Amended in Assembly July 16, 2015

Amended in Assembly July 7, 2015

Amended in Senate May 12, 2015

Amended in Senate April 28, 2015

Amended in Senate April 15, 2015

Senate Bill No. 762

Introduced by Senator Wolk

February 27, 2015

An act to amend Sections 10187.5 and 22161 of, and to add and repeal Article 3.7 (commencing with Section 20155) of Chapter 1 of Part 3 of Division 2 of, the Public Contract Code, relating to public contracts.

LEGISLATIVE COUNSEL’S DIGEST

SB 762, as amended, Wolk. Competitive bidding: best value: pilot program: design-build.

The Local Agency Public Construction Act requires counties, among others, to comply with specified procedures for contracting for public works projects, including the use of a competitive bidding process and awarding contracts to the lowest responsible bidder. Existing law provides that specified provisions of the act applicable to public works contracts awarded by counties, as specified, do not apply to certain contracts by the County of Napa and the County of San Diego.

This bill would establish a pilot program to allow counties to select the lowest responsible bidder on the basis of best value, as defined, for construction projects in excess of $1,000,000. The bill would establish procedures and criteria for the selection of a best value contractor. The bill would require that bidders verify specified information under oath, thereby imposing a state-mandated local program by creating a new crime. The bill would require the board of supervisors of a participating county, before January 1, 2020, to submit a report to specified legislative committees. The bill would repeal the pilot program provisions on January 1, 2020.

Existing law, until January 1, 2025, authorizes the Department of General Services, the Department of Corrections and Rehabilitation, and certain local agencies to use the design-build procurement process for specified public works. Existing law defines “best value” for those purposes to mean a value determined by evaluation of objective criteria that may include, but are not limited to, price, features, functions, life-cycle costs, experience, and past performance.

This bill would modify that definition to have the objective criteria evaluated, instead, relate to those specific criteria.

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:

SECTION 1.  

Section 10187.5 of the Public Contract Code is
amended to read:

10187.5.  

For purposes of this article, the following definitions
and the definitions in subdivision (a) of Section 13332.19 of the
Government Code shall apply:

(a) “Best value” means a value determined by evaluation of
objective criteria that relate to price, features, functions, life-cycle
costs, experience, and past performance. A best value determination
may involve the selection of the lowest cost proposal meeting the
interests of the department and meeting the objectives of the
project, selection of the best proposal for a stipulated sum
established by the procuring agency, or a tradeoff between price
and other specified factors.

(b) “Construction subcontract” means each subcontract awarded
by the design-build entity to a subcontractor that will perform work
or labor or render service to the design-build entity in or about the
construction of the work or improvement, or a subcontractor
licensed by the State of California that, under subcontract to the
design-build entity, specially fabricates and installs a portion of
the work or improvement according to detailed drawings contained
in the plans and specifications produced by the design-build team.

(c) “Department” means the Department of General Services
and the Department of Corrections and Rehabilitation.

(d) “Design-build” means a project delivery process in which
both the design and construction of a project are procured from a
single entity.

(e) “Design-build entity” means a corporation, limited liability
company, partnership, joint venture, or other legal entity that is
able to provide appropriately licensed contracting, architectural,
and engineering services as needed pursuant to a design-build
contract.

(f) “Design-build team” means the design-build entity itself and
the individuals and other entities identified by the design-build
entity as members of its team. Members shall include the general
contractor and, if utilized in the design of the project, all electrical,
mechanical, and plumbing contractors.

(g) “Director” means, with respect to procurements undertaken
by the Department of General Services, the Director of General
Services or, with respect to procurements undertaken by the
Department of Corrections and Rehabilitation, the secretary of that
department.

SEC. 2.  

Article 3.7 (commencing with Section 20155) is added
to Chapter 1 of Part 3 of Division 2 of the Public Contract Code,
to read:

 

Article 3.7.  Best Value Construction Contracting for Counties
Pilot Program

 

20155.  

(a) This article provides for a pilot program for counties
for construction projects in excess of one million dollars
($1,000,000).

(b) The board of supervisors of any county shall let any contract
for a construction project pursuant to this article to the lowest
responsible bidder or else reject all bids.

(c) The lowest responsible bidder may be selected on the basis
of the best value to a county. In order to implement this method
of selection, the board of supervisors shall adopt and publish
procedures and required criteria that ensure that all selections are
conducted in a fair and impartial manner. These procedures shall
conform to Sections 20155.3 to 20155.6, inclusive, and shall be
mandatory for counties who choose to participate in the pilot
program.

