BILL ANALYSIS Ó
SB 762
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 762
(Wolk) - As Amended August 17, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill authorizes counties to use "best value" criteria to
award construction contracts valued above $1 million, until
January 1, 2020. In order to use best value, the bill requires
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a county to evaluate at a public meeting the alternative of
awarding the contract on the basis of lowest bid price, and make
a finding that using best value will accomplish one or more of
the following: reduce project costs, expedite project
completion, or provide features not available by awarding based
on lowest bid price. The bill prescribes the methodology for
preparing solicitations for bids, prequalifying bidders,
evaluating bidder qualifications, and selection of the best
value contractor. The bill requires any county using best value
procurement to report specified information on its experience
using best value to the Legislature by January 1, 2020.
FISCAL EFFECT:
Negligible state costs.
COMMENTS:
1)Purpose. The author states, "Counties are currently permitted
to award construction contracts using the 'best value' method
of selection for the design-build project delivery method and
for the construction management at risk project delivery
method. However, counties are prohibited from awarding
construction contracts based on Best Value for projects
contracted through the traditional (design-bid-build) method
of project delivery. Awarding public works contracts solely
based on lowest responsible bid can result in firms
underbidding the cost of work to receive the contract award,
which can set up a contentious relationship between the county
and general contractor."
This bill authorizes counties to award contracts in excess of
$1 million to the lowest responsible bidder selected on the
basis of objective criteria representing the best value to the
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county including both price and bidder qualifications.
2)Background. Existing law requires public entities to comply
with certain procedures in soliciting and evaluating bids and
awarding contracts for the construction of public works. The
traditional approach to public contracting is referred to as
the design-bid-build method, which requires local officials to
invite bids for construction projects, based on a completed
set of engineering plans, then award the construction bid to
the lowest bidder. In recent years, the Legislature has
authorized local agencies to also use the "design-build" and
"construction manager at risk" procurement methods, as
specified. During the bidding phase, these alternative
procurement methods allow a local government to evaluate bids
on a best-value basis, which allows a contract to be awarded
based on consideration of objective criteria that include
features, functions, lifecycle costs, experience, and past
performance, in addition to price.
Existing law, until January 1, 2017, authorizes a pilot
program at the University of California (UC) to award
construction contracts on a "best value" basis. The
authorization was initially established as a five year pilot
program for UC San Francisco in 2006. In a January 2010 report
to the Legislature, UC concluded that the best value pilot
program fostered better quality work, less labor and safety
problems, better qualified persons/contractors, better on-time
completion, and better on-budget performance. As a result, the
authority was expanded to all UC campuses in 2011 and the
sunset extended to January 1, 2017.
3)Related Legislation. AB 1185 (Ridley-Thomas) authorizes a
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pilot program for the Los Angeles Unified School District to
use best value procurement for projects over $1 million and
requires the Legislative Analyst's Office to report on the use
of the best value procurement method by school districts. AB
1185 is pending in the Senate Appropriations Committee.
4)Previous Legislation.
a) AB 1971 (Bocanegra) of 2014 was substantially similar to
AB 1185. AB 1971 was held on the Senate Floor.
b) SB 835 (Wolk), Chapter 636, Statutes of 2011, extended
the sunset of the best value pilot program for the UC to
January 1, 2017, and expanded the program to all UC
campuses.
c) SB 667 (Migden), Chapter 367, Statutes of 2006,
established the best value pilot program for the UC San
Francisco campus for five years.
1)Arguments in Support. Counties state that a "best value"
construction contract allows them to select the lowest
responsible bidder by factoring in relevant criteria that
allow for the best combination of price and quality.
2)Arguments in Opposition. Contractors worry that the best value
process invites abuse in the awarding process, possibly
allowing a public agency to select a contractor based on their
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preference rather than the lowest responsible bid.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081