Amended in Senate August 19, 2016

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)

(Coauthors: Assembly Members Chang and Dahle)

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 subcontractors 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 start and completion, simplified project controls and
12accountability, 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 Section 79700) of the Water Code may use, in
18addition to any other methods of project delivery otherwise
19allowable by irrigationbegin delete districtsend deletebegin insert districts, county water districts,
P3    1or other similar water districtsend insert
by law, the following methods of
2project delivery:

3(1) Construction manager at-risk.

4(2) Design-Build, including conventional, progressive, and
5target price.

6(3) Design-build-operate.

7(b) The contract shall be awarded on a best value basis or to the
8lowest responsible bidder.

9

20928.2.  

The procurement process for the project shall progress
10as follows:

11(a) The local agency shall prepare a set of documents setting
12forth the scope and estimated price of the project. The documents
13may include, but need not be limited to, the size, type, and desired
14design character of the project, performance specifications covering
15the quality of materials, equipment, workmanship, preliminary
16plans or building layouts, or any other information deemed
17necessary to describe adequately the local agency’s needs. The
18performance specifications and any plans shall be prepared by a
19design professional who is duly licensed and registered in
20California.

21(b) The local agency shall prepare and issue a request for
22qualifications in order to prequalify or short-list the entities,
23including subcontractors and suppliers, whose bids shall be
24evaluated for final selection. The request for qualifications shall
25include, but need not be limited to, the following elements:

26(1) Identification of the basic scope and needs of the project or
27contract, the expected cost range, the methodology that will be
28used by the local agency to evaluate bids, the procedure for final
29selection of the bidder, and any other information deemed
30necessary by the local agency to inform interested parties of the
31contracting opportunity.

32(2) Significant factors that the local agency reasonably expects
33to consider in evaluating qualifications, including technical
34design-related expertise, construction expertise, acceptable safety
35records, and all other nonprice-related factors.

36(3) A standard template request for statements of qualifications
37prepared by the local agency. In preparing the standard template,
38the local agency may consult with the construction industry, the
39building trades and surety industry, and other local agencies
P4    1interested in using the authorization provided by this article. The
2template shall require all of the following information:

3(A) If the bidder is a privately held corporation, limited liability
4company, partnership, or joint venture, comprised of privately-held
5entities, a listing of all of the shareholders, partners, or members
6known at the time of statement of qualification submission who
7will perform work on the project.

8(B) Evidence that the members of the contracting team have
9completed, or demonstrated the experience, competency, capability,
10and capacity to complete, projects of similar size, scope, or
11complexity and that proposed key personnel have sufficient
12experience and training to competently manage and complete the
13project, and a financial statement that ensures that the bidder has
14the capacity to complete the project.

15(C) The licenses, registration, and credentials required for the
16project, including, but not limited to, information on the revocation
17or suspension of any license, credential, or registration.

18(D) Evidence that establishes that the bidder has the capacity
19to obtain all required payment and performance bonding, liability
20insurance, and errors and omissions insurance.

21(E) Information concerning workers’ compensation experience
22history and a worker safety program.

23(F) An acceptable safety record.begin delete A bidder’s safety record shall
24be deemed acceptable if its experience modification rate for the
25most recent three-year period is an average of 1.00 or less, and its
26average total recordable injury or illness rate and average lost work
27rate for the most recent three-year period does not exceed the
28applicable statistical standards for its business category or if the
29bidder is a party to an alternative dispute resolution system as
30provided for in Section 3201.5 of the Labor Code.end delete
begin insert“Safety record”
31means the prior history concerning the safe performance of
32construction contracts. The criteria used to evaluate a bidder’s
33safety record shall include, at a minimum, its experience
34modification rate for the most recent three-year period, and its
35average total recordable injury or illness rate and average lost
36work rate for the most recent three-year period.end insert

37(4) The information required under this subdivision shall be
38certified under penalty of perjury by the bidder and its general
39partners or joint venture members.

P5    1(c) A contracting entity shall not be prequalified or short-listed
2unless the entity provides an enforceable commitment to the local
3agency that the entity and its subcontractors will use a skilled and
4trained workforce to perform all work on the project or contract
5that falls within an apprenticeable occupation in the building and
6construction trades.

7(1) For purposes of this subdivision:

8(A) “Apprenticeable occupation” means an occupation for which
9the chief had approved an apprenticeship program pursuant to
10Section 3075 of the Labor Code prior to January 1, 2014.

11(B) “Skilled and trained workforce” means a workforce that
12meets all of the following conditions:

13(i) All the workers are either skilled journeypersons or
14apprentices registered in an apprenticeship program approved by
15the Chief of the Division of Apprenticeship Standards.

16(ii) (I)begin deleteend deletebegin deleteAt the start of construction,end deletebegin insertend insertbegin insertFor work performed on or
17after January 1, 2017,end insert
at leastbegin delete 20end deletebegin insert 30end insert percent of the skilled
18journeypersons employed to perform work on the contract or
19project by the bidder and each of its subcontractors at every tier
20 are graduates of an apprenticeship program for the applicable
21occupation that was either approved by the Chief of the Division
22of Apprenticeship Standards pursuant to Section 3075 of the Labor
23Code or located outside California and approved for federal
24purposes pursuant to the apprenticeship regulations adopted by
25the federal Secretary of Labor.

