BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: AB 1185
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|Author: |Ridley-Thomas |
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|Version: |May 20, 2015 Hearing |
| |Date: June 17, 2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Kathleen Chavira |
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Subject: Los Angeles Unified School District: best value
procurement: pilot program
NOTE: This bill has been referred to the Committee on
Education and the Committee on Appropriations. A "do pass"
motion should include referral to the Committee on
Appropriations.
SUMMARY
This bill, establishes a pilot program to authorize the Los
Angeles Unified School District (LAUSD) to use a best value
procurement method, before December 31, 2020, for public
projects that exceed $1 million, and requires submission of
specified reports on the use of this procurement method.
BACKGROUND
Existing law requires the governing board of a school district,
to competitively bid, and award to the lowest responsible
bidder, any contract for a public project (as defined) involving
an expenditure of $15,000 or more. (Public Contract Code §
20111)
Existing law, until January 1, 2017 authorizes a pilot program
at the University of California (UC) to award construction
contracts on a "best value" basis, rather than just to the
lowest bid. (Public Contract Code §10506.4)
Existing law defines "best value," for purposes of the UC, as a
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procurement process whereby the lowest responsible bidder may be
selected on the basis of objective criteria with the resulting
selection representing the best combination of price and
qualifications. (Public Contract Code § 10506.5)
ANALYSIS
This bill:
1)Authorizes the governing board of the Los Angeles Unified School
District (LAUSD), before December 31, 2020, to use best value
procurement for projects over $1 million.
2)Generally outlines the definitions, policies, and procedures to
be followed by the LAUSD consistent with current law
provisions applicable to best value contracting by the UC
(Public Contract Code, Chapter 2.1, Article 1.5, commencing
with § 10506.4) and additionally requires that:
a) Specified "skilled and trained workforce"
requirements are met.
b) Specified proceeds retention and surety bond
conditions are met.
c) Subcontracting fair practices are followed.
d) Los Angeles Unified School District (LAUSD)
weigh, at minimum and as deemed appropriate, factors such
as relevant experience, acceptable safety record and other
factors identified in a request for proposal in determining
qualification scores for each bid, and specifically assign
preference of up to 5% to small businesses, as defined by
the LAUSD.
3)Establishes the following additional definitions for purposes of
the pilot:
a) "Best value score" as the resulting score when
the bidder's price is divided by the bidder's qualification
score.
b) "Skilled journeyperson" as a worker who either
graduated from an applicable apprenticeship program which
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met specified state or federal approval requirements, or
had at least as many hours of on-the-job experience in an
applicable occupation as would be required for graduation
from a state-approved apprenticeship program.
c) "Apprenticeable occupation" as an occupation for
which the Chief of the Division of Apprenticeship Standards
of the Department of Industrial Relations had approved an
apprenticeship program before January 1, 2015.
d) "Skilled and trained workforce" as a workforce in
which all the workers are skilled journeypersons or
apprentices registered in an apprenticeship program
approved by the Chief of the Division of Apprenticeship
Standards of the Department of Industrial Relations and
establishes the following phased-in implementation of the
proportion of skilled journeypersons and subcontractors at
every tier, employed that must be approved apprenticeship
program graduates to meet the condition of having a
"skilled and trained workforce":
i) At least 30% by January 1, 2016.
ii) At least 40% by January 1, 2017.
iii) At least 50% by January 1, 2018.
iv) At least 60% by January 1, 2019.
v) At least 70% by January 1, 2020.
4)Provides that, for an apprenticeable occupation with no approved
program prior to January 1, 1995, up to one-half of the
apprenticeship program graduate percentage requirements may be
met by skilled journeypersons who commenced work in the
occupation prior to the approval of an applicable apprentice
program in the county of the project's location.
5)Prohibits the prequalification or shortlisting of a best value
entity absent an enforceable commitment to use a skilled and
trained workforce for all work on the project/contract as
applicable and provides that this commitment may be
established by:
a) An agreement between the entity and the school
district governing board to comply with these requirements
and the provision of monthly evidence demonstrating such
compliance during the performance of the project/contract.
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b) A project labor agreement (PLA), entered into by
the school district governing board, that includes these
requirements and that binds all contractors/subcontractors
working on the project/contract and agreement by the entity
to become a party to the PLA.
c) Evidence that the entity has entered into a PLA
that includes these requirements and that binds the entity
and all its subcontractors at every tier performing the
project/contract.
