BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 975 Hearing Date: 6/29/2015
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|Author: |Frazier |
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|Version: |5/4/2015 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Felipe Lopez |
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SUBJECT: Local Agency Public Construction Act: bid criteria
DIGEST: This bill prohibits local public agencies and school
districts from disqualifying prospective bidders on public works
contracts through its uniform system of rating bidders, based
solely on whether a prospective bidder has filed a claim against
a project owner through the courts, mediation, or arbitration.
ANALYSIS:
Existing law:
1)Sets, under the Local Agency Public Construction Act (LAPCA),
the requirements for competitive bidding on various types of
contracts awarded by state and local agencies, including a
school district.
2)Authorizes, under the LAPCA, a public entity or school
district to require prospective bidders for a construction
contract to complete and submit to the governing board a
prequalification questionnaire and financial statement, and
requires the board to adopt and apply a uniform system of
rating bidders on the basis of completed questionnaires and
financial statements.
This bill prohibits local public agencies and school districts
from disqualifying prospective bidders on public works contracts
through its uniform system of rating bidders, based solely on
AB 975 (Frazier) Page 2 of ?
whether a prospective bidder has filed a claim against a project
owner through the courts, mediation, or arbitration
Background
Purpose of the bill. According to the author, "AB 975 is
intended to address a troubling trend involving public works
construction pre-qualification questionnaires. Specifically, a
number of public agencies have begun disqualifying, or
significantly penalizing, any contractor who has been involved,
or is involved, in any claim with a public agency, whether
initiated by the contractor or the public agency. Arguably,
these clauses stand in violation of the 14th Amendment as they
deem parties guilty, thus denying them the opportunity to bid,
regardless of whether or not the parties have actually been
found guilty."
The Local Agency Public Construction Act (LAPCA). The LAPCA
allows, but does not require, public agencies to establish a
process to evaluate and pre-qualify prospective bidders on
public works projects. An agency may choose to require
prospective bidders to submit a standardized questionnaire and a
financial statement, which includes the prospective bidder's
experience in performing public works. If the agency selects
this procedure, it must adopt a uniform rating system to
determine the minimum requirements permitted for qualification
to bid and the type and size of contracts for which each bidder
is eligible to bid. It also must offer an appeals process to
allow prospective bidders to dispute their proposed
pre-qualification rating.
The LAPCA directs the Department of Industrial Relations (DIR)
to develop a model questionnaire and guidelines for a uniform
rating system that can be used by public agencies. The DIR
questionnaire requires contractors to provide detailed
information regarding the company and its financial status,
including whether the company has been in bankruptcy or involved
in a civil lawsuit, licensing information, prior contracting
experience, whether the contractor has been involved or been
found to have violated any federal, state or local laws, and
whether the contractor has violated any labor and health and
safety laws, including prevailing wage. A rating system assigns
points according to a bidder's answers to the questionnaire and
enables a local agency to exclude bids from companies that do
not meet a minimum number of points.
AB 975 (Frazier) Page 3 of ?
The LAPCA applies to all cities, counties and special districts,
but does not apply to school districts, which have separate code
sections pertaining to pre-qualification.
Prior/Related Legislation
AB 566 (O'Donnell, 2015) requires, until January 1, 2019, school
districts to require prospective bidders on public contracts to
submit a pre-qualification questionnaire and financial
statement, if the expenditure of the project is $1 million or
more, regardless of the funding source, and the average daily
attendance (ADA) of the school district is more than 2,500.
(Pending in Senate Appropriations Committee)
AB 1581 (Buchanan, Chapter 408, Statutes of 2014) required,
until January 1 2019, school districts entering into
lease/leaseback or lease-to-own contracts to required
prospective bidders to submit a pre-qualification questionnaire
and financial statement, if the project is funded with state
bond funds, the expenditure of the project is $1 million or
more, and the ADA of the school district is more than 2,500.
AB 1565 (Fuentes, Chapter 808, Statutes of 2012,) required,
beginning with contracts awarded on or after January 1, 2014 and
until January 1, 2019 school districts to require prospective
bidders on public contracts to submit a pre-qualification
questionnaire and financial statement, if the project is funded
with state bond funds, the expenditure of the project is $1
million or more, and the ADA of the school district is more than
2,500.
AB 281 (Bermudez, 2003) would have prohibited the bidder
pre-qualification form that is required under the LAPCA from
disqualifying a bidder solely based on the bidder's financial
capacity, provided that the bidder otherwise qualifies for the
public works contract. (Never heard in Assembly Local
Government Committee)
AB 611 (Villaraigosa, Chapter 390, Statutes of 1997) allowed
school districts to pre-qualify bidders on a quarterly basis and
allowed the pre-qualification to be valid for up to one calendar
year.
FISCAL EFFECT: Appropriation: No Fiscal
AB 975 (Frazier) Page 4 of ?
Com.: Yes Local: Yes
SUPPORT:
Construction Employers Association (Source)
Air Conditioning Sheet Metal Association
Air-conditioning & Refrigeration Contractors Association
Associated Builders and Contractors of California
Associated General Contractors
California Chapters of the National Electrical Contractors
Association
California Concrete Contractors Association
California Legislative Conference of the Plumbing, Heating and
Piping Industry
Finishing Contractors Association of Southern California
United Contractors
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: According to the Construction
Employer's Association, "this bill is intended to address a
troubling trend involving public works construction
prequalification questionnaires. Specifically, a number of
public agencies have begun disqualifying, or significantly
penalizing through their pre-qualification process, any
contractor who has been involved, or is involved, in any claim
with a public agency, whether initiated by the contractor or the
public agency."
CEA further argues that, "These pre-qualification questions
represent a fundamental denial of a contractor's basic due
process rights. The automatic disqualification ignores the
specific circumstances surrounding a claim, the severity of the
claim, the outcome of the claim, whether the contractor
prevailed, whether the claim was the result of a subcontractor,
architect or engineer or whether the claim was simply erroneous.
AB 975 does not preclude public agencies from asking about prior
claims, nor does it preclude them from factoring in the
disposition of said claims, it simply provides that the
existence of a claim cannot be considered a disqualifying
factor."
AB 975 (Frazier) Page 5 of ?
DUAL REFERRAL: Senate Education Committee