Amended in Senate June 17, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 566


Introduced by Assembly Member O'Donnell

February 24, 2015


An act to amend Sections 17406 and 17407 of, and to add Section 17407.5 to, the Education Code, and to amend Section 20111.6 of the Public Contract Code, relating to school facilities.

LEGISLATIVE COUNSEL’S DIGEST

AB 566, as amended, O'Donnell. School facilities: leasing property: construction contracts.

Existing law authorizes the governing board of a school district, without advertising for bids, to lease real property for a minimum rental of $1 per year if the instrument by which this property is leased requires the lessee to construct, or provide for the construction of, a building to be used by the school district and provides that the title to the building shall vest in the school district at the end of the lease. Existing law, until January 1, 2019, also requires the instrument, if funds for the instrument derive from the Leroy F. Greene School Facilities Act of 1998 or from any future state school bond for a public project that involves a projected expenditure of $1,000,000 or more, to provide that the person, firm, or corporation that constructs the building shall comply with specified prequalification requirements.

Existing law also authorizes the governing board of a school district to enter into an agreement with the lowest responsible bidder to construct, or provide for the construction of, a building to be leased and used by the school district upon a designated site if the instrument provides that the title to the building and site shall vest in the school district at the end of the lease. Existing law, until January 1, 2019, requires the agreement, if funds for the agreement derive from the Leroy F. Greene School Facilities Act of 1998 or from any future state school bond for a public project that involves a projected expenditure of $1,000,000 or more, to provide that the person, firm, or corporation that constructs the building shall comply with specified prequalification requirements.

This bill would, until January 1, 2019, require the instrument and agreement to provide that the person, firm, or corporation that constructs the building to comply with specified prequalification requirements in this context regardless of the funding source for the public project. The bill would require that certain conditions relating to the use of a skilled and trained workforce on the project or contract be satisfied before the governing board of a school district may enter into a contract with any entity for the construction, or for providing for the construction of, a building to be leased or used by the school district.

Existing law requires, until January 1, 2019, the governing board of a school district that enters into a contract for a public project, as defined, for which the board uses moneys received pursuant to the Leroy F. Greene School Facilities Act of 1998 or moneys from future state school bonds for a public project that involves a projected expenditure of $1,000,000 or more, to require prospective bidders for a construction contract to complete and submit a standardized prequalification questionnaire and financial statement, as provided.

This bill would impose these requirementsbegin delete forend deletebegin insert onend insert a public projectbegin delete in this context regardless of theend deletebegin insert ifend insert fundingbegin delete source for the public project.end deletebegin insert for the project includes reimbursement from any state school bond.end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 17406 of the Education Code, as amended
2by Section 1 of Chapter 408 of the Statutes of 2014, is amended
3to read:

4

17406.  

(a) (1) Notwithstanding Section 17417, the governing
5board of a school district, without advertising for bids, may let,
6for a minimum rental of one dollar ($1) a year, to a person, firm,
P3    1or corporation real property that belongs to the school district if
2the instrument by which this property is let requires the lessee
3therein to construct on the demised premises, or provide for the
4construction thereon of, a building or buildings for the use of the
5school district during the term of the lease, and provides that title
6to that building shall vest in the school district at the expiration of
7that term. The instrument may provide for the means or methods
8by which that title shall vest in the school district before the
9expiration of that term, and shall contain other terms and conditions
10as the governing board of the school district may deem to be in
11the best interest of the school district.

12(2) For a public project, as defined in subdivision (c) of Section
1322002 of the Public Contract Code, regardless of its funding source,
14an instrument created pursuant to paragraph (1) shall also require
15that a person, firm, or corporation that constructs the building,
16including, but not limited to, the prime contractor and, if used,
17electrical, mechanical, and plumbing subcontractor, shall be subject
18to the same prequalification requirements for prospective bidders
19described in subdivisions (b) to (m), inclusive, of Section 20111.6
20of the Public Contract Code, including the requirement for the
21completion and submission of a standardized prequalification
22questionnaire and financial statement that is verified under oath
23and is not a public record.

24(b) A rental of property that complies with subdivision (a) as it
25reads on the day that the lease is entered into shall be deemed to
26have thereby required the payment of adequate consideration for
27purposes of Section 6 of Article XVI of the California Constitution.

