The Surety & Fidelity Association of America s1

THE SURETY & FIDELITY ASSOCIATION OF AMERICA

MEMORANDUM

TO: Government Affairs Advisory Committee Contract Bonds Advisory Committee

FROM: Lenore S. Marema

DATE: March 5, 2009

SUBJECT: Overview of the State Legislative Sessions—Contract Surety

The following summarizes key state legislation affecting contract surety that SFAA has been working on most recently with AIA and the NASBP. As it is early in the state sessions, this report contains the key legislation that has been introduced in the states to date.

Status of the State Sessions All the states are in session except Louisiana and Virginia. The former convenes in April and the later has adjourned for the year.

Bad Faith The surety bad faith bill has been introduced again in Rhode Island. SB 369 would allow any obligee, principal or claimant that is under any fiduciary, performance or payment bond to file a claim against the surety on the bond for wrongfully, and in bad faith, refusing to pay or settle a claim. The bill would allow the claimant to seek both compensatory and punitive damages, as well as reasonable attorneys' fees and costs of the suit. The bill is identical to legislation that SFAA has defeated in prior sessions and we will work to do so again. We believe that there is one subcontractor behind this bill and that we can expect the bill to be continually introduced in Rhode Island.

Of General Interest Montana HB 160 has been amended to permit a captive insurance company to write surety insurance. By law, a pure captive could write surety insurance only for its parent and affiliated companies, or for its members if it is an association captive. The amendments were at the request of the Montana Insurance Department, apparently to assist mining companies with license and permit bonds and reclamation bonds. SFAA believes that it makes little sense to permit captives to write surety as the captive would have no incentive to do any underwriting of its parent company or its association members and the value of the surety’s prequalification would be lost. It also means that an innocent third party relying on the existence of a bond would find that if the parent or affiliates became bankrupt or otherwise defaulted, it would have no independent entity to look to for payment of claims. The SFAA and AIA opposed this bill.

1 SFAA and AIA contacted the Montana Insurance Department and were told that the laws of most other states permit captives to write surety. SFAA researched the laws of Vermont, Hawaii and South Carolina, which are home to most U.S. captives. The laws do permit captives to write most property-casualty lines, except auto, homeowners and workers compensation. SFAA contacted the Vermont captive association and the Vermont Insurance Department, as Vermont is the home to most captives, and learned that there are a very limited number of captives in Vermont that write surety bonds. The parent companies of such captives are contractors. With the support of the Insurance Department and the fact that other states permit captives to write surety, the bill likely will pass this year in Montana.

State Bond Thresholds --Enacted Laws. Under emergency/temporary rules, the Oregon Department of Administrative Services decided to allow for the waiver of performance and payment bonds for projects funded under the state's own stimulus package. SFAA can find nothing in the current law or in the Oregon stimulus bill (SB 338) that provides any authority to do this. There was no opportunity to comment on the temporary rules and they are in place until August 12, 2009. CNA Surety’s local counsel contacted the Department regarding the reason for the bond waivers. The Department contends that it has statutory authority to waive bonds in emergency situations and the Department believes that the current economic situation is an emergency.

The Office of State Procurement, however, does not think that most state agencies will use this authority to waive bonds. There may be some waivers on specific projects, based on size, or for small and emerging contractors. Nonetheless, this regulation will be in effect for six months and it could be problematic. Sureties will have to watch the projects funded by the stimulus package and be prepared to address attempts to waive bonds.

--Bills on the Move. North Dakota SB 2401 would have increased the threshold at which performance and payment bonds are required on construction contracts for public improvements from $100,000 to $200,000. SFAA contacted members of the legislature from the National Conference of Insurance Legislators (NCOIL) regarding our opposition to this bill and AIA circulated our chart of the state bond threshold laws, which shows that North Dakota already is among the states with the higher state bond thresholds of $100,000. The bill was converted into a study bill.

New Hampshire HB 284 would increase the threshold for payment bonds on all contracts for public buildings, public highways, bridges or other public works from $25,000 to $35,000. The bill is a request from the New Hampshire Department of Transportation (DOT), which explains that for the projects coming up between FY 2010 and FY 2013, a number of them will cost between $25,000 and $35,000. The DOT wants to eliminate the payment bond requirement on these small projects in order to cut the cost of the bond in order to save the State money. Further, the DOT explains that the Bureau of Public Works will still continue to require performance bonds on all of its contracts in excess of $25,000 as a "good business practice." Upon the advice of AIA state counsel, we did not argue against such a modest increase, when with the increase, the state bond

2 threshold still would be below $50,000. The concern was that there was a real possibility that we could open the threshold to a larger increase. Last year, AIA and SFAA worked to defeat legislation that would have raised the state bond threshold from $25,000 to $100,000. The bill has passed the House and is in the Senate.

New York AB 4093/SB 1786, which would increase the state bond threshold, was scheduled for a hearing in the Assembly. Under existing law, a state agency or commission may waive the bond requirements on contracts that exceed $100,000, or that exceed $200,000 for a contract not subject to state requirements for multiple awards under the Wicks Act. The bill would increase the bond threshold to $150,000 or $300,000 for contracts not subject to the Wicks Act. The bill also provides that the state agency or commission would have to adjust the bond threshold annually to account for increases in the costs of construction.

The AIA regional manager and state counsel talked to the bill sponsor and she has agreed to hold the bill for now, but she wants to discuss the bonding issues in more detail with us. The AIA has been working with the AFL-CIO on the payment bond threshold issue, and SFAA alerted the local AGC regarding the legislation. AIA also contacted the legislative liaison for the New York Insurance Department and asked the Department to weigh in on this legislation because of the progress being made in our work together in New York in implementing SFAA’s Model Contractor Development Program.

AB 4094 is the same but it also would outline a mentor-protégé program for contracting agencies to foster relationships between mentor firms and small, minority-, and women-owned businesses. It also contains provisions for increasing contract awards through reporting and enforcement measures.

In North Carolina, the Innovations Subcommittee of the North Carolina State Building Commission is working on amendments to the state procurement law that would increase the state bond threshold from $300,000 to $500,000. SFAA has had a conference call with the Chair of the Subcommittee and learned that its rationale is to make the bond threshold consistent with changes that have been made to the procurement process for state universities under which projects in excess of $500,000 are subject to competitive bidding and require at least three bidders. SFAA was able to explain the differences between raising a competitive bidding threshold and a bonding threshold in terms of protection of the subcontractors, suppliers and taxpayers. Consistency in the law is the only reason behind the Subcommittee’s proposal at this point, rather than any small and emerging contractor issues.

SFAA and some of its members met with the Subcommittee in early March, and have been in contact with Subcommittee members since then. They agree with our position on the “A” rated surety and have accepted our amendments on the phased bonding issue, but may still recommend a $500,000 bond threshold. The Subcommittee is not working under any time frame, and the deadlines for bill introduction in North Carolina are at the end of March. We may not see legislation this year.

3 --Recent Introductions. Two new serious threats have emerged to state bond thresholds. Illinois HB 2500 would authorize any public agency subject to Illinois' little Miller Act to waive or lower the required amount of a surety bond for a public construction contract if the contractor is a small business enterprise. The bill would define a "small business enterprise" as a construction business with annual sales and receipts not exceeding $10 million and considered a small business by the Department of Central Management Services under existing law. Tennessee HB 1339/SB 399 would require the state bond threshold for public works contracts to be adjusted annually according to the consumer price index as published by the United States Bureau of Labor Statistics. Current law sets the threshold at $100,000, requiring a surety bond, cash or other securities in an amount equal to 25% of the contract price. SFAA is working with the AIA to determine the viability of these bills.

Other recent introductions include: Hawaii SB 705 would provide that construction contracts under $250,000 are small purchases and can be treated under the procurement requirements for such contracts. SFAA believes that this may be a back door way to increase the state bond threshold because existing regulations require payment and performance bonds on contracts in excess of the small purchases threshold, which now is $50,000. If this bill is enacted, it is conceivable that the bond threshold could be raised to $250,000. The local surety association currently is obtaining background information as to what the bill sponsor is trying to achieve. Iowa SSB 1291/SSB 1239 would provide that performance and payment bonds would not be required for contracts for the emergency repair of a public improvement, highway, bridge, or culvert. Minnesota HB 1195 would increase the bond threshold for city housing and redevelopment authorities from $50,000 to $100,000 by subjecting the contracts to the State's adoption of the Uniform Municipal Contracting law. The bill also would increase a number of competitive bidding thresholds from $50,000 to $100,000 in the same manner. Currently, the State's bond threshold for public contracts is $75,000. Texas HB 2515 would increase the payment bond threshold on public construction contracts for municipalities or joint boards created under the Texas Transportation Code. Currently, the law mirrors the federal Miller Act, requiring a performance bond for contracts in excess of $100,000 and a payment bond for contracts in excess of $25,000. The bill would increase the payment bond threshold for municipalities to $50,000 and would maintain the $25,000 threshold for all other public owners. The bill also would increase the cap for general authority to approve change orders from $25,000 to $50,000.

Rhode Island is heading in a different direction. Rhode Island SB 398 provides that the "[w]aiver of the bonding requirements...is expressly prohibited" for the performance and payment bonds required for public construction contracts with the state DOT and Department of Administration. Current law requires such bonds on contracts in excess of $50,000 in an amount equal to at least 50% of the contract price and not to exceed 100% of such price. Rhode Island SB 530 and 531 are similar except that they would prohibit waivers on any public project in excess of $50,000.

4 Retainage --Bills on the Move. Oklahoma SB 573 would create a new retainage bond. Any general contractor, subcontractor or sub-subcontractor would be permitted to post a bond before the start of a project in lieu of any retainage being withheld. The new retainage bond would be for 10% of the contract or subcontract price.

SFAA was concerned about this new “release of retainage” bond, which must contain provisions to the effect that 1) the obligations under the contract shall be faithfully performed; 2) payment shall promptly be made to all persons supplying labor or materials to the prime contractor or subcontractor for the work provided in the contract; and 3) all state and federal withholdings shall promptly be made. This appears to be essentially the same guarantees made in the payment and performance bonds, which would already be in place.

SFAA worked with the Oklahoma local surety association, who put us in touch with the local ASA, the proponent of this legislation. We suggested some alternative provisions to the ASA, which were based on the existing law in Washington, which permits retainage bonds. The local ASA was agreeable to our changes, which are reflected in the attached redraft of Oklahoma SB 573. The bill may pass the Senate as is, but we expect our amendments to be dealt with in the House if and when SB 573 gets sent to the House.

--New Introductions. Arkansas SB 302 would reduce retainage from 10% to 5%. California SB 802 would cap retainage at 5% for public contracts with any public entity. Further, the bill would revise the retainage requirements for the Department of General Services. Current law provides that retainage shall be in an amount not less than 5%. The bill would prohibit retainage from exceeding 5% instead.

Payment and Performance Bond Issues --To Governor. Virginia HB 2029 would reduce the subdivision bond required from developers under existing law from 25% to 10% of the construction costs. The bond is required to guarantee the completion of the streets, sewers and utility installations in a subdivision. Surety bonds or other security may be posted.

--Bills on the Move. Missouri HB 359/SB 128 would conform the performance bond requirements for design-build construction contracts of the State Highways and Transportation Commission (Commission) to the existing payment bond requirements for such projects. Currently, the performance bond must be in an aggregate amount of not less than $200 million or 25% of a reasonable estimate of the cost of construction work, whichever amount is lower. Other security may be submitted in lieu of or in addition to the performance bond. Under the bill's provisions, which seem to be patterned after the Miller Act, the performance bond would have to be equal to a reasonable estimate of the total cost of construction work under the terms of the design-build highway project contract, unless the Commission submits a written finding that a performance bond or bonds in such an amount would be impractical. The Commission would be able to

5 establish the amount of the performance bond or bonds required in that case. The bill also would eliminate the use of alternative security for performance bonds.

SFAA worked with NASBP in developing the amendments to SB 128 in terms of suggesting model language from existing state laws that have worked well for our members. We pointed them to the Florida law as a good example of how this Missouri bill could be amended. NASBP in turn worked with some NASBP members and the local AGC rep in Missouri and got the changes that are in the Senate substitute of the Senate Committee substitute to SB 128. The amendments require: 1) the surety issuing the bond to be authorized to do the surety business in Missouri; 2) that alternative security to be from a federally insured financial institution; and 3) a minimum bond of $250 million on projects in which the normal 100% bonding is not practical. The bill has passed the Senate and is in the House.

New Mexico SB 363 is another attempt to limit the subcontractors’ performance and payment bond requirements for public works contracts required under existing law. The bill provides that the requirements would not apply to subcontractors on public works contracts that are a design and build project delivery system selected using competitive sealed proposals; on such contracts where the prime contractor is a construction manager at risk selected under the Educational Facility Construction Manager At Risk Act; or on such contracts where the prime contractor was selected using competitive qualifications-based proposals. Current law requires all subcontractors to furnish a performance and payment bond on all public works contracts in excess of $125,000. The threshold for the bonds was added to the law last year, but this is another attempt to eliminate this bond requirement. SFAA members report that there are no major problems in the market for this bond. Time is running out in the New Mexico session, and at this point, it does not appear that the bill will pass.

--Recent Introductions. Connecticut SB 1035 provides that subcontractors would not have to obtain bonds for subcontracts for public projects when the general contractor has obtained bonding under the State's little Miller Act. The bill also provides that subcontractors would not have to participate in the State's pre-qualification program for public contracts. Florida HB 299/SB 466/SB 560 would require the surety to record the payment bond in the public records of the county in which the public improvement is located. Florida HB 1021/SB 7014 would require contractors to keep a copy of the payment and performance bond required by law at their principal place of business and also at the jobsite's office (if one exists). The contractor would have to furnish a copy of the bond within five days from when any written request was made. Existing law requires the contractor to record the payment and performance bond in the public records of the county where the public improvement is located.

Texas HB 2095 would require homebuilders to obtain a performance bond for each project in an amount not less than the fair market value of the completed project if it had no defects. A liability insurance policy also would be required. Current law only requires registration.

6 Land Use Permit Bonds --To Governor. Virginia HB 1628 would provide that if the Virginia Department of Transportation (VDOT) is included as a dual obligee on a contractor's performance bond, the amount of such bonds shall be no greater than required if VDOT was not named as a dual obligee. In addition, the liability of the surety will be no greater to VDOT than to the county, city or town administering the project, and the amount of the bond is the limit of the surety’s obligation to either or both obligees.

The current practice in VDOT is to require land use permit bonds for work being done in the State’s right of way on a job in which VDOT is not involved. Historically, VDOT has asked for reasonable bond amounts—$10,000 and $15,000. Recently, however, they have started to ask for larger bond amounts. In Northern Virginia, for example, they asked for a $10 million permit bond on a project in which the payment and performance bonds were $20 million. When faced with these large bond amounts, the contractors have argued that these large permit bonds are not needed as the payment and performance bonds already provide the protection that VDOT wants for the right of way.

SFAA worked with the AIA to amend the bill, although the amendments that we achieved were not as robust as we would have liked. As enacted, however, the bill would not require VDOT to be a dual obligee. If VDOT wants to be a dual obligee, it must sign a rider to the performance bond, which has a savings clause in it. SFAA continues to work with VDOT, and has given it samples of riders and explained the savings clause.

Prevailing Wages --Enactments. California SB 9b was introduced and enacted in special session within a matter of days. The new law provides that the definition of public works includes a city's water, sewer, or storm drain system or similar system to a disadvantaged community in an unincorporated area. It also authorizes a public works project-awarding body to not require the payment of the prevailing wage under certain conditions. It also establishes the State Public Works Enforcement Fund to fund prevailing wage enforcement and provides money for the fund from related fees.

--Bills on the Move. Colorado HB 1208 would require contractors and subcontractors who have been awarded public works contracts with the State to pay their workers the prevailing wages and fringe benefits outlined in the bill. For knowingly failing to pay such wages and benefits, the contractor or subcontractor would be subject to a civil penalty in an amount equal to at least twice the amount due, but not more than three times the amount due. The surety for any contractor or subcontractor would be "bound to pay any penalties assessed on [the] contractor or subcontractor." The bill provides for other penalties for failures to provide records in a timely manner or for falsifying the records. The bill was held in committee by a 6-5 vote and likely is dead for this year.

Mega Construction Projects. --Bills on the Move. Washington HB 1533/SB 5499 would permit less than 100% bonding on Department of Transportation construction contracts that are in excess of $250 million. The DOT would determine the amount required in this case on a

7 contract-by-contract basis, and the amount would have to "adequately protect [100%] of the state's exposure to loss." The bill would require the DOT to develop guidelines for assessing such loss risks for the State. The Office of Financial Management would have to approve the guidelines. Of note, in no case could the bond be in an amount less than $250 million.

The Secretary of Transportation would have to approve each performance bond and payment bond authorized to be less than the full contract price of a project. Of note, for these projects, a separate performance bond and payment bond would be mandatory. Also, the payment bond could not be in an amount less than the amount fixed for the performance bond.

This is a significant improvement over legislation SFAA worked to defeat last year in which the minimum bond would have been $80 million. We worked with the DOT over the summer on this year’s bill. SB 5499 passed the Senate and is in the House.

Public Private Partnerships --Enactments. California SB 4b was a bill introduced in special session to address the State’s budget deficit and had no impact on surety. The bill was gutted and converted into a design-build and public-private partnership bill that passed the legislature in 24 hours. As passed, the bill would authorize a number of state and local entities to use design- build firms on construction projects. Performance and payment bonds would be required for such projects. Of concern to SFAA are the ten design-build projects authorized for the California Department of Transportation (Caltrans) for highways, bridges, or tunnels and five projects for local transportation entities for streets, roads, bridges, tunnels, or public transit. SB 4b provides that for these projects, the design-build entity shall provide payment and performance bonds in the form and in the amount required by the transportation entity, issued by a California admitted surety. These 15 authorized projects are the only ones for which state and local government agencies would be allowed to set the amount of the bonds. In no case could the payment bond be for an amount less than the performance bond. The authorization for these projects would expire on January 1, 2014.

SB 4b would limit retainage in the ten authorized design-build projects for redevelopment agencies in local communities if a performance and payment bond is required in the solicitation for bids. The design-build entity would be permitted to withhold additional retainage in excess of the limit from its subcontractors if they are unable or refuse to furnish any required bonds. There is a $1 million cost threshold before a design-build entity can be used.

The bill also would revise the authority for Caltrans and regional transportation agencies to enter into PPPs for transportation projects. The existing law authorizes on only four PPPs in the State, and requires legislative approval of any PPP agreement. The bill would repeal this limitation and extend the authorization for PPPs from January 1, 2012, to January 1, 2017, and would require the California Transportation Commission to approve the agreement. The legislature and the Public Infrastructure Advisory Commission would be charged with reviewing the agreement after it was approved.

8 In last month’s report, we reported on PPP legislation in Arizona SB 1261 and Hawaii HB 139. We have drafted amendments to both of those bills to address the bonding issues, but neither bill is moving at this point. .

--Recent Introductions. Florida HB 1291/SB 2060 SB 2060 would authorize the Department of Management Services (Department) and all governmental entities to enter into public-private partnerships for infrastructure projects, excluding transportation facility projects. The bill provides that the private entity would have to provide security for performance on the project and the payment of subcontractors. Security could be in the form of surety bonds, letters of credit, parent company guarantees, and lender and equity partner guarantees. With respect to the form and amount of such security, the bill provides that the Department and the participating governmental unit must "balance the structure of the security requirements with the cost of the security in order to ensure the most efficient pricing." We have given the lobbyist for the Florida local surety association amendments to the bill to address the bonding issues.

Illinois SB 305 would authorize the State and its political subdivisions to enter into public-private partnerships (PPP) for the construction of transportation facilities. The bill provides that the PPP agreement would have to provide for performance and payment bonds for the development and/or operation of the facility in an amount that the public entity determined to be satisfactory.

South Carolina SB 521 would authorize the South Carolina DOT to enter into public-private partnerships (PPPs) for transportation facilities. Such facilities would include highways, roads, bridges, tunnels, toll roads, overpasses, ferries, mass transit facilities, vehicle parking facilities, rail facilities, and intermodal facilities. The bill provides that the comprehensive development agreement between the private entity and the DOT could provide for a surety bond, a letter of credit or a corporate or parent company guarantee for the private partner's operations and maintenance obligations under the agreement.

Bonding Assistance Programs --New Introductions. Arkansas HB 1418 would appropriate $2 million for the Arkansas Department of Workforce Education for its Small Minority Contractors Surety Bonding and Mentor Protégé Training Pilot program. Iowa HB 582 would require a minority impact statement to be submitted with each bid for a contract with the Department of Transportation. The statement would have to include information on any disproportionate or unique impact the contract could have on minority persons in the State, a rationale for the impact, and evidence that the bidder consulted with representatives of minority persons when the contract has an identifiable impact on minority persons. Tennessee HB 518 would create a state bond guarantee program for small and emerging contractors, with an emphasis on small and minority-owned businesses. The bill would create a fund for the guarantee of bid, payment and performance bonds on contracts up to $1 million. West Virginia HB 2387 would create the Targeted Minority Economic Development Fund (Fund). The bill would allow the Fund to be used to encourage small business start

9 up and expansion, as well as providing funding to assist minority vendors to meet bid bonding requirements.

Contract Bundling Maryland HB 124/SB 187 is an anti-contract bundling measure that would prohibit the procurement units from structuring or bundling a procurement in order to preclude a small and/or minority business enterprise's participation, limit the number of competitive bidders, limit the participation to a predetermined group of bidders, or to bundle contracts. The bill would exempt units of State government participating in the existing Small Business Reserve Program from the anti-bundling provisions.

The bill would define contract bundling as the "consolidation of two or more procurement requirements for goods or services into a single solicitation seeking offers for a single contract that is unlikely to be accessible for award to a small business or minority business enterprise." Based on the definition of services under existing law, however, this bill would not apply to construction contracts, as "construction related services" are explicitly excluded from the definition of "services" under existing Maryland procurement law.

SFAA, AIA and NASBP will work together to see if this legislation can be amended to apply to construction contracts. The bill sponsor in the Senate was the sponsor of the individual surety legislation that was enacted in Maryland, so this will give us a chance to work with the Senator in support of one of his efforts. Time is running short in Maryland.

Bid Shopping --Recent Introductions. West Virginia HB 2923 is an anti-bid shopping measure which would require the general contractor to submit a list of all subcontractors to be used on a public construction contract. The bill would prohibit the general contractor from substituting any subcontractors unless he or she could prove its advantage to the owner.

Electronic Bidding --To Governor. Montana HB 120 would allow the Montana Transportation Commission to accept electronic bid bonds from contractors bidding on its projects. The bond would have to be signed electronically or the bidder and the surety would have to provide some other form of verification.

Bid Preferences In last month’s report, we summarized bid preference legislation in Connecticut HB New York AB 2349 and AB 2710, Rhode Island HB 5210 and South Carolina HB 3051. None of this legislation has moved to date.

-Recent Introductions. California AB 25 would require a state agency awarding a public works contract to provide a bid preference to a bidder whose employee health care expenditures, and those of its subcontractors, are a percentage of the aggregate Social Security Wages paid to its employees in the State. The bill would require a bidder and its subcontractors to submit statements certifying that they qualify for the bid preference.

10 Maine HB 263 would require the Director of the Bureau of General Services within the Department of Administrative and Financial Services to adopt rules establishing a preference percentage of up to 15% for small businesses bidding for state contracts.

New York SB 1549 would grant a 2% bidding preference to contractors on state and municipal public works contracts that exceed $20,000 if the contractor is a New York State resident, firm or corporation.

Rhode Island HB 5210 would create a 10% contract preference for women-owned businesses.

Several states have preferences under consideration for veterans. Illinois SB 206/SB 1092 would grant a 10% bidding preference on public contracts to businesses owned by qualified service-disabled veterans. The bill also would create a 3% set-aside goal for awarding contracts to such businesses. Maryland HB 559/SB 656 would establish a participation goal for certified service disabled veteran business enterprises for procurement contracts. It would require an awarding unit to consider specified efforts, and award specified contracts to bidders that meet or make good-faith efforts to meet participation goals. Michigan HB 4255 would exempt certain contracts that the DOT awards from an existing 10% bidding preference and 5% contract participation goal for disabled veterans. Michigan HB 4512/SB 313 would establish a 10% contracting preference on state contracts for service disabled veteran-owned businesses. New York AB 6402 would establish a contracting preference for service disabled veteran-owned businesses with a minimum 3% participation goal on state contracts. Oregon SB 479 would authorize state contracting agencies to give preferences to disabled veterans when awarding contracts. Pennsylvania HB 350 would create a statewide 5% contract set participation goal for service-disabled veteran-owned businesses. Washington HB 1648 would include veterans in existing contracting preference programs.

Other Oregon HB 2838 would require compliance with an existing apprenticeship program on contracts in excess of $750,000 for public works. Sureties would be required to provide certain documentation showing that apprentices are utilized on the project.