BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1431|
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                                   THIRD READING 


          Bill No:  AB 1431
          Author:   Gomez (D)
          Amended:  7/16/15 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

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 7/13/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           ASSEMBLY FLOOR:  50-25, 5/22/15 - See last page for vote

           SUBJECT:   Local Agency Public Construction Act:  job order  
                     contracting


          SOURCE:    Author


          DIGEST:  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. 


          ANALYSIS:   Existing law authorizes the LAUSD to utilize a job  
          order contracting process, as specified, until December 1, 2020,  
          and requires the LAUSD to report, as specified, if it opts to  
          use this authority. An interim report to specified committees of  
          the Legislature and to the Office of Public School Construction,  








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          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)



          This bill establishes the authority of all school districts to  
          utilize the job order contracting process subject to specified  
          requirements which are substantively similar to those  
          established under current law for the LAUSD. Specifically, this  
          bill:

        1)Authorizes school districts to utilize Job Order Contracting  
             (JOC) pursuant to this bill's provisions only if it has  
             entered into a Project Labor Agreement, or agreements, that  
             apply to all public works projects in excess of $25,000  
             through at least December 31, 2021, regardless of the  
             contracting procedure.

        2)Outlines requirements to be met by a district to use the JOC  
             process, including, preparation of an execution plan for all  
             potentially eligible modernization projects, the creation of  
             a catalog of construction tasks, unit prices, and technical  
             specifications, bid procedures, bidder requirements, and the  
             information to be provided by bidders.

        3)Requires a school district to establish a prequalification  
             procedure for job order contractors, as specified. 

        4)Establishes restrictions on the amount and terms of job order  
             contracts. 

        5)Requires that all JOC work comply with specified Public Contract  
             law relative to the use of subcontractors, authorizes the  
             termination of a contract, or the declaration that a  
             contractor is ineligible to bid, for violations of these  
             provisions, and makes additional provision for the use of  
             subcontractors, including public notice requirements and  
             bidding procedures, based upon the dollar amount of the work  
             to be performed. 








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        6)Requires the JOC to set forth the parties responsible for  
             ensuring compliance with specified labor law, establishes  
             requirements regarding the payment of  prevailing wages, and  
             requires the district to designate one individual to monitor  
             and inspect labor compliance violations at the request of the  
             designated labor representative.

        7)Requires specified notice by a school district to the Labor  
             Commission of any JOC contractors or subcontractors who  
             violate this bill's provisions regarding the use of  
             subcontractors and prohibits the awarding of a JOC or job  
             order to the offending contractors or subcontractors during  
             the effective period of debarment.  

        8)Establishes requirements for the employment of apprentices on  
             JOCs including the submission of specified information to an  
             applicable apprenticeship program, work ratios, payment of  
             prevailing rate of per diem wages, and the hiring of  
             apprentices from specified sources, and provides for civil  
             penalties and precludes the awarding of jobs under the JOC  
             for contractors who knowingly violate these provisions.

        9)Requires that a school district adopting JOC prepare an  
             independent estimate, as specified, for each individual job  
             order, and provides for managerial and public review of all  
             related documents in order to prevent fraud, waste and abuse.  
                

        10)Requires that a district that adopt JOC to adopt a payment  
             resolution process, which may include the convening of a  
             payment resolution committee.

        11)Sunsets this bill's provisions on January 1, 2022.

     Comments
     
       1)Need for the bill.  According to the author, the LAUSD JOC pilot  
            program has proven cost effective and efficient, in large part  
            because of the required Project Labor Agreement which ensures  
            access to a skilled workforce.  This bill proposes extension  
            of JOC to all districts based upon the LAUSD model (developed  
            collaboratively with the Los Angeles Building Trades Council),  
            which the author opines has resulted in improvements which  
            have benefitted LAUSD, local taxpayers, contractors, and  







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            workers. 

       2)JOC.  JOC 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.  Selection of the contractors is  
            based on the lowest responsible bidder.  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.  

            JOC 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.

       3)History of statute.  The authority for JOC was first extended to  
            the LAUSD on a pilot basis by AB 14 (Horton, Chapter 885,  
            Statutes of 2003).  AB 14 established a 2007 sunset date for  
            the pilot program and required an interim report on the use of  
            JOC by June 30, 2005, with a final report due by December 1,  
            2007.  Due to the short time frame, there was an absence of  
            meaningful information in the first report. AB 2362 (Horton,  
            Chapter 570, Statutes of 2006) was enacted to extend the  
            period for the JOC projects to December 1, 2012, and require a  
            report on its use by December 1, 2011 (see comment #4).   AB  
            2580 (Furutani, Chapter 825, Statutes of 2012) extended the  
            existing authorization to 2020 and established additional  
            reporting dates in 2017 for interim reporting, and 2019 for  
            final reporting.  

       4)LAUSD experience.  In its November 2011 report, the LAUSD reports  
            that, since the inception of JOC in 2005, the District has  







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            executed 138 master contracts with 44 different contracting  
            firms. As of November 1, 2011, the District had issued JOC  
            "master" contracts valued at up to $791 million, with total  
            contract receipts ranging from $200,000 to $10 million per  
            contractor.  For job orders completed through November 1,  
            2011, the LAUSD reports that actual project costs were reduced  
            by an average of 9.26% as compared to the estimates and the  
            procurement time.  The LAUSD reports that the procurement time  
            savings varied among projects, but overall, JOC produced  
            significant time savings and provided the district with a  
            valuable procurement tool.
          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes


          According to the Senate Appropriations Committee, 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.




          SUPPORT:   (Verified7/30/15)


          State Building and Construction Trades Council


          OPPOSITION:   (Verified7/30/15)


          Air Conditioning Trade Association
          American Fire Sprinkler Association
          Associated Builders and Contractors - San Diego Chapter
          Associated Builders and Contractors of California
          Plumbing-Heating-Cooling Contractors Association of California
          Western Electrical Contractors Association

          ASSEMBLY FLOOR:  50-25, 5/22/15
          AYES:  Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos,  







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            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman,  
            Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  
            Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin,  
            Jones-Sawyer, Levine, Linder, Lopez, Low, McCarty, Medina,  
            Mullin, Nazarian, Perea, Quirk, Rendon, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting,  
            Williams, Wood, Atkins
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,  
            Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,  
            Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez,  
            Obernolte, Patterson, Steinorth, Wagner, Wilk
          NO VOTE RECORDED:  Alejo, O'Donnell, Olsen, Waldron, Weber

          Prepared by:Kathleen Chavira / ED. / (916) 651-4105
          8/13/15 13:38:39


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