28(c) This section shall remain in effect only until January 1, 2019,
29and as of that date is repealed, unless a later enacted statute, that
30is enacted before January 1, 2019, deletes or extends that date.

31

SEC. 2.  

Section 17407 of the Education Code, as amended by
32Section 3 of Chapter 408 of the Statutes of 2014, is amended to
33read:

34

17407.  

(a) The governing board of a school district may enter
35into an agreement with a person, firm, or corporation under which
36that person, firm, or corporation shall construct, or provide for the
37construction of, a building to be used by the school district upon
38a designated site and lease the building and site to the school
39district. The instrument shall provide that the title to the building
40and site shall vest in the school district at the expiration of the
P4    1lease, and may provide the means or method by which the title to
2the building and site shall vest in the school district before the
3expiration of the lease, and shall contain other terms and conditions
4as the governing board of the school district deems to be in the
5best interest of the school district.

6(b) The agreement entered into shall be with the lowest
7responsible bidder who shall give the security that a governing
8board of a school district requires. The governing board of a school
9district may reject all bids. For the purpose of securing bids the
10governing board of a school district shall publish at least once a
11week for two weeks in a newspaper of general circulation published
12in the school district, or if there is nobegin delete paper,end deletebegin insert newspaper,end insert then in a
13begin delete paperend deletebegin insert newspaperend insert of general circulation circulated in the county, a
14notice calling for bids, stating the proposed terms of the agreement
15and the time and place where bids will be opened.

16(c) For a public project, as defined in subdivision (c) of Section
1722002 of the Public Contract Code, regardless of its funding source,
18an agreement entered into pursuant to subdivision (a) shall also
19require that a person, firm, or corporation that constructs the
20building, including, but not limited to, the prime contractor and,
21if used, electrical, mechanical, and plumbing subcontractor, under
22this section shall be subject to the same prequalification
23requirements for prospective bidders described in subdivisions (b)
24to (m), inclusive, of Section 20111.6 of the Public Contract Code,
25including the requirement for the completion and submission of a
26standardized prequalification questionnaire and financial statement
27that is verified under oath and is not a public record.

28(d) This section shall remain in effect only until January 1, 2019,
29and as of that date is repealed, unless a later enacted statute, that
30is enacted before January 1, 2019, deletes or extends that date.

31

SEC. 3.  

Section 17407.5 is added to the Education Code, to
32read:

33

17407.5.  

(a) The governing board of a school district shall not
34enter into an agreement pursuant to Section 17406 or 17407 with
35any entity unless the entity provides to the governing board of the
36school district an enforceable commitment that the entity and its
37subcontractors at every tier will use a skilled and trained workforce
38to perform all work on the project or contract that falls within an
39apprenticeable occupation in the building and construction trades.

40(b) For purposes of this section:

P5    1(1) “Apprenticeable occupation” means an occupation for which
2the Chief of the Division of Apprenticeship Standards of the
3Department of Industrial Relations had approved an apprenticeship
4program pursuant to Section 3075 of the Labor Code before
5January 1, 2014.

6(2) “Chief” means the Chief of the Division of Apprenticeship
7Standards of the Department of Industrial Relations.

8(3) “Skilled and trained workforce” means a workforce that
9meets all of the following conditions:

10(A) All the workers are either skilled journeypersons or
11apprentices registered in an apprenticeship program approved by
12the chief.

13(B) (i) As of January 1, 2016, at least 30 percent of the skilled
14journeypersons employed to perform work on the contract or
15project by the entity and each of its subcontractors at every tier
16are graduates of an apprenticeship program for the applicable
17occupation that was either approved by the chief pursuant to
18Section 3075 of the Labor Code or located outside California and
19approved for federal purposes pursuant to the apprenticeship
20regulations adopted by the federal Secretary of Labor.

21(ii) As of January 1, 2017, at least 40 percent of the skilled
22journeypersons employed to perform work on the contract or
23project by the entity and each of its subcontractors at every tier
24are graduates of an apprenticeship program for the applicable
25occupation that was either approved by the chief pursuant to
26Section 3075 of the Labor Code or located outside California and
27approved for federal purposes pursuant to the apprenticeship
28regulations adopted by the federal Secretary of Labor.

