BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 693 Hearing Date: August 23,
2016
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|Author: |Hueso |
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|Version: |June 27, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Brandon Seto |
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Subject: Public contracts: skilled and trained workforce
KEY ISSUE
Should the Legislature consolidate the "skilled and trained
workforce" requirements of various provisions of existing law
related to alternative construction delivery methods, as well as
define the terms of these requirements, and make other
conforming changes?
ANALYSIS
Existing law
1) Lays out the following definitions regarding
"alternative construction delivery methods" and related
bidding for public contracts in school districts:
a) "Best value" is a procurement process where
the lowest responsible bidder may be selected on the
basis of objective criteria and may include, but need
not be limited to, price, features, functions,
life-cycle costs, and among others.
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b) "Design-build" means a procurement process in
which both the design and construction of a project
are performed by a single entity.
c) "Design-build entity" means a corporation,
limited partnership, partnership, or other association
that is able to provide appropriately-licensed
contracting, architectural, and engineering services
as needed pursuant to a design-build contract.
(Education Code §17250.15)
2) Defines a skilled and trained workforce as workers who
are either registered apprentices or skilled
journeypersons. Such journeypersons are graduates of
programs in which they have received applicable training
and education approved by the Chief of the Division of
Apprenticeship Standards (DAS) of the Department of
Industrial Relations (DIR), or approved for federal
purposes under federal apprenticeship regulations (Health
and Safety Code §25536.7, Public Contract Code §20119.1 and
§20155.2, among others).
3) Defines an "apprenticeable occupation" as one for which
the Chief of the DAS has approved an apprenticeship program
in the building and construction trades (Public Contract
Code §20119.1 and §20155.2 and Labor Code §3075, among
others).
4) Specifies that a design-build entity shall not be
prequalified or shortlisted for such public contracts
unless it provides an enforceable commitment to the school
district that the entity 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. Existing law lays down
additional related definitions and requirements, including
the use of binding project labor agreements (PLAs) as
evidence of an entity's commitment to utilizing a skilled
and trained workforce (Education Code §17250.25).
5) States that the governing board of a school district
shall not enter into a "lease/leaseback" agreement, as
defined, with any entity unless the governing board is
provided with an enforceable commitment that the entity
will use a skilled and trained workforce to perform all
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work on the project or contract that falls within an
apprenticeable occupation in the building and construction
trades. Existing law lays down additional related
definitions and requirements, including the use of binding
PLAs as evidence of an entity's commitment to utilizing a
skilled and trained workforce (Education Code §17407.5)
6) Stipulates that when the governing board of a school
district awards "best value" contracts, a contractor's
commitment to a skilled and trained workforce can be
established by providing the governing board with monthly
evidence of compliance, or by being party to a project
labor agreement, entered into by the governing board, that
binds all of its contractors to the use of a skilled and
trained workforce (Public Contract Code §20119.3).
7) Specifies that a design-build entity shall not be
prequalified or shortlisted under the procurement process
for public contracts unless it provides an enforceable
commitment to the Director of the Department of General
Services or the Secretary of the Department of Corrections
and Rehabilitation that the entity and 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. Existing law lays
down additional related definitions and requirements,
including the use of binding PLAs as evidence of an
entity's commitment to utilizing a skilled and trained
workforce (Public Contract Code §10191).
8) Allows local agencies under specified conditions to
procure design-build contracts for certain public works
projects, but prohibits contractor prequalification or
shortlisting unless the entity and its subcontractors
provide the local agency with an enforceable commitment to
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.
Existing law lays down additional related definitions and
requirements, including the use of binding PLAs as evidence
of an entity's commitment to utilizing a skilled and
trained workforce (Public Contract Code §22164).
9) Authorizes a pilot program in the Los Angeles Unified
School District to utilize best value procurement methods
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for certain public projects but forbids contractor
prequalification or shortlisting unless the entity provides
the governing board of the school district with and
enforceable commitment to use a skilled and trained
workforce. Existing law lays down additional related
definitions and requirements, including the use of binding
PLAs as evidence of an entity's commitment to utilizing a
skilled and trained workforce (Public Contract Code
§20119-20119.7).
10) Authorizes a pilot program allowing the counties of
Alameda, Los Angeles, Riverside, San Bernardino, San Diego,
Solano, and Yuba District to utilize best value procurement
methods for certain public projects but forbids contractor
prequalification or shortlisting unless the entity provides
the governing board of the school district with and
enforceable commitment to use a skilled and trained
workforce. Existing law lays down additional related
definitions and requirements, including the use of binding
PLAs as evidence of an entity's commitment to utilizing a
skilled and trained workforce (Public Contract Code
§20155-20155.9).
This Bill
1) Authorizes a public entity to require a bidder,
contractor or other entity to use a skilled and trained
workforce to complete a contract or project regardless of
whether the public entity is required to do so by a statute
or regulation.
