Amended in Assembly April 30, 2015

Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1431

Introduced by Assembly Member Gomez

February 27, 2015

An act to add and repeal Article 60.4 (commencing with Section 20919.20) of Chapter 1 of Part 3 of Division 2 of the Public Contract Code, relating to local public contracting.

LEGISLATIVE COUNSEL’S DIGEST

AB 1431, as amended, Gomez. Local Agency Public Construction Act: job order contracting.

Existing law, the Local Agency Public Construction Act, authorizes job order contracting, as provided, by the Los Angeles Unified School District (LAUSD), until December begin delete 1, end delete begin insert 31, end insert 2020.

This bill would authorize job order contracting in a similar manner for school districts other than LAUSD until January 1, 2022. The bill would restrict job order contracting pursuant to the bill to school districts that have entered into a project labor agreement or agreements, as defined, that will apply to all public works in excess of $25,000 undertaken by the school district through at least December 31, 2021, regardless of what contracting procedure is used to award that work. The bill would require job order contractors to submit a questionnaire to the school district containing specified information verified under oath. By expanding the crime of perjury, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

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

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

SECTION 1.  

Article 60.4 (commencing with Section 20919.20)
is added to Chapter 1 of Part 3 of Division 2 of the Public Contract
Code, to read:

 

Article 60.4.  Job Order Contracting for School Districts

 

20919.20.  

The Legislature finds and declares all of the
following:

(a) It is the intent of the Legislature, in enacting this article, to
demonstrate an alternative and optional procedure for bidding of
public works projects that is applicable only to school districts
other than the Los Angeles Unified School District. The Legislature
has previously authorized the use of this alternative and optional
procedure in Article 60.3 (commencing with Section 20219) only
for the Los Angeles Unified School District, which is using the
procedure in conjunction with its project stabilization agreement.

(b) Districts should be able to utilize cost-effective options for
the delivery of public works projects, in accordance with the
national trend, which include authorizations in California, to allow
public entities to utilize job order contracts as a project delivery
method.

(c) The benefits of a job order contract project delivery system
include accelerated completion of the projects, cost savings, and
reduction of construction contracting complexity for the unified
school district.

(d) The job order contracting approach should be used for the
purposes of reducing project cost and expediting project
completion.

(e) The Legislature is uncertain of the benefits and advantages
of job order contracting for California school districts and therefore
looks forward to the reports required by Section 20919.32 in order
to fully and competently assess any further exemptions to the
school contracting process.

(f) The availability of job order contracting as a project delivery
method will not preclude the use of traditional methods of project
delivery if a traditional method results in higher cost savings.

(g) It is the intent of the Legislature that job order contracts be
competitively bid and awarded to the bidder providing the most
qualified responsive bid. It is further the intent of the Legislature
that school districts use the job order contract process pursuant to
this article only if the school district has entered into a project
labor agreement that meets the requirements of Section 2500 for
all its public works projects.

20919.21.  

As used in this chapter:

(a) “Adjustment factor” means the job order contractor’s
competitively bid adjustment to the school district’s prices as
published in the catalog of construction tasks.

(b) “Catalog of construction tasks” means a book containing
specific construction tasks and the unit prices to install or demolish
that construction. The listed tasks shall be based on generally
accepted industry standards and information, where available, for
various items of work to be performed by the job order contractor.
The prices shall include the cost of materials, labor, and equipment
for performing the items of work. The prices shall not include
overhead and profit. All unit prices shall be developed using local
prevailing wages.

(c) “Indefinite quantity” means one or more of the construction
tasks listed in the catalog of construction tasks.

(d) “Job order” means a firm, fixed priced, lump-sum order
issued by the school district to a job order contractor for a definite
project scope of work as compiled from the catalog of construction
tasks to be performed pursuant to a job order contract. No single
job order may exceed one million dollars ($1,000,000) in value.

(e) “Job order contract” means a contract, awarded to the most
qualified bidder as described in paragraph (1) of subdivision (b)
of Section 20919.24, between the school district and a licensed,
bonded, and general liability insured contractor in which the
contractor agrees to a fixed period, fixed unit price, and indefinite
quantity contract that provides for the use of job orders for public
works or maintenance projects.

(f) “Job order contract technical specifications” means a book,
published by the school district, detailing the technical
specifications with regard to quality of materials and workmanship
to be used by the job order contractor in accomplishing the tasks
listed in the catalog of construction tasks.

(g) “Job order contractor” means a licensed, bonded, and general
liability insured contractor awarded a job order contract.

(h) “Offer to perform work” means the job order contractor’s
proposal for a specific job order.