29(iii) As of January 1, 2018, at least 50 percent of the skilled
30journeypersons employed to perform work on the contract or
31project by the entity and each of its subcontractors at every tier
32are graduates of an apprenticeship program for the applicable
33occupation that was either approved by the chief pursuant to
34Section 3075 of the Labor Code or located outside California and
35approved for federal purposes pursuant to the apprenticeship
36regulations adopted by the federal Secretary of Labor.

37(iv) As of January 1, 2019, at least 60 percent of the skilled
38journeypersons employed to perform work on the contract or
39project by the entity and each of its subcontractors at every tier
40are graduates of an apprenticeship program for the applicable
P6    1occupation that was either approved by the chief pursuant to
2Section 3075 of the Labor Code or located outside California and
3approved for federal purposes pursuant to the apprenticeship
4regulations adopted by the federal Secretary of Labor.

5(C) For an apprenticeable occupation in which no apprenticeship
6program had been approved by the chief before January 1, 1995,
7up to one-half of the graduation percentage requirements of
8subparagraph (B) may be satisfied by skilled journeypersons who
9commenced working in the apprenticeable occupation before the
10chief’s approval of an apprenticeship program for that occupation
11in the county in which the project is located.

12(4) “Skilled journeyperson” means a worker who either:

13(A) Graduated from an apprenticeship program for the applicable
14occupation that was approved by the chief or located outside
15California and approved for federal purposes pursuant to the
16apprenticeship regulations adopted by the federal Secretary of
17Labor.

18(B) Has at least as many hours of on-the-job experience in the
19applicable occupation as would be required to graduate from an
20apprenticeship program for the applicable occupation that is
21approved by the chief.

22(c) An entity’s commitment that a skilled and trained workforce
23will be used to perform the project or contract may be established
24by any of the following:

25(1) (A) The entity’s agreement with the governing board of the
26school district that the entity and its subcontractors at every tier
27will comply with the requirements of this section and that the entity
28will provide to the governing board of the school district, on a
29monthly basis while the project or contract is being performed, a
30report demonstrating that the entity and its subcontractors are
31complying with the requirements of this section.

32(B) If the entity fails to provide to the governing board of the
33school district the monthly report pursuant to subparagraph (A),
34the governing board of the school district shall immediately cease
35making payments to the entity pursuant to the instrument or
36agreement described in Section 17406 or 17407.

37(C) The monthly report provided to the governing board of the
38school district pursuant to this paragraph shall be a public record
39under the California Public Records Act (Chapter 3.5 (commencing
P7    1with Section 6250) of Division 7 of Title 1 of the Government
2Code), and shall be open to public inspection.

3(2) If the governing board of a school district has entered into
4a project labor agreement that will bind all contractors and
5subcontractors performing work on the project or contract and that
6includes the requirements of this section, the entity’s agreement
7that it will become a party to that project labor agreement.

8(3) Evidence that the entity has entered into a project labor
9agreement that includes the requirements of this section and that
10will bind the entity and all its subcontractors at every tier
11performing the project or contract.

12

SEC. 4.  

Section 20111.6 of the Public Contract Code is
13amended to read:

14

20111.6.  

(a) This section shall apply only to public projects,
15as defined in subdivision (c) of Section 22002,begin delete regardless of the
16funding source,end delete
begin insert for which the governing board of the district uses
17funds received pursuant to the Leroy F. Greene School Facilities
18Act of 1998 (Chapter 12.5 (commencing with Section 17070.10)
19of Part 10 of Division 1 of Title 1 of the Education Code) or any
20funds received, including funds reimbursed, from any future state
21school bondend insert
for a public project that involves a projected
22expenditure of one million dollars ($1,000,000) or more.

23(b) If the governing board of the school district enters into a
24contract meeting the criteria of subdivision (a), then the governing
25board of the school district shall require that prospective bidders
26for a construction contract complete and submit to the governing
27board of the school district a standardized prequalification
28questionnaire and financial statement. The questionnaire and
29financial statement shall be verified under oath by the bidder in
30the manner in which civil pleadings in civil actions are verified.
31The questionnaires and financial statements shall not be public
32records and shall not be open to public inspection.

33(c) The governing board of the school district shall adopt and
34apply a uniform system of rating bidders on the basis of the
35completed questionnaires and financial statements. This system
36shall also apply to a person, firm, or corporation that constructs a
37building described in Section 17406 or 17407 of the Education
38Code.

