information required under Subsection (13)(a) before
291 September 30 of each year to the chief procurement officer.
292 (14) The chief procurement officer shall provide a written report of the information
293 received under Subsection (13) to the Natural Resources, Agriculture, and Environment Interim
294 Committee prior to November 30 of each year.
295 Section 5. Section 63-56-20.8 is amended to read:
296 63-56-20.8. Use of alkaline paper.
297 (1) As used in this section, "alkaline paper" means paper that is acid-free,
298 manufactured with calcium carbonate as the principal filler, and meets standards for paper
299 approved by the American National Standards Institute, National Information Standards
300 Organization, and American Society for Testing and Materials.
301 (2) (a) Notwithstanding Section 63-56-20 , which requires public procurement units to
302 purchase products from the second lowest [responsible] bidder, and except as provided in
303 Subsection (2)(b), every public procurement unit shall purchase and use alkaline paper.
304 (b) A public procurement unit shall purchase alkaline paper unless:
305 (i) the bid or purchase price for alkaline paper or alkaline recycled paper exceeds the
306 second lowest [responsive and responsible] bidder whose bid meets the requirements and

307 criteria set forth in the invitation for bids;
308 (ii) there is no alkaline or alkaline recycled paper reasonably available that meets the
309 requirements and criteria set forth in the invitation for bids; or
310 (iii) other paper products have equal or better quality characteristics than alkaline paper
311 and meet standards for paper approved by the American National Standards Institute, National
312 Information Standards Organization, and American Society for Testing and Materials.
313 (3) The state archivist shall promote the use of alkaline paper within state government,
314 local units of government, and school districts.
315 Section 6. Section 63-56-20.9 is enacted to read:
316 63-56-20.9. Preference for contractors participating in a registered apprenticeship
317 program.
318 (1) As used in this section:
319 (a) "Chief procurement officer" is the chief procurement officer appointed under
320 Section 63-56-8 .
321 (b) "Registered apprenticeship program" means an apprenticeship training program that
322 is registered with the U.S. Department of Labor's Bureau of Apprenticeship Training and meets
323 the apprenticeship standards required by the U.S. Department of Labor.
324 (2) (a) Notwithstanding Section 63-56-20 , which requires public procurement units to
325 purchase products from the second lowest bidder, each public procurement unit issuing bids
326 involving the provision of labor shall give a 5% preference to bids that are submitted by a
327 bidder that participates in a registered apprenticeship program.
328 (b) A bidder seeking a preference shall certify on the bid that the bidder participates in
329 a registered apprenticeship program at the time of submitting the bid.
330 (3) (a) If the bidder submitting the second lowest bid does not qualify for the
331 preference under Subsection (2) and if another bidder has submitted a bid that does qualify and,
332 with the benefit of the 5% preference, is equal to or less than the original second lowest bid, the
333 procurement officer shall:
334 (i) give the bidder that qualifies for the preference notice that he qualifies as a preferred
335 bidder; and
336 (ii) make the purchase from the preferred bidder if:
337 (A) the labor offered in the bid is reasonably available;

338 (B) the labor offered in the bid meets the requirements or criteria set forth in the
339 contract or invitation for bids; and
340 (C) within 72 hours after notification that he is a preferred bidder, the preferred bidder
341 agrees, in writing, to meet the original second lowest bid.
342 (b) The procurement officer shall include the exact price submitted by the original
343 second lowest bidder in the notice the procurement officer submits to the preferred bidder.
344 (c) The procurement officer may not enter into a contract with any other bidder for the
345 purchase until 72 hours have elapsed after notification to the preferred bidder.
346 (4) (a) If there is more than one preferred bidder, the procurement officer shall award
347 the contract to the willing preferred bidder who was the lowest preferred bidder originally.
348 (b) If there were two or more equally low preferred bidders, the procurement officer
349 shall comply with the rules adopted by the Procurement Policy Board to determine which
350 bidder should be awarded the contract.
351 (5) The provisions of this section do not apply if application of this section might
352 jeopardize the receipt of federal funds.
353 Section 7. Section 63-56-40 is amended to read:
354 63-56-40. Required contract clauses -- Computation of price adjustments -- Use
355 of rules and regulations.
356 (1) Rules and regulations shall require for state construction contracts and may permit
357 or require for state contracts for supplies and services the inclusion of clauses providing for
358 adjustments in prices, time of performance, or other appropriate contract provisions, and
359 covering the following subjects:
360 (a) the unilateral right of the state to order in writing changes in the work within the
361 scope of the contract and changes in the time of performance of the contract that do not alter
362 the scope of the contract work;
363 (b) variations occurring between estimated quantities of work in a contract and actual
364 quantities;
365 (c) suspension of work ordered by the state; and
366 (d) site conditions differing from those indicated in the construction contract, or
367 ordinarily encountered, except that differing site conditions clauses required by the rules and
368 regulations need not be included in a construction contract when the contract is negotiated,

