Amended in Senate August 2, 2016

Amended in Assembly April 27, 2016

Amended in Assembly April 5, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 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 constructionbegin delete managementend deletebegin insert managerend insert at-risk, design-build, 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 short-listed 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:

P2    1

SECTION 1.  

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

4 

5Article 60.6.  Surface Storage Projects
6

 

7

20928.  

The Legislature finds and declares that alternative
8project delivery, using the best value procurement methodology,
9has been authorized for various agencies that have reported benefits
10from those projects, including reduced project costs, expedited
11project completion, and design features that are not achievable
12through the traditional design-bid-build method.

13

20928.1.  

(a) A surface storage project identified in the
14CALFED Bay-Delta Program Record of Decision, dated August
1528, 2000, that receives funding pursuant to Division 26.7
16(commencing with Section 79703) of the Water Code may use the
17following methods of project delivery:

18(1) Constructionbegin delete managementend deletebegin insert managerend insert at-risk.

19(2) Design-build.

20(3) Design-build-operate.

21(b) The contract shall be awarded on a best value basis or to the
22lowest responsible bidder.

P3    1

20928.2.  

The procurement process for the project shall progress
2as follows:

3(a) The local agency shall prepare a set of documents setting
4forth the scope and estimated price of the project. The documents
5may include, but need not be limited to, the size, type, and desired
6design character of the project, performance specifications covering
7the quality of materials, equipment, workmanship, preliminary
8plans or building layouts, or any other information deemed
9necessary to describe adequately the local agency’s needs. The
10performance specifications and any plans shall be prepared by a
11design professional who is duly licensed and registered in
12California.

13(b) The local agency shall prepare and issue a request for
14qualifications in order to prequalify or short-list the entities whose
15bids shall be evaluated for final selection. The request for
16qualifications shall include, but need not be limited to, the
17following elements:

18(1) Identification of the basic scope and needs of the project or
19contract, the expected cost range, the methodology that will be
20used by the local agency to evaluate bids, the procedure for final
21selection of the bidder, and any other information deemed
22necessary by the local agency to inform interested parties of the
23contracting opportunity.

24(2) Significant factors that the local agency reasonably expects
25to consider in evaluating qualifications, including technical design,
26construction expertise, acceptable safety records, and all other
27nonprice-related factors.

28(3) A standard template request for statements of qualifications
29prepared by the local agency. In preparing the standard template,
30the local agency may consult with the construction industry, the
31building trades and surety industry, and other local agencies
32interested in using the authorization provided by this article. The
33template shall require all of the following information:

34(A) If the bidder is a privately held corporation, limited liability
35company, partnership, or joint venture, a listing of all of the
36shareholders, partners, or members known at the time of statement
37of qualification submission who will perform work on the project.

38(B) Evidence that the members of the contracting team have
39completed, or demonstrated the experience, competency, capability,
40and capacity to complete, projects of similar size, scope, or
P4    1complexity and that proposed key personnel have sufficient
2experience and training to competently manage and complete the
3project, and a financial statement that ensures that the bidder has
4the capacity to complete the project.

5(C) The licenses, registration, and credentials required for the
6project, including, but not limited to, information on the revocation
7or suspension of any license, credential, or registration.

8(D) Evidence that establishes that the bidder has the capacity
9to obtain all required payment and performance bonding, liability
10insurance, and errors and omissions insurance.

11(E) Information concerning workers’ compensation experience
12history and a worker safety program.

13(F) An acceptable safety record. A bidder’s safety record shall
14be deemed acceptable if its experience modification rate for the
15most recent three-year period is an average of 1.00 or less, and its
16average total recordable injury or illness rate and average lost work
17rate for the most recent three-year period does not exceed the
18applicable statistical standards for its business category or if the
19bidder is a party to an alternative dispute resolution system as
20provided for in Section 3201.5 of the Labor Code.

21(4) The information required under this subdivision shall be
22certified under penalty of perjury by the bidder and its general
23partners or joint venture members.

