Amended in Senate August 3, 2016

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)

begin insert

(Coauthors: Assembly Members Chang and Dahle)

end insert

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 manager 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 subcontractorsbegin delete who will be doing construction on the projectend delete 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
11projectbegin insert start andend insert completion,begin insert simplified project controls and
12accountability,end insert
and design features that are not achievable through
13the traditional design-bid-build method.

14

20928.1.  

(a) A surface storage project identified in the
15CALFED Bay-Delta Program Record of Decision, dated August
1628, 2000, that receives funding pursuant to Division 26.7
17(commencing with Sectionbegin delete 79703)end deletebegin insert 79700)end insert of the Water Code may
18begin delete useend deletebegin insert use, in addition to any other methods of project delivery
19otherwise allowable by irrigation districts by law,end insert
the following
20methods of project delivery:

P3    1(1) Construction manager at-risk.

2(2) begin deleteDesign-build. end deletebegin insertDesign-Build, including conventional,
3progressive, and target price.end insert

4(3) Design-build-operate.

5(b) The contract shall be awarded on a best value basis or to the
6lowest responsible bidder.

7

20928.2.  

The procurement process for the project shall progress
8as follows:

9(a) The local agency shall prepare a set of documents setting
10forth the scope and estimated price of the project. The documents
11may include, but need not be limited to, the size, type, and desired
12design character of the project, performance specifications covering
13the quality of materials, equipment, workmanship, preliminary
14plans or building layouts, or any other information deemed
15necessary to describe adequately the local agency’s needs. The
16performance specifications and any plans shall be prepared by a
17design professional who is duly licensed and registered in
18California.

19(b) The local agency shall prepare and issue a request for
20qualifications in order to prequalify or short-list thebegin delete entitiesend deletebegin insert entities,
21including subcontractors and suppliers,end insert
whose bids shall be
22evaluated for final selection. The request for qualifications shall
23include, but need not be limited to, the following elements:

24(1) Identification of the basic scope and needs of the project or
25contract, the expected cost range, the methodology that will be
26used by the local agency to evaluate bids, the procedure for final
27selection of the bidder, and any other information deemed
28necessary by the local agency to inform interested parties of the
29contracting opportunity.

30(2) Significant factors that the local agency reasonably expects
31to consider in evaluating qualifications, including technicalbegin delete design,end delete
32begin insert design-related expertise,end insert construction expertise, acceptable safety
33records, and all other nonprice-related factors.

34(3) A standard template request for statements of qualifications
35prepared by the local agency. In preparing the standard template,
36the local agency may consult with the construction industry, the
37building trades and surety industry, and other local agencies
38interested in using the authorization provided by this article. The
39template shall require all of the following information:

P4    1(A) If the bidder is a privately held corporation, limited liability
2company, partnership, or joint venture,begin insert comprised of privately-held
3entities,end insert
a listing of all of the shareholders, partners, or members
4known at the time of statement of qualification submission who
5will perform work on the project.

6(B) Evidence that the members of the contracting team have
7completed, or demonstrated the experience, competency, capability,
8and capacity to complete, projects of similar size, scope, or
9complexity and that proposed key personnel have sufficient
10experience and training to competently manage and complete the
11project, and a financial statement that ensures that the bidder has
12the capacity to complete the project.

13(C) The licenses, registration, and credentials required for the
14project, including, but not limited to, information on the revocation
15or suspension of any license, credential, or registration.

16(D) Evidence that establishes that the bidder has the capacity
17to obtain all required payment and performance bonding, liability
18insurance, and errors and omissions insurance.

19(E) Information concerning workers’ compensation experience
20history and a worker safety program.

21(F) An acceptable safety record. A bidder’s safety record shall
22be deemed acceptable if its experience modification rate for the
23most recent three-year period is an average of 1.00 or less, and its
24average total recordable injury or illness rate and average lost work
25rate for the most recent three-year period does not exceed the
26applicable statistical standards for its business category or if the
27bidder is a party to an alternative dispute resolution system as
28provided for in Section 3201.5 of the Labor Code.

