BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1409
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: J. perez
VERSION: AS PROPOSED To
be Amended
Analysis by: Art Bauer FISCAL: NO
Hearing date: July 14, 2009
SUBJECT:
County highways: work authorization
DESCRIPTION:
This bill removes the ability of counties to use either county
road commissioner contracting authority or the authority granted
under the Uniform Public Construction Cost Accounting Act when
determining whether to contract out construction or to perform
it with county staff.
ANALYSIS:
Since 1935, state law has specified the conditions governing how
a county road commissioner, or a registered civil engineer under
the direction of the county director of transportation, may use
county employees, day labor, or contracts with private firms to
perform work on county streets and roads.
In 1983, the Legislature enacted the Uniform Public Construction
Cost Accounting Act (act) to alleviate disputes between public
agencies and the construction industry over what projects should
be put out to bid and what projects should be completed with
county employees. The act achieves this object in two principle
ways. First, it establishes a process for developing uniform
cost accounting procedures for public construction projects and
for recommending the procedures to the Controller for adoption.
Second, it establishes the dollar limits, which the State
Controller may adjust over time, for what work must be done
in-house and what work must be contracted out.
AB 1409 (J. PEREZ) Page 2
The use of the act is a discretionary decision of the governing
boards of counties, cities, and special districts. The act only
applies to public agencies whose governing boards have elected
by resolution to become subject to the act's uniform
construction cost accounting procedures. For those counties
that elect to be subject to the act's uniform construction
accounting procedures, they may continue to use the "road
commissioner" procurement procedures established in 1935 for
highway construction only. This is known as the road
commissioner exemption.
The Uniform Public Construction Cost Accounting Act of 1983:
1. Defines "public agency" as a city, county, city and
county, including chartered cities and
chartered counties, any special district, and any other
agency of the state for the local performance of
governmental or proprietary functions within limited
boundaries. Included within the definition is a nonprofit
transit corporation that is wholly owned by a public agency
and formed to carry out the purposes of the public agency.
2. Defines a "public project" as:
a. The construction, reconstruction, erection,
alteration, renovation, improvement, demolition, and
repair work involving any publicly-owned, leased, or
operated facility.
b. Painting or repainting of any publicly-owned,
leased, or operated facility.
c. In the case of a publicly owned utility
system, "public project" shall include only the
construction, erection, improvement, or repair of
dams, reservoirs, powerplants, and electrical
transmission lines of 230,000 volts and higher.
3. Excludes from the definition of a "public project"
maintenance work and defines "maintenance work" as:
a. Routine, recurring, and usual work for the
preservation or protection of any publicly-owned or
publicly-operated facility for its intended purposes.
b. Minor repainting.
AB 1409 (J. PEREZ) Page 3
c. Resurfacing of streets and highways at less
than one inch.
d. Landscape maintenance, including mowing,
watering, trimming, pruning, planting, replacement of
plants, and servicing of irrigation and sprinkler
systems.
e. Work performed to keep, operate, and maintain
publicly owned water, power, or waste disposal
systems, including, but not limited to, dams,
reservoirs, powerplants, and electrical transmission
lines of 230,000 volts and higher.
4. Authorizes the governing boards of public agencies to
adopt a resolution agreeing to be subject to uniform cost
accounting procedures established by the act.
5. Establishes the following contracting procedures for
public agencies that have adopted a resolution:
a. Public projects of $25,000 or less may be
performed by agency employees, by force account, by
negotiated contract, or by purchase order.
b. Public projects of $100,000 or less may be let
to contract by informal procedures specified in the
act.
c. Public projects of greater than $100,000 are
let to contract by a formal bidding procedure
specified in the act, but requiring the contract to be
awarded to the lowest responsible bidder.
d. The above limits may be, and have been,
adjusted by the Controller to account for inflation.
The current limit for use of agency workforce is
$30,000, the informal bidding limit is up to $120,000,
and the formal bidding procedure must be followed for
construction procurement over $120,000.
6. Establishes procedures for performing working during
emergencies and allows the work to be performed by day
labor, under the direction of the agency, by a contractor,
or by both.
The 1935 Road Commissioner Authority authorizes a county road
commissioner or a county engineer to use an alternative
procurement procedure for street and road purposes that the
Legislature adopted in 1935. This procedure includes the
following contract options:
AB 1409 (J. PEREZ) Page 4
a. Awarding a contract covering both work and
material, with the contract let to the lowest
responsible bidder.
b. Purchasing the material and letting a contract
for the performance of the work, with the material
bought at the lowest possible cost and the contract
let to the lowest responsible bidder.
c. Purchasing the material and having the work
done by day labor, in which case advertising for bids
is not required.
d. Authorizing the county road commissioner or a
registered civil engineer under the direction of the
county director of transportation to execute changes
up to $5,000 for any contract of $50,000 or less, or
ten percent for contracts over $50,000 but not to
exceed $250,000. For contracts whose original cost
exceeds $250,000, the extra cost for any change or
addition to the work so ordered cannot exceed $25,000,
plus five percent of the amount of the original
contract costs in excess of $250,000.
e. Purchasing the material and letting a contract
for the work or by letting a contract covering both
work and material without advertising for bids when
the estimated cost of emergency work necessitated by
the imminence or occurrence of a landslide, flood,
storm damage, or other emergency exceeds $25,000 and
the public interest and necessity demand immediate
action to safeguard life, health, or property.
