BILL ANALYSIS Ó
AB 720
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 720 (Hall) - As Amended: May 9, 2011
SUBJECT : Public contracts: uniform construction cost
accounting provisions: alternative procedures.
SUMMARY : Prohibits a public agency that opts in to the Uniform
Public Construction Cost Accounting Act (UPCCAA) from utilizing
as an alternative procedure those statutory provisions that
apply to contracts by county boards of supervisors (BOS) and
county road commissioners for the construction of a county
highway. Specifically, this bill :
1)Prohibits a public agency that opts in to UPCCAA from
utilizing as an alternative procedure those statutory
provisions that apply to contracts by a BOS and county road
commissioners for the construction of a county highway.
2)Increases the force account cap under UPCCAA from $30,000 to
$45,000, and increases the formal bidding threshold under
UPCCAA from $125,000 to $175,000.
EXISTING LAW :
1)Authorizes public agencies to opt in to UPCCAA.
2)Requires public agencies who opt in to UPCCAA to use the
following thresholds:
a) Public projects of $30,000 or less are authorized to be
performed by the employees
of a public agency by force account, negotiated contract, or
by purchase order;
b) Public projects of $125,000 or less are authorized to be
let to contract by informal procedures as established under
UPCCAA; and,
c) Public projects of more than $125,000 are required to be
let to contract by formal bidding procedure, except as
otherwise provided in UPCCAA.
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1)Requires the Uniform Public Construction Cost Accounting
Commission (Commission) to review the accounting procedures of
a participating public agency when an interested party
presents evidence that the work undertaken by the public
agency falls within any of the following categories:
a) The work is to be performed by a public agency after
rejecting all bids, claiming work can be done less
expensively by the public agency;
b) The work exceeded the force account limits; or,
c) The work has been improperly classified as maintenance.
1)Authorizes a BOS to enter into contracts for the construction,
repair, or maintenance of a county highway, and includes an
authorization for a BOS to delegate some of this authority to
its county road commissioner under specified circumstances.
2)Specifies that a BOS is authorized to direct a road
commissioner or a registered civil engineer under the
direction of the county director of transportation to have any
work upon county highways done in one of five ways:
a) By letting a contract covering both work and material,
with the contract let to the lowest responsible bidder;
b) By 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) By purchasing the material and having the work done by
day labor, in which case advertising for bids is not
required;
d) By authorizing the county road commissioner or a
registered civil engineer under the direction of the county
director of transportation to execute changes for any
contract in an amount not to exceed $5,000 for contracts of
$50,000 or less, or 10% 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 5% of
the amount of the original contract costs in excess of
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$250,000; or,
e) By 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.
FISCAL EFFECT : None
COMMENTS :
1)The Public Contract Code spells out the procedures that public
agencies are required to follow when they build public works
projects, including limits on the contracts' values. However,
when public agencies voluntarily use UPCCAA, they can use
their own employees for projects worth $30,000 or less.
Projects worth $125,000 or less require informal bidding and
those worth more than $125,000 require formal bidding. UPCCAA
requires the Commission to review these limits to account for
higher costs every five years. If the Commission recommends
higher limits, the State Controller promulgates the new
limits.
The Commission and the Controller last raised these limits in
2005, with them taking effect in 2007.
Under UPCCAA, there is an express authorization in Section 22031
for a BOS to use the alternative procedures outlined for
county highway work in Article 25 (commencing with Section
20390) of the Public Contract Code.
For most local agencies, state law imposes caps on the dollar
amount of public works projects that can be completed with
local government employees (i.e., force accounts) or day
labor. Projects that exceed the cap generally are required to
be put out to bid to the private sector and awarded to the
lowest responsible bidder. Similar requirements are in place
for state agencies as well.
Existing law makes an exception, however, for counties that have
road commissioners or that have registered civil engineers
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working under the authority of a county transportation
director. These counties have virtually unlimited authority
to use day labor or force account for highway projects. In
fact, in an Attorney General opinion (11 Op.Atty.Gen. 73), the
Attorney General opined that work on county bridges may be
performed without the necessity of advertising for bids.
