There are a few basic rules that any contractor needs to be aware of before bidding a project in Colorado, including rules related to licensing, bonding, bid preferences for local contractors, local employment rules, bid shopping rules, bid mistakes, and bid protest issues. No article can cover these topics with the specificity needed to determine whether to bid a project in Colorado, and what steps need to be accomplished to do so (those are issues that should be discussed with a lawyer) but at a very high level, we lay out some of the basic requirements under Colorado Law in this post.
Colorado does not have a state level licensing requirement for general contractors. All general contractor license requirements are handled at the municipal level or county level. On the other hand, engineers and other design professionals, and certain specialty subcontractors, do require a state license. And any company seeking to do business in Colorado must file a Statement of Foreign Entity Authority with the Colorado Secretary of State. C.R.S. § 7-90-801 et seq.
Bid Preference Rules
Colorado has a reciprocal bid preference on public projects. On such projects, where no federal money is involved, “a resident bidder shall be allowed a preference against a non-resident bidder from a state or foreign country equal to the preference given or required by the state or foreign country in which the non-resident bidder is a resident.” C.R.S. § 8-19-101.
Local Employee Rules
On Colorado Public Works Projects that do not involve federal money, “Colorado labor shall be employed to perform at least eighty percent of the work.” C.R.S. § 8-17-101. This requirement may be waived by the governmental body financing the project if there is “reasonable evidence to demonstrate insufficient Colorado labor to perform the work of the project and if compliance with this article would create an undue burden that would substantially prevent a project from proceeding to completion.” “Colorado labor” means persons who are residents of the state at the time of the project. A resident of the state is a person who can provide documentation that he or she has resided in Colorado for the last 30 days.
Bid bonds are required on all public construction contracts where the price is estimated to exceed $50,000. C.R.S. § 24-105-201. Additionally, payment and performance bonds are required on all public contracts in excess of $150,000. C.R.S. § 24-105-202. Similar bond requirements exist for projects below the state level, such as municipal and county projects. C.R.S. § 38-26-105. Contractors should be aware that public entities are not authorized to enter into contracts with a contractor or design professional for a public works project unless a full and lawful appropriation has been made for the project. C.R.S. § 24-91-103.6. Among other things, change orders that exceed the original amount of the work will not be paid if they cause the aggregate amount payable under the contract to exceed the amount appropriated for the original contract, unless the public entity provides written assurance that lawful appropriations to cover the cost of the additional work have been made and are available for the additional work.
There is currently no prohibition under Colorado law against bid shopping. While a contractor might have an argument that subcontractor bids are binding under a theory of reliance, there is no reciprocal requirement binding the contractor to subcontractor bids absent an agreement. Contractors should note that oral agreements may be enforceable.
At the state level, mistaken bids may be withdrawn before the award “if the bidder submits proof of evidentiary value which clearly and convincingly demonstrates that an error was made.” C.R.S. § 24-92-103(6). In general, the type of mistake that permits withdrawal of a bid is a mathematical error or clear omission, not simply an underbid. No similar statute applies to bids below the state level (i.e. municipal or county projects), although there is some case law allowing withdrawal of a mistaken bid under similar circumstances. Note that typically the remedy for a mistaken bid is withdrawal of the bid, not correction of the bid.
Bid protests are always a bit of a long shot. For projects at the state level, the state procurement code allows a protest within seven working days after the complaining party knows or should have known about the facts supporting the protest. C.R.S. § 24-109-102. If a protest is upheld before the award of contract, the solicitation or proposed award is cancelled or revised to comply with the law. C.R.S. § 24-109-402. If a protest is upheld after an award, the contract may be terminated, or it may be ratified if it is determined that doing so is in the best interest of the state. C.R.S. § 24-109-403. For protests that are not under the state procurement code, standing to assert a protest is limited unless the rules of the government entity provide otherwise. Absent a local rule providing for a protest, a disappointed bidder has no standing under Colorado law to challenge the award unless it also happens to be a tax payer of the particular entity awarding the contract.
Obviously, we have only offered a bare bones description of some of the issues that should matter to a contractor wishing to bid on public projects in Colorado. Any contractor considering bidding projects in Colorado should consult with an attorney for detailed and updated advice.