369 when the contractor provides the site or design, or when the parties have otherwise agreed with
370 respect to the risk of differing site conditions.
371 (2) Adjustments in price pursuant to clauses promulgated under Subsection (1) shall be
372 computed in one or more of the following ways:
373 (a) by agreement on a fixed price adjustment before commencement of the pertinent
374 performance or as soon thereafter as practicable;
375 (b) by unit prices specified in the contract or subsequently agreed upon;
376 (c) by the costs attributable to the events or situations under the clauses with
377 adjustment of profit or fee, all as specified in the contract or subsequently agreed upon;
378 (d) in any other manner as the contracting parties may mutually agree; or
379 (e) in the absence of agreement by the parties, by a unilateral determination by the state
380 of the costs attributable to the events or situations under the clauses with adjustment of profit
381 or fee, all as computed by the state in accordance with applicable sections of the rules and
382 regulations issued under Subsection 63-56-28 (1) and subject to the provisions of Part H of this
383 chapter.
384 (3) A contractor shall be required to submit cost or pricing data if any adjustment in
385 contract price is subject to the provisions of Section 63-56-28 .
386 (4) Rules and regulations shall require for state construction contracts and may permit
387 or require for state contracts for supplies and services the inclusion of clauses providing for
388 appropriate remedies and covering at least the following subjects:
389 (a) liquidated damages as appropriate;
390 (b) specified excuses for delay or nonperformance;
391 (c) termination of the contract for default; and
392 (d) termination of the contract in whole or in part for the convenience of the state.
393 (5) A contract awarded under Section 63-56-20 shall include:
394 (a) the qualified health insurance requirement of Section 63-56-40.2 ;
395 (b) the employee hours and compensation requirements of Section 63-56-40.3 ; and
396 (c) the resident labor requirements of Section 63-56-40.4 .
397 [(5)] (6) The contract clauses promulgated under this section shall be set forth in rules
398 and regulations. However, the chief procurement officer or the head of a purchasing agency
399 may modify the clauses for inclusion in any particular contract. Any variations shall be

400 supported by a written determination that describes the circumstances justifying the variations,
401 and notice of any material variation shall be included in the invitation for bids or request for
402 proposals.
403 Section 8. Section 63-56-40.2 is enacted to read:
404 63-56-40.2. Required contract clauses -- Health insurance requirement.
405 (1) As used in this section:
406 (a) "Business" means a corporation, limited liability company, partnership, sole
407 proprietorship, or individual whose volume of business with the state exceeds $500,000.
408 (b) (i) "Contract" means a contract with a public procurement unit that is awarded by
409 sealed bid as required by Section 63-56-20 .
410 (ii) "Contract" does not mean an agreement between a business and an academic or
411 clinical researcher, institution, or subunit of an institution.
412 (c) "Employee" means an "employee," "worker," or "operative" as defined in Section
413 34A-2-104 who works at least 20 hours per calendar week.
414 (d) "Qualified health insurance coverage" means health insurance in which the
415 employer pays at least 75% of the premium for the employee and at least 50% of the premium
416 for any dependents of the employee.
417 (e) "Volume of business" means the sum of the value of all contracts that the person or
418 entity entering the contract has with the state.
419 (2) To be eligible to contract with a public procurement unit under Section 63-56-20 , a
420 business shall provide qualified health insurance coverage to each employee.
421 (3) Within ten days of a contract being awarded under Section 63-56-20 , a business
422 shall submit documentation of current qualified health insurance coverage for its employees to
423 the public procurement unit that awarded the contract.
424 (4) The public procurement unit shall terminate a contract it has awarded and may seek
425 debarment of the contractor under Section 63-56-48 if the contracting business:
426 (a) fails to submit documentation of current qualified health insurance coverage as
427 required by Subsection (3); or
428 (b) submits documentation of current qualified health insurance coverage when none
429 exists.
430 (5) (a) If a business enters into a contract with the public procurement unit and the