24(c) A contracting entity shall not be prequalified or short-listed
25unless the entity provides an enforceable commitment to the local
26agency that the entity and its subcontractors who will be doing
27construction on the project will use a skilled and trained workforce
28to perform all work on the project or contract that falls within an
29apprenticeable occupation in the building and construction trades
30in effect at the time the request for qualifications is issued.

31(1) For purposes of this subdivision:

32(A) “Apprenticeable occupation” means an occupation for which
33the chief had approved an apprenticeship program pursuant to
34Section 3075 of the Labor Code prior to January 1, 2014.

35(B) “Skilled and trained workforce” means a workforce that
36meets all of the following conditions:

37(i) All the workers are either skilled journeypersons or
38apprentices registered in an apprenticeship program approved by
39the Chief of the Division of Apprenticeship Standards.

P5    1(ii) (I) At the start of construction, at least 20 percent of the
2skilled journeypersons employed to perform work on the contract
3or project by the bidder and each of its subcontractors at every tier
4 are graduates of an apprenticeship program for the applicable
5occupation that was either approved by the Chief of the Division
6of Apprenticeship Standards pursuant to Section 3075 of the Labor
7Code or located outside California and approved for federal
8purposes pursuant to the apprenticeship regulations adopted by
9the federal Secretary of Labor.

10(II) By the second year of construction, and every year
11thereafter, the workforce requirements of subclause (I) shall
12increase by 10 percent until at least 50 percent of skilled
13journeypersons employed to perform work on the contract or
14project by the bidder and each of its subcontractors at every tier
15are graduates of an apprenticeship program for the applicable
16occupation that was either approved by the Chief of the Division
17of Apprenticeship Standards pursuant to Section 3075 of the Labor
18Code or located outside California and approved for federal
19purposes pursuant to the apprenticeship regulations adopted by
20the federal Secretary of Labor.

21(iii) For an apprenticeable occupation in which no apprenticeship
22program had been approved by the chief prior to January 1, 1995,
23up to one-half of the graduation percentage requirements of clause
24(ii) may be satisfied by skilled journeypersons who commenced
25working in the apprenticeable occupation prior to the chief’s
26approval of an apprenticeship program for that occupation in the
27county in which the project is located.

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

29(i) Graduated from an apprenticeship program for the applicable
30occupation that was approved by the chief or located outside
31California and approved for federal purposes pursuant to the
32apprenticeship regulations adopted by the federal Secretary of
33Labor.

34(ii) Has at least as many hours of on-the-job experience in the
35applicable occupation as would be required to graduate from an
36apprenticeship program for the applicable occupation that is
37approved by the chief.

38(2) An entity’s commitment that a skilled and trained workforce
39will be used to perform the project or contract may be established
40by any of the following:

P6    1(A) The entity’s agreement with the local agency that the entity
2and its subcontractors at every tier will comply with this
3subdivision and that the entity will provide the local agency with
4evidence, on a monthly basis while the project or contract is being
5performed, that the entity and its subcontractors are complying
6with the requirements of this subdivision.

7(B) If the local agency has entered into a project labor agreement
8that will bind all contractors and subcontractors performing work
9on the project or contract and that includes the requirements of
10this subdivision, the entity’s agreement that it will become a party
11to that project labor agreement.

12(C) Evidence that the entity has entered into a project labor
13agreement or equivalent document that includes the requirements
14of this subdivision and that will bind the bidder and all its
15subcontractors who performed construction work on the project.

16(d) The local agency shall make the list of prequalified entities
17available to the public.

18(e) Based on the documents prepared as described in subdivision
19(a), the local agency shall prepare a request for bids that invites
20prequalified or short-listed entities to submit competitive sealed
21bids in the manner prescribed by the local agency. The request for
22bids shall include, but need not be limited to, all of the following
23elements:

24(1) Identification of the basic scope and needs of the project or
25contract, the estimated cost of the project, the methodology that
26will be used by the local agency to evaluate bids, whether the
27contract will be awarded on the basis of best value or to the lowest
28responsible bidder, and any other information deemed necessary
29by the local agency to inform interested parties of the contracting
30opportunity.