(i) “Plans and specifications” means the catalog of construction
tasks and the job order contract technical specifications. The scope
of work to be performed with a job order contract is potentially,
but not necessarily, all the tasks published in the catalog of
construction tasks.

(j) “Project” means the specific requirements and work to be
accomplished by the job order contractor in connection with an
individual job order.

(k) “Project labor agreement” means an agreement that meets
the requirements of Section 2500.

(l) “Project scope of work” means the document and related
drawings, specifications, and writings referenced therein which
together set forth the specific requirements and work to be
accomplished by the job order contractor in connection with an
individual job order.

(m) “Proposal” means the job order contractor prepared
document quoting those construction tasks listed in the catalog of
construction tasks that the job order contractor requires to complete
the project scope of work, together with the appropriate quantities
of each task. The pricing of each task shall be accomplished by
multiplying the construction task unit price by the proposed
quantity and the contractor’s competitively bid adjustment factor.
The proposal shall also contain a schedule for the completion of
a specific project scope of work as requested by the school district.
The proposal may also contain approved drawings, work schedule,
permits, or other documentation as the school district may require
for a specific job order.

(n) “Public works” has the same meaning as in Chapter 1
(commencing with Section 1720) of Part 7 of Division 2 of the
Labor Code.

(o) “Public works project” has the same meaning as “public
project,” as defined in Section 22002.

(p) “Subcontractor” means any person, firm, or corporation,
other than the employees of the job order contractor, who is bonded
and general liability insured and who contracts to furnish labor,
or labor and materials, at the worksite or in connection with a job
order, whether directly or indirectly on behalf of the job order
contractor.

(q) “School district” means any school district other than the
Los Angeles Unified School District.

20919.22.  

Nothing in this article or in this code shall prohibit
the school district from utilizing job order contracting, as an
alternative to any contracting procedures that the school district
is otherwise authorized or required by law to use.

20919.23.  

(a) The school district may utilize job order
contracting pursuant to this article only if the school district has
entered into a project labor agreement or agreements that will apply
to all public works in excess of twenty-five thousand dollars
($25,000) undertaken by the school district through at least
December 31, 2021, regardless of what contracting procedure is
used to award that work.

(b) The school district shall prepare an execution plan for all
modernization projects that may be eligible for job order
contracting pursuant to this article. The school district shall select
from that plan a sufficient number of projects to be initiated as job
order contracts during each calendar year and shall determine for
each selected project that job order contracting will reduce the
total cost of that project. Job order contracting shall not be used if
the school district finds that it will increase the total cost of the
project.

20919.24.  

Bidding for job order contracts shall progress as
follows:

(a) (1) The school district shall prepare a set of documents for
each job order contract. The documents shall include a catalog of
construction tasks and preestablished unit prices, job order contract
technical specifications, and any other information deemed
necessary to describe adequately the school district’s needs.

(2) Any architect, engineer, or consultant retained by the school
district to assist in the development of the job order contract
documents shall not be eligible to participate in the preparation of
a bid with any job order contractor.

(b) Based on the documents prepared under subdivision (a), the
school district shall prepare a request for bid that invites
prequalified job order contractors to submit competitive sealed
bids in the manner prescribed by the school district.

(1) (A) The prequalified job order contractors, as determined
by the school district, shall bid one or more adjustment factors to
the unit prices listed in the catalog of construction tasks based on
the job order contract technical specifications. Awards shall be
made to the prequalified bidder that the school district determines
to be the most qualified based upon preestablished criteria made
by the school district. The prequalified bidder must be in
compliance with the school district’s project labor agreement.

(B) Compliance shall constitute no more than three major
violations on any school district projects within the last three years.
If a contractor has more than three violations within a three-year
period of time, the school district shall seek administrative review
of the violations. Violations will include, but are not limited to,
the following:

(i) Failure to register core workers with the appropriate building
trade union.

(ii) Failure to assign apprentices in accordance with Section
1777.5 of the Labor Code.

(iii) Failure to comply with subdivision (c) of Section 20919.25.

(iv) Incorrect assignment of work in accordance with the school
district’s project labor agreement.

(2) The school district may award multiple job order contracts.
Each job order contract shall be awarded to the most qualified
prequalified bidder described in paragraph (1).

(3) The request for bids may encourage the participation of local
construction firms and the use of local subcontractors.

(c) (1) The school district shall establish a procedure to
prequalify job order contractors using a standard questionnaire
that includes, at a minimum, the issues covered by the standardized
questionnaire and model guidelines for rating bidders developed
by the Department of Industrial Relations pursuant to subdivision
(a) of Section 20101. This questionnaire shall require information
including, but not limited to, all of the following:

(A) If the job order contractor is a partnership, limited
partnership, or other association, a listing of all of the partners or
association members known at the time of bid submission who
will participate in the job order contract.

