Request By:
Mr. Charles D. Wickliffe
Attorney
Department of Finance
Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
On August 25, 1978, bids were opened for the construction of an academic building at Kentucky State University. The low bidder was Hartz-Kirkpatrick Construction Company. T & E Electrical Contractors, Inc., was listed as the electrical subcontractor for the work in the Hartz-Kirkpatrick bid.
On September 1, 1978, and prior to the award of the contract for the construction of the academic building, Secretary Stevens received a memorandum from Commissioner Yocum of the Department of Labor indicating that his department had found T & E Electrical Contractors, Inc., to be in violation of the provisions of KRS 337.505 to KRS 337.550. The statutes just mentioned relate to Prevailing Wage Law in connection with public works. Commissioner Yocum requested Secretary Stevens to hold such subcontractor ineligible to bid on public works until such time as that subcontractor is in substantial compliance with those statutes as determined by the Commissioner of Labor. Commissioner Yocum's request was based upon KRS 337. 550(1), as amended in the Regular Session of 1978. That subsection provides that the Commissioner of Labor shall investigate and enforce the provisions of KRS 337.505 to 337.550, inter alia. It also provides that if any contractor or subcontractor is found to be in violation of any provisions of KRS 337.505 to 337.550, then the Commissioner shall inform the Secretary of the Finance Department, and the Secretary of the Finance Department shall hold such contractor or subcontractor ineligible to bid on public works until such time as that contractor or subcontractor is in substantial compliance as determined by the Commissioner of Labor. The Department of Finance had no information or knowledge that T & E Electrical Contractors, Inc., may have been found to be in violation of the Prevailing Wage Law prior to receipt of Commissioner Yocum's memorandum as aforestated.
T & E Electrical Contractors, Inc., had made its electrical subcontract bid directly to the general contractor who incorporated that bid into its overall bid for construction of the building. Acting on the communication from Commissioner Yocum, Secretary Stevens sent a notice to T & E Electrical Contractors that it would be ineligible to bid on contracts for the construction of public works by the Commonwealth of Kentucky on and after September 1, 1978, and until such time as the Commissioner of the Department of Labor determines that such subcontractor is in substantial compliance with the Prevailing Wage Law, KRS 337.505 to 337.550. However, the award has been made to Hartz-Kirkpatrick, based on its low bid, and based on the premiese that the bid disequalification can only be applied prospectively.
A question has subsequently arisen as to whether T & E Electrical Contractors should be disqualified as the electrical subcontractor for the Kentucky State project even though neither the Finance Department nor the general contractor had any notice, knowledge, or information about this alleged violation of the Prevailing Wage Law prior to the bid opening.
You request our opinion as to whether a contractor or a subcontractor, who may have been found by the Department of Labor to be in violation of the Prevailing Wage Law, can be held ineligible for award of a contract under KRS 337.550(1) when notice of their disqualification for such reason is not received by the Finance Department prior to the date for the receipt and opening of bids for a construction project, or whether such ineligibility should apply only to bids invited after the date of receipt of such notice.
We think it is clear from reading KRS 337.550(1) that, when the Commissioner of Labor notifies the Secretary of the Finance Department that a contractor or subcontractor has been found to be in violation of the Prevailing Wage Law, from the time such notice is received by the Secretary of Finance he (the Secretary of Finance) must hold such contractor or subcontractor ineligible to bid on public works until such time as that contractor or subcontractor, as the case may be, is in substantial compliance with the subject law as determined by the Commissioner of Labor. Our construction of KRS 337.550(1) is reinforced by the statutory principle that no statute shall be construed to be retroactive unless expressly so declared by the statute. See KRS 446.080(3) and Taylor v. Asher, Ky., 317 S.W.2d 895 (1958).
In view of the fact that the notice of the violation of the Prevailing Wage Law was communicated several days after such bids were opened for the construction of the building at Kencucky State University, it is our opinion that the ineligibility of the subcontractor does not apply to the bids that were opened for such construction. To hold that they do apply would mean that KRS 337.550(1) can be retroactively applied, when in fact, under the law, the statute cannot be applied retroactively. Here the bidding process, as concerns bidders, was complete.
Here it is clear that the ineligibility, as a result of determined violations of the Prevailing Wage Law, applies strictly to future bidding on public works; and here the bids, regardless of what they provided, were already made and received and opened by the Finance Department several days in advance of the time when the Commissioner of Labor communicated his notice of such violations to the Secretary. Thus it is clear to us that the statutory ineligibility provided for can only attach to such bids that might be made by such subcontractor, whether directly or indirectly to the Finance Department, on and after September 1, 1978, the date of the communicated violations of the Prevailing Wage Law.
In addition, our construction lends itself to a stability in the administration of the state bidding law. Any contrary rule would indeed promote confusion and uncertainty.