29(4) The information required under this subdivision shall be
30certified under penalty of perjury by the bidder and its general
31partners or joint venture members.

32(c) A contracting entity shall not be prequalified or short-listed
33unless the entity provides an enforceable commitment to the local
34agency that the entity and its subcontractorsbegin delete who will be doing
35construction on the projectend delete
will use a skilled and trained workforce
36to perform all work on the project or contract that falls within an
37apprenticeable occupation in the building and constructionbegin delete trades
38in effect at the time the request for qualifications is issued.end delete
begin insert trades.end insert

39(1) For purposes of this subdivision:

P5    1(A) “Apprenticeable occupation” means an occupation for which
2the chief had approved an apprenticeship program pursuant to
3Section 3075 of the Labor Code prior to January 1, 2014.

4(B) “Skilled and trained workforce” means a workforce that
5meets all of the following conditions:

6(i) All the workers are either skilled journeypersons or
7apprentices registered in an apprenticeship program approved by
8the Chief of the Division of Apprenticeship Standards.

9(ii) (I) At the start of construction, at least 20 percent of the
10skilled journeypersons employed to perform work on the contract
11or project by the bidder and each of its subcontractors at every tier
12 are graduates of an apprenticeship program for the applicable
13occupation that was either approved by the Chief of the Division
14of Apprenticeship Standards pursuant to Section 3075 of the Labor
15Code or located outside California and approved for federal
16purposes pursuant to the apprenticeship regulations adopted by
17the federal Secretary of Labor.

18(II) By the second year of construction, and every year
19thereafter, the workforce requirements of subclause (I) shall
20increase by 10 percent until at leastbegin delete 50end deletebegin insert 60end insert percent of skilled
21journeypersons employed to perform work on the contract or
22project by the bidder and each of its subcontractors at every tier
23are graduates of an apprenticeship program for the applicable
24occupation that was either approved by the Chief of the Division
25of Apprenticeship Standards pursuant to Section 3075 of the Labor
26Code or located outside California and approved for federal
27purposes pursuant to the apprenticeship regulations adopted by
28the federal Secretary of Labor.

29(iii) For an apprenticeable occupation in which no apprenticeship
30program had been approved by the chief prior to January 1, 1995,
31up to one-half of the graduation percentage requirements of clause
32(ii) may be satisfied by skilled journeypersons who commenced
33working in the apprenticeable occupation prior to the chief’s
34approval of an apprenticeship program for that occupation in the
35county in which the project is located.

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

37(i) Graduated from an apprenticeship program for the applicable
38occupation that was approved by the chief or located outside
39California and approved for federal purposes pursuant to the
P6    1apprenticeship regulations adopted by the federal Secretary of
2Labor.

3(ii) Has at least as many hours of on-the-job experience in the
4applicable occupation as would be required to graduate from an
5apprenticeship program for the applicable occupation that is
6approved by the chief.

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7
(2) The apprenticeship graduation percentage requirements of
8subparagraph (B) of paragraph (1) are satisfied if, in a particular
9calendar month, either of the following is true:

end insert
begin insert

10
(A) The required percentage of the skilled journeypersons
11employed by the contractor or subcontractor to perform work on
12the contract or project meet the graduation percentage
13requirement.

end insert
begin insert

14
(B) For the hours of work performed by skilled journeypersons
15employed by the contractor or subcontractor on the contract or
16project, the percentage of hours performed by skilled
17journeypersons who met the graduation requirement meets or
18exceeds the required graduation percentage.

end insert
begin insert

19
(3) A contractor or subcontractor need not meet the
20apprenticeship graduation requirements of subparagraph (B) of
21paragraph (1) if, during the calendar month, the contractor or
22subcontractor employs skilled journeypersons to perform fewer
23than 10 hours of work on the contract or project.

