BILL ANALYSIS Ó
AB 2440
Page 1
Date of Hearing: April 23, 2012
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 2440 (B. Lowenthal) - As Amended: April 12, 2012
SUBJECT : Los Angeles County Metropolitan Transportation
Authority: procurement
SUMMARY : Modifies provisions governing the Los Angeles County
Metropolitan Transportation Authority's (Metro's) procurement
authorities, procedures, and requirements. Specifically, this
bill :
1)Repeals provisions unique to Metro that require its inspector
general to prepare a prequalification questionnaire for any
business seeking to provide goods or services under contract
with Metro.
2)Raises the threshold from $100,000 to $150,000 for purchases
of supplies, equipment and materials that may be selected
under a "best value" methodology.
3)Raises the threshold from $25,000 to $150,000 for construction
of facilities that may be selected under a "best value"
methodology.
4)Raises the upper threshold from $100,000 to $150,000 under
which Metro can use an informal procurement process based on a
minimum of three quotations.
5)Authorizes Metro to award design-build contracts based on a
competitive bidding process that employs selection criteria in
addition to cost.
6)Requires, for design-build contracts estimated to cost over
$10 million, a request for bids or proposal to be advertised
at least 60 days in advance.
7)Requires, for design-build contracts estimated to cost under
$10 million, a request for bids or proposal to be advertised
at least 30 days in advance.
8)Requires the contractor on a design-build contract to
competitively bid those portions of the design work that can
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be subcontracted.
9)Requires the contractor to provide to Metro a list of
subcontractors whose work is over one-half of one percent of
the total project cost, as soon as subcontractors are
identified.
10)Provides that, once subcontractors are listed, they should
have the same rights as provided for in the Subletting and
Subcontracting Fair Practices Act.
11)Repeals the requirement that Metro adopt a change order
procedure for its contracts.
12)Makes various other technical or non-substantive changes.
EXISTING LAW:
1)Establishes Metro as the successor agency to the Southern
California Rapid Transit District and the Los Angeles County
Transportation Commission and prescribes its membership and
duties.
2)Directs Metro to require its general counsel to develop a
prequalification questionnaire to be completed by any business
entity seeking to contract with the authority.
3)Sets forth provisions governing Metro's contracting authority,
including the authority, for contracts for supplies,
equipment, and material over $100,000 to be based on lowest
responsible bidder or, at Metro's discretion, to the bidder
that provides the best value.
4)Requires Metro to award contracts over $25,000 for facility
construction based on lowest responsible bid.
5)Requires Metro to obtain a minimum of three bids, either
written or oral, whenever the estimated contract price is
between $3,000 and $100,000.
6)Authorizes Metro to enter into design-build contracts for
transit projects and for facilities on property it owns;
requires Metro to advertise requests for bids at least 60
days.
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7)Requires Metro adopt a change order procedure for its
contracts.
FISCAL EFFECT : Unknown
COMMENTS : This bill makes a variety of changes to Metro's
contracting authority, including minor expansions of Metro's use
of design-build and "best value" contracting methodologies.
This bill is sponsored by Metro.
AB 2440 contains four separate provisions related to Metro's
public contracting authority:
1)Pre-qualification questionnaire: The bill deletes the
requirement that Metro's inspector general develop a
pre-qualification questionnaire for prospective contractors.
Instead, Metro will be governed by prequalification
questionnaire requirements set forth in more general statutes
enacted subsequent to the Metro-only provision. Removing the
Metro-specific law will reduce the burden on prospective
bidders of having to comply with Metro-unique requirements and
would eliminate a potential conflict raised by the
requirement.
2)Contracting thresholds: The bill raises three contracting
thresholds: a) for the purchase of supplies, equipment and
materials that may be selected under a "best value"
methodology, the limit goes from $100,000 to $150,000; b) for
the construction of facilities that may be selected under a
"best value" methodology, the limit goes from $100,000 to
$150,000; and, c) for contracts where Metro may use an
informal procurement process based on a minimum of three
quotations, the upper threshold goes from $100,000 to
$150,000. According to the author, "These changes will allow
Metro to take advantage of the streamlining opportunities
offered by its federal funding partners by conforming state
law to recent changes made federal contracting thresholds."
3)Design-build: The bill makes a number of changes to Metro's
design-build authority statute. First, it gives Metro
authority to utilize "best value" methodology (i.e. using
selection criteria other than cost) in contract selection.
The bill further specifies that for contracts estimated to
cost under $10 million dollars, Metro need only publish a
notice requesting bids or proposals at least 30 days before
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receipt (contracts in excess of $10 million dollars must still
advertise for 60 days.) Finally, AB 2440 requires the
contractor to competitively bid those portions of the
design-work that can be subcontracted and to provide Metro
with a list of subcontractors whose work is over of 1% of
the total project cost. Listed subcontractors will have the
same rights provided in the Subletting and Subcontracting Fair
Practices Act.
Relative to the shorter 30 day bid/proposal notice for
projects under $10 million dollars, the author states that
"The notice period in this section refers only to the
timeframe under which a solicitation is advertised. This does
not impact the timeframe that proposers have to both review
the solicitation documents and respond to the proposal. Metro
uses a variety of methods to publish proposals including
posting on its webpage and a 60-day look-ahead at upcoming
projects. These methods are more effective in providing
notice of solicitations and are more effective in targeting
potential bidders. Additionally, bidders use these methods to
identify potential opportunities rather than broad,
non-targeted newspaper advertising."
4)Change order process: AB 2440 deletes the requirement that
Metro adopt a change order procedure for contracts. According
to the author, "This provision was written at a time when
Metro's contract administration function was under the control
of its construction department. Since then, however, Metro is
required by law to have an 'independent professional
procurement staff.' Consequently, this provision is no longer
necessary to ensure that change orders are reviewed
appropriately."
Proposed amendments: The author intends to amend the bill in
committee to strike provisions that raise the threshold from
$25,000 to $150,000 for facility construction contracts that
could be selected on the basis of best value.
Double-referred: This bill was heard in Assembly Local
Government Committee and passed out on a 7-1 vote.
Previous legislation: AB 2755 (B. Lowenthal) 2009, also related
to Metro procurement provisions, died without a hearing.
AB 1471 (Eng), Chapter 536, Statutes of 2009, made a number of
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amendments to provisions governing Metro's procurement
authority, including provisions authorizing the delegation of
board powers relative to specific procurement activities to the
chief executive officer and increasing the minimum bid threshold
from $2,500 to $3,000 before triggering the requirement for
Metro to obtain at least three quotes prior to making an
expenditure.
SB 1687 (Murray), Chapter 814, Statutes of 2006, raised from
$40,000 to $100,000 Metro's formal bidding threshold.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles County Metropolitan Transportation Authority
(sponsor)
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093