Amended in Assembly April 27, 2016

Amended in Assembly April 5, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2551

Introduced by Assembly Members Gallagher, Olsen, and Salas

(Principal coauthor: Senator Nielsen)

February 19, 2016

An act to add Article 60.6 (commencing with Section 20928) to Chapter 1 of Part 3 of Division 2 of the Public Contract Code, relating to water.

LEGISLATIVE COUNSEL’S DIGEST

AB 2551, as amended, Gallagher. Contract procurement: surface storage projects.

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.

This bill would allow a local agency to use the construction management at-risk, design-build, begin delete public-private partnership, end delete 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 begin delete shortlisted end delete begin insert short-listed end insert 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.

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 60.6 (commencing with Section 20928)
is added to Chapter 1 of Part 3 of Division 2 of the Public Contract
Code, to read:

 

Article 60.6.  Surface Storage Projects

 

20928.  

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

20928.1.  

(a) A surface storage project identified in the
CALFED Bay-Delta Program Record of Decision, dated August
28, 2000, that receives funding pursuant to Division 26.7
(commencing with Section 79703) of the Water Code may use the
following methods of project delivery:

(1) Construction management at-risk.

(2) Design-build.

begin delete

(3) Public-private partnership.

end delete begin delete

(4)

end delete

begin insert (3) end insert  Design-build-operate.

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

20928.2.  

The procurement process for the project shall progress
as follows:

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

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

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

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

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

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

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

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

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

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

(F) An acceptable safety record. A bidder’s safety record shall
be deemed 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 or illness rate and average lost work
rate for the most recent three-year period does not exceed the
applicable statistical standards for its business category or if the
bidder is a party to an alternative dispute resolution system as
provided for in Section 3201.5 of the Labor Code.

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

(c) A contracting entity shall not be prequalified or begin delete shortlisted end delete
begin insert short-listed end insert unless the entity 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 in effect at the time the request for
qualifications is issued.

(1) For purposes of this subdivision:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(F) Ability to meet the quality requirements.

(G) Proposed risk allocation and sharing.

(H) Safety record.

(I) Warranty.

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

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

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

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

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

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

20928.3.  

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

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

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

(2) Establish reasonable qualification criteria and standards.

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

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.