BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 635|
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THIRD READING
Bill No: AB 635
Author: Assembly Accountability & Administrative Review
Committee
Amended: 8/20/10 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE : 6-2, 8/10/10
AYES: Harman, Florez, Negrete McLeod, Padilla, Price,
Wyland
NOES: Wright, Yee
NO VOTE RECORDED: Calderon, Denham, Oropeza
ASSEMBLY FLOOR : Not relevant
SUBJECT : Public contracts: roof projects
SOURCE : Author
DIGEST : This bill adds a new article to the Public
Contract Code to promote competition and enhance bidding
practices for the replacement or repair of roofing projects
for public schools, and community colleges.
ANALYSIS : Under existing law, the Department of General
Services generally governs state procurement activities,
including acquisition of materials, supplies, and services.
Under existing law (the State Contract Act) and various
provisions in the Local Agency Public Construction Act,
state and local agencies awarding contracts are required to
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award the contract to the lowest responsible bidder.
Existing law prohibits a state agency or political
subdivision of the state letting a bid from requiring
public works specifications that require specific brand
materials (sole-sourcing) or that limits bidding to one
material, product, or service, unless an "or equal" clause
is applied, allowing bidders to provide equal materials,
products, or services as a substitute. Existing law also
requires that the bid specifications provide a time period
prior to, after, or prior to and after, the award of a
contract for the contractor to submit data substantiating
that items are equal when requesting permission to use
substitutes. If no time period is specified, data may be
submitted any time within 35 days after the award of a
contract. (Section 3400 of the Public Contract Code)
Existing law provides for the State Allocation Board (SAB)
which is responsible for determining the allocation of
state resources (proceeds from general obligation bond
issues and other designated state funds) used for the new
construction and modernization of local public school
facilities. The SAB is the policy level body for the
programs administered by the Office of Public School
Construction (OPSC).
The OPSC facilitates the processing of school applications
and makes funding available to qualifying school districts.
The OPSC is also charged with the responsibility of
verifying that all applicant school districts meet specific
criteria based on the type of funding which is being
requested. It is also incumbent on the OPSC staff to
prepare regulations, policies and procedures which carry
out the mandates of the SAB, and to work with school
districts to assist them throughout the application
process. The OPSC is responsible for ensuring that funds
are disbursed properly and in accordance with the decisions
made by the SAB.
This bill:
1. Provides that for any roofing project, a material,
product, thing, or service shall be considered "equal"
if it meets all the following requirements: (a) it is
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at least equal in quality, durability, design, and
appearance but not necessarily of an identical color,
(b) it will perform the intended function at least
equally well, and (c) it conforms substantially, even
with deviations, to the detailed requirements contained
in the specifications.
2. Requires financial disclosure on each roofing project of
any financial relationship between any manufacturers,
contractors, architects, engineers or consultants
involved in the project. This disclosure must be filed
with the district initiating the roofing project. Also
provides that any person who knowingly provides false
information and fails to disclose a financial
relationship shall be liable to the district for any
reasonable costs and also subject to a civil penalty, as
specified, in addition to any other available remedies.
3. Provides a toll-free phone line, as specified, for
contractors and others to report bid rigging and to file
a complaint.
4. Provides that this bill does not apply to a school
district operating in accordance with Section 20113 or a
community college district operating in accordance with
Section 20654 of the Public Contract Code.
Comments
According to the author's office, this bill is the result
of a lengthy investigation by the Assembly Accountability
and Administrative Review Committee and a June 30, 2010
hearing that uncovered evidence of consistent overcharging
on school roofing projects in amounts commonly between 30
and 100 percent. The author's office notes that despite
Public Contract Code provisions that require competitive
bidding in publicly-funded construction, the Committee
found widespread efforts to limit competition in school
roofing projects throughout the state. The author's office
points out that in both large and small school districts,
community college districts and state universities,
proprietary specifications are used in bidding documents to
force contractors to use a specific roofing manufacturer's
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products, even though there are more than a dozen roofing
manufacturers selling similar products in California.
The author's office contends that bidding documents
examined by the Committee for school re-roofing projects
throughout the state all limited roofing products to a
specific manufacturer and created significant hurdles for
any contractor attempting to substitute an alternative
product that could be similar in quality but at less cost.
The author's office emphasizes that roofing industry
officials, contractors and school district officials
interviewed by the Committee all suggested this limited
competition occurs routinely in numerous school districts,
community college districts and universities, and leads to
non-competitive bidding and higher prices.
School roofing projects are typically awarded to a
contractor with the lowest bid through a procurement
process set up by the purchaser. The author's office
points out that while the bidding processes that the
Committee reviewed indicated that multiple contractors bid
on these jobs, the contractors were often limited to the
products they could use by the specifications put forth by
the school district. Some contractors also could not bid
on certain jobs because they were not approved by the
manufacturer singled out for the project in the
specifications. It was found that such a process often
leads to inflated project costs amounting to 25 percent or
more. Industry officials who testified at the June 30th
hearing indicated that at least three roofing manufacturers
have specific business models aimed at subverting the
competitive bidding process. It was reported that sales
representatives from these roofing manufacturers provide
free consultations for the district officials, design
consultants or architects who do the construction planning
and procurement for schools. Additionally, the Committee
found that the manufacturers' representatives routinely
provided bidding documents with specifications favoring
their company. It was disclosed that school district
officials use these documents because they often lack
in-house roofing expertise.
According to the author's office, this bill is intended to
provide additional tools and requirements to deter such
activity without taking the decision-making authority away
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from state entities or school districts regarding what
products to use. Specifically, this bill requires active
financial disclosure on each roofing project (replacement
or repair) for state buildings or public schools of any
financial relationships between any manufacturer,
contractor, architects, engineers or consultants involved
in the project. Additionally, this bill requires an
independent licensed architect, engineer, or certified
roofing consultant to make decisions on whether a proposed
"or equal" product meets bid specifications.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/25/10)
Coalition for Procurement Reform
TSM:mw 8/25/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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