(d) If the board of supervisors deems it to be in the best interest
of the county, the board of supervisors, on the refusal or failure of
the successful bidder for a project to execute a tendered contract,
may award it to the second lowest responsible bidder. If the second
lowest responsible bidder fails or refuses to execute the contract,
the board of supervisors may likewise award it to the third lowest
responsible bidder.

20155.1.  

As used in this article:

(a) “Best value” means a procurement process whereby the
lowest responsible bidder may be selected on the basis of objective
criteria with the resulting selection representing the best
combination of price and qualifications.

(b) “Best value contract” means a contract entered into pursuant
to this article.

(c) “Best value contractor” means a properly licensed person,
firm, or corporation that submits a bid for, or is awarded, a best
value contract.

(d) “Demonstrated management competency” means the
experience, competency, capability, and capacity of the proposed
management staffing to complete projects of similar size, scope,
or complexity.

(e) “Financial condition” means the financial resources needed
to perform the contract. The criteria used to evaluate a bidder’s
financial condition shall include, at a minimum, capacity to obtain
all required payment bonds, performance bonds, and liability
insurance.

(f) “Labor compliance” means the ability to comply with, and
past performance with, contract and statutory requirements for the
payment of wages and qualifications of the workforce. The criteria
used to evaluate a bidder’s labor compliance shall include, as a
minimum, the bidder’s ability to comply with the apprenticeship
requirements of the California Apprenticeship Council and the
Department of Industrial Relations, its past conformance with
those requirements, and its past conformance with requirements
to pay prevailing wages on public works projects.

(g) “Qualifications” means the financial condition, relevant
experience, demonstrated management competency, labor
compliance, and safety record of the bidder, and, if required by
the bidding documents, some or all of the preceding qualifications
as they pertain to subcontractors proposed to be used by the bidder
for designated portions of the work. A county shall evaluate
financial condition, relevant experience, demonstrated management
competency, labor compliance, and safety record, using, to the
extent possible, quantifiable measurements.

(h) “Relevant experience” means the experience of the bidder
with projects of similar size, scope, or complexity.

(i) “Safety record” means the prior history concerning the safe
performance of construction contracts. The criteria used to evaluate
a bidder’s safety record shall include, at a minimum, its experience
modification rate for the most recent three-year period, and its
average total recordable injury or illness rate and average lost work
rate for the most recent three-year period.

20155.2.  

As used in this article:

(a) “Apprenticeable occupation” means an occupation for which
the Chief of the Division of Apprenticeship Standards had approved
an apprenticeship program pursuant to Section 3075 of the Labor
Code prior to January 1, 2014.

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

(1) All the workers are either skilled journeypersons or
apprentices registered in an apprenticeship program approved by
the begin delete chief. end delete begin insert Chief of the Division of Apprenticeship Standards. end insert

(2) (A) As of January 1, 2016, at least 20 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(B) As of January 1, 2017, at least 30 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(C) As of January 1, 2018, at least 40 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(D) As of January 1, 2019, at least 50 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(E) As of January 1, 2020, at least 60 percent of the skilled
journeypersons employed to perform work on the contract or
project by the entity and each of its subcontractors at every tier
are graduates of an apprenticeship program for the applicable
occupation that was either approved by the Chief of the Division
of Apprenticeship Standards pursuant to Section 3075 of the Labor
Code or located outside California and approved for federal
purposes pursuant to the apprenticeship regulations adopted by
the federal Secretary of Labor.

(F) For an apprenticeable occupation in which no apprenticeship
program had been approved by the begin delete chief end delete begin insert end insert begin insert Chief of the Division of
Apprenticeship Standards end insert prior to January 1, 1995, up to one-half
of the graduation percentage requirements of begin delete subparagraph (B) end delete
begin insert subparagraphs (A) through (E), inclusive, end insert may be satisfied by
skilled journeypersons who commenced working in the
apprenticeable occupation prior to the chief’s approval of an
apprenticeship program for that occupation in the county in which
the project is located.

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

(1) Graduated from an apprenticeship program for the applicable
occupation that was approved by the begin delete chief end delete begin insert end insert begin insert Chief of the Division
of Apprenticeship Standards end insert or located outside California and
approved for federal purposes pursuant to the apprenticeship
regulations adopted by the federal Secretary of Labor.

(2) Has at least as many hours of on-the-job experience in the
applicable occupation as would be required to graduate from an
apprenticeship program for the applicable occupation that is
approved by the begin delete chief. end delete begin insert Chief of the Division of Apprenticeship
Standards. end insert

20155.3.  

