BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 762|
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UNFINISHED BUSINESS
Bill No: SB 762
Author: Wolk (D)
Amended: 9/4/15
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
SENATE FLOOR: 24-12, 5/18/15
AYES: Allen, Beall, Block, Cannella, De León, Galgiani,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara,
Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Pan,
Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Fuller, Gaines, Huff, Moorlach,
Morrell, Nguyen, Nielsen, Runner, Stone, Vidak
NO VOTE RECORDED: Berryhill, Hall, Pavley
ASSEMBLY FLOOR: 53-25, 9/8/15 - See last page for vote
SUBJECT: Competitive bidding: best value: pilot program:
design-build
SOURCE: County of Solano
DIGEST: This bill allows seven specified counties to award
construction contracts through a "best value" procurement
process and modifies the definitions of "best value" in statutes
allowing the state and local government officials to use the
design-build contracting method for some public works.
Assembly Amendments:
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1)Direct that the bill's provisions will only apply in seven
specified counties.
2)Add requirements relating to the use of a skilled and trained
workforce, as defined.
3)Add language limiting retention proceeds that can be withheld
in a contract awarded pursuant to this bill's provisions.
4)Modify definitions of "best value" in existing statutes that
allow state and local officials to use the design-build
procurement method.
5)Add findings and declarations explaining the need for
legislation that applies only to seven specified counties.
ANALYSIS:
Existing law:
1) Requires, pursuant to the Local Agency Public Construction
Act, that local officials must invite bids for construction
projects and then award contracts to the lowest responsible
bidder.
2) Allows various state and local agencies to use the
design-build procurement process for specified public works
under different laws.
This bill:
1) Establishes a pilot program to allow the counties of
Alameda, Los Angeles, Riverside, San Bernardino, San Diego,
Solano, and Yuba, until January 1, 2020, to use a "best
value" procurement process to award 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 bidder
representing the best value or else reject all bids.
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3) Allows a county to select the 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
selected bidder may be selected on the basis of objective
criteria with the resulting selection representing the best
combination of price and qualifications.
5) Defines "best value contract" as a competitively bid
contract entered into pursuant to this bill's provisions.
6) Defines "qualifications" as comprising the following five
criteria, as further defined within this bill: demonstrated
management competency, financial condition, labor compliance,
relevant experience, and safety record.
7) Requires a county to evaluate financial condition, relevant
experience, demonstrated management competency, labor
compliance, and safety record, using, to the extent possible,
quantifiable measurements.
8) 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.
9) 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.
10)Prohibits a county from prequalifying a best value
contractor unless the contractor provides an enforceable
commitment to the county that the contractor and its
subcontractors at every tier will use a skilled and trained
workforce, as defined, to perform all work on the project or
contract that falls within an apprenticeable occupation, as
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defined, in the building and construction trades.
11)Prohibits a county from selecting a 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:
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.
12)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.
13)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
criteria identified in the request for bids.
14)Requires bidders to verify under oath the information that
is required as part of the bid solicitation process.
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15)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.
16)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.
17)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.
18)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.
19)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.
20)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.
21)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.
22)Requires a county to issue a written decision of its
contract award.
23)Requires that, after issuing a contract award, a county
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must:
a) Publicly announce its award identifying the best value
contractor that was selected, the project, the project
price, and the selected 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.
24)Allows, if a successful bidder for a project refuses or
fails to execute a tendered contract, a board of supervisors
that deems it to be in the best interest of the county to
award the contract to bidder with the second lowest best
value score. 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
bidder with the third lowest best value score.
25)Imposes limits on retention proceeds that can be withheld in
a contract awarded pursuant to this bill's provisions.
26)Requires that the board of supervisors of a county that uses
the best value contracting process authorized by this bill
must submit a report that fulfills specified requirements to
the appropriate policy committees of the Legislature and the
Joint Legislative Budget Committee.
27)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.
28)Modifies definitions in statutes that allow state and local
officials to use the design-build procurement method to
specify that "best value" means a value determined by
evaluation of objective criteria that relate to price,
features, functions, life-cycle costs, experience, and past
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performance.
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).
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
According to the Assembly Appropriations Committee, this bill
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will result in negligible state costs.
SUPPORT: (Verified9/8/15)
County of Solano (source)
Air Conditioning & Refrigeration Contractors Association
Air Conditioning Sheet Metal Association
Associated General Contractors
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California State Association of Counties
County of Los Angeles
County of San Bernardino
County of Yuba
Finishing Contractors Association of Southern California
National Electrical Contractors Association, California Chapters
Northern California Allied Trades
State Building and Construction Trades Council of California
Wall and Ceiling Alliance
OPPOSITION: (Verified9/8/15)
Air Conditioning Trade Association
American Fire Sprinkler Association
Associated Builders and Contractors - San Diego Chapter
Associated Builders and Contractors of California
National Right to Work Committee
Pacific Power & Systems
Plumbing-Heating-Cooling Contractors Association of California
Southern California Contractors Association
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT: Supporters state allowing local
governments to consider a range of relevant criteria, rather
than focusing solely on price allows local governments to better
match a contractor to a public works project's specific
requirements. Contracts awarded solely on a low-bid basis may
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go to bidders who are not the best-qualified to meet the
technical challenges, mitigate the unique risks, or fulfill the
scheduling requirements of a particular construction project.
This sometimes results in change orders, construction defects,
delays, and litigation that ultimately cost taxpayers more than
the savings that were realized by awarding a contract to the
lowest bidder. This bill allows counties to use a version of
the "best value" bid evaluation that is already authorized as
part of some alternative project delivery methods, like
design-build. By doing so, the bill lets local officials to
exercise discretion in awarding contracts to the bidder who is
most likely to provide the public with the best project outcome
for a fair price.
ARGUMENTS IN OPPOSITION: Opponents state by allowing
officials to award contracts based on a range of
variously-weighted criteria in addition to price, this bill
makes the procurement process for county construction projects
more subjective. More subjectivity increases the chances that
inappropriate factors could influence which bidders are awarded
some contracts. Many common public works projects can be
specified with great precision in bid documents. In such cases,
where a public agency can meticulously describe a project
exactly as it is to be built, it is unclear why the agency
should distinguish between bidders based on any criteria other
than price.
ASSEMBLY FLOOR: 53-25, 9/8/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Campos, Chau,
Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández,
Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty,
Medina, Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Beth Gaines, Grove, Hadley, Harper, Jones, Kim, Lackey,
Linder, Maienschein, Mathis, Mayes, Melendez, Obernolte,
Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Calderon, Chávez
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Prepared by: Brian Weinberger / GOV. & F. / (916) 651-4119
9/8/15 21:51:47
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