BILL ANALYSIS Bill No: AB 2036 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2009-2010 Regular Session Staff Analysis AB 2036 Author: Bill Berryhill As Amended: July 15, 2010 Hearing Date: August 10, 2010 Consultant: Paul Donahue SUBJECT Public Works Contracts: Documents DESCRIPTION AB 2036 is an urgency bill requiring a state public entity taking bids for a public work or improvement to distribute a paper or electronic copy of the project's contract documents to prospective bidders, subcontractor bidders and suppliers when requested by a contractor plan room service. The bill specifies that, if the public entity requires that a deposit be paid as part of a paper contract documents distribution policy, the deposit cannot exceed $250 per set, and it shall be refunded upon return of the contract documents within 14 days after the project is awarded. The bill provides that the government entity shall reimburse a landscape architect, architect or professional engineer for the actual costs of preparation and distribution of the plans and specifications. EXISTING LAW The State Contract Act enacts a comprehensive scheme governing contracts between state departments and private contractors for construction of public works contracts, which are defined in existing law as agreements for the "erection, construction, alteration, repair, or improvement AB 2036 (Bill Berryhill) continued Page 2 of any public structure, building, road, or other public improvement of any kind" (Public Contract Code 1101). Public entities advertise for bids on the State Contracts Register by way of a notification to contractors, and larger public works projects are also advertised in additional publications. Before entering into any contract for a project, the contracting entity must prepare full, complete, and accurate plans and specifications and estimates of cost, giving such directions as will enable any competent mechanic or other builder to carry them out (Public Contract Code 10120). The original draft or a certified copy of the plans, specifications, and estimates of cost is required to be filed in the department's offices before further action is taken on the contract for the project (Public Contract Code 10121). BACKGROUND Purpose of the bill . The author states that "a number of public entities in California are requiring contractors, subcontractors, and material suppliers to pay for the plans and specification documents" on the particular bid solicitation for the proposed public works project. The author and supporters of the bill note that historically, public entities authorized those seeking to examine project plans for the purpose of determining whether or not to bid on the proposed project to simply take the plans and specifications after paying a deposit, which was returned if the plans were returned to the entity in good condition. This is in fact still the practice in many jurisdictions in the state. Many builders' exchanges and other contractor groups operate "contractor plan room services," which allow their members to view hard copy plans or download plans and specifications for projects throughout the state. Many of these services have become online plan services. Arguments in support . The Associated General Contractors (AGC) contend that charging for plans and specifications leads to a reduction in the number of bidders competing on a project, because subcontractors and material suppliers avoid bidding on projects on which they must pay a non-refundable fee just to view the plans and AB 2036 (Bill Berryhill) continued Page 3 specifications. In addition, AGC states that the practice of charging fees to plans and specifications diminishes the participation of small, minority-owned and women-owned businesses because these firms are typically too small to front payment of plans for project after project. AGC contends that it often takes bidding on 8 to 10 projects to be successful on one project. The National Electrical Contractors Association (NECA), Golden State Builders' Exchanges, Engineering Contractors Association, and others argue that this emerging practice on the part of public entities to charge for plans and specifications is contrary to good public policy because it limits the number of bidders by forcing them to absorb the upfront costs before they have had a chance to review the project details. SUPPORT: American Fence Association, California Chapter Associated General Contractors of America, California Chapters California Fence Contractors' Association California Legislative Conference of the Plumbing, Heating and Piping Industry Engineering Contractors' Association Flasher/Barricade Association Golden State Builders' Exchanges Kern County Builders' Exchange Marin Builders' Association National Electrical Contractors Association, California Chapters OPPOSE: None on file. FISCAL COMMITTEE: Senate Appropriations Committee ********** AB 2036 (Bill Berryhill) continued Page 4