BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 693| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 693 Author: Hueso (D), et al. Amended: 6/27/16 Vote: 21 SENATE ENERGY, U. & C. COMMITTEE: 9-0, 4/7/15 AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley, Wolk NO VOTE RECORDED: Fuller, Morrell SENATE FLOOR: 31-1, 4/13/15 AYES: Allen, Bates, Beall, Block, Cannella, De León, Galgiani, Hall, Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Roth, Stone, Vidak, Wieckowski, Wolk NOES: Anderson NO VOTE RECORDED: Berryhill, Fuller, Gaines, Hertzberg, Liu, Pavley, Runner SENATE LABOR AND IND. REL. COMMITTEE: 4-1, 8/23/16 (Pursuant to Senate Rule 29.10) AYES: Mendoza, Jackson, Leno, Mitchell NOES: Stone ASSEMBLY FLOOR: 64-14, 8/18/16 - See last page for vote SUBJECT: Public contracts: skilled and trained workforce SOURCE: State Building and Construction Trades Council DIGEST: This bill consolidates the "skilled and trained workforce" requirements of various provisions of existing law SB 693 Page 2 related to alternative construction delivery methods, defines the terms of these requirements, and makes other conforming changes. Assembly Amendments gutted and amended this bill's original subject matter dealing with the State Energy Resources Conservation and Development Commission and conflicts of interest, and replace it with the issue of public contracts and the utilization of a skilled and trained workforce. 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. 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 SB 693 Page 3 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)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 (as defined) 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). 4)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 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) 5)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 PLA, 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). 6)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 SB 693 Page 4 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). 7)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). 8)Authorizes a pilot program in the Los Angeles Unified School 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 (Public Contract Code §20119-20119.7). 9)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 (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 SB 693 Page 5 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 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 SB 693 Page 6 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. 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. SB 693 Page 7 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 PLA that will bind all contractors and subcontractors performing work on the project or contract to use a skilled and trained workforce. ii) The project or contract is being performed under the extension or renewal of a PLA 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. SB 693 Page 8 FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee, this bill would result in administrative costs to the Division of Apprenticeship Standards (DAS) of approximately $123,000 in the first year and $116,000 ongoing (special funds), to respond to skilled workforce requirement inquires. SUPPORT: (Verified8/23/16) State Building and Construction Trades Council (source) 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 Western States Council of Sheet Metal Workers OPPOSITION: (Verified8/23/16) Pro-Craft Construction, Inc. Western Electrical Contractors Association ARGUMENTS IN SUPPORT: The State Building and Construction Trades Council, contend that SB 693 will unify state statutes SB 693 Page 9 regarding a "skilled and 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. ARGUMENTS IN OPPOSITION: 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. ASSEMBLY FLOOR: 64-14, 8/18/16 AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, SB 693 Page 10 Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Holden, Irwin, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood, Rendon NOES: Travis Allen, Bigelow, Brough, Chávez, Dahle, Beth Gaines, Grove, Harper, Jones, Mathis, Melendez, Obernolte, Patterson, Wagner NO VOTE RECORDED: Roger Hernández, Mayes Prepared by: Brandon Seto / L. & I.R. / (916) 651-1556 8/24/16 9:44:40 **** END ****