39(d) The questionnaire and financial statement described in
40subdivision (b), and the uniform system of rating bidders described
P8    1in subdivision (c), shall cover, at a minimum, the issues covered
2by the standardized questionnaire and model guidelines for rating
3bidders developed by the Department of Industrial Relations
4pursuant to subdivision (a) of Section 20101.

5(e) Each prospective bidder shall be furnished by the school
6district letting the contract with a standardized proposal form that,
7when completed and executed, shall be submitted as his or her bid.
8Bids not presented on the forms so furnished shall be disregarded.

9(f) A proposal form required pursuant to subdivision (e) shall
10not be accepted from any person or other entity that is required to
11submit a completed questionnaire and financial statement for
12 prequalification pursuant to subdivision (b) or from any person or
13other entity that uses a subcontractor that is required to submit a
14completed questionnaire and financial statement for
15prequalification pursuant to subdivision (b), but has not done so
16at least 10 business days before the date fixed for the public
17opening of sealed bids or has not been prequalified for at least five
18business days before that date. The school district may require the
19completed questionnaire and financial statement for
20prequalification to be submitted more than 10 business days before
21the fixed date for the public opening of sealed bids. The school
22district may also require the prequalification more than five
23business days before the fixed date.

24(g) (1) The governing board of the school district may establish
25a process for prequalifying prospective bidders pursuant to this
26section on a quarterly or annual basis and a prequalification
27 pursuant to this process shall be valid for one calendar year
28following the date of initial prequalification.

29(2) The governing board of the school district shall establish a
30process to prequalify a person, firm, or corporation, including, but
31not limited to, the prime contractor and, if used, an electrical,
32mechanical, and plumbing subcontractor, to construct a building
33described in Section 17406 or 17407 of the Education Code on a
34quarterly or annual basis. A prequalification pursuant to this
35process shall be valid for one calendar year following the date of
36initial prequalification.

37(h) This section shall not preclude the governing board of the
38school district from prequalifying or disqualifying a subcontractor
39of any specialty classification described in Section 7058 of the
40Business and Professions Code.

P9    1(i) For purposes of this section, bidders shall include both of
2the following:

3(1) A prime contractor, as defined in Section 4113, that is either
4of the following:

5(A) A general engineering contractor described in Section 7056
6of the Business and Professions Code.

7(B) A general building contractor described in Section 7057 of
8the Business and Professions Code.

9(2) If utilized, each electrical, mechanical, and plumbing
10contractor, whether as a prime contractor or as a subcontractor, as
11defined in Section 4113.

12(j) If a public project covered by this section includes electrical,
13mechanical, or plumbing components that will be performed by
14electrical, mechanical, or plumbing contractors, a list of
15 prequalified general contractors and electrical, mechanical, and
16plumbing subcontractors shall be made available by the school
17district to all bidders at least five business days before the dates
18fixed for the public opening of sealed bids. The school district may
19require the list to be made available more than five business days
20before the fixed dates for the public opening of sealed bids.

21(k) For purposes of this section, electrical, mechanical, and
22plumbing subcontractors are contractors licensed pursuant to
23Section 7058 of the Business and Professions Code, specifically
24contractors holding C-4, C-7, C-10, C-16, C-20, C-34, C-36, C-38,
25C-42, C-43, and C-46 licenses, pursuant to regulations of the
26Contractors’ State License Board.

27(l) This section shall not apply to a school district with an
28average daily attendance of less than 2,500.

29(m) (1) This section shall apply only to contracts awarded on
30or after January 1, 2014.

31(2) The amendments made to this section by the act adding this
32paragraph shall apply only to contracts awarded on or after January
331, 2015.

34(n) (1) On or before January 1, 2018, the Director of Industrial
35Relations shall (A) submit a report to the Legislature evaluating
36whether, during the years this section has applied to contracts,
37violations of the Labor Code on school district projects have
38decreased as compared to the same number of years immediately
39preceding the enactment of this section, and (B) recommend
P10   1improvements to the system for prequalifying contractors and
2subcontractors on school district projects.

3(2) A report to be submitted pursuant to this subdivision shall
4be submitted in compliance with Section 9795 of the Government
5Code.

6(o) This section shall become inoperative on January 1, 2019,
7and, as of July 1, 2019, is repealed.



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