BILL ANALYSIS Ó
AB 943
Page 1
Date of Hearing: April 6, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 943 (Williams) - As Amended: March 22, 2011
SUBJECT : Public contracts: local contracts: port and harbor
districts.
SUMMARY : Raises the thresholds on when a harbor district and a
port district are required to use competitive bidding when
awarding contracts. Specifically, this bill :
1)Requires a harbor district to use competitive bidding for
work, including new construction, exceeding $35,000 in cost.
2)Requires a port district board to use competitive bidding for
contracts for the following:
a) New construction work exceeding $35,000 in cost;
b) Purchasing of supplies exceeding $35,000 in cost; and,
c) Building maintenance and improvements exceeding $35,000
in cost.
EXISTING LAW :
1)Requires a harbor district to use competitive bidding for the
following:
a) Work exceeding $5,000 in cost; and,
b) Work consisting closely of new construction that exceeds
$10,000 in cost.
2)Requires a port district board to use competitive bidding for
contracts for the following:
a) New construction work exceeding $10,000 in cost;
b) Purchasing of supplies exceeding $25,000 in cost; and,
c) Building maintenance and improvements exceeding $10,000
in cost.
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3)Authorizes local agencies to opt in to the Uniform Public
Construction Cost Accounting Act (UPCCAA).
4)Requires local 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.
5)Requires the 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.
FISCAL EFFECT : None
COMMENTS :
1)The Oxnard Harbor District (Harbor) is an independent special
district that owns and operates the commercial Port of
Hueneme. The Harbor was created in 1937 under the Harbors and
Navigation Code, which provides for the formation of harbor
districts. The Harbor District's political boundaries include
the Cities of Oxnard and Port Hueneme.
The Harbor is empowered to acquire, construct, own, operate,
control or develop any and all harbor works or facilities
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necessary for the efficient undertaking of its mission. Among
other duties, the Harbor is responsible for all construction
and operations in the Harbor.
The Harbor operates entirely on Harbor-business-generated funds.
In addition to paying fees for harbor development permits,
the Harbor pays significant amounts to the City of Port
Hueneme through special agreements to provide for City
services necessary to support port activities. On an annual
basis, Port Hueneme publishes an audited financial statement
for the prior fiscal year and adopts a budget including a debt
schedule and capital plan for the current fiscal year.
In all, over $7 billion in cargo value moves through the Port of
Hueneme each year. The Port of Hueneme is one of the nation's
busiest banana importing ports and is included in the nation's
top 10 automobile importing ports.
2)The Ventura Port District (Port) is an independent special
district whose boundaries encompass the City of Ventura as
well as some small areas outside the city. It was created
pursuant to the provisions of the Harbors and Navigation Code
that govern the formation and operation of port districts.
The Port is the owner and operator of the Ventura Harbor, which
is a 274-acre, multiple-use recreational and commercial
fishing small craft harbor. The Port also provides a Harbor
Patrol; leases certain parcels for private use; owns and
operates a commercial, office, and marina complex; and,
dredges the entrance, Pierpont Basin, Stub Channel, and the
inner harbor.
While the Port receives about $300,000 yearly from property
taxes, by far most of the Port's $6.5 million of operating
funds come from lease revenues.
3)Section 20723 of the Public Contract Code was originally added
to the Harbors and Navigation Code in 1931, when the threshold
for having to use competitive bidding for contracts for the
doing of all work was set at $500. That threshold was
increased to $1,000 in 1959, increased to $2,500 in 1965, and
increased to $3,500 in 1969. In 1980, the threshold for
contracts for all work was raised to $5,000 with an exception
for work consisting solely of new construction, which had a
new threshold of $10,000. The 1980 thresholds are current
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law.
Section 20751 of the Public Contract Code was originally added
to the Harbors and Navigation Code in 1931. Initially,
contracts for the doing of work or purchasing of supplies
exceeding $500 were required to be let through competitive
bidding. That threshold was raised to $1,500 in 1937 and
$3,000 in 1953. In 1978, the threshold for contracts for the
doing of work or purchasing of supplies was raised to $10,000
and a new threshold for maintenance and improvements was added
at $5,000. Then in 1984, the threshold for contracts of work
stayed at $10,000, the threshold for supplies was increased to
$25,000, and the threshold for maintenance and improvement was
increased to $10,000. The 1984 caps still are current law.
4)The Public Contract Code spells out the procedures that local
agencies are required to follow when they build public works
projects, including limits on the contracts' values. However,
when local 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 bid and those worth
more than $125,000 require formal bids. UPCCAA requires the
California Uniform Construction Cost Accounting Commission
(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.
The Committee may wish to consider whether it would be more
prudent for the Harbor and Port to join UPCCAA instead of
raising the competitive bidding limit for all harbor districts
and port districts.
5)According to the author, the low caps on the competitive bid
process are an impediment to the upkeep and maintenance of the
Port and the Harbor. The author says the Port in particular
has difficulty because, unlike other port districts that enter
into long-term ground leases with private businesses to
operate marinas, shopping centers, or the visitor-serving
facilities, the Port took over the operations of its shopping
center, office complex, and marina after the original
developer defaulted on their loan in the mid-1990s. Thus, the
author says, the Port directly employs security, maintenance,
janitorial and landscaping workers along with property
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management and marina personnel. The Port is unable to
utilize its own workforce to perform certain functions to
maintain public facilities within its jurisdiction without
incurring additional expense and time delays associated with a
formal bid process because the thresholds are so low.
6)Support arguments: Supporters, Ventura Port District and
California Association of Port Authorities, say the current
thresholds on competitive bidding are unrealistically low and
prevent districts from using their financial resources wisely.
Opposition arguments: Opposition might argue the Harbor and
Port should opt in to UPCCAA rather than raising competitive
bidding thresholds on all harbor district and port districts.
REGISTERED SUPPORT / OPPOSITION :
Support
Ventura Port District ÝSPONSOR]
CA Association of Port Authorities
Opposition
None on file
Analysis Prepared by : Jennifer Klein Baldwin / L. GOV. /
(916) 319-3958