Amended in Senate July 1, 2015

Amended in Assembly May 20, 2015

Amended in Assembly May 6, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1185

Introduced by Assembly Member Ridley-Thomas

February 27, 2015

An act to add and repeal Article 3.3 (commencing with Section 20119) of Chapter 1 of Part 3 of Division 2 of the Public Contract Code, relating to best value procurement.

LEGISLATIVE COUNSEL’S DIGEST

AB 1185, as amended, Ridley-Thomas. Los Angeles Unified School District: best value procurement: pilot program.

The Local Agency Public Construction Act requires the governing board of any school district to let any contract for a public project, as defined, involving an expenditure of $15,000 or more, to the lowest responsible bidder that gives security as the board requires, or else reject all bids.

This bill would establish a pilot program to authorize the Los Angeles Unified School District to use, before December 31, 2020, a best value procurement method for bid evaluation and selection for public projects that exceed $1,000,000. The bill would establish various requirements applicable to the use of the best value procurement method under this authorization. The bill would require the school district to submit an interim and final report to the Legislative Analyst, and would require the Legislative Analyst to submit an interim and final report to the appropriate policy and fiscal committees of the Legislature on the use of the procurement method pursuant to the bill, in accordance with a specified schedule. These provisions would be repealed on January 1, 2021.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Los Angeles Unified School District.

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

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

SECTION 1.  

Article 3.3 (commencing with Section 20119) is
added to Chapter 1 of Part 3 of Division 2 of the Public Contract
Code, to read:

 

Article 3.3.  Los Angeles Unified School District -- Best Value
Procurement

 

20119.  

(a) It is the intent of the Legislature to enable school
districts to use cost-effective options for building and modernizing
school facilities. The Legislature has recognized the merits of the
best value procurement method process in the past by authorizing
its use for projects undertaken by the University of California.

(b) The Legislature also finds and declares that school districts
using the best value procurement method require a clear
understanding of the roles and responsibilities of each participant
in the best value process. As reflected in the University of
California report to the Legislature, the benefits of a best value
procurement method include a reduction in contract delays, change
orders, and claims producing a savings in both contract costs and
administration.

(c) It is the intent of the Legislature to provide an optional,
alternative procedure for bidding and building school construction
projects.

20119.1.  

As used in this article:

(a) “Apprenticeable begin delete Occupation” end delete begin insert occupation” end insert means an
occupation for which the Chief of the Division of Apprenticeship
Standards had approved an apprenticeship program pursuant to
Section 3075 of the Labor Code prior to January 1, 2015.

(b) “Best value” means a procurement process whereby the
selected bidder may be selected on the basis of objective criteria
for evaluating the qualifications of bidders with the resulting
selection representing the best combination of price and
qualifications.

(c) “Best value contract” means a competitively bid contract
entered into pursuant to this article.

(d) “Best value contractor” means a properly licensed person,
firm, or corporation that submits a bid for and is awarded a best
value contract.

(e) “Best value score” means the resulting score when the school
district divides the bidder’s price by the bidder’s qualification
score.

(f) “Demonstrated management competency” means the
experience, competency, capability, and capacity of the proposed
management staffing to complete projects of similar size, scope,
or complexity.

(g) “Financial condition” means the financial resources needed
to perform the contract. The criteria used to evaluate a bidder’s
financial condition shall include, at a minimum, capacity to obtain
all required payment bonds and required insurance.

(h) “Governing board” or “governing board of the school
district” means the governing board of the Los Angeles Unified
School District.

(i) “Labor compliance” means the ability to comply with, and
past performance with, contract and statutory requirements for the
payment of wages and qualifications of the workforce. The criteria
used to evaluate a bidder’s labor compliance shall include, at a
minimum, the bidder’s ability to comply with the apprenticeship
requirements of the California Apprenticeship Council and the
Department of Industrial Relations, its past conformance with such
requirements, and its past conformance with requirements to pay
prevailing wages on public works projects.

(j) “Project” has the same meaning as “public project” as defined
in subdivision (c) of Section 22002.

(k) “Qualifications” means financial condition, relevant
experience, demonstrated management competency, labor
compliance, the safety record of the bidder, and, to the extent
relevant, the preceding qualifications as they pertain to all
subcontractors proposed to be used by the bidder for designated
portions of the work.

(l) “Relevant experience” means the experience, competency,
capability, and capacity to complete projects of similar size, scope,
or complexity.