Counties without road commissioners are limited to doing work by
force account or day labor to contracts costing $25,000 or
less.
2)The practical effect of AB 720 will be local agencies will
have to choose between UPCCAA and Public Contract Code Section
20395, which allows county road commissioners to use force
account for purposes of county highway construction.
With regard to Section 20395, the California Court of Appeal, in
Copeland v. Kern County (1951) 105 Cal.App.2d 821, ruled that
the words "day labor" in Streets and Highways Code Section
1075 (now codified as Section 20395) did not preclude regular
trained road crews
of a county from engaging in work pursuant to its provisions and
did not contemplate that only inexperienced and casual day
laborers were to be hired. Furthermore, the Court of Appeal
ruled, a county could use regular road crews and prisoners
from county road camps, as well as casual employees that were
available for this work. Thus, county road commissioners have
been authorized since that 1951 court of appeal decision to
use force account for the construction and maintenance of
county highways.
3)According to the author, AB 720 would end confusion with
regard as to whether public agency optees of UPCCAA can
utilize other aspects of the Public Contract Code. AB 720,
the author says, will provide clarity that the county road
commissioner authorization in other provisions of the Public
Contract Code would apply only for purposes of maintenance and
emergency work. The author says public agencies still are
free to make a choice as to how they wish to perform county
highway and road construction projects: either by opting in to
UPCCAA or by using the county road commissioner provisions.
Furthermore, the author says AB 720 raises the force account
limit under UPCCAA to offset any suggestion of job loss to the
public employee unions.
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4)Counties say the county road commissioner authority to use
force account for county highway construction saves them
money, time, and effort necessary to prepare plans,
specifications, and contract documents for bidding out minor
repair and construction or renovation projects. It also
allows them a faster delivery time. The County of Del Norte
says it would have to reduce its public works department by as
many as 10 positions
if AB 720 becomes law. This would have a ripple effect
throughout the department
for its obligations ranging from road maintenance to safety
obligations.
5)AB 943 (Williams), a similar measure, would increase the
formal bidding threshold under UPCCAA from $125,000 to
$175,000. It is also scheduled to be heard in this Committee
on May 11, 2011.
6)Support arguments: Supporters say the ability to use the
county road commissioner authority while also being a
signatory to UPCCAA is in conflict with good public policy and
eliminates the opportunity for contractors to bid on work.
Opposition arguments: Opposition says the county road
commissioner authority provides county transportation
departments with the necessary flexibility to address local
issues and AB 720 would unfairly tie the hands of public
agencies.
REGISTERED SUPPORT / OPPOSITION :
Support
American Fence Association, CA Chapter
CA Fence Contractors' Association
CA Landscape and Irrigation Council
CA Legislative Conference of the Plumbing, Heating and Piping
Industry
Construction and General Laborers' Local 185
Construction Industry Force Account Council
Engineering & Utility Contractors Association
Engineering Contractors' Association
Flasher Barricade Association
Golden State Builders Exchange
Marin Builders' Association
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National Electrical Contractors Association, CA Chapters
Operating Engineers Local Union No. 3
Sierra Mountain Construction
State Building and Construction Trades Council
Opposition
CA Emergency Services Association
CA State Association of Counties
Counties of Alpine, Del Norte, Fresno, Glenn, Humboldt,
Imperial, Kern, Kings, Los Angeles,
Madera, Marin, Mendocino, Mono, Napa, Orange, Plumas, Riverside,
Sacramento, San
Bernardino, San Luis Obispo, San Mateo, Santa Clara, Sierra,
Solano, Stanislaus, Trinity,
Tuolumne, Ventura, Yolo, and Yuba
Laborers' International Union of North America Locals 777 and
792
Regional Council of Rural Counties
Urban Counties Caucus
Analysis Prepared by : Jennifer Klein Baldwin / L. GOV. /
(916) 319-3958