You cannot bid while in the process of obtaining a license nor can you see if you are awarded a bid before applying for one. Most bids require licensing information on the outside of the bid envelope or the bid will be rejected. Bidding without a license is a class A misdemeanor, and the violator is subject to fines and prohibition from participating in the project. In addition, the contractor license may be held for up to six (6) months from the date the board learns of the violation, or denied. The only exception would be Federal projects or the Tennessee Department of Transportation for their highway projects.
Is a license required before bidding? How long does it take to get a license?
Yes, a contractor license is required prior to bidding, offering a price, or contracting for projects $25,000 or more. A Home Improvement license is required prior to offering to engage when the cost is $3,000 or more.
Typically, it takes 4 to 6 weeks before the license is approved.
Can a contractor bid in excess of their monetary limit?
Yes; there is a 10% bid tolerance, only. Contractors with a restricted limited license (BC-A/r) classification, do NOT have a 10% bid tolerance. Projects cannot be split into phases to circumvent the law's monetary limit for the total project amount. In addition, contractors exceeding their monetary limit do not have the right to file a lien, regardless if it is a residential or commercial project.
Prime contractors must be cautious when obtaining bids from subcontractors that are required to be licensed. TCA § 62-6-120 finds it a violation for a contractor to accept a bid from a subcontractor without the sufficient monetary limit and classification. In addition, only the owner may supply labor/equipment, therefore, these portions could not be deducted from the total cost of the project. Caution is also recommended when bidding alternates as part of the total bid. The Attorney General has issued opinions on this matter; February 11, 1993 (#93-12); and August 6, 1981 (#81-452). If a bid is rejected for failing to supply a valid bid due to violating the law, the contractor may not be allowed to re-bid.
Always ask for a copy of the subcontractor's license before listing them on the outside of the bid envelope or verify online.
What if I have a chance to bid but my monetary limit is not enough? You may be able to get a special review if the Board does not meet again for another month. If it considered a "hardship" to the owner (not to you as the contractor), the owner may submit a written request for the contractor to have their license application reviewed prior to the next meeting.
Are there specific bidding requirements?
Yes. Bidding requirements are defined in TCA § 62-6-119, which states the contractor must list their name as licensed, license ID#, classification, expiration date, and list the same information for their electrical, plumbing, mechanical or HVAC subcontractors, if those portions exceed $25,000. For geothermal, must list their Department of Environment and Conservation (TDEC) license information. In addition, effective July 1, 2010, masonry subcontractors must be listed for portions $100,000 or more (including materials and labor). You may review the law from our Web site under Rules and Laws. Effective January 1, 2014, roofing subcontractors must be licensed to perform work. Roofing acceptable classifications include: BC; or BC-A (for residential roofs), BC-B (commercial roofs), or BC-C (industrial roofs); or BC-21 (Roofing, Gutters and Vinyl Siding); or BC-12 (Roof Decks).
The contractor must have a classification that covers 60% of the project in order to bid. If they do not, but have a commercial classification, they may bid but could not perform any of the work in excess of $25,000. These portions would need to be subcontracted to a properly licensed contractor. See "Initial Application Package" on the website for more information.
May a contractor bid in another name other than as licensed?
No. Bidding in a name other than as licensed has been considered unlicensed activity. Even if the contractor owns both companies, they must bid in the name as licensed (the licensed legal entity providing the financial statement, bond and insurance). Contractors may obtain more than one license should they have additional companies separated for bookkeeping or tax reasons. In some cases, their licensed entity could contract with the owner, and subcontract to their entity, unless the subcontract requires a license (as listed above). See TCA 62-6-114 and Rule 0680-1-.25. The entity contracting with the owner needs to be licensed in the same name as operating; and subcontractors required to be licensed must contract in the name as licensed.