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), et al.
Amended: 8/27/15 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.
Senate Floor Amendments of 8/27/15 conform the legislative
findings and declarations to amendments adopted in the policy
committee that eliminated reporting requirements and
consolidated the job order contracting statutes under a single
code section.
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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,
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' 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 Contractor
(JOC) pursuant to the 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
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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.
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 adopts 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
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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
workers.
2)Job order contracting. 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
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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
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: (Verified8/28/15)
State Building and Construction Trades Council
OPPOSITION: (Verified8/28/15)
Air Conditioning Trade Association
American Fire Sprinkler Association
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
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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,
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
8/31/15 12:48:02
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