Amended in Assembly April 5, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2551


Introduced by Assembly Membersbegin delete Gallagher and Olsenend deletebegin insert Gallagher, Olsen, and Salasend insert

(Principal coauthor: Senator Nielsen)

February 19, 2016


An act to addbegin delete Section 79714.5 to the Water Code,end deletebegin insert Article 60.6 (commencing with Section 20928) to Chapter 1 of Part 3 of Division 2 of the Public Contract Code,end insert relating to water.

LEGISLATIVE COUNSEL’S DIGEST

AB 2551, as amended, Gallagher. begin deleteSurface storage: design-build contracts. end deletebegin insertContract procurement: surface storage projects.end insert

begin insert

The Local Agency Public Construction Act establishes procedures and requirements for contracting by local agencies for the construction of public works, including the requirement to award the contract to the lowest responsible bidder. Existing law governing specified water districts requires those districts to use competitive bidding and to award the contract to the lowest responsible bidder.

end insert
begin insert

This bill would allow a local agency to use the construction management at-risk, design-build, public-private partnership, or design-build-operate method of delivery on a surface storage project, as described. The bill would require these contracts to be awarded on a best value basis or to the lowest responsible bidder, and establish a procurement process for these contracts. The bill would require the bidder to certify specified information under penalty of perjury. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would also prohibit a contracting entity from being prequalified or shortlisted unless it provides an enforceable commitment to the local agency that the entity and its subcontractors who will be doing construction on the project will use a skilled and trained workforce to perform all work on the project or contract that falls within an apprenticeable occupation in the building and construction trades, as specified.

end insert
begin insert

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.

end insert
begin insert

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

end insert
begin delete

Existing law, the Water Quality, Supply, and Infrastructure Improvement Act of 2014, approved by the voters as Proposition 1 at the November 4, 2014, statewide general election, authorizes the issuance of general obligation bonds in the amount of $7,545,000,000 to finance a water quality, supply, and infrastructure improvement program. The bond act provides that the sum of $2,700,000,000 is continuously appropriated from the fund to the California Water Commission for public benefits associated with water storage projects that improve the operation of the state water system, are cost effective, and provide a net improvement in ecosystem and water quality conditions.

end delete
begin delete

This bill would authorize certain surface storage projects that receive Proposition 1 funding to use the design-build method of project delivery.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

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

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertArticle 60.6 (commencing with Section 20928) is
2added to Chapter 1 of Part 3 of Division 2 of the end insert
begin insertPublic Contract
3Code
end insert
begin insert, to read:end insert

4 

begin insert
5Article begin insert60.6.end insert  begin insertSurface Storage Projectsend insert
end insert
6

 

begin insert
7

begin insert20928.end insert  

The Legislature finds and declares that alternative
8project delivery, using the best value procurement methodology,
9has been authorized for various agencies that have reported
10benefits from those projects, including reduced project costs,
P3    1expedited project completion, and design features that are not
2achievable through the traditional design-bid-build method.

end insert
begin insert
3

begin insert20928.1.end insert  

(a) A surface storage project identified in the
4CALFED Bay-Delta Program Record of Decision, dated August
528, 2000, that receives funding pursuant to Division 26.7
6(commencing with Section 79703) of the Water Code may use the
7following methods of project delivery:

8
(1) Construction management at-risk.

9
(2) Design-build.

10
(3) Public-private partnership.

11
(4) Design-build-operate.

12
(b) The contract shall be awarded on a best value basis or to
13the lowest responsible bidder.

end insert
begin insert
14

begin insert20928.2.end insert  

The procurement process for the project shall
15progress as follows:

16
(a) The local agency shall prepare a set of documents setting
17forth the scope and estimated price of the project. The documents
18may include, but need not be limited to, the size, type, and desired
19design character of the project, performance specifications
20covering the quality of materials, equipment, workmanship,
21preliminary plans or building layouts, or any other information
22deemed necessary to describe adequately the local agency’s needs.
23The performance specifications and any plans shall be prepared
24by a design professional who is duly licensed and registered in
25California.

26
(b) The local agency shall prepare and issue a request for
27qualifications in order to prequalify or short-list the entities whose
28bids shall be evaluated for final selection. The request for
29qualifications shall include, but need not be limited to, the
30following elements:

31
(1) Identification of the basic scope and needs of the project or
32contract, the expected cost range, the methodology that will be
33used by the local agency to evaluate bids, the procedure for final
34selection of the bidder, and any other information deemed
35necessary by the local agency to inform interested parties of the
36contracting opportunity.

37
(2) Significant factors that the local agency reasonably expects
38to consider in evaluating qualifications, including technical design,
39construction expertise, acceptable safety records, and all other
40nonprice-related factors.

