BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 762|
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THIRD READING
Bill No: SB 762
Author: Wolk (D)
Amended: 5/12/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 5-0, 4/22/15
AYES: Hertzberg, Beall, Hernandez, Lara, Pavley
NO VOTE RECORDED: Nguyen, Moorlach
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Counties: competitive bidding: best value: pilot
program
SOURCE: Author
DIGEST: This bill allows counties award construction contracts
through a "best value" procurement process.
ANALYSIS: Existing law, the Local Agency Public Construction
Act, requires local officials to invite bids for construction
projects and then award contracts to the lowest responsible
bidder.
This bill:
1) Establishes a pilot program to allow counties, until January
1, 2020, to use a "best value" procurement process to award
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construction contracts in excess of $1 million.
2) Requires a county using the pilot program to award a contract
for a construction project to the lowest responsible bidder
or else reject all bids.
3) Allows a county to select the lowest responsible bidder on
the basis of the best value to a county. To ensure that
selections are conducted fairly and impartially, a county
that wants to select a bidder using the best value method
must adopt and publish mandatory procedures and criteria that
conform to this bill's requirements.
4) Defines "best value" as 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.
5) Defines "qualifications" as comprising the following five
criteria:
a) "Demonstrated management competency," which this bill
defines as the experience, competency, capability, and
capacity of the proposed management staffing to complete
projects of similar size, scope, or complexity.
b) "Financial condition," which this bill defines as the
financial resources needed to perform the contract,
including the capacity to obtain all required payment
bonds, performance bonds, and liability insurance.
c) "Labor compliance," which this bill defines as the
ability to comply with, and past performance with,
contract and statutory requirements for the payment of
wages and qualifications of the workforce. Criteria used
to evaluate a bidder's labor compliance must include the
bidder's ability to comply with the apprenticeship
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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.
d) "Relevant experience," which this bill defines as
experience of the bidder to complete projects of similar
size, scope, or complexity.
e) "Safety record," which this bill defines as the prior
history concerning the safe performance of construction
contracts. The criteria used to evaluate a bidder's safety
record must 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.
6) Requires a county to evaluate financial condition, relevant
experience, demonstrated management competency, labor
compliance, and safety record, using, to the extent possible,
quantifiable measurements.
7) Specifies that the bidding documents may require the county
to evaluate 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.
8) Requires that a county using best value contracting must
establish a procedure to prequalify bidders pursuant to a
specified statute, prepare a solicitation for bids, and give
public notice of the solicitation pursuant to a specific
statute.
9) Prohibits a county from selecting 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
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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:
a) Reducing project costs,
b) Expediting the completion of the project, or
c) Providing features not achievable through awarding the
contract on the basis of the lowest bid price.
10)Allows a county to identify specific types of subcontractors
that are required to be included in the bids and requires a
county to comply with the Subletting and Subcontracting Fair
Practices Act with regard to construction subcontractors
identified in the bid.
11)Each solicitation for bids must:
a) Invite prequalified bidders to submit sealed bids in a
specified manner.
b) Include a section identifying and describing the
following:
i) Criteria that a county will consider in evaluating
bids.
ii) The methodology and rating or weighting system
that the county will use in evaluating bids.
iii) The relative importance or weight assigned to the
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criteria identified in the request for bids.
12)Requires bidders to verify under oath the information that is
required as part of the bid solicitation process.
13)Specifies that information submitted by a bidder is not open
to public inspection to the extent that information is exempt
from disclosure under the California Public Records Act.
14)Requires that an evaluation committee appointed by a county
selecting a best value contractor must evaluate bidders'
qualifications based solely upon the criteria specified in
the solicitation documents. The evaluation committee must
assign a qualifications score to each bid.
15)Requires a county to 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.
16)Requires that the final evaluation of a best value contractor
must 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.
17)Prohibits a county from awarding a contract for a
construction project under this bill's provisions if a
solicitation for bids for that construction project results
in fewer than three responsive bids being submitted for the
county to evaluate.
18)Requires that the bidder whose bid is determined by a county,
in writing, to be the best value to a county must be awarded
the contract.
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19)Requires a county to determine the best value contractor by
dividing each bidder's price by its qualifications score. The
lowest resulting cost per quality point represents the best
value bid.
20)Requires a county to issue a written decision of its contract
award.
21)Requires that, after issuing a contract award, a county must:
a) 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.
b) Make the notice of award public and include the score
of the selected best value contractor in relation to all
other responsive bidders and their respective prices.
Include, in the contract file, documentation sufficient to
support the decision to award.
22)If a successful bidder for a project refuses or fails to
execute a tendered contract, allows a board of supervisors
that deems it to be in the best interest of the county to
award the contract to the second lowest responsible bidder.
If the second lowest responsible bidder fails or refuses to
execute the contract, this bill allows the board of
supervisors to likewise award the contract to the third
lowest responsible bidder.
23)Requires that the board of supervisors of a county that uses
the best value contracting process authorized by this bill
must submit a report to the appropriate policy committees of
the Legislature and the Joint Legislative Budget Committee.
The report must comply with statutory requirements for
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submitting reports to the Legislature and must include
specified information about projects awarded using best value
procedures.
24)Clarifies that, except for the best-value process it
authorizes, it is not intended to change any guideline,
criteria, procedure, or requirement for a county to let a
contract to the lowest responsible bidder or else reject all
bids.
Background
Over the last two decades, legislators have gradually expanded
local governments' authority to procure construction projects
using various alternatives to the design-bid-build project
delivery method. These alternative methods include:
"Design-build" contracting, which allows local officials to
procure both design and construction services from a single
company before the development of complete plans and
specifications (SB 785, Wolk, Chapter 931, Statutes of 2014);
and "Construction manager at risk" contracting, which allows
local officials to retain a construction manager, who provides
pre-construction services during the design period, later
becomes the general contractor during the construction process,
and is responsible for delivering the project within an agreed
upon price, thereby assuming the risk for cost-overruns (SB 328,
Knight, Chapter 517, Statutes of 2013).
During the bidding phase, these alternative procurement methods
allow a local government to evaluate bids on a best-value basis,
incorporating technical factors, such as qualifications, in
addition to price. For example, the statutes authorizing
design-build contracting allow a contract to be awarded based on
consideration of objective criteria that include features,
functions, lifecycle costs, experience, and past performance.
State law allows the University of California (UC), as a pilot
project until January 1, 2017, to award construction contracts
on a best-value basis, rather than awarding contracts based on
the lowest-priced bid (SB 835, Wolk, Chapter 636, Statutes of
2011).
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Some county officials want the Legislature to grant them the
authority to award construction contracts on a best-value basis,
similar to the pilot program authorized for UC.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified5/12/15)
Solano County
OPPOSITION: (Verified5/13/15)
Southern California Contractors Association
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
5/13/15 16:45:35
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