end insert
begin insert

24
(4) A subcontractor need not meet the apprenticeship graduation
25requirements of subparagraph (B) of paragraph (1) if both of the
26following requirements are met:

end insert
begin insert

27
(A) The subcontractor was not a listed subcontractor under
28Section 4104 or a substitute for a listed subcontractor.

end insert
begin insert

29
(B) The subcontract does not exceed one-half of 1 percent of
30the price of the prime contract.

end insert
begin delete

31(2) An

end delete

32begin insert(5)end insertbegin insertend insertbegin insert(A)end insertbegin insertend insertbegin insertA contractor, bidder, or otherend insert entity’s commitment that
33a skilled and trained workforce will be used to perform the project
34or contractbegin delete mayend deletebegin insert shallend insert be established bybegin delete any of the following:end deletebegin insert the
35contractor, bidder, or other entity’s agreement with the local
36agency that the contractor, bidder, or other entity and its
37subcontractors at every tier will comply with this subdivision and
38that the contractor, bidder, or other entity will provide the local
39agency with a report on a monthly basis while the project or
40contract is being performed, as to whether theend insert
begin insert contractor, bidder,
P7    1or other end insert
begin insertentity and its subcontractors are complying with the
2requirements of this subdivision.end insert

begin delete

3(A) The entity’s agreement with the local agency that the entity
4and its subcontractors at every tier will comply with this
5subdivision and that the entity will provide the local agency with
6evidence, on a monthly basis while the project or contract is being
7performed, that the entity and its subcontractors are complying
8with the requirements of this subdivision.

9(B) If the local agency has entered into a project labor agreement
10that will bind all contractors and subcontractors performing work
11on the project or contract and that includes the requirements of
12this subdivision, the entity’s agreement that it will become a party
13to that project labor agreement.

14(C) Evidence that the entity has entered into a project labor
15agreement or equivalent document that includes the requirements
16of this subdivision and that will bind the bidder and all its
17subcontractors who performed construction work on the project.

end delete
begin insert

18
(B) If the contractor, bidder, or other entity fails to provide the
19monthly report required by this section, or provides a report that
20is incomplete, the local agency shall withhold further payments
21until a complete report is provided.

end insert
begin insert

22
(C) If a monthly report does not demonstrate compliance with
23this chapter, the local agency shall withhold further payments until
24the contractor, bidder, or other entity provides a plan to achieve
25substantial compliance with this article, with respect to the relevant
26apprenticeable occupation, prior to completion of the contract or
27project.

end insert
begin insert

28
(D) A monthly report provided to the public agency or other
29awarding body shall be a public record under the California Public
30Records Act (Chapter 3.5 (commencing with Section 6250) of
31Division 7 of Title 1 of the Government Code) and shall be open
32to public inspection.

end insert
begin insert

33
(6) This subdivision shall not apply if the contractor, bidder,
34or other entity has entered into a project labor agreement that will
35bind itself and all its subcontractors who perform construction
36work on the project, and the contractor, bidder, or other entity
37agrees to be bound by the project agreement.

end insert

38(d) The local agency shall make the list of prequalified entities
39available to the public.

P8    1(e) Based on the documents prepared as described in subdivision
2(a), the local agency shall prepare a request for bids that invites
3prequalified or short-listed entities to submit competitive sealed
4bids in the manner prescribed by the local agency. The request for
5bids shall include, but need not be limited to, all of the following
6elements:

7(1) Identification of the basic scope and needs of the project or
8contract, the estimated costbegin delete of the project,end deletebegin insert to perform the work
9being requested,end insert
the methodology that will be used by the local
10agency to evaluate bids, whether the contract will be awarded on
11the basis of best value or to the lowest responsible bidder, and any
12other information deemed necessary by the local agency to inform
13interested parties of the contracting opportunity.

14(2) Significant factors that the local agency reasonably expects
15to consider in evaluating bids, including, but not limited to, cost
16or price and all nonprice-related factors.

