BILL ANALYSIS
Bill No: SB
937
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Edward Vincent, Chair
2001-2002 Regular Session
Staff Analysis
SB 937 Author: Margett
As to be Amended: January 15, 2002
Hearing Date: January 15, 2002
Consultant: Art Terzakis
SUBJECT
Public Contracts
DESCRIPTION
SB 937 makes clarifying and technical changes relating to
the public works contract bidding process and dispute
resolution procedures. Specifically, this measure:
1. Modifies existing bid submittal deadline provisions by
requiring the entity taking bids to specify the "place"
bids are to be received and the "time" by which they must
be received. Also, requires that late bids on state
public works contracts be returned unopened.
2. Adds to the "general" provisions of the Public Contract
Code a section of law that authorizes the second lowest
"responsible" bidder on all public works contracts, and
any person or organization contracting with that bidder
for that project, who suffers damage as a result of
losing the bid to the successful bidder who subsequently
violates statutory requirements to provide unemployment
or workers' compensation insurance to employees on that
project, to bring a civil damages action against that
successful bidder.
EXISTING LAW
Under existing law, the State Contract Act provides a
comprehensive statutory scheme for the regulation of
SB 937 (Margett) continued
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contracts entered into by specified state agencies which
are subject to the Act. The Local Agency Public
Construction Act provides a comprehensive statutory scheme
for the regulation of contracts entered into by specified
local governmental agencies which are subject to that Act.
Both of these acts require a competitive bidding process in
respective, specified circumstances.
Existing provisions of the State Contract Act and the Local
Agency Public Construction Act (Sections 19102 and 20104.70
of the Public Contract Code) permit the second lowest
bidder (as defined) on a public works project, and those
persons and organizations with a contractual relationship
with the second lowest bidder, to file a civil action for
damages when the entities suffer damages as a result of
losing the bid to a successful bidder who is later
convicted of failing to provide unemployment insurance or
workers' compensation insurance, or both, to employees as
required by law. The law provides that a court may award
costs and reasonable attorney's fees to a prevailing party
in actions brought pursuant to Sections 19102 and 20104.70
of the Public Contract Code.
In addition, the law provides that a second lowest bidder
who has been convicted of a violation of any provision of
Division 4 (commencing with Section 3200) of the Labor Code
or of the Unemployment Insurance Code, or both, within one
year prior to filing the bid for public work, and who has
failed to take affirmative steps to correct that violation
or those violations, is prohibited from taking any action
authorized by Sections 19102 and 20104.70 of the Public
Contract Code.
Existing law, the Subletting and Subcontracting Fair
Practices Act, requires a public entity taking bids for
construction of a public improvement to establish a date
for submission of bids by prime contractors. Existing law
applicable to local agencies requires that any bids that
are submitted after the bid submittal deadline must be
returned unopened to the bidder.
BACKGROUND
According to the author's office, this measure is intended
to improve the bidding process for public works contracts,
save taxpayer money and help deter bids from unscrupulous
contractors who violate the law.
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The sponsor of this measure, the Engineering Contractors'
Association, notes that the changes incorporated in Section
1 of this bill are intended to require state agencies to
comply with a law that has applied to local agencies for
several years. Specifically, that law (found in Section
53068 of the Government Code) provides, among other things,
that any bids received by a local agency after the time
specified in the notice shall be returned to the bidder
unopened.
In addition, the sponsor indicates that Section 2 of this
bill, pertaining to the resolution of disputes between
contractors and public agencies, was extracted from
existing provisions of the State Contract Act and the Local
Agency Public Construction Act and improved upon to clarify
and strengthen the law.
The sponsor points out that the author of SB 937 will offer
amendments in committee on Tuesday, January 15, 2002 that
are intended to remove opposition expressed by various
entities. Specifically, Sections 3 and 4 of the bill will
be deleted (page 4, delete lines 16-37, and page 5, delete
lines 1-25.)
Staff Comments: This measure would create an "umbrella"
provision or a statute of "general" application by adding
Section 9204 to the Public Contract Code. However, it's
not clear whether this is intended to supercede the other
two nearly identical provisions found in Sections 19102 and
20104.70 of the Public Contract Code.
SUPPORT: As of January 11, 2002:
Engineering Contractors' Association (sponsor)
California Chapter of the American Fence Contractors'
Association
California Fence Contractors' Association
California Landscape Contractors Association
Flasher/Barricade Association
Marin Builders' Exchange
Sacramento Builders' Exchange
OPPOSE: No known opposition as of January 11, 2002.
FISCAL COMMITTEE: Senate Appropriations Committee
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