P4    1
(3) A standard template request for statements of qualifications
2prepared by the local agency. In preparing the standard template,
3the local agency may consult with the construction industry, the
4building trades and surety industry, and other local agencies
5interested in using the authorization provided by this article. The
6template shall require all of the following information:

7
(A) If the bidder is a privately held corporation, limited liability
8company, partnership, or joint venture, a listing of all of the
9shareholders, partners, or members known at the time of statement
10of qualification submission who will perform work on the project.

11
(B) Evidence that the members of the contracting team have
12completed, or demonstrated the experience, competency, capability,
13and capacity to complete, projects of similar size, scope, or
14complexity and that proposed key personnel have sufficient
15experience and training to competently manage and complete the
16project, and a financial statement that ensures that the bidder has
17the capacity to complete the project.

18
(C) The licenses, registration, and credentials required for the
19project, including, but not limited to, information on the revocation
20or suspension of any license, credential, or registration.

21
(D) Evidence that establishes that the bidder has the capacity
22to obtain all required payment and performance bonding, liability
23insurance, and errors and omissions insurance.

24
(E) Information concerning workers’ compensation experience
25history and a worker safety program.

26
(F) An acceptable safety record. A bidder’s safety record shall
27be deemed acceptable if its experience modification rate for the
28most recent three-year period is an average of 1.00 or less, and
29its average total recordable injury or illness rate and average lost
30work rate for the most recent three-year period does not exceed
31the applicable statistical standards for its business category or if
32the bidder is a party to an alternative dispute resolution system
33as provided for in Section 3201.5 of the Labor Code.

34
(4) The information required under this subdivision shall be
35certified under penalty of perjury by the bidder and its general
36partners or joint venture members.

37
(c) A contracting entity shall not be prequalified or shortlisted
38unless the entity provides an enforceable commitment to the local
39agency that the entity and its subcontractors who will be doing
40construction on the project will use a skilled and trained workforce
P5    1to perform all work on the project or contract that falls within an
2apprenticeable occupation in the building and construction trades
3in effect at the time the request for qualifications is issued.

4
(1) For purposes of this subdivision:

5
(A) “Apprenticeable occupation” means an occupation for
6which the chief had approved an apprenticeship program pursuant
7to Section 3075 of the Labor Code prior to January 1, 2014.

8
(B) “Skilled and trained workforce” means a workforce that
9meets all of the following conditions:

10
(i) All the workers are either skilled journeypersons or
11apprentices registered in an apprenticeship program approved by
12the Chief of the Division of Apprenticeship Standards.

13
(ii) (I) At the start of construction, at least 20 percent of the
14skilled journeypersons employed to perform work on the contract
15or project by the bidder and each of its subcontractors at every
16tier are graduates of an apprenticeship program for the applicable
17occupation that was either approved by the Chief of the Division
18of Apprenticeship Standards pursuant to Section 3075 of the Labor
19Code or located outside California and approved for federal
20purposes pursuant to the apprenticeship regulations adopted by
21the federal Secretary of Labor.

22
(II) By the second year of construction, and every year
23thereafter, the workforce requirements of subclause (I) shall
24increase by 10 percent until at least 50 percent of skilled
25journeypersons employed to perform work on the contract or
26project by the bidder and each of its subcontractors at every tier
27are graduates of an apprenticeship program for the applicable
28occupation that was either approved by the Chief of the Division
29of Apprenticeship Standards pursuant to Section 3075 of the Labor
30Code or located outside California and approved for federal
31purposes pursuant to the apprenticeship regulations adopted by
32the federal Secretary of Labor.

33
(iii) For an apprenticeable occupation in which no
34apprenticeship program had been approved by the chief prior to
35January 1, 1995, up to one-half of the graduation percentage
36requirements of clause (ii) may be satisfied by skilled
37journeypersons who commenced working in the apprenticeable
38occupation prior to the chief’s approval of an apprenticeship
39program for that occupation in the county in which the project is
40located.

P6    1
(C) “Skilled journeyperson” means a worker who either:

2
(i) Graduated from an apprenticeship program for the
3applicable occupation that was approved by the chief or located
4outside California and approved for federal purposes pursuant to
5the apprenticeship regulations adopted by the federal Secretary
6of Labor.

7
(ii) Has at least as many hours of on-the-job experience in the
8applicable occupation as would be required to graduate from an
9apprenticeship program for the applicable occupation that is
10approved by the chief.

11
(2) An entity’s commitment that a skilled and trained workforce
12will be used to perform the project or contract may be established
13by any of the following:

14
(A) The entity’s agreement with the local agency that the entity
15and its subcontractors at every tier will comply with this
16subdivision and that the entity will provide the local agency with
17evidence, on a monthly basis while the project or contract is being
18performed, that the entity and its subcontractors are complying
19with the requirements of this subdivision.

20
(B) If the local agency has entered into a project labor
21agreement that will bind all contractors and subcontractors
22performing work on the project or contract and that includes the
23requirements of this subdivision, the entity’s agreement that it will
24become a party to that project labor agreement.

25
(C) Evidence that the entity has entered into a project labor
26agreement or equivalent document that includes the requirements
27of this subdivision and that will bind the bidder and all its
28subcontractors who performed construction work on the project.