(B) Evidence that the members of the job order contractor have
the capacity to complete projects of similar size, scope, or
complexity, and that proposed key personnel have sufficient
experience and training to competently manage the construction
of the project, as well as a financial statement that assures the
school district that the job order contractor has the capacity to
complete the project.

(C) The licenses, registration, and credentials required to
perform construction, including, but not limited to, information
on the revocation or suspension of any license, credential, or
registration.

(D) Evidence that establishes that the job order contractor has
the capacity to obtain all required payment and performance
bonding and liability insurance.

(E) Information concerning workers’ compensation experience
history, worker safety programs, and apprenticeship programs.

(i) An acceptable safety record as determined by the school
district. In its determination, the school district shall consider, but
is not required to find, a contractor’s safety record as acceptable
if its experience modification rate for the most recent three-year
period is an average of 1.00 or less, and its average total recordable
injury/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 contractor is a party to an
alternative dispute resolution system as provided for in Section
3201.5 of the Labor Code.

(ii) Skilled labor force availability as determined by the
existence of an agreement with a registered apprenticeship program,
approved by the California Apprenticeship Council, that has
graduated apprentices in each of the preceding five years. This
graduation training for any craft that was first deemed by the
Department of Labor and the Department of Industrial Relations
to be an apprenticeable craft within the five years prior to the
effective date of this article.

(F) A full disclosure regarding all of the following that are
applicable:

(i) Any serious or willful violation of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code or the federal
Occupational Safety and Health Act of 1970 (Public Law 91-596),
settled against any member of the job order contractor.

(ii) Any debarment, disqualification, or removal from a federal,
state, or local government public works project.

(iii) Any instance where the job order contractor, or its owners,
officers, or managing employees submitted a bid on a public works
project and were found to be nonresponsive, or were found by an
awarding body not to be a responsible bidder.

(iv) Any instance where the job order contractor, or its owners,
officers, or managing employees defaulted on a construction
contract.

(v) Any violations of the Contractors’ State License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), excluding alleged violations of
federal or state law regarding the payment of wages, benefits,
apprenticeship requirements, or personal income tax withholding,
or of Federal Insurance Contribution Act (FICA) withholding
requirements settled against any member of the job order
contractor.

(vi) Any bankruptcy or receivership of any member of the job
order contractor, including, but not limited to, information
concerning any work completed by a surety.

(vii) Any settled adverse claims, disputes, or lawsuits between
the owner of a public works project and any member of the job
order contractor during the five years preceding submission of a
bid under this article, in which the claim, settlement, or judgment
exceeds fifty thousand dollars ($50,000). Information shall also
be provided concerning any work completed by a surety during
this period.

(G) In the case of a partnership or any association that is not a
legal entity, a copy of the agreement creating the partnership or
association and specifying that all partners or association members
agree to be fully liable for the performance under the job order
contract.

(2) The information required under this subdivision shall be
verified under oath by the entity and its members in the manner
in which civil pleadings in civil actions are verified. Information
that is not a public record under the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code) shall not be open to public
inspection.

20919.25.  

(a) The maximum total dollar amount that may be
awarded under a single job order contract shall not exceed five
million dollars ($5,000,000) in the first term of the job order
contract and, if extended or renewed, ten million dollars
($10,000,000) over the maximum two terms of the job order
contract adjusted annually to reflect the percentage change in the
California Consumer Price Index.

(b) Job order contracts may be executed for an initial contract
term of no more than 12 months, with the option of extending or
renewing the job order contract for two 12-month periods. The
term of the job order contract shall be for the contract term or
whenever the maximum value of the contract is achieved,
whichever is less. All extensions or renewals shall be priced as
provided in the request for bids. The extension or renewal shall
be mutually agreed to by the school district and the job order
contractor.

(c) The school district may issue job orders to the job order
contractor that has been awarded the job order contract. The job
order issued to the job order contractor shall not commence for
seven days from the time the job order was issued and the job order
contractor shall provide a minimum of seven days notice for the
addition of any subcontractor or substitution of any subcontractor
as described in subdivision (e) of Section 20919.26. The job order
shall be based on a project scope of work prepared by the school
district as well as a proposal from the job order contractor who is
awarded the job order contract. No single job order may exceed
one million dollars ($1,000,000).

(d) It is unlawful to split or separate into smaller job orders any
project for the purpose of evading the cost limitation provisions
of this chapter.

