Sharing debarment info protects taxpayers

OPINION – When it comes to expenditures of public funds, taxpayers of every political stripe deserve accountability. Above all, they want to know that their hard-earned dollars are not padding the pockets of unscrupulous actors who fail to honor the public’s trust.

California’s most recent legislative session delivered real protections on this metric, though you may not have heard about it yet.

The law in question—AB 1121—is designed to protect tens of billions of dollars in annual public construction investments. Here’s how it works.

Each year, this spending is allocated through literally thousands of federal, state, regional, and local awarding bodies, who each must align community needs and applicable regulatory standards to select the lowest responsible and responsive bidder.  Projects can range from roads, bridges, highways and schools, to courthouses, water or utility projects.

In 2021, California state and local governments spent more than $44 billion on such projects, not including additional spending on publicly financed residential projects.

Like any industry, construction has unique complexities, as well as rogue actors who try to gain competitive or financial advantage by refusing to play by the rules. This can include failing to  perform work as promised, under-paying workers, flouting reporting, licensure, and project-specific requirements, or engaging in other nefarious or illegal conduct.

When Contractors cheat the public, they can be subject to a range of civil or criminal penalties, as well as a process called debarment. This is, in effect, a designation of unreliability by a public awarding body that would prevent them from receiving subsequent bid awards for a period of time.

The problem has been that while any one of the thousands of awarding bodies across our state can debar a contractor, California has lacked any single resource that aggregates all debarments from EVERY awarding body.

Like any industry, construction has unique complexities, as well as rogue actors who try to gain competitive or financial advantage by refusing to play by the rules.

For example, there are currently more than 40,000 registered public works contractors in California, yet the state’s Department of Labor Standards Enforcement lists just five as actively debarred. Yet if we look at just two local awarding bodies—the City of Irvine and County of Los Angeles—we see lists of two and thirteen actively debarred contractors, respectively.

Absent a comprehensive, single list of all debarred contractors across the state, there would be little to stop a public awarding body in another jurisdiction—like San Francisco or Sacramento—from awarding a multi-million dollar public construction contract to a firm that had been prohibited from winning a comparable public works bid in Los Angeles or Irvine.

While many public awarding bodies ask contractors about prior debarments as part of the contractor pre-qualification process, it would be both cost prohibitive and unrealistic to expect these bodies to spend their scarce resources individually checking the databases of thousands of potential awarding bodies to assess the truthfulness of answers.

Now they don’t have to.

AB 1121 (Haney) requires all state and local awarding agencies to upload lists of debarred contractors, including details of their violations, to the CA Department of Industrial Relations website annually. This common-sense taxpayer protection passed to legislature with unanimous bi-partisan support.

At a practical level, the passage of AB 1121 means that before any awarding body decides to spend millions of dollars on public works – anywhere in California – they will be able to know with certainty whether that same contractor or its officers have a track record of lying, cheating, or endangering the public. Importantly, this levels the playing field for honest California construction businesses, and their employees.

While we live in divided times, we should be heartened that the protection of public resources—especially as we begin generational new investments in modernizing our infrastructure, energy and utility systems—remains a point of unity in our politics.

In other words, sunshine is still the best disinfectant.

Dina Morsi is the Executive Director of NorCal Construction Industry Compliance, a joint labor management organization that promotes equitable public contracting standards.