29
(d) The local agency shall make the list of prequalified entities
30available to the public.

31
(e) Based on the documents prepared as described in subdivision
32(a), the local agency shall prepare a request for bids that invites
33prequalified or short-listed entities to submit competitive sealed
34bids in the manner prescribed by the local agency. The request
35for bids shall include, but need not be limited to, all of the following
36elements:

37
(1) Identification of the basic scope and needs of the project or
38contract, the estimated cost of the project, the methodology that
39will be used by the local agency to evaluate bids, whether the
40contract will be awarded on the basis of best value or to the lowest
P7    1responsible bidder, and any other information deemed necessary
2by the local agency to inform interested parties of the contracting
3opportunity.

4
(2) Significant factors that the local agency reasonably expects
5to consider in evaluating bids, including, but not limited to, cost
6or price and all nonprice-related factors.

7
(3) The relative importance or the weight assigned to each of
8the factors identified in the request for bids.

9
(4) If a best value selection method is used, the local agency
10may reserve the right to request bid revisions and hold discussions
11and negotiations with responsive bidders, in which case the local
12agency shall so specify in the request for bids and shall publish
13separately or incorporate into the request for bids applicable
14procedures to be observed by the local agency to ensure that any
15discussions or negotiations are conducted in good faith.

16
(f) For those projects utilizing low bid as the final selection
17method, the competitive bidding process shall result in lump-sum
18bids by the prequalified or short-listed entities, and awards shall
19be made to the bidder that is the lowest responsible bidder.

20
(g) For those projects utilizing best value as a selection method,
21the competition shall progress as follows:

22
(1) Competitive bids shall be evaluated by using only the criteria
23and selection procedures specifically identified in the request for
24bids. The following minimum factors, however, shall be weighted
25as deemed appropriate by the local agency:

26
(A) Price, unless a stipulated sum is specified and including
27financial and bonding capacity requirements.

28
(B) Technical design, procurement, and construction expertise.

29
(C) Proposed construction approach, sequencing, and methods.

30
(D) Compliance with the requirements of the owner-provided
31performance specification.

32
(E) Ability to meet the milestone schedule dates and, if
33applicable, any liquidated damages.

34
(F) Ability to meet the quality requirements.

35
(G) Proposed risk allocation and sharing.

36
(H) Safety record.

37
(I) Warranty.

38
(J) Lifecycle costs over 15 or more years as specified by the
39local agency.

P8    1
(2) Pursuant to subdivision (d), the local agency may hold
2discussions or negotiations with responsive bidders using the
3process articulated in the local agency’s request for bids.

4
(3) When the evaluation is complete, the responsive bidders
5shall be ranked based on a determination of value provided by the
6local agency if no more than three bidders are required to be
7ranked.

8
(4) The award of the contract shall be made to the responsible
9bidder whose bid is determined by the local agency to have offered
10the best value to the public.

11
(5) Notwithstanding any provision of the Water Code, upon
12issuance of a contract award the local agency shall publicly
13announce its award, identifying the bidder to which the award is
14made, along with a statement regarding the basis of the award.

15
(6) The statement regarding the local agency’s contract award,
16described in paragraph (5), and the contract file shall provide
17sufficient information to satisfy an external audit.

end insert
begin insert
18

begin insert20928.3.end insert  

(a) The local agency, in each request for proposals,
19may identify specific types of subcontractors that must be included
20in the entity statement of qualifications and proposal.

21
(b) Following award of the contract, the entity shall proceed
22as follows in awarding construction subcontracts with a value
23exceeding one-half of 1 percent of the contract price allocable to
24construction work:

25
(1) Provide public notice of availability of work to be
26subcontracted in accordance with the publication requirements
27applicable to the competitive bidding process of the local agency,
28including a fixed date and time on which qualification statements,
29bids, or proposals will be due.

30
(2) Establish reasonable qualification criteria and standards.

31
(3) Award the subcontract either on a best value basis or to the
32lowest responsible bidder. The process may include
33prequalification or short-listing. The foregoing process does not
34apply to construction subcontractors listed in the original proposal.

end insert
35begin insert

begin insertSEC. 2.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
36Section 6 of Article XIII B of the California Constitution because
37the only costs that may be incurred by a local agency or school
38district will be incurred because this act creates a new crime or
39infraction, eliminates a crime or infraction, or changes the penalty
40for a crime or infraction, within the meaning of Section 17556 of
P9    1the Government Code, or changes the definition of a crime within
2the meaning of Section 6 of Article XIII B of the California
3Constitution.

end insert
begin delete4

SECTION 1.  

Section 79714.5 is added to the Water Code, to
5read:

6

79714.5.  

A surface storage project identified in the CALFED
7Bay-Delta Program Record of Decision, dated August 28, 2000,
8that receives funding pursuant to this division may use the
9design-build method of project delivery.

end delete


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