Licensing and Other Requirements (Subcontractors)
Licensing and Other Requirements (Subcontractors)
Obtaining licensing, registration, insurance and bonding are critical first steps. Subcontractors are not required to prequalify with ADOT.
Licensing and Registration
Before seeking work with ADOT, you need to have the proper licensing, permits, and registration.
- All companies wishing to do business with ADOT must also register with the Arizona Unified Transportation Registration and Certification System (AZ UTRACS).
- Most Construction contractors (both primes and subs) must be licensed with the Arizona Registrar of Contractors; some exemptions apply. To become a licensed contractor, you must submit an application showing you have passed one or more written exams, met appropriate experience requirements, and have sufficient bonding. You can learn more about contractor licensing and access the application on the Registrar of Contractors website.
- Businesses wishing to operate commercial motor vehicles or oversized vehicles must be registered with the Federal Motor Carrier Safety Administration (FMCSA) and obtain a United States Department of Transportation (USDOT) number. You can do that on the FMCSA website. Additionally, all drivers must have a Commercial Driver License (CDL). The specific CDL required depends on the vehicle to be driven. Obtaining a CDL requires both a written test and a road test, as well as a current medical certification that the driver is fit to safely operate the vehicle. More information on CDLs can be found in the Driver Services section of the ADOT website.
- Companies wishing to be utilized as DBE or SBC subcontractors must be certified/registered on AZ UTRACS.
All companies working with ADOT are required to carry certain types of insurance. The specific type of insurance and coverage and limits required may vary depending on your type of business as well as the size and type of contract you wish to bid. ADOT will require the winning contractor or consultant to submit proof of insurance (usually done by submitting a certificate of insurance will accompanying endorsements).
Here are some common types of insurance that would be required on an ADOT contract:
Workers’ Compensation Insurance — this type of insurance covers medical expenses and at least some lost wages if employees of the business are hurt on the job or become sick as a result of their work.
General Liability Insurance — this type of insurance protects you in case an employee, subcontractor or client claims they were injured or their property was damaged by you or someone in your employ.
Commercial Automobile Liability Insurance — this type of liability insurance functions much the same as private auto insurance, but applies to any vehicle owned or leased by your Business. This includes both large commercial vehicles and small vehicles such as cars used for company business.
Professional Liability Insurance — this type of liability insurance, also sometimes called errors and omissions insurance, provides defense, investigation, and settlement cost for claims or alleged negligence against Professional advice and service-providing individuals and businesses.
Property Insurance — this type of insurance provides financial reimbursement (up to the set limit) to the owner or renter of a structure and its content.
Product Liability Insurance — this type of insurance protects manufacturers, distributors and retailers from financial loss if their product causes injury or bodily harm to a user or client.
For more specific information, see the ECS Insurance Requirements section of the ADOT website.
Surety bonds, frequently referred to just as bonds or bonding, are a guarantee from the bonding company that, should the bonded contractor default on a contract, the bonding company will step in to ensure the contract is fulfilled. There are generally four different types of surety bonds:
- License Bonds ensure that a licensed contractor will complete all projects in a reasonable manner. These are required by the Arizona Registrar of Contractors as a condition of licensing. They are general bonds issued to contractors and are not attached to specific projects.
- Bid Bonds ensure that the bid has been submitted in good faith, and the contractor submitting the bid will accept the contract at its bid price.
- Performance Bonds ensure that the contractor will complete the contract.
- Payment Bonds ensure that the contractor will pay all subcontractors, laborers, and others owed for work or materials related to the project.
ADOT typically requires bid, payment and performance bonds from firms bidding construction contracts. ADOT typically does not require subcontractors to provide bonding for a project, but some prime contractors might require it.
The size and type of bond you need (and whether you need a bond at all) depends on the project you are undertaking, and whether you will be acting as the prime contractor for the project. ADOT typically specifies the required bonding for a contract in the invitation to bid. ADOT also has requirements concerning the surety that issues the bond. The cost and size of the bond you can obtain depends on a number of different things, including
- references and reputation.
- prior experience.
- demonstrable ability to meet project demands.
- current financial situation.
- equipment owned/available.
- credit history.
- established bank relationship.
In addition to the primary benefits of having a surety bond, having obtained bonding might indicate to customers that your firm is competent and capable of successfully completing a contract.
You can learn more about surety bonds from this brochure and on the Surety & Fidelity Association of America (SFAA) website.
Surety bonds are required by law on federal construction projects. You can learn more about this on the SFAA website.
Non-Procurement Debarment and Suspension
Debarment and suspension procedures are intended to prevent waste, abuse and fraud. Debarment and suspension procedures are used to prevent an individual or firm from doing business with the federal or state government, and are enacted if there is adequate evidence that the individual or firm has a history of acting in bad faith.
Essentially, the prime contractor and all subconsultants must certify that they are in fact eligible to enter into a contract with ADOT. If the prime or and subcontractor is unable to do so, they may submit a written explanation to ADOT.
For more information on suspension and debarment, visit the U.S. Department of Transportation website.