431 contract is in effect or is expected to be in effect for 60 or more days, the business shall inform
432 the public procurement unit if the business fails to provide qualified health insurance coverage
433 to its employees for 30 or more days during the term of the contract.
434 (b) (i) A public procurement unit that receives notice that a contractor is not providing
435 qualified health insurance shall terminate the contract unless:
436 (A) termination would materially harm the interests of the public procurement unit;
437 and
438 (B) a comparable business to contract with is not readily available.
439 (ii) Before declining to terminate a contract under this Subsection (5)(b), the public
440 procurement unit shall issue a written finding detailing specifically its basis for declining to
441 terminate the contract.
442 (c) A public procurement unit that receives notice that a contractor is not providing
443 qualified health insurance may seek debarment of the contractor under Section 63-56-48 .
444 (d) A business may not terminate a contract it has with the public procurement unit
445 because the business does not provide qualified health insurance coverage to its employees.
446 Section 9. Section 63-56-40.3 is enacted to read:
447 63-56-40.3. Required contract clauses -- Employee hours and compensation
448 requirements.
449 (1) As used in this section:
450 (a) "Business" means a corporation, limited liability company, partnership, sole
451 proprietorship, or individual whose volume of business with the state exceeds $500,000.
452 (b) (i) "Contract" means a contract with a public procurement unit that is awarded by
453 sealed bid as required by Section 63-56-20 .
454 (ii) "Contract" does not mean an agreement between a business and an academic or
455 clinical researcher, institution, or subunit of an institution.
456 (c) "Employee" means an "employee," "worker," or "operative" as defined in Section
457 34A-2-104 who works at least 20 hours per calendar week.
458 (2) To be eligible to contract with a public procurement unit under Section 63-56-20 , a
459 business shall:
460 (a) notwithstanding Subsection (2)(b), limit and restrict the hours worked by each
461 employee to eight hours during any one calendar day and to 40 hours during any one calendar

462 week; or
463 (b) compensate each employee that performs work related to the contract with the
464 public procurement unit at not less than 1-1/2 times the basic hourly rate of pay for all work
465 performed:
466 (i) in excess of eight hours per calendar day; or
467 (ii) in excess of 40 hours per calendar week.
468 (3) Within ten days of a contract being awarded under Section 63-56-20 , a business
469 shall submit a certification to the public procurement unit that awarded the contract that it will
470 provide compensation for its employees in a manner consistent with the requirements of
471 Subsection (2).
472 (4) The public procurement unit shall terminate a contract it has awarded and may seek
473 debarment of the contractor under Section 63-56-48 if the contracting business fails to submit
474 the certification required by Subsection (3).
475 (5) (a) If a business enters into a contract with the public procurement unit and the
476 contract is in effect or is expected to be in effect for 60 or more days, the business shall, during
477 the term of the contract, inform the public procurement unit if the business had failed to
478 provide compensation for those employees performing work related to the contract in a manner
479 consistent with Subsection (2).
480 (b) (i) A public procurement unit that receives notice that a contractor is not providing
481 compensation as required by Subsection (2) shall terminate the contract unless:
482 (A) termination would materially harm the interests of the public procurement unit;
483 and
484 (B) a comparable business to contract with is not readily available.
485 (ii) Before declining to terminate a contract under this Subsection (5)(b), the public
486 procurement unit shall issue a written finding detailing specifically its basis for declining to
487 terminate the contract.
488 (c) A public procurement unit that receives notice that a contractor is not providing
489 compensation as required by Subsection (2) may seek debarment of the contractor under
490 Section 63-56-48 .
491 (d) A business may not terminate a contract it has with the public procurement unit
492 because the business does not provide or is unable to provide compensation as required by