This bill deletes the provision of the act that allows a county
road commissioner or a county engineer to use the 1935 road
commissioner authority as an alternative procurement procedure
for street and road purposes (i.e., it deletes the road
commissioner exemption).
COMMENTS:
1. Purpose . According to the bill's sponsors, the purpose
of this bill is to remove the confusion between the general
procurement provisions of the act and the road commissioner
exemption included in the act.
2. What are the incentives for using the act ? Thirty-two of
California's fifty-eight counties have elected to utilize
the provisions of the act for procuring construction
AB 1409 (J. PEREZ) Page 5
services for all facilities, including roads, because the
limits in the act for using their own work forces and for
informal bidding are higher than the limits otherwise
provided for in the Public Contract Code. Counties that
have elected not to participate in the act have done so
because they may have county charter provisions that
provide greater contracting flexibility or the cost of
establishing the uniform system of accounts for
construction required by the act is too high. After
comparing the counties that are signatory to the act and
the non-signatory counties, there does not appear to be a
pattern between large and small. For example, Alameda, Los
Angeles, and San Diego counties are not signatory counties,
but Amador, Mono, and Orange counties are. Once a county
has elected to be a signatory, it may reverse its decision
and notify the Controller it is no longer participating.
3. Is the act really confusing ? The argument of the
proponents is that there is confusion between the
provisions of the act and the county road commissioner
authority. It is unclear if that is really the case. In
discussion with the contracting staff of a suburban county,
the road commissioner authority is not used in that county
because there are sufficient contractors within the area.
Each county makes a calculation as to the advantage the act
has for its circumstances. A small, rural county may be a
signatory to the act for the flexibility it offers for
managing the construction of facilities other than roads.
It may chose to use the road commissioner provision because
of the availability of sufficient road contactors to
constitute a competitive market or for some other localized
reason.
4. Can using the Road Commissioner Provision result in
abuses ? The issue underlying the desire for deleting the
road commissioner authority may be the perception that the
authority is being abused by counties that have elected to
participate under the terms of the act. For example, the
act specifies that projects with a value of $30,000 or less
may be performed by county staff, projects with a value of
$120,000 or less may be bid informally, and projects with a
value greater than $120,000 must be competitively procured
and awarded to the lowest responsible bidder. The road
commissioner authority, however, does not specify a dollar
value limit for distinguishing between informal and formal
bids that must be awarded to the lowest responsible bidder.
AB 1409 (J. PEREZ) Page 6
Nor does it specify the limit at which counties must stop
relying on their own work force and contract for
construction services. For example, the road commissioner
provision allows counties to purchase material for
construction or maintenance and then use their own work
force to perform the work without specifying any dollar
limits either on the value of the material or the value of
the construction work. The road commissioner provision does
not distinguish between maintenance work and new
construction. The act, however, defines specifically what
constitutes new construction and maintenance, and for
roads, the act defines resurfacing a road with an inch or
less of asphalt as maintenance which can be done with
county staff.
5. Arguments in opposition . The counties argue that in
rural areas there are an insufficient number of contractors
available to perform the construction work, and it is more
cost-effective to use the road commissioner authority. The
Controller reports on the dollar value of work done by
county staff or day labor for counties that are both
signatories to the act and non-signatories. An example of
the disparity among large counties in the use of the road
commissioner provision can be seen in a comparison between
Riverside and Los Angeles counties. Riverside County, which
is a signatory to the act, has 2,668 miles of county
maintained roads and spent $18.6 million on road
improvements using its own workforce. On the other hand,
Los Angeles County, a non-signatory county, with 2,868
miles of road spent $6.3 million on road improvements using
its own workforce.
Staff finds that there is insufficient information to draw
any firm conclusion on why counties select a specific
procurement process or if there is abuse of the procurement
process for the construction and maintenance of roads.
Assembly Votes:
Floor: N/A
Appr: N/A
Trans: N/A
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
July 8, 2009)
AB 1409 (J. PEREZ) Page 7
SUPPORT: California State Council of Laborers (co-sponsor)
California-Nevada Conference of Operating
Engineers (co-sponsor)
Stimpel-Wiebelhaus Associates, Inc.
OPPOSED: California State Association of Counties
Urban Counties Caucus
Regional Council of Rural Counties