A county shall proceed in accordance with the
following when awarding best value contracts under this article:

(a) A county shall not select a lowest responsible bidder on the
basis of the best value to a county unless, after evaluating at a
public meeting the alternative of awarding the contract on the basis
of the lowest bid price, the county makes a written finding that
awarding the contract on the basis of best value, for the specific
project under consideration, will accomplish one or more of the
following objectives: reducing project costs, expediting the
completion of the project, or providing features not achievable
through awarding the contract on the basis of the lowest bid price.

(b) A county shall prepare a solicitation for bids and give notice
pursuant to Section 20125. A county may identify specific types
of subcontractors that are required to be included in the bids. A
county shall comply with Chapter 4 (commencing with Section
4100) of Part 1 with regard to construction subcontractors identified
in the bid.

(c) A county shall establish a procedure to prequalify bidders
pursuant to Section 20101. The information required pursuant to
this section shall be verified under oath by the bidder in the manner
in which civil pleadings in civil actions are verified. Information
submitted by the bidder as part of the evaluation process shall not
be open to public inspection to the extent that information is
exempt from disclosure under the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of
Title 1 of the Government Code).

(d) Each solicitation for bids shall do all of the following:

(1) Invite prequalified bidders to submit sealed bids in the
manner prescribed by this article.

(2) Include a section identifying and describing the following:

(A) Criteria that a county will consider in evaluating bids.

(B) The methodology and rating or weighting system that will
be used by a county in evaluating bids.

(C) The relative importance or weight assigned to the criteria
identified in the request for bids.

(e) Final evaluation of the best value contractor shall be done
in a manner that prevents cost or price information from being
revealed to the committee evaluating the qualifications of the
bidders prior to completion and announcement of that committee’s
decision.

20155.4.  

(a) A best value entity shall not be prequalified or
shortlisted unless the entity provides an enforceable commitment
to the local agency that the entity and its subcontractors at every
tier 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.

(b) An entity’s commitment that a skilled and trained workforce
will be used to perform the project or contract may be established
by any of the following:

(1) The entity’s agreement with the county that the entity and
its subcontractors at every tier will comply with the requirements
of this begin delete subdivision end delete begin insert section end insert and that the entity will provide the
county with evidence, on a monthly basis while the project or
contract is being performed, that the entity and its subcontractors
are complying with the requirements of this begin delete subdivision. end delete begin insert section. end insert

(2) If the county has entered into a project labor agreement that
will bind all contractors and subcontractors performing work on
the project or contract, and that includes the requirements of this
begin delete subdivision, end delete begin insert section, end insert the entity’s agreement that it will become a
party to that project labor agreement.

(3) Evidence that the entity has entered into a project labor
agreement that includes the requirements of this section and that
will bind the entity and all its subcontractors at every tier
performing the project or contract.

20155.5.  

Selection of the best value contractor shall be made
as follows:

(a) (1) An evaluation committee appointed by the county shall
evaluate the qualifications of the bidders based solely upon the
criteria set forth in the solicitation documents, and shall assign a
qualifications score to each bid.

(2) A county shall establish written policies and procedures,
consistent with applicable law, to ensure that members of an
evaluation committee are free from conflicts of interest, if the
county has not already established applicable written policies and
procedures.

(b) A county shall not award a contract for a construction project
pursuant to this article if a solicitation for bids for that construction
project results in the submission of fewer than three responsive
bids to the county for evaluation.

(c) The award of the contract shall be made to the bidder whose
bid is determined by a county, in writing, to be the best value to a
county. To determine the best value contractor, the county shall
divide each bidder’s price by its qualifications score. The lowest
resulting cost per quality point will represent the best value bid.

(d) A county shall issue a written decision of its contract award.

(e) Upon issuance of a contract award, a county shall publicly
announce its award identifying the best value contractor to which
the award is made, the project, the project price, and the selected
best value contractor’s score based on the evaluation criteria listed
in the request for bids. The notice of award shall be made public
and include the score of the selected best value contractor in
relation to all other responsive bidders and their respective prices.
The contract file shall include documentation sufficient to support
the decision to award.

20155.6.  

(a) If the county elects to award a project pursuant
to this article, retention proceeds withheld by the begin delete district end delete begin insert county end insert
from the selected best value contractor shall not exceed 5 percent
if a performance and payment bond, issued by an admitted surety
insurer, is required in the solicitation of bids.

(b) In a contract between the selected best value contractor and
a subcontractor, and in a contract between a subcontractor and any
subcontractor thereunder, the percentage of the retention proceeds
withheld shall not exceed the percentage specified in the contract
between the begin delete district end delete begin insert county end insert and the selected best value contractor.
If the selected best value contractor provides written notice to a
subcontractor that, prior to or at the time the bid is requested, a
bond may be required and the subcontractor subsequently is unable
or refuses to furnish a bond to the selected best value contractor,
then the selected best value contractor may withhold retention
proceeds in excess of the percentage specified in the contract
between the begin delete district end delete begin insert county end insert and the selected best value contractor
from any payment made by the selected best value contractor to
the subcontractor.