493 Subsection (2).
494 Section 10. Section 63-56-40.4 is enacted to read:
495 63-56-40.4. Required contract clauses -- Resident labor requirement.
496 (1) As used in this section:
497 (a) "Business" means a corporation, limited liability company, partnership, sole
498 proprietorship, or individual whose volume of business with the state exceeds $500,000.
499 (b) "Resident labor" means any person who resides in the state at the time of
500 employment.
501 (2) To be eligible to contract with a public procurement unit under Section 63-56-20 , a
502 business shall employ resident labor for at least 80% of the employment positions for each type
503 or class of labor that will be performed under the contract.
504 (3) Within ten days of a contract being awarded under Section 63-56-20 , a business
505 shall submit a certification to the public procurement unit that awarded the contract that it will
506 employ resident labor in a manner consistent with the requirements of Subsection (2).
507 (4) The public procurement unit shall terminate a contract it has awarded and may seek
508 debarment of the contractor under Section 63-56-48 if the contracting business fails to submit
509 the certification required by Subsection (3).
510 (5) (a) If a business enters into a contract with the public procurement unit and the
511 contract is in effect or is expected to be in effect for 60 or more days, the business shall, during
512 the term of the contract, inform the public procurement unit if the business had failed to
513 comply with the requirements of Subsection (2).
514 (b) (i) A public procurement unit that receives notice that a contractor has not met the
515 resident labor requirements under Subsection (2) shall terminate the contract unless:
516 (A) termination would materially harm the interests of the public procurement unit;
517 and
518 (B) a comparable business to contract with is not readily available.
519 (ii) Before declining to terminate a contract under this Subsection (5)(b), the public
520 procurement unit shall issue a written finding detailing specifically its basis for declining to
521 terminate the contract.
522 (c) A public procurement unit that receives notice that a contractor is not employing
523 resident labor as required by Subsection (2) may seek debarment of the contractor under

524 Section 63-56-48 .
525 (d) A business may not terminate a contract it has with the public procurement unit
526 because the business does not employ or is unable to employ resident labor as required by
527 Subsection (2).
528 Section 11. Section 63-56-48 is amended to read:
529 63-56-48. Debarment from consideration for award of contracts -- Causes for
530 debarment.
531 (1) After reasonable notice to the person involved and reasonable opportunity for that
532 person to be heard, the chief procurement officer or the head of a purchasing agency, after
533 consultation with the using agency and the attorney general, shall have authority to debar a
534 person for cause from consideration for award of contracts. The debarment shall not be for a
535 period exceeding three years. The same officer, after consultation with the using agency and the
536 attorney general, shall have authority to suspend a person from consideration for award of
537 contracts if there is probable cause to believe that the person has engaged in any activity which
538 might lead to debarment. The suspension shall not be for a period exceeding three months
539 unless an indictment has been issued for an offense which would be a cause for debarment
540 under Subsection (2) of this section, in which case the suspension shall, at the request of the
541 attorney general, remain in effect until after the trial of the suspended person.
542 (2) The causes for debarment include the following:
543 (a) conviction of a criminal offense as an incident to obtaining or attempting to obtain a
544 public or private contract or subcontract or in the performance of such contract or subcontract;
545 (b) conviction under state or federal statutes of embezzlement, theft, forgery, bribery,
546 falsification or destruction of records, receiving stolen property, or any other offense indicating
547 a lack of business integrity or business honesty which currently, seriously, and directly affects
548 responsibility as a state contractor;
549 (c) conviction under state or federal antitrust statutes;
550 (d) failure without good cause to perform in accordance with the terms of the contract;
551 [or]
552 (e) violation of the qualified health insurance requirement of Section 63-56-40.2 ;
553 (f) violation of the employee hours and compensation requirements of Section
554 63-56-40.3 ;

555 (g) violation of the resident labor requirements of Section 63-56-40.4 ; or
556 [(e)] (h) any other cause the chief procurement officer, or the head of a purchasing
557 agency determines to be so serious and compelling as to affect responsibility as a state
558 contractor, including debarment by another governmental entity for any cause listed in rules
559 and regulations.




Legislative Review Note
as of 2-7-05 5:56 PM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel