Somerset CPAs and Advisors has been working to learn the impact of the common construction wage repeal to our contractor clients.

Training programs, liability insurance, drug testing and registration with Indiana Department of Administration are all requirements under the new statute with effect dates of June 30, 2016.    With few exceptions, all contractors working on public works jobs in excess of $150,000 will need prequalified.

There are two ways to apply for prequalification:  Indiana Department of Transportation (INDOT) or Indiana Department of Administration (IDOA).  These forms differ in content and requirements and also have different effective dates.  Therefore, it’s important to plan ahead and understand the strategies available as your company determines which application to submit.

We participated in initial discussions with leaders from IDOA earlier this week.  It is difficult to know if attempts to change the legislation or current application process will come in the next few months.  Their department has not currently been allocated additional resources to handle anticipated increased volume of applications.  They are reviewing the law, its requirements and the impact on their department.  We’ll stay current as more details develop.

I also met with a local surety this week to discuss what they have received regarding the repeal.  They too are absorbing and learning the details impacting them most.   However, they are familiar with the surety letter requirement in the IDOA application (Attachment  B of the INDOA form) and, this particular surety, issues them as a matter of course for those contractors currently in good standing with their bond program.  That said, those without a current program would be required to complete their underwriting process.  This takes time so, we’re recommending companies act sooner than later to put in place these requirements.

Those with current INDOT prequalification can rest easy as the INDOT form is one of two ways to be prequalified under the new law.  However, calendar year end companies will need to resubmit to ensure prequalification is current since the form is required annually and expires 16 months from the company’s year-end date.  This same prequalification necessary for highway work will also cover other types of public works projects.  It will be important to complete and file this as soon after year end as possible to avoid delays in approval.

The best strategy we can recommend to clients that already have a bonding program in place with any chance of doing public works projects in excess of $150,000:  consider filing the IDOA prequalification form as soon as possible.  Their approval is 27 months from the date of issuance so applying now will avoid delays in processing your application and carry through the first year of the new legislation.  The INDOA form can be found at

If you don’t currently prequalify with INDOT or have a bonding program, this the time to determine which form is best for your company.  Please contact your construction industry CPA at Somerset CPAs, P.C. to discuss your specific situation to determine the best strategy to employ for prequalification.