BILL ANALYSIS Ó
SB 1214
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Date of Hearing: June 21, 2016
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Jose Medina, Chair
SB
1214 (Allen) - As Amended March 31, 2016
SENATE VOTE: 27-9
SUBJECT: University of California: Best Value Construction
Contracting Program
SUMMARY: 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. Specifically, this bill:
1)Deletes the sunset on the authority of the UC Regents to use
the best value procurement method for projects over $1
million.
2)Expands the authority of the UC Regents to use best value
contracting at all locations of the UC.
3)Deletes obsolete reporting requirements.
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4)Makes several technical and conforming changes.
EXISTING LAW:
1)Authorizes, until January 1, 2017, a pilot program at the UC
to award construction contracts over $1 million, on a "best
value" basis, rather than just to the lowest bid (Public
Contract Code (PCC) Section 10506.4).
2)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 (PCC Section 10506.5).
3)Requires the UC Regents, on or before January 1, 2016, to
submit a report to the appropriate policy committees of the
Legislature and the Joint Legislative Budget Committee,
regarding the UC's best value pilot (PCC Section 10506.8).
4)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 (PCC
Sections 20119 - 20119.7).
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS: History UC Best Value Pilot. Senate Bill 667
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(Migden), Chapter 367, Statutes of 2006, created the UC Best
Value Pilot, authorized for five years, solely at UC's San
Francisco campus (UCSF). SB 667 allowed UCSF 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.
Senate Bill 835 (Wolk), Chapter 636, Statutes of 2011, extended
the sunset in SB 667 and expanded the best value pilot to all UC
campuses and medical centers for five more years; with a status
report due to the Joint Legislative Budget Committee, on or
before January 1, 2016.
According to the UC "Report on the Best Value Construction
Contract Pilot Program", issued in December 2015, since January
2012, UC awarded over 320 construction contracts totaling $4.05
billion. Forty of these contracts, or 13 percent, totaling
$1.19 billion, utilized the best value construction authority.
Additionally, the report finds that given the additional time
and administrative requirements associated with the best value
selection process, the UC screens its projects carefully to
maximize the value obtained from said process.
To note, according to the author's office, when SB 835 was
initially debated in the Legislature, some legislators expressed
concerns that granting best value authority to the UC would
allow for subjectivity and favoritism to enter into the
selection process. However, according to the report, "To date,
no bidder, or third-party for that matter, has protested any
qualification score determined by the University's BV [best
value] Contractor Selection scoring committees." Lastly, the
report finds that UC's best value pilot has fostered improved
cooperative project administration, better quality work, less
labor and safety violations, better qualified contractors, more
on-time completion of projects, and increased on-budget
performance.
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Need for the measure. According to the author, "Best Value
contracting is far more effective at selecting contractors who
will provide the lowest finished cost as opposed to selecting
contractors on the basis of the lowest first cost." The author
contends that best value contracting has been met with praise
from the design and contracting community and that the loss of
UC's authority to offer best value contracting would be to the
detriment of students, patients, researchers, faculty, and the
taxpayers of California.
This measure seeks to permanently eliminate the sunset on UC's
authority to be able to utilize a best value procurement
process.
Arguments in Support. According to the UC, "the University
continues to pursue increased efficiencies; use of best value
has generated savings for UC campuses. These savings accrue
from cost avoidance resulting from lack of bid protests, claims,
and litigation." Additionally, UC contends that its experiences
in utilizing best value has, "demonstrated that this method of
contractor selection results in a higher success rate in terms
of price, quality, and timely completion of capital projects.
Removing the sunset on this program would allow UC to continue
using best value for complex projects, such as those requiring a
contract with unique skills or those where the performance of
the contractor is critical in minimizing disruption to ongoing
instruction, research, or healthcare activities."
Arguments in Opposition. According to State Building and
Construction Trades Council, AFL-CIO (Building and Trades) and
the California Labor Federation, "this measure does not contain
important workforce requirements currently in law for other
alternative delivery methods including best value." Building
and Trades and the California Labor Federation contend that in
recent years, legislation has been enacted that created uniform
provisions for, "the Department of General Services, the
California Department of Corrections and Rehabilitation, local
agencies, cites, and counties who choose to use DB [design
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build]. Subsequent legislation added identical requirements to
lease-back, DB, and best value for K-12 education facilities, as
well as best value pilot program for several counties."
Requested amendment. Building and Trades and California Labor
Federation argue that in the wake of SB 693 (Hueso), which is
currently moving through the Legislative Process, and seeks to
consolidate and create uniformity among the skilled and trained
workforce statutes, the UC should only be granted a one year
sunset on their best value program in order to allow all
entities to, "partner on improvements to UC's best value program
in the next Legislative Session."
10506.4. (a) This article provides the Best Value Construction
Contracting pilot Program for the Regents of the
University of California for projects over one million dollars
($1,000,000).
Section 10506.9 of the Public Contract Code is repealed.
10506.9. This article shall remain in effect only until
January 1, 2018, and as of that date is repealed unless a
later enacted statute, that is enacted before January 1, 2018,
deletes or extends that date.
Related legislation. SB 667 (Migden), SB 835 (Wolk) - as
described above, and AB 1185 (Ridley-Thomas), Chapter 786,
Statutes of 2015, which, among others, authorizes the Los
Angeles Unified School District to utilize a best value
procurement process as a pilot project until January 1, 2021,
for construction projects over $1 million.
REGISTERED SUPPORT / OPPOSITION:
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Support
University of California
Opposition
California Chapters of the National Electrical Contractors
Association
California Labor Federation
California State Association of Electrical Workers
California State Pipe Trades Council
International Union of Elevator Constructors
State Building and Construction Trades Council
Western States Council of Sheet Metal Workers
Analysis Prepared by:Jeanice Warden / HIGHER ED. / (916)
319-3960
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