BILL ANALYSIS                                                                                                                                                                                                    Ó



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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