6)Establishes related reporting requirements. More specifically
it:
a) Requires the Los Angeles Unified School District
(LAUSD) to submit an interim report and a final report,
conducted by an independent third party, containing
specified information on the use of best value to the
Legislative Analyst's Office (LAO) by July 1, 2018, and
January 1, 2020, respectively.
b) Requires the LAO to submit an interim report and
a final report, on the use of best value, as specified, to
the appropriate policy and fiscal committees of the
Legislature by January 1, 2019, and July 1, 2020,
respectively, to evaluate whether the best value
procurement method should be continued, expanded, or
prohibited.
7)Clarifies that the best value procurement method is not intended
to change guideline, criterion, procedure, or requirement of
the governing board to let a project contract to the lowest
responsible bidder other than those specifically provided for
in the bill's provisions.
8)Sunsets these provisions on January 1, 2021.
STAFF COMMENTS
1)Need for the bill. According to the author, this bill will
empower LAUSD to consider qualifications other than just
price. The current lowest bidder process restricts the
ability of school districts to evaluate bidders on the basis
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of prior school construction experience, previous violations
of health and safety laws, disqualification or removal from
prior school construction jobs, and financial stability. This
bill can ensure that the district can consider the bidder's
experience or knowledge to navigate the school construction
process when selecting a contractor, minimizing project delays
and cost overruns.
2)Best Value Pilot Program. SB 667 (Migden), Chapter 367, Statutes
of 2006, established a pilot program for the University of
California (UC). Initially authorized for five years, the
bill allowed the UC San Francisco to award contracts based on
the best value for the university. Under this process, UC
prequalifies bidders, then evaluates the bid based on answers
to a separate best value questionnaire and assigns a
qualification score. UC then divides each bidder's price by
its qualification score. The lowest resulting cost per
quality point represents the best value bid.
In a report to the Legislature in January 2010, the University
of California (UC) reported that 23 contracts totaling $158.3
million were issued under the best value pilot program. Of
the 23 contracts, 12 contracts were low bid contracts.
According to the report, the "University Representatives for
all these projects [four completed and two almost completed
projects] have been unanimous in their praise of this process
that has already demonstrated numerous advantages such as
decreased bid protests and communication problems, decreased
the need for multiple inspections and re-work, decreased
disputes, change order requests, claims and litigation and
increased incentives for contractors to perform their work
safety and to adhere to high labor and quality standards." UC
concludes that the best value pilot program fosters better
quality work, less labor and safety problems, better qualified
persons/contractors, better on-time completion, and better
on-budget performance. In 2011, SB 835 (Wolk, Chapter 636,
Statutes of 2011), expanded the authority to all UC campuses
and extended the sunset from January 1, 2012, to January 1,
2017.
The provisions of this bill are generally based upon the pilot
program authorized for the UC, but codify more prescriptive
requirements around labor, contractors and subcontractors, and
the weighting of certain factors in the evaluation of bids.
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3)Skilled workforce provisions. The provisions of this bill
relative to a skilled workforce are very similar to recently
adopted provisions regarding the use of a design-build method
for awarding public works contracts by state and local
agencies (SB 785, Chapter 931, Statutes of 2014), as well as
contracts for the construction, alteration, demolition,
installation, repair, or maintenance work at petroleum
refineries (SB 54, Chapter 795, Statutes of 2013). In
addition, these provisions were a component of SB 566
(O'Donnell), which was heard and passed by this Committee on
June 10, 2015, by a vote of 6-2.
4)Fiscal implications. To the extent this bill results in the
awarding of contracts to other than the lowest bidder,
contracting costs could increase. It is unclear whether the
resultant savings from reduced change orders and delays would
offset these costs. Staff notes that Legislative Counsel has
identified this bill as non-fiscal. However, the Senate Rules
Committee has referred the bill to the Senate Appropriations
Committee, at their request. If it is the desire of the
committee to move this bill, the bill should be referred to
the Senate Appropriations Committee.
5)Prior Legislation. This bill is almost identical to AB 1971
(Bocanegra, 2014) which was heard and passed by this Committee
in June 2014, by a vote of 4-1. AB 1971 was never acted upon
on the Senate Floor.
SUPPORT
Los Angeles Unified School District
OPPOSITION
Air Conditioning Trade Association
Associated Builders and Contractors of California
Associated Builders and Contractors - San Diego Chapter
Plumbing-Heating-Colling Contractors Association of California
Western Electrical Contractors Association
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