Licensing Law Would Raise Bar for Contractors

The days when anyone with a pickup and a set of tools could call themselves a contractor in Oklahoma may be numbered.

Commercial contractors and homebuilders are closely watching an industry-sponsored effort to come up with legislation that would develop regulations and a system for licensing all contractors in the state.

Currently, the only contractors who are required to be licensed in Oklahoma are in the mechanical, electrical and plumbing fields.

The Oklahoma Contractors Licensing Task Force, created with the approval in May of Senate Concurrent Resolution 56, by Sen. Harry Coates, R-Seminole, is charged with generating a report laying the groundwork for such legislation. Industry spokesmen said the state Senate has named its appointees, and the task force is awaiting the naming of House appointees to begin work.

Tulsan Dick Anderson, executive vice president of the Associated General Contractors of Oklahoma, is an outspoken proponent of the effort.

“The intent of a comprehensive, all-inclusive licensing law would be one that hopefully raises the level of professionalism within our industry and gives the general public a better opportunity to get their money’s worth from the construction marketplace,” he said.

“Why do I put it that way? In today’s marketplace, anybody who has a mortgaged pickup truck and a set of tools can hold up their right hand and say, ‘I’m a contractor,’ and they are in business.”

Although the task force will need to address the inherent differences in licensing of contractors for the commercial and residential industries, most of the concerns of both camps boil down to two areas: professionalism and accountability.

License and Proof of Insurance

For homebuilders, the primary issue is actual regulation of the license, said Mike Means, executive vice president of the Oklahoma State Home Builders Association.

“What we don’t want is, if the state decides to require a license that it will only be going around to check and see if a builder is licensed,” he said. “It has to be more involved than that. If we are going to have licensing, we want to make sure the builders that are out there are complying with building codes and build homes the way we think they should be built according to minimal standards.”

The second major concern for homebuilders is the protection of the public by requiring adequate insurance, Means said.

“We are a trade organization, so we are pushing and supporting our members, obviously, but our guys are having to compete against builders who are not carrying any kind of insurance,” he said. “They don’t carry general liability insurance, they don’t carry workers’ compensation insurance and the public has no idea how exposed they are when they have somebody who is building a home on their property who doesn’t carry any kind of insurance.”

Paul Kane, executive vice president of the Home Builders Association of Greater Tulsa, said the standards imposed by home builder associations on their own membership would be a good template for licensing.

“To be a builder member (in the Tulsa association), you have to have recommendations from existing members, referrals from home owners, references from suppliers, subcontractors and banks, sufficient insurance and workers’ compensation,” he said. “We believe these are the types of safeguards licensing would be interested in.”

Raising the Bar

On the commercial side of the issue, the smaller contractors and subcontractors will likely feel the most impact from licensing in Oklahoma, contractors said.

Large general contractors will not be greatly affected, said Jake Nabholz, project development officer for the Tulsa office of the Oklahoma Division of Nabholz Construction.

“You will see a lot more significant impact for the mid-volume and low-volume contractors and subcontractors,” he said. “It will really raise the bar on the people who do this kind of work.”

Nabholz Construction is general contractor on several large projects in Tulsa, including the Case Athletic Complex and Collins Hall on the University of Tulsa campus.

Nabholz, whose company is licensed in 27 states, said one of the regulations that likely will be introduced in a licensing law is a requirement that contractors and subcontractors have a certified financial statement on file.

That requirement ensures that “everybody on a project is financially capable of doing the project,” he said.

“Right now you have to go on your past experience with them or their reputation,” he said.

Chris Burnett, president of the Oklahoma Division of Nabholz Construction, said, “One place where we will see a lot of impact will be in competitive bidding, where we are kind of bound by Title 61 (the lowest-bidder rule for contracts on public projects.) Anybody can bid on a job regardless of their qualifications.”

“Who bears the liability for that once you sign them up? It’s us – the general contractors.”

“The biggest thing is it will clear up is who is capable of bidding on these projects. We will know that they are competent and financially capable,” he said.

Who’s in charge?

Administration and possible enforcement duties would likely be placed with the state Construction Industries Board, which currently oversees licensing of mechanical, electrical and plumbing contractors, Anderson said.

“That would be the logical place to put it because it has to be self-sustaining,” he said.

Revenue would come from testing, licensing and penalty fees, and licensing fees would depend on the level of enforcement established in any legislation, he said. ?

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