BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1185 (Ridley-Thomas) - Los Angeles Unified School District:  
          best value procurement: pilot program.
          
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          |Version: May 20, 2015           |Policy Vote: ED. 6 - 2          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: July 6, 2015      |Consultant: Jillian Kissee      |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  This bill, an urgency measure, authorizes a pilot  
          program for the Los Angeles Unified School District (LAUSD) to  
          use best value procurement for projects over $1 million and  
          requires the Legislative Analyst Office (LAO) to report on the  
          use of the best value procurement method by school districts.


          Fiscal  
          Impact:  
           LAUSD: Unknown, but potentially significant costs and/or  
            savings at the district level to the extent that (1) the  
            district elects to use a best value procurement method, and  
            (2) that the method actually realizes savings that would  
            surpass potential increases in costs from not choosing the  
            lowest bidder.  This bill is permissive, and would also allow  
            LAUSD to continue to choose the lowest responsible bidder.  
           LAO indicates costs of approximately $75,000 General Fund  
            related to the interim and final reporting requirement.







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          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  
          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)


          Proposed Law:  
            This bill, an urgency measure, authorizes a pilot program for  
          the Los Angeles Unified School District (LAUSD) to use best  
          value procurement for projects over $1 million before December  
          31, 2020 and requires the Legislative Analyst's Office (LAO) to  
          report on the use of the best value procurement method by school  
          districts.  This bill's provisions are only in effect until  
          January 1, 2021.
          Specifically, this bill:

             1)   Authorizes that a bidder may be selected on the basis of  
               best value to the governing board.  

             2)   Generally outlines the definitions, policies, and  
               procedures to be followed by 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.








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                  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)   Consistent with the UC pilot, this bill requires LAUSD  
               to establish a procedure to prequalify bidders, as  
               specified.  However, it prohibits a best value entity from  
               being prequalified unless the entity provides an  
               enforceable commitment that it will use a skilled and  
               trained workforce to perform all work on the project.  This  
               commitment may be established in the following three ways:

                  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.

                  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. 

             4)   Establishes the following definitions:
                  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  








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                    program which 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 20% by January 1, 2016.
                        ii.            At least 30% by January 1, 2017.
                        iii.           At least 40% by January 1, 2018.
                        iv.            At least 50% by January 1, 2019.
                        v.             At least 60% by January 1, 2020.

             5)   This bill also establishes the following reporting  
               requirements:
                  a.        LAUSD to submit an interim report and a final  
                    report, completed by an independent third party,  
                    containing specified information on the use of best  
                    value to the LAO by July 1, 2018 and January 1, 2020,  
                    respectively.

                  b.        LAO to submit an interim report to the  
                    Legislature on the use of the best value procurement  
                    method by school district by January 1, 2019 and a  
                    final report by July 1, 2020 to evaluate whether the  
                    best value procurement method should be continued,  
                    expanded, or prohibited.








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          Related  
          Legislation:  This bill is almost identical to AB 1971  
          (Bocanegra, 2014) which was never acted upon on the Senate  
          Floor.


          Staff  
          Comments:  This bill gives the governing board of the LAUSD the  
          authority to use best value procurement on projects above $1  
          million, but does not require the district to do so.  To the  
          extent this bill results in the LAUSD awarding contracts to  
          bidders other than those with the lowest bid, contracted costs  
          could increase.  Savings attributed to higher quality  
          construction, reduction in contract delays, and fewer change  
          orders and claims are speculative and it is unclear whether  
          potential savings would offset any increases in contracts. 


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