(m) “Safety record” shall be deemed “acceptable” begin delete as determined
by the school district. In its determination, the school district shall
consider, but is not required to find, end delete begin insert if end insert a contractor’s begin delete safety record
as acceptable if its end delete experience modification rate for the most recent
three-year period is an average of 1.00 or less, and its average total
recordable injury or illness rate and average lost work rate for the
most recent three-year period do not exceed the applicable
statistical standards for its business category, or if the bidder is a
party to an alternative dispute resolution system as provided for
in Section 3201.5 of the Labor Code.

(n) “School district” means the Los Angeles Unified School
District.

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

(1) All the workers are either skilled journeypersons or
apprentices registered in an apprenticeship program approved by
the Chief of the Division of Apprenticeship Standards.

(2) (A) As of January 1, 2016, at least begin delete 30 end delete begin insert 20 end insert percent of the
skilled journeypersons employed to perform work on the contract
or project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(B) As of January 1, 2017, at least begin delete 40 end delete begin insert 30 end insert percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(C) As of January 1, 2018, at least begin delete 50 end delete begin insert 40 end insert percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(D) As of January 1, 2019, at least begin delete 60 end delete begin insert 50 end insert percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(E) As of January 1, 2020, at least begin delete 70 end delete begin insert 60 end insert percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(3) For an apprenticeable occupation in which no apprenticeship
program had been approved by the chief prior to January 1, 1995,
up to one-half of the graduation percentage requirements of
paragraph (2) may be satisfied by skilled journeypersons who
commenced working in the apprenticeable occupation prior to the
chief’s approval of an apprenticeship program for that occupation
in the county in which the project is located.

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

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

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

20119.2.  

(a) This article provides for a pilot program for the
Los Angeles Unified School District to use best value procurement
for projects over one million dollars ($1,000,000).

(b) The governing board, for projects over one million dollars
($1,000,000), before December 31, 2020, may use the best value
procurement method in accordance with this article.

(c) The bidder may be selected on the basis of the best value to
the governing board of the school district. In order to implement
this method of selection, the governing board of the school district
shall adopt and publish procedures and required guidelines for
evaluating the qualifications of the bidders that ensure the best
value selections by the school district are conducted in a fair and
impartial manner. These procedures and guidelines shall conform
to this article and shall be mandatory for the school district when
using best value selection.

(d) If the governing board of the school district deems it to be
for the best interest of the school district, the governing board of
the school district, on the refusal or failure of the selected bidder
for a project to execute a tendered contract, may award it to the
bidder with the second lowest best value score. If the second bidder
fails or refuses to execute the contract, the governing board of the
school district may likewise award it to the bidder with the third
lowest best value score.

(e) The governing board of the school district shall let any
contract for a project pursuant to this article to the selected bidder
that represents the best value or else reject all bids.

(f) (1) If the school district elects to award a project pursuant
to this section, retention proceeds withheld by the district from the
selected best value contractor shall not exceed 5 percent if a
performance and payment bond, issued by an admitted surety
insurer, is required in the solicitation of bids.

(2) In a contract between the selected best value contractor and
a subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld shall not exceed the percentage specified in the contract
between the district and the selected best value contractor. If the
selected best value contractor provides written notice to a
subcontractor that, prior to or at the time the bid is requested, a
bond may be required and the subcontractor subsequently is unable
or refuses to furnish a bond to the selected best value contractor,
then the selected best value contractor may withhold retention
proceeds in excess of the percentage specified in the contract
between the district and the selected best value contractor from
any payment made by the selected best value contractor to the
subcontractor.

(g) All subcontractors bidding on contracts pursuant to this
chapter shall be afforded the protection contained in Chapter 4
(commencing with Section 4100) of Part 1.

20119.3.  

The governing board of the school district shall
proceed in accordance with the following when awarding best
value contracts under this article:

(a) The school district shall prepare a solicitation for bids and
give notice pursuant to Section 20112.

(b) (1) The school district shall establish a procedure to
prequalify bidders as required by this code. Information submitted
by the bidder as part of the evaluation process shall not be open
to public inspection to the extent that information is exempt from
disclosure under the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).

(2) A best value entity shall not be prequalified or shortlisted
unless the entity provides an enforceable commitment to the
governing board that the entity and its subcontractors at every tier
will use a skilled and trained workforce to perform all work on the
project or contract that falls within an apprenticeable occupation
in the building and construction trades.

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

(A) The entity’s agreement with the school district that the entity
and its subcontractors at every tier will comply with the
requirements of this subdivision and that the entity will provide
the governing board of the school district with evidence, on a
monthly basis while the project or contract is being performed,
that the entity and its subcontractors are complying with the
requirements of this subdivision.