20155.7.  

(a) Before January 1, 2020, the board of supervisors
of a participating county shall submit a report to the appropriate
policy committees of the Legislature and the Joint Legislative
Budget Committee. The report shall include, but is not limited to,
the following information:

(1) A description of the projects awarded using the best value
procedures.

(2) The contract award amounts.

(3) The best value contractors awarded the projects.

(4) A description of any written protests concerning any aspect
of the solicitation, bid, or award of the best value contracts,
including the resolution of the protests.

(5) A description of the prequalification process.

(6) The criteria used to evaluate the bids, including the weighting
of the criteria and an assessment of the effectiveness of the
methodology.

(7) If a project awarded under this article has been completed,
an assessment of the project performance, to include a summary
of any delays or cost increases.

(b) A report submitted pursuant to subdivision (a) shall be
submitted in compliance with Section 9795 of the Government
Code.

20155.8.  

Except as otherwise provided in this article, this article
is not intended to change in any manner any guideline, criteria,
procedure, or requirement of a county to let any contract for a
project to the lowest responsible bidder or else reject all bids.

20155.9.  

This article shall remain in effect only until January
1, 2020, and as of that date is repealed.

SEC. 3.  

Section 22161 of the Public Contract Code is amended
to read:

22161.  

For purposes of this chapter, the following definitions
apply:

(a) “Best value” means a value determined by evaluation of
objective criteria that relate to price, features, functions, life-cycle
costs, experience, and past performance. A best value determination
may involve the selection of the lowest cost proposal meeting the
interests of the local agency and meeting the objectives of the
project, selection of the best proposal for a stipulated sum
established by the procuring agency, or a tradeoff between price
and other specified factors.

(b) “Construction subcontract” means each subcontract awarded
by the design-build entity to a subcontractor that will perform work
or labor or render service to the design-build entity in or about the
construction of the work or improvement, or a subcontractor
licensed by the State of California that, under subcontract to the
design-build entity, specially fabricates and installs a portion of
the work or improvement according to detailed drawings contained
in the plans and specifications produced by the design-build team.

(c) “Design-build” means a project delivery process in which
both the design and construction of a project are procured from a
single entity.

(d) “Design-build entity” means a corporation, limited liability
company, partnership, joint venture, or other legal entity that is
able to provide appropriately licensed contracting, architectural,
and engineering services as needed pursuant to a design-build
contract.

(e) “Design-build team” means the design-build entity itself
and the individuals and other entities identified by the design-build
entity as members of its team. Members shall include the general
contractor and, if utilized in the design of the project, all electrical,
mechanical, and plumbing contractors.

(f) “Local agency” means the following:

(1) A city, county, or city and county.

(2) A special district that operates wastewater facilities, solid
waste management facilities, water recycling facilities, or fire
protection facilities.

(3) Any transit district, included transit district, municipal
operator, included municipal operator, any consolidated agency,
as described in Section 132353.1 of the Public Utilities Code, any
joint powers authority formed to provide transit service, any county
transportation commission created pursuant to Section 130050 of
the Public Utilities Code, or any other local or regional agency,
responsible for the construction of transit projects.

(g) (1) For a local agency defined in paragraph (1) of
subdivision (f), “project” means the construction of a building or
buildings and improvements directly related to the construction
of a building or buildings, county sanitation wastewater treatment
facilities, and park and recreational facilities, but does not include
the construction of other infrastructure, including, but not limited
to, streets and highways, public rail transit, or water resources
facilities and infrastructure. For a local agency defined in paragraph
(1) of subdivision (f) that operates wastewater facilities, solid waste
management facilities, or water recycling facilities, “project” also
means the construction of regional and local wastewater treatment
facilities, regional and local solid waste facilities, or regional and
local water recycling facilities.

(2) For a local agency defined in paragraph (2) of subdivision
(f), “project” means the construction of regional and local
wastewater treatment facilities, regional and local solid waste
facilities, regional and local water recycling facilities, or fire
protection facilities.

(3) For a local agency defined in paragraph (3) of subdivision
(f), “project” means a transit capital project that begins a project
solicitation on or after January 1, 2015. A “project,” as defined by
this paragraph, that begins the solicitation process before January
1, 2015, is subject to Article 6.8 (commencing with Section
20209.5) of Chapter 1. “Project,” as defined by this paragraph,
does not include state highway construction or local street and
road projects.

SEC. 4.  

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