2) Deletes various provisions of existing law in order to
establish a new comprehensive section of the Public
Contract Code applicable whenever a public entity is
required by statute or regulation to obtain an enforceable
commitment that a bidder, contractor, or other entity will
use a skilled and trained workforce to complete a contract
or project, with the following provisions:
a) Defines a "skilled and trained workforce" as a
workforce that meets all of the following conditions:
i) All the workers performing work in an
apprenticeable occupation in the building and
construction trades are either skilled journeypersons
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or apprentices registered in a state-approved
apprenticeship program.
ii) For work performed on or after January 1,
2017, at least 30% of the skilled journeypersons are
graduates of an apprenticeship program, as specified.
iii) For work performed on or after January 1,
2018, at least 40% of the skilled journeypersons are
graduates of an apprenticeship program, as specified.
iv) For work performed on or after January 1,
2019, at least 50% of the skilled journeypersons are
graduates of an apprenticeship program, as specified.
v) For work performed on or after January 1,
2020, at least 60% of the skilled journeypersons are
graduates of an apprenticeship program, as specified.
b) Defines "graduate of an apprenticeship program" to
mean either of the following:
i) The individual has been issued a certificate
of completion under the authority of the California
Apprenticeship Council for completing an approved
apprenticeship program.
ii) The individual completed an apprenticeship
program located outside California and approved for
federal purposes, as specified.
c) Provides that the apprenticeship graduate
requirements are satisfied if, in a particular calendar
month, either of the following is true:
i) At least the required percentage of skilled
journeypersons employed by the contractor or
subcontractor meet the specified graduate
requirements.
ii) For the hours of work performed by skilled
journeypersons employed by the contractor or
subcontractor, the percentage of hours performed is at
least equal to the required graduate percentage.
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d) Exempts a contractor or subcontractor from the
apprenticeship graduation requirements if, during the
calendar month the employed skilled journeypersons
perform fewer than 10 hours of work on the contract or
project.
e) Provides that a subcontractor need not meet the
apprenticeship graduate requirements if both of the
following are true:
i) The subcontractor was not listed as a
subcontractor or a substitute for a listed
subcontractor.
ii) The subcontract does not exceed one-half of 1%
of the price of the prime contract.
f) Provides that when a contractor, bidder, or other
entity is required to provide a commitment that a skilled
and trained workforce will be used, the commitment shall
be made in an enforceable agreement that provides
specified provisions, including a monthly compliance
report that shall be a public record.
g) Provides that if the entity fails to provide the
monthly report, the public agency or other awarding body
shall withhold further payment until a complete report is
provided.
h) Provides that if a monthly report does not
demonstrate compliance with these requirements, the
public agency or other awarding body shall withhold
further payments until the entity provides a plan to
achieve substantial compliance prior to completion of the
contract or project.
i) Provides that these requirements shall not apply if
any of the following is true:
i) The entity has entered into, and agrees to
abide by, a project labor agreement that will bind all
contractors and subcontractors performing work on the
project or contract to use a skilled and trained
workforce.
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ii) The project or contract is being performed
under the extension or renewal of a project labor
agreement that was entered into prior to January 1,
2017.
iii) The entity has entered into a project labor
agreement that will bind the entity and all its
subcontractors at every tier to use a skilled and
trained workforce.
3) Amends provisions of existing law related to
construction and related work performed by contract at
specified stationary sources (petroleum refineries and
petrochemical manufacturing facilities) to do the
following:
a) Specify that those provisions do not preclude the
use of an alternative workweek schedule adopted pursuant
to existing law.
b) Incorporate the same definition of "graduate of an
apprenticeship program" described above.
c) Make other technical changes.
4) Provides that the amendments made by this bill shall not
apply to contracts that were advertised for bid or awarded
before January 1, 2017.
5) Provides that for contracts advertised for bid or
awarded before January 1, 2017, for which an entity or
contractor provided an enforceable commitment regarding the
use of a skilled and trained workforce, the entity may
grant a request by the entity or contractor to instead
comply with the requirements of this bill.
6) Makes related legislative findings and declarations.
COMMENTS
1. Need for this bill?
According to the author, beginning in 2014, the Legislature
passed and the Governor signed legislation requiring a skilled
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and trained workforce on design-build, lease/leaseback, and
best-value construction projects. The author believes that
consolidation of the statutes will provide uniformity and will
ensure the statute can be appropriately amended in the future
should there be any changes needed. Various statutes have
incorporated the skilled and trained workforce language and
graduation requirements. Among them are (please see also:
"Prior Legislation"):
SB 785 (Wolk, 2014) which allows for the design-build
construction delivery method to be utilized for Department of
General Services, Department of Corrections, cities, counties,
special districts and transit districts. AB 566 (O'Donnell,
2015) reforms the use of the lease/leaseback construction
method. AB 1358 (Dababneh, 2015) extends the sunset for
school districts to use design-build method until 2025. AB
1185 (Ridley-Thomas, 2015) authorizes a pilot program for the
use of the "best value" contracting method at Los Angeles
Unified School District for projects over $1 million. SB 762
(Wolk, 2015) authorizes a pilot program granting the Counties
of Alameda, Los Angeles, Riverside, San Bernardino, San Diego,
Solano and Yuba to utilize the "best value" contracting method
for projects above $1 million.