26(II) begin deleteBy the second year of construction, and every year
27thereafter, the workforce requirements of subclause (I) shall
28increase by 10 percent until at least 60 percent ofend delete
begin insertFor work
29performed on or after January 1, 2018, at least 40 percent of theend insert

30 skilled journeypersons employed to perform work on the contract
31or project by the bidder and each of its subcontractors at every tier
32are graduates of an apprenticeship program for the applicable
33occupation that was either approved by the Chief of the Division
34of Apprenticeship Standards pursuant to Section 3075 of the Labor
35Code or located outside California and approved for federal
36purposes pursuant to the apprenticeship regulations adopted by
37the federal Secretary of Labor.

begin insert

38
(III) For work performed on or after January 1, 2019, at least
3950 percent of the skilled journeypersons employed to perform work
40on the contract or project by the bidder and each of its
P6    1subcontractors at every tier are graduates of an apprenticeship
2program for the applicable occupation that was either approved
3by the Chief of the Division of Apprenticeship Standards pursuant
4to Section 3075 of the Labor Code or located outside California
5and approved for federal purposes pursuant to the apprenticeship
6regulations adopted by the federal Secretary of Labor.

end insert
begin insert

7
(IV) For work performed on or after January 1, 2020, at least
860 percent of the skilled journeypersons employed to perform work
9on the contract or project by the bidder and each of its
10subcontractors at every tier are graduates of an apprenticeship
11program for the applicable occupation that was either approved
12by the Chief of the Division of Apprenticeship Standards pursuant
13to Section 3075 of the Labor Code or located outside California
14and approved for federal purposes pursuant to the apprenticeship
15regulations adopted by the federal Secretary of Labor.

end insert

16(iii) For an apprenticeable occupation in which no apprenticeship
17program had been approved by the chief prior to January 1, 1995,
18up to one-half of the graduation percentage requirements of clause
19(ii) may be satisfied by skilled journeypersons who commenced
20working in the apprenticeable occupation prior to the chief’s
21approval of an apprenticeship program for that occupation in the
22county in which the project is located.

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

24(i) Graduated from an apprenticeship program for the applicable
25occupation that was approved by the chief or located outside
26California and approved for federal purposes pursuant to the
27apprenticeship regulations adopted by the federal Secretary of
28Labor.

29(ii) Has at least as many hours of on-the-job experience in the
30applicable occupation as would be required to graduate from an
31apprenticeship program for the applicable occupation that is
32approved by the chief.

33(2) The apprenticeship graduation percentage requirements of
34subparagraph (B) of paragraph (1) are satisfied if, in a particular
35calendar month, either of the following is true:

36(A) The required percentage of the skilled journeypersons
37employed by the contractor or subcontractor to perform work on
38the contract or project meet the graduation percentage requirement.

39(B) For the hours of work performed by skilled journeypersons
40employed by the contractor or subcontractor on the contract or
P7    1project, the percentage of hours performed by skilled
2journeypersons who met the graduation requirement meets or
3exceeds the required graduation percentage.

4(3) A contractor or subcontractor need not meet the
5apprenticeship graduation requirements of subparagraph (B) of
6paragraph (1) if, during the calendar month, the contractor or
7subcontractor employs skilled journeypersons to perform fewer
8than 10 hours of work on the contract or project.

9(4) A subcontractor need not meet the apprenticeship graduation
10requirements of subparagraph (B) of paragraph (1) if both of the
11following requirements are met:

12(A) The subcontractor was not a listed subcontractor under
13Section 4104 or a substitute for a listed subcontractor.

14(B) The subcontract does not exceed one-half of 1 percent of
15the price of the prime contract.

16(5) (A) A contractor, bidder, or other entity’s commitment that
17a skilled and trained workforce will be used to perform the project
18or contract shall be established by the contractor, bidder, or other
19entity’s agreement with the local agency that the contractor, bidder,
20or other entity and its subcontractors at every tier will comply with
21this subdivision and that the contractor, bidder, or other entity will
22provide the local agency with a report on a monthly basis while
23the project or contract is being performed, as to whether the
24contractor, bidder, or other entity and its subcontractors are
25complying with the requirements of this subdivision.

26(B) If the contractor, bidder, or other entity fails to provide the
27monthly report required by this section, or provides a report that
28is incomplete, the local agency shall withhold further payments
29until a complete report is provided.

30(C) If a monthly report does not demonstrate compliance with
31this chapter, the local agency shall withhold further payments until
32the contractor, bidder, or other entity provides a plan to achieve
33substantial compliance with this article, with respect to the relevant
34apprenticeable occupation, prior to completion of the contract or
35project.