31(2) Significant factors that the local agency reasonably expects
32to consider in evaluating bids, including, but not limited to, cost
33or price and all nonprice-related factors.

34(3) The relative importance or the weight assigned to each of
35the factors identified in the request for bids.

36(4) If a best value selection method is used, the local agency
37may reserve the right to request bid revisions and hold discussions
38and negotiations with responsive bidders, in which case the local
39agency shall so specify in the request for bids and shall publish
40separately or incorporate into the request for bids applicable
P7    1procedures to be observed by the local agency to ensure that any
2discussions or negotiations are conducted in good faith.

3(f) For those projects utilizing low bid as the final selection
4method, the competitive bidding process shall result in lump-sum
5bids by the prequalified or short-listed entities, and awards shall
6be made to the bidder that is the lowest responsible bidder.

7(g) For those projects utilizing best value as a selection method,
8the competition shall progress as follows:

9(1) Competitive bids shall be evaluated by using only the criteria
10and selection procedures specifically identified in the request for
11bids. The following minimum factors, however, shall be weighted
12as deemed appropriate by the local agency:

13(A) Price, unless a stipulated sum is specified and including
14financial and bonding capacity requirements.

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

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

17(D) Compliance with the requirements of the owner-provided
18performance specification.

19(E) Ability to meet the milestone schedule dates and, if
20applicable, any liquidated damages.

21(F) Ability to meet the quality requirements.

22(G) Proposed risk allocation and sharing.

23(H) Safety record.

24(I) Warranty.

25(J) begin deleteLifecycle end deletebegin insertLife-cycle end insertcosts over 15 or more years as specified
26by the local agency.

27(2) Pursuant to subdivisionbegin delete (d),end deletebegin insert (e),end insert the local agency may hold
28discussions or negotiations with responsive bidders using the
29process articulated in the local agency’s request for bids.

30(3) When the evaluation is complete, the responsive bidders
31shall be ranked based on a determination of value provided by the
32local agency if no more than three bidders are required to be
33ranked.

34(4) The award of the contract shall be made to the responsible
35bidder whose bid is determined by the local agency to have offered
36 the best value to the public.

37(5) Notwithstanding any provision of the Water Code, upon
38issuance of a contract award the local agency shall publicly
39announce its award, identifying the bidder to which the award is
40made, along with a statement regarding the basis of the award.

P8    1(6) The statement regarding the local agency’s contract award,
2described in paragraph (5), and the contract file shall provide
3sufficient information to satisfy an external audit.

4

20928.3.  

(a) The local agency, in each request for proposals,
5may identify specific types of subcontractors that must be included
6in the entity statement of qualifications and proposal.

7(b) Following award of the contract, the entity shall proceed as
8follows in awarding construction subcontracts with a value
9exceeding one-half of 1 percent of the contract price allocable to
10construction work:

11(1) Provide public notice of availability of work to be
12subcontracted in accordance with the publication requirements
13applicable to the competitive bidding process of the local agency,
14including a fixed date and time on which qualification statements,
15bids, or proposals will be due.

16(2) Establish reasonable qualification criteria and standards.

17(3) Award the subcontract either on a best value basis or to the
18lowest responsible bidder. The process may include prequalification
19or short-listing. The foregoing process does not apply to
20construction subcontractors listed in the original proposal.

21

SEC. 2.  

No reimbursement is required by this act pursuant to
22Section 6 of Article XIII B of the California Constitution because
23the only costs that may be incurred by a local agency or school
24district will be incurred because this act creates a new crime or
25infraction, eliminates a crime or infraction, or changes the penalty
26for a crime or infraction, within the meaning of Section 17556 of
27the Government Code, or changes the definition of a crime within
28the meaning of Section 6 of Article XIII B of the California
29Constitution.



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