17(3) The relative importance or the weight assigned to each of
18the factors identified in the request for bids.

19(4) If a best value selection method is used, the local agency
20may reserve the right to request bid revisions and hold discussions
21and negotiations with responsive bidders, in which case the local
22agency shall so specify in the request for bids and shall publish
23separately or incorporate into the request for bids applicable
24procedures to be observed by the local agency to ensure that any
25discussions or negotiations are conducted in good faith.

26(f) For those projects utilizing low bid as the final selection
27method, the competitive bidding processbegin delete shallend deletebegin insert shall, if appropriate
28for the delivery method,end insert
result in lump-sum bids by the prequalified
29or short-listed entities, and awards shall be made to the bidder that
30is the lowest responsible bidder.

31(g) For those projects utilizing best value as a selection method,
32the competition shall progress as follows:

33(1) Competitive bids shall be evaluated by using only the criteria
34and selection procedures specifically identified in the request for
35bids. The following minimum factors, however, shall bebegin insert included,
36if applicable to the delivery method andend insert
weighted as deemed
37appropriate by the local agency:

38(A) Price, unless a stipulated sum is specified and including
39financial and bonding capacity requirements.

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

P9    1(C) Proposed construction approach, sequencing, and methods.

2(D) Compliance with the requirements of the owner-provided
3performance specification.

4(E) Ability to meet the milestone schedule dates and, if
5applicable, any liquidated damages.

6(F) Ability to meet the quality requirements.

7(G) Proposed risk allocation and sharing.

8(H) Safety record.

9(I) Warranty.

10(J) Life-cycle costs over 15 or more years as specified by the
11local agency.

12(2) Pursuant to subdivision (e), the local agency may hold
13discussions or negotiations with responsive bidders using the
14process articulated in the local agency’s request for bids.

15(3) When the evaluation is complete, the responsive bidders
16shall be ranked based on a determination of value provided by the
17local agency if no more than three bidders are required to be
18ranked.

19(4) The award of the contract shall be made to the responsible
20bidder whose bid is determined by the local agency to have offered
21 the best value to the public.

22(5) Notwithstanding any provision of the Water Code, upon
23issuance of a contract award the local agency shall publicly
24announce its award, identifying the bidder to which the award is
25made, along with a statement regarding the basis of the award.

26(6) The statement regarding the local agency’s contract award,
27described in paragraph (5), and the contract file shall provide
28sufficient information to satisfy an external audit.

29

20928.3.  

(a) The local agency, in each request for proposals,
30may identify specific types of subcontractors that must be included
31in the entity statement of qualifications and proposal.

32(b) Following award of the contract, the entity shall proceed as
33follows in awarding construction subcontracts with a value
34exceeding one-half of 1 percent of the contract price allocable to
35construction work:

36(1) Provide public notice of availability of work to be
37subcontracted in accordance with the publication requirements
38applicable to the competitive bidding process of the local agency,
39including a fixed date and time on which qualification statements,
40bids, or proposals will be due.

P10   1(2) Establish reasonable qualification criteria and standards.

2(3) Award the subcontract either on a best value basis or to the
3lowest responsible bidder. The process may include prequalification
4or short-listing. The foregoing process does not apply to
5construction subcontractors listed in the original proposal.

begin insert
6

begin insert20928.4.end insert  

Any project constructed pursuant to this article shall
7be subject to Part 1 (commencing with Section 6000) of Division
83 of the Water Code.

end insert
9

SEC. 2.  

No reimbursement is required by this act pursuant to
10Section 6 of Article XIII B of the California Constitution because
11the only costs that may be incurred by a local agency or school
12district will be incurred because this act creates a new crime or
13infraction, eliminates a crime or infraction, or changes the penalty
14for a crime or infraction, within the meaning of Section 17556 of
15the Government Code, or changes the definition of a crime within
16the meaning of Section 6 of Article XIII B of the California
17Constitution.



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