(B) If the governing board has entered into a project labor
agreement that will bind all contractors and subcontractors
performing work on the project or contract and that includes the
requirements of this subdivision, the entity’s agreement that it will
become a party to that project labor agreement.

(C) Evidence that the entity has entered into a project labor
agreement that includes the requirements of this subdivision and
that will bind the entity and all its subcontractors at every tier
performing the project or contract.

(c) Each solicitation for bids shall do all of the following:

(1) Invite prequalified bidders to submit sealed bids in the
manner prescribed by this article.

(2) Include a section identifying and describing the following:

(A) Criteria that the school district will consider in evaluating
the qualifications of the bidders.

(B) The methodology and rating or weighting system that will
be used by the school district in evaluating bids.

(C) The relative importance or weight assigned to the criteria
for evaluating the qualifications of bidders identified in the request
for bids.

(d) Final evaluation of the bidders shall be done in a manner
that prevents the identity of the bidders and the cost or price
information from being revealed in evaluating the qualifications
of the bidders prior to completion of qualification scoring.

20119.4.  

Selection of the best value contractor shall be made
as follows:

(a) (1) The school district shall evaluate the qualifications of
the bidders based solely upon the criteria set forth in the solicitation
documents, and shall assign a qualification score to each bid.

(2) Qualification scores shall be determined by using only the
criteria and selection procedures specifically identified in the
request for proposals. The following minimum factors, however,
shall be weighted as deemed appropriate by the school district:

(A) Relevant experience.

(B) Safety record.

(C) Other factors identified in the request for proposal.

(b) To determine the best value contractor, the school district
shall divide each bidder’s price by its qualifications score. A
preference of up to 5 percent shall be applied to the price of a bid
submitted by a small business, as defined by the school district,
before dividing the bidder’s price by its qualification score. The
lowest resulting cost per quality point will represent the best value
bid. The award of the contract shall be made to the bidder whose
bid is determined, by the school district in writing, to be the best
value to the school district.

(c) The school district shall issue a written decision of its
contract award or else reject all bids.

(d) Upon issuance of a contract award, the school district shall
publicly announce its award identifying the project, the project
price, the best value contractor to which the award is made, as well
as the prices, qualification scores, and resulting costs per
qualification point for all responsive bidders. The contract file
shall include documentation sufficient to support the decision to
award.

20119.5.  

(a) (1) A school district that uses the best value
procurement method pursuant to this article shall submit to the
Legislative Analyst the following reports completed by an
independent third party:

(A) An interim report on or before July 1, 2018.

(B) A final report on or before January 1, 2020.

(2) A report shall include, but is not limited to, the following
information:

(A) A description of the projects awarded using the best value
procedures.

(B) The contract award amounts.

(C) The best value contractors awarded the projects.

(D) A description of any written protests concerning any aspect
of the solicitation, bid, or award of the best value contracts,
including the resolution of the protests.

(E) A description of the prequalification process.

(F) The criteria used to evaluate the bids, including the
weighting of the criteria and an assessment of the effectiveness of
the methodology.

(G) If a project awarded under this article has been completed,
an assessment of the project performance, to include a summary
of any delays or cost increases.

(b)  begin delete (1) end delete begin delete   end delete The Legislative Analyst shall submit an interim report
to the appropriate policy and fiscal committees of the Legislature
on the use of the best value procurement method by school districts
on or before January 1, 2019, and a final report on or before July
1, 2020. The report may include the information provided from
the school district reports pursuant to subdivision (a) and any
pertinent information that the Legislative Analyst deems instructive
in evaluating whether the best value procurement method should
be continued, expanded, or prohibited.

begin delete

(2) The requirement for submitting a report imposed pursuant
to this subdivision is inoperative on January 1, 2021, pursuant to
Section 10231.5 of the Government Code.

end delete

20119.6.  

Except as otherwise provided in this article, the best
value procurement method is not intended to change any guideline,
criterion, procedure, or requirement of the governing board of the
school district to let a contract for a project to the lowest
responsible bidder or else reject all bids.

20119.7.  

This article shall remain in effect only until January
1, 2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.

SEC. 2.  

The Legislature finds and declares that a special law
is necessary and that a general law cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution because of the need to establish a pilot project for the
Los Angeles Unified School District to determine the potential
benefits and consequences of using best value procurement to
facilitate infrastructure improvements and ease fiscal impacts.