BILL ANALYSIS SENATE LOCAL GOVERNMENT COMMITTEE Senator Patricia Wiggins, Chair BILL NO: SB 694 HEARING: 1/6/10 AUTHOR: Correa FISCAL: Yes VERSION: 12/15/09 CONSULTANT: Detwiler UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Background and Existing Law The Public Contract Code spells out the procedures that local officials follow when they build public works projects, including limits on the contracts' values. When counties, cities, special districts, redevelopment agencies, school districts, and community college districts voluntarily adopt the standards and procedures of the Uniform Public Construction Cost Accounting Act, they can use higher limits for their contracts (AB 1666, Cortese, 1983). The State Controller must tell local agencies about the Act's benefits (AB 1047, Houston, 2007). About 700 local agencies participate. A 14-member California Uniform Construction Cost Accounting Commission reviews the statutory limits every five years. If the Commission recommends higher amounts, the State Controller promulgates the changes and the Legislature periodically amends the Act to reflect the new limits. Currently, local agencies can use their own employees for projects worth $30,000 or less. This amount is called the "force account limit." Projects worth $125,000 or less rely on informal bids; projects that cost more than $125,000 require formal bids (SB 1196, Senate Local Government Committee, 2006). When someone contends that a local agency isn't following the Act, the Commission has 30 days to review and act on the dispute. If the Commission finds that a local agency has violated the Act three times within a 10-year period, it can prohibit that agency from using the Act for five years (AB 2372, Pavley, 2006). The State General Fund doesn't pay the Commission's administrative expenses. The Act requires the State Controller to provide limited staff support to the Commission whose members are uncompensated, except for SB 694 -- 12/15/09 -- Page 2 travel expenses. Since 2004, when the Commission began soliciting money from local agencies, contractors' associations, and labor unions, it's received about $11,000 in donations. This lack of a dependable revenue stream makes it hard for the Commission to respond quickly to complaints. SB 694 -- 12/15/09 -- Page 3 Proposed Law Senate Bill 694 extends the time limit for the California Uniform Construction Cost Accounting Commission to review and act on disputes over whether local agencies have followed the Uniform Public Contract Construction Cost Accounting Act. For complaints which allege that local officials rejected all bids and instead claimed that the agency can do the work less expensively, SB 694 extends the time limit from 30 days to 45 days. For complaints which allege that local officials have either exceeded the force accounts or improperly classified the work as maintenance, the bill extends the time limit from 30 days to 90 days. SB 694 allows the Commission to impose reasonable fees on the agencies that have elected to be subject to the Act's procedures. The bill requires that the Commission ensure that the total amount collected equals the amount reasonably needed to cover the Commission's administrative costs. Comments 1. Dollars and duties . The California Uniform Construction Cost Accounting Commission has considerable responsibilities, but only limited resources. Without State General Fund support or its own employees, the Commission gets by on donations and the help that the State Controller's Office can spare. As a result, it's hard for the Commission to resolve complicated complaints within the 30-day statutory deadline. By extending the time limits for the Commission to act on complaints, the bill gives the part-time body enough time to fulfill its statutory duties. By allowing the Commission to charge fees to the participating local governments, SB 694 improves oversight of how local officials use the more flexible state law. 2. It's about time . Because the California Uniform Construction Cost Commission is a part-time body without employees, it's nearly impossible for the commissioners to investigate complaints and then schedule a publicly noticed hearing within the 30-day statutory time limit. SB 694 extends that deadline by creating a two-tier arrangement: 45 days for one type of allegation, 90 days for the other two types of complaints. The Committee may wish to SB 694 -- 12/15/09 -- Page 4 consider an amendment that provides a simpler approach: 90 days to review and act on all complaints. 3. Take it easy . State regulatory fees shouldn't generate revenues that exceed a program's costs. SB 694 limits the California Uniform Construction Cost Commission's new fees to "the amount necessary to cover the commission's costs." While that formula fits, it lacks a fixed limit on the amount to be paid by the participating local governments. If legislators want to tread carefully, the Committee may wish to consider amendments that: (1) preclude the Commission from charging more than $500 a year to a participating local government, (2) encourage the Commission to adopt a sliding scale for its fees, and (3) put a seven-year sunset clause on the new fee authority so that legislators can review how the Commission responds. 4. Legislative history . When originally introduced in February 2009, SB 694 would have set a threshold for requiring competitive bids on local public works projects, with few exceptions. The May 2009 amendments reduced the bill to a statement of legislative intent. The December 15, 2009 amendments removed all of that language and instead substituted the changes to the Uniform Construction Cost Accounting Act. Support and Opposition (12/22/09) Support : Air-conditioning & Refrigeration Contractors Association, Air Conditioning Sheet Metal Association, Associated General Contractors, California Chapter of the American Fence Contractors' Association, California Chapters of the National Electrical Contractors Association, California Fence Contractors' Association, California Landscape Contractors Association, California Legislative Conference of the Plumbing, Heating, and Piping Industry, Construction Industry Force Account Council, Engineering Contractors' Association, Flasher/Barricade Association, Marin Builders' Association, Southern California Contractors Association. Opposition : California State Association of Counties, Regional Council of Rural Counties. SB 694 -- 12/15/09 -- Page 5