BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON EDUCATION
                              Senator Carol Liu, Chair
                                2015 - 2016  Regular 

          Bill No:             SB 1214             
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          |Author:    |Allen                                                |
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          |Version:   |March 31, 2016                          Hearing      |
          |           |Date:    April 13, 2016                              |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Kathleen Chavira                                     |
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          Subject:  University of California:  Best Value Construction  
          Contracting Program


            SUMMARY
          
          This bill eliminates the sunset on the authority of the  
          University of California (UC) to use the best value procurement  
          method at all its campuses and medical centers and permanently  
          extends the authority of the UC to use this procurement method  
          at all its locations.

            BACKGROUND
          
          Existing law, until January 1, 2017, authorizes a pilot program  
          at the UC to award construction contracts on a "best value"  
          basis, rather than just to the lowest bid.  
          (Public Contract Code §10506.4)

          Existing law defines "best value," for purposes of the UC, 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.  (Public Contract Code § 10506.5)

          Existing law establishes a pilot program to authorize the Los  
          Angeles Unified School District (LAUSD) to use a best value  
          procurement method, before December 31, 2020, for public  
          projects that exceed $1 million, and requires submission of  
          specified reports on the use of this procurement method.   







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          (Public Contract Code § 20119 - 20119.7)

            ANALYSIS
          
          This bill:

          1)   Expands the authority of the UC to use best value  
               contracting beyond its campuses and medical centers to  
               include all locations of the UC.

          2)   Deletes obsolete reporting requirements.

          3)   Deletes the sunset on the authority of the UC to use the  
               best value procurement method, thereby extending this  
               authority permanently.
           
          4)   Makes several technical and conforming changes.


          STAFF COMMENTS
          
          1)   Need for the bill.  The existing law, which authorizes the  
               University of California (UC) Best Value Pilot program  
               sunsets on January 1, 2017.  According to the author,  
               without this bill, the UC will forego the ability to employ  
               a contractor selection method that provides significant  
               opportunity for cost avoidance. The UC estimates that these  
               projects were completed with a demonstrated savings of  
               about 3 percent. 

          2)   UC Best Value Pilot Program.  SB 667 (Migden, Chapter 367,  
               Statutes of 2006) established a Best Value Pilot program  
               for the UC.  Initially authorized for five years, the bill  
               allowed the UC San Francisco to award contracts based on  
               the best value for the university.  Under this process, UC  
               prequalifies bidders, then evaluates the bid based on  
               answers to a separate best value questionnaire and assigns  
               a qualification score.  UC then divides each bidder's price  
               by its qualification score.  The lowest resulting cost per  
               quality point represents the best value bid.

               In a report to the Legislature, in January 2010, the UC  
               reported that 23 contracts totaling $158.3 million were  
               issued under the Best Value Pilot program.  Of the 23  








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               contracts, 12 contracts were low bid contracts.  According  
               to the report, the "University Representatives for all  
               these projects [four completed and two almost completed  
               projects] have been unanimous in their praise of this  
               process that has already demonstrated numerous advantages  
               such as decreased bid protests and communication problems,  
               decreased the need for multiple inspections and re-work,  
               decreased disputes, change order requests, claims and  
               litigation and increased incentives for contractors to  
               perform their work safety and to adhere to high labor and  
               quality standards."  UC concludes that the Best Value Pilot  
               program fosters better quality work, less labor and safety  
               problems, better qualified persons/contractors, better  
               on-time completion, and better on-budget performance.  In  
               2011, SB 835 (Wolk, Chapter 636, Statutes of 2011),  
               expanded the authority to all UC campuses, including  
               medical centers, and extended the sunset from January 1,  
               2012, to January 1, 2017.    

               In its December 18, 2015 report, the UC reports that of the  
               320 construction contracts awarded since January 1, 2012,  
               40 totaling $1.19 billion were awarded through the Best  
               Value Pilot program, representing 13 percent of overall  
               projects.  The UC cites numerous advantages of this process  
               including decreased bid protests, improved communication  
               with contractors, reduced re-inspection and re-work, fewer  
               disputes, change order requests, claims and litigation.   
               The UC notes that the selection criteria it uses for best  
               value procurement rewards contractors for maintaining  
               strong safety and labor compliance standards and delivering  
               high quality workmanship. The UC also notes that its best  
               value contractor selection was met with nearly unanimous  
               praise from the design and contracting community. 

          3)   Prior legislation.  AB 1185 (Ridley-Thomas, Chapter 786,  
               Statutes of 2015) established a Best Value Pilot program at  
               the Los Angeles Unified School District (LAUSD). The  
               provisions of AB 1185 were generally based upon provisions  
               authorizing the Best Value Pilot program for the UC, but  
               codified more prescriptive requirements around labor,  
               contractors and subcontractors, and the weighting of  
               certain factors in the evaluation of bids.

            SUPPORT








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          University of California

            OPPOSITION
           
           None received.

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