Chapter 4 - § 4.20 • OTHER CONSIDERATIONS

• Jurisdiction: Colorado

§ 4.20 • OTHER CONSIDERATIONS

§ 4.20.1-No Damages for Delay Clauses

Public entities may not insert clauses in public works contracts that waive, release, or extinguish the rights of contractors to recover costs or damages or an equitable adjustment for delays caused in whole or in part by acts or omissions within the control of the public entities or persons acting on their behalf.³³¹ Such clauses are against Colorado public policy and are void and unenforceable.³³² However, public entities may include clauses that limit the ability of contractors to recover damages for delays caused by the acts or omissions of contractors and their agents.³³³ Additionally, this prohibition does not preclude public entities from including provisions in construction contracts for liquidated damages or for arbitration or another form of alternative dispute resolution.³³⁴

§ 4.20.2-Indemnification and Hold Harmless Provisions

For contracts entered into prior to September 15, 2015, public contracts may not contain a provision that indemnifies or holds harmless public entities for their own negligence.³³⁵ Such a provision is against Colorado public policy and, therefore, is void and unenforceable.³³⁶ However, for contracts entered into on or after September 15, 2015, public contracts may contain a provision that indemnifies or holds harmless public entities, but only to the extent of the degree of negligence or fault by the contractor.³³⁷ A provision that indemnifies or holds harmless public entities for their own negligence or fault still is void and unenforceable.³³⁸

Colorado Constitution Article XI, § 1 provides that the state may not become "responsible for any debt, contract or liability of any person, company or corporation, public or private, in or out of the state." No reported Colorado appellate case has addressed the application of Colorado Constitution Article XI, § 1 to contract provisions where public entities indemnify and hold harmless contractors. However, the state can make the argument that Colorado Constitution Article XI, § 1 precludes the inclusion of such contract provisions.³³⁹

§ 4.20.3-Privatization

Before the state and its agencies may undertake the construction of a public project expected to cost over $50,000 with its own employees, it must prove that its price is lower than any competitively obtained bids.³⁴⁰ For a project under the supervision of the Department of Transportation, the amount is $150,000.³⁴¹ Allowing state agencies to undertake the construction of public projects appears to be at odds with C.R.S. §§ 24-113-101, et seq., which prohibit state agencies from competing with private enterprise in the sale of goods and services.³⁴² However, state agencies are not prohibited from competing with private enterprise if specially authorized by law or for specifically identified categories, such as construction, maintenance, and operation of state transportation facilities and veterans community living centers.³⁴³

§ 4.20.4-Types of Contracts

The state and its agencies, generally, may use any type of contract that will promote the best interests of the state.³⁴⁴ However, use of a cost-plus-a-percentage contract is prohibited.³⁴⁵ The state and its agencies may use a cost-reimbursement contract under the following circumstances: (1) a cost-reimbursement contract is likely to be less costly to the state than any other type of contract, or (2) it is impracticable to obtain construction without a cost-reimbursement contract.³⁴⁶ A contingency-based contract may be used only upon approval by the governor's Office of State Planning and Budgeting pursuant to C.R.S. § 24-17-204.³⁴⁷

§ 4.20.5-Books and Records

Contractors and subcontractors must maintain the books and records relating to the contract or subcontract performance for a period of six years after the date of final payment under the prime contract or subcontract.³⁴⁸ Additionally, the state may audit the books and records of such contractors and subcontractors to the extent the books and records relate to the performance of the contract or subcontract.³⁴⁹

§ 4.20.6-Employment for Public Works

For all public works financed in whole or in part by funds of the state, counties, school districts, or municipalities, Colorado labor must be employed to perform not less than 80 percent of the work.³⁵⁰ The governmental body may waive the requirement for Colorado labor if (1) there is reasonable evidence of insufficient Colorado labor and (2) the requirement would create an undue burden for the project to proceed.³⁵¹ Any waiver must be posted on the governmental body's website.³⁵² "Colorado labor" means any person who is a resident of Colorado at the time of the public works project, without discrimination as to race, color, creed, sex, sexual orientation, marital status, national origin, ancestry, age, or religion except when sex or age is a bona fide occupational qualification.³⁵³ Residency may be proven by (1) a valid Colorado driver's license, (2) a valid Colorado state-issued photo identification, or (3) documentation that one has resided in Colorado for the last 30 days.³⁵⁴ All contracts for such public works must contain provisions for the preference in employment of Colorado labor.³⁵⁵ The Department of Labor and Employment is responsible for enforcement.³⁵⁶

The state and its agencies may not enter into or renew a public contract for services with a contractor who knowingly employs or contracts with an illegal alien to perform work under the contract or who knowingly contracts with a subcontractor who knowingly employs or contracts with an illegal alien to perform work under the contract.³⁵⁷ "Services" means the furnishing of labor, time, or effort by a contractor or a subcontractor not involving the...