BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 693|
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                                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  








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          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  








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            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  








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            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  








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            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  








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               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.








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             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.








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          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  








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          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,  








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            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


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