BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 502
AUTHOR: Block
INTRODUCED: February 21, 2013
FISCAL COMM: Yes HEARING DATE: May 1, 2013
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : University of California bidding requirements.
SUMMARY
This bill increases the threshold below which the
University of California (UC) is authorized to use a
streamlined competitive bid process for a construction
contract from $100,000 to $600,000 and requires that this
amount be adjusted to reflect changes in the annual
California Construction Index every two years beginning
January 1, 2016, as specified.
BACKGROUND
Current law authorizes the UC Regents, where they determine
that statutorily prescribed competitive bidding procedures
are not required and the cost of the project does not
exceed one hundred thousand dollars ($100,000), to solicit
bids in writing and award the work to the lowest
responsible bidder or reject all bids, a more streamlined
method of competitive bidding.
(Public Contract Code §10504.5)
Current law establishes the State Contract Act, and
authorizes specified departments, where the nature of the
work in the opinion of the department is such that its
services in connection with a project are not required, to
permit the carrying out of the project directly by the
state agency concerned with the project, if the estimated
project cost does not exceed $600,000, as specified.
(PCC § 10108)
ANALYSIS
This bill :
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1) Increases the threshold below which the UC may use a
more streamlined bid process for a construction
contract from $100,000 to $600,000.
2) Requires the contract amount threshold to be adjusted
to reflect changes in the annual California
Construction Index every two years beginning January
1, 2016.
STAFF COMMENTS
1) Need for the bill . Current law authorizes the
University of California to employ streamlined bidding
procedures for awarding a contract to the lowest
responsible bidder for "minor capital projects." The
current threshold for this "streamlined" bidding
process is $100,000 as established by statute in 1997.
Above this threshold the UC is required to advertise
bids in formal publications, allows several weeks to
allow potential bidders to respond, and upon closing
of formal bidding allow time for bid protests.
For contracts of $100,000 or below, the UC can employ
a more informal streamlined version of competitive
bidding. For this process, the UC generally assembles
a list of prequalified contractors interested in
bidding on small low cost projects. No advertising is
required and bidding time is typically one week, with
quick informal bids being submitted by bidders on the
prequalified list.
According to the UC, the more expanded process delays
start of projects and uses up staff time and resources
for relatively small contract amounts. Setting the
new threshold at $600,000 would ensure that the
proportional costs of bidding these contracts are
minimized, and would align the threshold for minor
capital outlay projects with that of state agencies.
2) Minor capital projects ? The UC defines minor capital
projects as those that involve construction or
facilities related projects below the current $100,000
contract threshold, i.e. they are defined by the
threshold. Generally, these smaller construction
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projects involve a retrofit, or a modification of an
existing facility. This bill would result in a
redefinition of minor capital outlay projects as those
below the $600,000 proposed threshold.
3) California Construction Index . The State Contract Act
governs contracting between state agencies and private
contractors, and establishes thresholds for
contracting that are adjusted every two years by the
Director of Finance to reflect the percentage change
in the annual California Construction Index as used by
the Department of General Services (DGS).
The UC rationale for this bill relates to AB 2181
(Hagman, Chapter 252, Statutes of 2010), which
increased the dollar limit for state agency minor
capital outlay projects from $400,000 to $600,000.
With the exception of some state agencies that have
delegated authority, major capital outlay projects are
administered by DGS on behalf of state agencies. For
projects with costs below the statutory threshold,
state departments can contract directly without using
the DGS services.
This bill would set the threshold for minor capital
outlay projects at the same level as that for state
agencies and authorize its adjustment every two years,
consistent with the thresholds and adjustments
authorized for state agencies.
4) Prior legislation . According to the University of
California, given fiscal constraints, the University
is constantly seeking tools to ensure accelerated
completion of construction jobs and administrative
relief, resulting in cost savings. Recent legislation
illustrates this trend:
a) SB 1280 (Pavley, Chapter 708, Statutes of
2012) modified Public Contract Code to authorize
the UC to let any contract for expenditures
greater than $100,000 for the purchase of
supplies and materials in accordance with "best
value" policies as adopted by the UC Regents.
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b) SB 835 (Wolk, Chapter 636, Statutes of 2011)
extended the sunset whereby the UC can award
construction contracts on a "best value" basis,
rather than just to the lowest bid, from 2012 to
2017.
.
c) SB 1122 (Wright, Chapter 638, Statutes of
2010) modified Public Contract Code to increases
the threshold above which the UC is required to
competitively bid contracts for materials, goods
and services from $50,000 to $100,000.
d) SB 667 (Migden, Chapter 367, Statutes of
2006) modified Public Contract Code to authorize
the UC to conduct a pilot program at their San
Francisco campus that allows for construction
contracts to be awarded on a "best value" basis,
rather than just to the lowest bidder.
SUPPORT
Associated General Contractors
University of California
OPPOSITION
None received.