(e) All work performed under the job order contract shall be
covered by a project begin delete stabilization end delete begin insert labor end insert agreement.

(f) Any change or alteration to a job order shall be in compliance
with Section 20118.4.

20919.26.  

(a) All work bid under the job order shall comply
with Chapter 4 (commencing with Section 4100) of Part 1 and is
subject to all of the penalties and provisions set forth in that
chapter.

(b) For purposes of this article, if the primary job order
contractor chooses to use subcontractors, the primary job order
contractor is required to verify that the subcontractors possess the
appropriate licenses and credentials required to perform
construction.

(c) Notwithstanding subdivision (a), the primary job order
contractor may use subcontractors that are not listed at the time
the job order is issued if the work to be performed under that job
order is less than ten thousand dollars ($10,000).

(d) If the primary job order contractor chooses to use a
subcontractor that is not listed at the time of bid to perform work
on a job order, both of the following apply:

(1) The primary job order contractor shall provide public notice
of the availability of work to be subcontracted by trade. The public
notice shall include the scope of work; the project location; the
name, address, and the telephone number of the primary job order
contractor; and the closing date, time, and location for sealed bids
to be submitted.

(2) The primary job order contractor shall take sealed bids from
the subcontractors solicited for the proposal. These bids shall be
publicly opened at a prescribed time and place by the primary job
order contractor. After the bids are opened, the job order contractor
shall notify the school district which subcontractor was selected.

(3) The notification shall include every subcontractor for all
tiers and must establish the authorized subcontractor list for the
job order. Work shall not commence prior to seven days notice of
the established subcontractor list and the subsequent addition of
any subcontractor to the job order.

(4) The notification shall identify the scope of the work to be
performed by each subcontractor to the job order, broken down
by craft. If a subcontractor performs multiple crafts, the job order
contractor shall identify the work of each craft to be performed.

(e) If the primary job order contractor chooses to make a
substitution to the subcontractor list, the primary job order
contractor shall provide a minimum of seven days’ notice to the
school district along with justification as to the need for the
substitution. The school district may request a hearing to evaluate
the substitution request, which shall be in accordance with Chapter
4 (commencing with Section 4100) of Part 1.

(f) If the school district determines that there has been a violation
of Chapter 4 (commencing with Section 4100) of Part 1, including
bid shopping by the primary job order contractor, the school district
may terminate the job order or the contractor may lose
authorization to proceed with awarded work subject to the school
district’s administrative due process review, if such review is
established pursuant to the school district’s project labor agreement.
If the school district determines that a job order contractor has
violated any provision set forth in Chapter 4 (commencing with
Section 4100) of Part 1, the school district may declare the
contractor ineligible for future job orders and may result in a loss
of prequalification status for a period of time to be determined by
the school district.

20919.27.  

(a) A job order contract shall set forth in the general
conditions of the job order contract the party or parties responsible
for seeing that the provisions of Article 2 (commencing with
Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor
Code are complied with.

(b) For purposes of job order contracting, prevailing wages
when required to be paid shall apply to all work ordered under the
job order contract regardless of thresholds set forth in Section
1771.5 of the Labor Code.

(c) The job order contractor shall pay the prevailing wage in
effect at the time the job order is issued by the school district and
all increases as published by the Department of Industrial Relations
for the term of the job order contract, including all overtime,
holiday, and shift provisions published by the Department of
Industrial Relations.

(d) The school district shall designate one individual begin delete within its
labor compliance office end delete to act as a monitor to inspect job sites for
labor compliance violations at the request of the designated labor
representative in its project labor agreement.

20919.28.  

A willful violation of Section 20919.26 occurs when
the job order contractor or subcontractor knew or reasonably should
have known of his or her obligations under the public works law
and deliberately fails or refuses to comply with its provisions. The
school district using job order contracting shall publish and
distribute to the Labor Commissioner a list of all job order
contractors or subcontractors who violate this provision and the
school district shall not award a job order contract or any future
job orders under an existing job order contract to any contractor
or subcontractor who violates this provision during the effective
period of debarment of the contractor or subcontractor.

20919.29.  

For purposes of employment of apprentices on job
order contracts, when the individual job order involves more than
thirty thousand dollars ($30,000) or 20 working days, all general
contractors or subcontractors shall at all times be in compliance
with Section 1777.5 of the Labor Code and shall comply with the
following:

(a) Prior to commencing work on an individual job order, every
contractor shall submit job order award information to an
applicable apprenticeship program that can supply apprentices to
the site of the job order. The information submitted shall include
an estimate of the journeyman hours to be performed under the
contract, the number of apprenticeships proposed to be employed,
and the approximate dates the apprentices would be employed. A
copy of this information shall also be submitted to the awarding
agency if requested by the awarding agency.