36(D) A monthly report provided to the public agency or other
37awarding body shall be a public record under the California Public
38Records Act (Chapter 3.5 (commencing with Section 6250) of
39Division 7 of Title 1 of the Government Code) and shall be open
40to public inspection.

P8    1(6) This subdivision shall not apply if the contractor, bidder, or
2other entity has entered into a project labor agreement that will
3bind itself and all its subcontractors who perform construction
4work on the project, and the contractor, bidder, or other entity
5agrees to be bound by the project agreement.

6(d) The local agency shall make the list of prequalified entities
7available to the public.

8(e) Based on the documents prepared as described in subdivision
9(a), the local agency shall prepare a request for bids that invites
10prequalified or short-listed entities to submit competitive sealed
11bids in the manner prescribed by the local agency. The request for
12bids shall include, but need not be limited to, all of the following
13elements:

14(1) Identification of the basic scope and needs of the project or
15contract, the estimated cost to perform the work being requested,
16the methodology that will be used by the local agency to evaluate
17bids, whether the contract will be awarded on the basis of best
18value or to the lowest responsible bidder, and any other information
19deemed necessary by the local agency to inform interested parties
20of the contracting opportunity.

21(2) Significant factors that the local agency reasonably expects
22to consider in evaluating bids, including, but not limited to, cost
23or price and all nonprice-related factors.

24(3) The relative importance or the weight assigned to each of
25the factors identified in the request for bids.

26(4) If a best value selection method is used, the local agency
27may reserve the right to request bid revisions and hold discussions
28and negotiations with responsive bidders, in which case the local
29agency shall so specify in the request for bids and shall publish
30separately or incorporate into the request for bids applicable
31procedures to be observed by the local agency to ensure that any
32discussions or negotiations are conducted in good faith.

33(f) For those projects utilizing low bid as the final selection
34method, the competitive bidding process shall, if appropriate for
35the delivery method, result in lump-sum bids by the prequalified
36or short-listed entities, and awards shall be made to the bidder that
37is the lowest responsible bidder.

38(g) For those projects utilizing best value as a selection method,
39the competition shall progress as follows:

P9    1(1) Competitive bids shall be evaluated by using only the criteria
2and selection procedures specifically identified in the request for
3bids. The following minimum factors, however, shall be included,
4if applicable to the delivery method and weighted as deemed
5appropriate by the local agency:

6(A) Price, unless a stipulated sum is specified and including
7financial and bonding capacity requirements.

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

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

10(D) Compliance with the requirements of the owner-provided
11performance specification.

12(E) Ability to meet the milestone schedule dates and, if
13applicable, any liquidated damages.

14(F) Ability to meet the quality requirements.

15(G) Proposed risk allocation and sharing.

16(H) Safety record.

17(I) Warranty.

18(J) Life-cycle costs over 15 or more years as specified by the
19local agency.

20(2) Pursuant to subdivision (e), the local agency may hold
21discussions or negotiations with responsive bidders using the
22process articulated in the local agency’s request for bids.

23(3) When the evaluation is complete, the responsive bidders
24shall be ranked based on a determination of value provided by the
25local agency if no more than three bidders are required to be
26ranked.

27(4) The award of the contract shall be made to the responsible
28bidder whose bid is determined by the local agency to have offered
29 the best value to the public.

30(5) Notwithstanding any provision of the Water Code, upon
31issuance of a contract award the local agency shall publicly
32announce its award, identifying the bidder to which the award is
33made, along with a statement regarding the basis of the award.

34(6) The statement regarding the local agency’s contract award,
35described in paragraph (5), and the contract file shall provide
36sufficient information to satisfy an external audit.

37

20928.3.  

(a) The local agency, in each request for proposals,
38may identify specific types of subcontractors that must be included
39in the entity statement of qualifications and proposal.

P10   1(b) Following award of the contract, the entity shall proceed as
2follows in awarding construction subcontracts with a value
3exceeding one-half of 1 percent of the contract price allocable to
4construction work:

5(1) Provide public notice of availability of work to be
6subcontracted in accordance with the publication requirements
7applicable to the competitive bidding process of the local agency,
8including a fixed date and time on which qualification statements,
9bids, or proposals will be due.

10(2) Establish reasonable qualification criteria and standards.

11(3) Award the subcontract either on a best value basis or to the
12lowest responsible bidder. The process may include prequalification
13or short-listing. The foregoing process does not apply to
14construction subcontractors listed in the original proposal.

15

20928.4.  

Any project constructed pursuant to this article shall
16be subject to Part 1 (commencing with Section 6000) of Division
173 of the Water Code.

18

SEC. 2.  

No reimbursement is required by this act pursuant to
19Section 6 of Article XIII B of the California Constitution because
20the only costs that may be incurred by a local agency or school
21district will be incurred because this act creates a new crime or
22infraction, eliminates a crime or infraction, or changes the penalty
23for a crime or infraction, within the meaning of Section 17556 of
24the Government Code, or changes the definition of a crime within
25the meaning of Section 6 of Article XIII B of the California
26Constitution.



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