BILL ANALYSIS                                                                                                                                                                                                    Ó

          |SENATE RULES COMMITTEE            |                       AB 1185|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 

          Bill No:  AB 1185
          Author:   Ridley-Thomas (D)
          Amended:  8/31/15 in Senate
          Vote:     21  

           SENATE EDUCATION COMMITTEE:  6-2, 6/17/15
           AYES:  Liu, Block, Hancock, Leyva, Monning, Pan
           NOES:  Runner, Vidak
           NO VOTE RECORDED:  Mendoza

           AYES: Lara, Beall, Hill, Leyva, Mendoza
           NOES: Bates, Nielsen

           ASSEMBLY FLOOR:  48-23, 5/22/15 - See last page for vote

           SUBJECT:   Los Angeles Unified School District:  best value  
                     procurement:  pilot program

          SOURCE:    Author
          DIGEST:   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. 

          Existing law:

          1)Requires the governing board of a school district, to  


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            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)  

          2)Authorizes, until January 1, 2017, 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)

          3)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)

          This bill:

          1)Authorizes the governing board of the LAUSD, before December  
            31, 2020, to use best value procurement for projects over $1  

          2)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)   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  


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            of the pilot:

             a)   "Best value score" as the resulting score when the  
               bidder's price is divided by the bidder's qualification  

             b)   "Skilled journeyperson" as a worker who either graduated  
               from an applicable apprenticeship 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 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  


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            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.

             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  

          6)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. 

          7)Requires a school district that uses the best value  
            procurement method to submit an interim and final report,  
            prepared by an independent third party, on its use, to be  
            delivered to the appropriate policy and fiscal committees of  
            the Legislature, as specified. 

          8)Sunsets these provisions on January 1, 2021.

          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  
            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  


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            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 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. 

          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  


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            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 the Senate  
            Education Committee on June 10, 2015, by a vote of 6-2.
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No

          According to the Senate Appropriations Committee, there are  
          unknown, but potentially significant 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 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  

          SUPPORT:   (Verified8/28/15)

          None received

          OPPOSITION:   (Verified8/28/15)

          None received

          ASSEMBLY FLOOR:  48-23, 5/22/15
          AYES:  Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos,  
            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,  
            Frazier, Eduardo Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,  
            Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez,  
            Low, McCarty, Medina, Mullin, Nazarian, Perea, Quirk, Rendon,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,  
            Thurmond, Ting, Wilk, Williams, Wood, Atkins
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Chang, Chávez,  
            Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones,  
            Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte,  
            Patterson, Steinorth, Wagner


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          NO VOTE RECORDED:  Alejo, Brough, Cristina Garcia, Gipson,  
            Linder, O'Donnell, Olsen, Waldron, Weber

          Prepared by:Kathleen Chavira / ED. / (916) 651-4105
          8/30/15 19:06:25

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