(b) The ratio of work performed by apprentices to journeymen
employed in a particular craft or trade on the job order may be no
higher than the ratio stipulated in the apprenticeship standard under
which the apprenticeship program operates where the job order
contractor agrees to be bound by those standards but, except as
otherwise provided in Section 1777.5 of the Labor Code, in no
case shall the ratio be less than one hour of apprenticeship work
for every five hours of journeyman work.

(c) Every apprentice employed under the job order contract shall
be paid the prevailing rate of per diem wages for apprentices in
the trade to which he or she is registered and shall be employed
only at the work of the craft or trade to which he or she is
registered.

(d) Every apprentice employed under the job order contract
shall be hired from the local joint labor management apprenticeship
committee that has jurisdiction in the geographic area of the
project.

20919.30.  

A job order contractor or subcontractor that
knowingly violates the provisions involving employment of
apprentices shall forfeit as a civil penalty an amount not exceeding
one hundred dollars ($100) for each full calendar day of
noncompliance. The amount of this penalty shall be based on
consideration of whether the violation was a good faith mistake
due to inadvertence. A contractor or subcontractor that knowingly
commits a second or subsequent violation of the provisions
involving employment of apprentices within a three-year period
where the noncompliance results in apprenticeship training not
being provided as required, shall forfeit as a civil penalty a sum
of not more than three hundred dollars ($300) for each full calendar
day of noncompliance and shall not be awarded any further job
orders under the job order contract and shall be precluded for a
period of one year from bidding on any future job order contracts.

20919.31.  

In order to prevent fraud, waste, and abuse, the
school district adopting job order contracting shall do all of the
following:

(a) Prepare for each individual job order developed under a job
order contract an independent school district estimate. The estimate
will be prepared prior to the receipt of the contractor’s offer to
perform work and will be compared to the contractor’s proposed
price to determine the reasonableness of that price before issuance
of any job order. The basis for any adjustments to the school district
estimate is to be documented. In the event that the contractor’s
proposal for a given job order is found to be unreasonable, not cost
effective, or undesirable, the school district is under no obligation
to issue the job order to the job order contractor, and may instead
utilize any other available procurement procedures.

(b) The school district shall not issue a job order until the job
order has been reviewed and approved by at least two levels of
management.

(c) Once a job order has been issued, all documents pertaining
to preparation and approval of the job order, including the
independent school district estimate, shall be available for public
review.

20919.32.  

If the school district adopts the job order contracting
process, the school district shall submit to the Office of Public
School Construction in the Department of General Services, the
Senate Committee on Business, Professions and Economic
Development and Assembly Committee on Business, Professions
and Consumer Protection, the Senate and Assembly Committees
on Education, and the Joint Legislative Budget Committee before
December 31, 2019, a report containing a description of each job
order contract procured, and the work under each contract
completed on or before June 30, 2019. The report shall be prepared
by an independent third party and the school district shall pay for
the cost of the report. The report shall include, but not be limited
to, all of the following information:

(a) A listing of all projects completed under each job order
contract.

(b) The job order contractor that was awarded each contract.

(c) The estimated and actual project costs.

(d) The estimated procurement time savings.

(e) A description of any written protests concerning any aspect
of the solicitation, bid, proposal, or award of the job order contract,
including, but not limited to, the resolution of the protests.

(f) An assessment of the prequalification process and criteria.

(g) A description of the labor force compliance program required
under Section 20919.24, and an assessment of the impact on a
project where compliance with that program is required.

(h) Recommendations regarding the most appropriate uses for
the job order contract process.

20919.33.  

If, after 30 days from receipt of the invoice, a
contract has not been paid, the contractor shall contact the
designated school district employee to resolve payment. If the
contact with the school district’s designee does not provide full
payment within three business days, the contractor may request a
special convening of the payment resolution committee.

(a) The payment resolution committee shall be composed of a
representative of the contractor, a representative from labor, a
representative designated by the director of facilities within the
school district, and a representative designated by the director of
facilities support services within the school district.

(b) After convening, the committee shall make its
recommendation of payment within three business days.

begin delete

20919.34.  

It is the intent of the Legislature that a moratorium
be placed on the enactment of any additional legislation authorizing
school districts to use job order contracting until the Legislature
has received the reports required by Sections 20919.12 and
20919.32.

end delete

begin delete 20919.35. end delete
begin insert 20919.34. end insert   

This article shall remain in effect only until January
1, 2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2022, deletes or extends
that date.

SEC. 2.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.