Oklahoma Lawmaker Calls for More Accountability from Out-of-State Construction Subcontractors

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Vance Whitlow works hard for a living.

When he gets the chance.

A masonry contractor, Whitlow spends a lot of his time these days doing odd projects for friends and struggling to find subcontracting work.

It's not that the work isn't out there, Whitlow said. The problem is that he's being undercut by out-of-state contractors who, he said, skirt the law, offer lower bids and walk away with the contract on publicly funded projects.

"We're out here and we have to pay our taxes and do the right thing and be honest and these contractors are out there underbidding us," Whitlow said. "There's unfairness out there."

Whitlow said the subcontractors don't pay taxes or Social Security for their workers and many don't pay workers' compensation insurance, yet they still are successful in landing work on publicly financed construction projects.

"It's pretty bad," he said. "You make a bid and you're honest and you end up getting sent home. We've had some workers tell us the contractors pay them by putting their pay on Wal-Mart cards."

Industry officials said the problem is caused by the state's strong economy and the fact that publicly funded construction projects are booming in Oklahoma.

"You have a lot of publicly funded projects, all the schools in Moore and Yukon and the jail in Norman," said Mark Rose, an Oklahoma City mason. "Almost all of those major projects and the MAPS 3 projects have been taken by out-of-state contractors."

Rose, president of the American Subcontractors Association of Oklahoma, said out-of-state contractors are able to lower their costs - and their bids - by skipping past state laws.

"Some of them declare employees independent contractors," he said. "They have these huge drops in payroll, which can cut their bid by 35 or 40 percent."

Because state subcontractors are forced to follow state law, the out-of-state subcontractors undercut the costs and get the contracts, Rose said.

"They all play it a little bit different," he said. "They all have a way of coming in under the radar screen. Most don't even register with the state. And by doing that, they are sliding in; they don't pay unemployment tax or income tax and they even ship material in from out-of-state to avoid sales tax. …