The author goes on to state that these bills require
contractors and sub-contractors at every tier to employ a
"skilled and trained workforce" defined as journeypersons who
have graduated from state-approved apprenticeship programs.
Four of these bills (SB 785, AB 1358, AB 1185 and SB 762) all
require the percentages of a skilled and trained workforce to
be: 20% in 2016, 30% in 2017, 40% in 2018, 50% in 2019, 60% in
2020. For AB 566 the percentages are slightly different: 30%
in 2016, 40% in 2017, 50% in 2018, and 60% in 2019.
The author believes that these requirements ensure that a high
level of competency will be required of the workers who
actually build these projects, which in turn results in public
agencies and taxpayers receiving the highest quality
construction and the hiring of graduates of regional
apprenticeship programs and California residents.
2. Proponent Arguments :
The State Building and Construction Trades Council, contend
that SB 693 will unify state statutes regarding a "skilled and
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trained workforce" for public construction contracts using
certain alternative delivery methods. They believe that this
bill will consolidate the statutes, ease compliance and
implementation issues, such as establishing streamlined
reporting requirements and clarifications to enforcement
provisions. They argue that consolidation of the statutes
will provide uniformity and will ensure the statute can be
appropriately amended in the future should there be any
changes needed. Additionally, the Coalition for Adequate
School Housing states that SB 693 will clarify the
relationship between project labor agreements and the skilled
workforce requirements for design-build, best-value, and
lease-leaseback school facility projects. The bill also makes
these provisions consistent for all three of the project
methods. They also argue that these changes will assist
school districts with clarification to implement these school
construction methods appropriately.
3. Opponent Arguments :
Opponents contend that provisions of the bill related to
project labor agreements create loopholes for evading the
skilled and trained workforce requirements of prior
legislation. They contend that if the use of a skilled and
trained workforce is truly a value to contracting, then it
should apply to all construction of a particular type and not
exempt certain projects simply because of the existence of a
project labor agreement. According to opponents, if a PLA was
entered into within the last year or two, it should have
included the skilled and trained workforce requirement, but
that this is not so under SB 693. Furthermore, they assert
that if older PLAs are in place prior to 2014, any extension
or renewal of these PLAs should include the skilled and
trained workforce requirement. Opponents believe that if the
use of a skilled and trained workforce is truly a value to
contracting then it should apply to all construction of a
particular type, not only to some projects but not others,
simply because of the existence of a PLA.
4. Prior Legislation :
AB 566 (O'Donnell ) Chapter 214, Statutes of 2015 - Required
school districts using the "lease/leaseback" construction
method to use a skilled and trained workforce.
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AB 1358 (Dababneh) Chapter 752, Statutes of 2015 - Aligned the
process for school districts awarding contracts through the
"design-build" method with the design-build process
established for state and local agencies. Also, extends the
sunset date for school districts to use the design-build
method until 2025.
AB 1185 (Ridley-Thomas) Chapter 786, Statutes of 2015 -
Authorized a pilot program for the use of the "best value"
contracting method in the Los Angeles Unified School District
for projects over $1 million.
SB 762 (Wolk) Chapter 627, Statutes of 2015 - Authorized a
pilot program granting the Counties of Alameda, Los Angeles,
Riverside, San Bernardino, San Diego, Solano and Yuba the
ability to utilize the "best value" contracting method for
public works projects above $1 million.
SB 785 (Wolk) Chapter 931, Statutes of 2014 - Repealed certain
existing law authorizing the Department of General Services
(DGS), the Department of Corrections and Rehabilitation
(CDCR), and specified that local agencies use the
"design-build" procurement process, and enacted more uniform
provisions authorizing DGS, CDCR, and most local agencies to
use the "design-build" procurement process for certain public
works projects.
SUPPORT
State Building and Construction Trades Council (Sponsor)
Air Conditioning Sheet Metal Association
Air-Conditioning & Refrigeration Contractors Association
California Chapters of National Electrical Contractors
Association
California Labor Federation
California Legislative Conference of the Plumbing, Heating, and
Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
California's Coalition for Adequate School Housing
Finishing Contractors Association of Southern California
International Union of Elevator Constructors
Northern California Allied Trades
United Contractors
Wall and Ceiling Alliance
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Western States Council of Sheet Metal Workers
OPPOSITION
Pro-Craft Construction, Inc.
Western Electrical Contractors Association
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