BILL ANALYSIS                                                                                                                                                                                                    



          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

                                      -- END --
          









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