BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1431 (Gomez) - Local Agency Public Construction Act: job
order contracting.
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|Version: June 25, 2015 |Policy Vote: ED. 6 - 2 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: July 13, 2015 |Consultant: Jillian Kissee |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: This bill expands an existing authority to use job
order contracting by the Los Angeles Unified School District
(LAUSD) to apply to all school districts until January 1, 2022.
Fiscal
Impact: This bill does not result in direct costs to the state.
It does not impose a state mandate, and school districts may
only choose this option if it does not result in increased
project costs. The number of school districts that would be
able to benefit from this option is unknown.
Background: Existing law authorizes the LAUSD to utilize a job order
contracting process, as specified, until December 1, 2020.
Existing law also requires the LAUSD to report as specified, if
it opts to use this authority. An interim report to specified
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committees of the Legislature and to the Office of Public School
Construction, prepared by an independent third party, is
required by January 30, 2017. A final report is due on December
31, 2019. Existing law also declares the Legislature's intent
that a moratorium be placed on the enactment of legislation
authorizing school districts to use job order contracting until
receipt of the required reports. (Public Contract Code §
20919-20919.15)
Job order contracting is a contracting procedure that allows for
the awarding of contracts based on prices for specific
construction tasks rather than bids for a specific project. A
catalog or book identifies all work that could be performed
(typically maintenance or modernization projects) and the unit
prices for each of those tasks. The tasks are based on accepted
industry standards and prices include the cost of materials,
labor, and equipment for performing the work, but exclude
overhead and profit. A contractor, who has been prequalified,
rather than bid a total price for the project, will bid an
adjustment factor, which reflects specified costs, to the
pre-set unit prices. The unit price, multiplied by the
adjustment factor equals the price the contractor is willing to
accept for completion of those tasks. When the school district
has a project that requires the tasks for which a contractor is
prequalified, the school district will issue a job order to the
contractor.
Job order contracting is intended to reduce costs and accelerate
completion of smaller projects; it is not generally viewed as an
appropriate method of contracting for large, complex
construction projects that require extensive or innovative
design or are likely to encounter changes and revisions during
constructions.
Proposed Law:
This bill establishes a structure for job order contracting as
an alternative procurement method for school districts until
January 1, 2022.
It requires that a school district may only use job order
contracting if it has entered into a public labor agreement that
will apply to all public works in excess of $25,000. If a
school district chooses this option it must: (1) prepare an
execution plan for all potentially eligible modernization
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programs; (2) select from the plan a sufficient number of
projects to be initiated as job order contracts; and (3)
determine for each selected project that job order contracting
will reduce the total cost of that project.
This bill requires a school district to prepare a request for
bid based on a unit price catalog and pre-established unit
prices, job order contract technical specifications, and other
information deemed necessary. Awards are to be made to the most
qualified bidder based on a prequalification process that is
required to be developed by the school district and adheres to
certain requirements. Prequalified bidders must be in
compliance with the school district's project labor agreement,
as specified.
This bill requires that the maximum amount that may be awarded
under a single job order contract must not exceed $5 million,
and if it is extended or renewed, a maximum of $10 million over
the subsequent two terms of the job order contract.
The school district is required to designate one individual to
monitor and inspect job sites for labor compliance violations at
the request of the designated labor representative in its
project labor agreement. This bill requires the school district
to publish and distribute to the Labor Commission a list of all
job order contractors or subcontractors who violate labor
provisions and precludes the awarding of jobs under the job
order contracting to those entities.
This bill establishes requirements for the employment of
apprentices on job order contracts, such as submitting specified
information to an applicable apprenticeship program that can
supply apprentices; certain ratios of work performed by
apprentices; that they be paid the prevailing rate of per diem
wages; and that they be hired from specified sources.
Finally, this bill requires that school districts using the job
order contracting process to submit a report to the Office of
Public School Construction and the Legislature by December 31,
AB 1431 (Gomez) Page 3 of
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2019 containing a description of each job order contract
procured, as specified, including recommendations regarding the
most appropriate uses for the job order contract process.
Related
Legislation: AB 566 (O'Donnell) expands prequalification
requirements for lease/leaseback and lease-to-own contracts, as
specified, and for school districts entering into these types of
contracts to use a skilled workforce, as specified. This bill
is pending on the Senate Floor.
AB 1185 (Ridley-Thomas) authorizes a pilot program for the LAUSD
to use best value procurement for certain projects and includes
skilled workforce requirements. This bill is pending in this
committee's Suspense File.
AB 1358 (Dababneh), among other things, reestablishes the
design-build authority to generally align with that which exists
for other state and local agencies and establishes extensive new
skilled workforce requirements. This bill is pending in this
committee.
Staff
Comments: Because the job order contracting process would be a
new tool available to school districts to use at their
discretion, does not disrupt current contracting procedures, and
cannot be used if a school district finds that it will increase
the total cost of the project, this bill does not appear to
impose direct costs to the state.
This bill outlines a detailed and prescriptive process which
must be followed if a school district chooses to use job order
contracting. It is unknown how many school districts will
ultimately use this process. To the extent school districts may
benefit from this contracting process and realize savings and
efficiencies, resources could be made available to address other
needs within the school district.
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Recommended
Amendments: Staff recommends the following amendments that: (1)
clarify that the requirements in this bill only apply to
districts that choose this contracting process; and (2)
streamline prequalification requirements; and (3) remove school
district reporting requirements.
20919.22. Nothing in this article or in this code shall prohibit
the school district from utilizing job order contracting,
Provisions in this article only apply to school districts that
choose to utilize job order contracting. A school district may
utilize job order contracting, when permitted by this article,
as an alternative to any contracting procedures that the school
district is otherwise authorized or required by law to use.
20919.24. Bidding for job order contracts shall progress as
follows:
(a) (1) The school district shall prepare a set of documents for
job order contracts. The documents shall include a unit price
catalog 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 unit price catalog based on the
job order contract technical specifications. Awards shall be
made to the prequalified bidders that the school district
determines to be the most qualified based upon preestablished
criteria made by the school district. The prequalified bidders
must be in compliance with the school district's project labor
agreement.
(B) Compliance shall constitute no more than three major
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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
through a request for bid. Job order contracts shall be awarded
to the most qualified prequalified bidders described in this
subdivision.
(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
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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
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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.
20919.32. 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.
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(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.
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