BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1086|
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THIRD READING
Bill No: AB 1086
Author: Miller (R)
Amended: 5/18/09 in Assembly
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 06/23/09
AYES: Wright, Harman, Benoit, Denham, Florez, Negrete
McLeod, Oropeza, Padilla, Price, Wiggins, Wyland, Yee
NO VOTE RECORDED: Calderon
SENATE JUDICIARY COMMITTEE : 5-0, 7/7/09
AYES: Corbett, Harman, Florez, Leno, Walters
ASSEMBLY FLOOR : 79-0, 6/1/09 - See last page for vote
SUBJECT : Public contracts: bids
SOURCE : California Fence Contractors Association
Engineering Contractors Association
Marin Builders Association
Flasher Barricade Association
American Fence Association, California Chapter
DIGEST : This bill makes findings and declarations that
it is legislative intent to encourage contractors and
manufacturers to develop and implement new and ingenious
materials, products, and services that function as well, in
all essential respects, as materials, products, and
services that are required by a contract, but at a lower
cost to taxpayers.
CONTINUED
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ANALYSIS : Existing law prohibits a state agency,
political subdivision, municipal corporation, district, or
public officer responsible for letting a public works
contract from drafting bid specifications that limits the
bidding to any one concern or product, unless the
specification is followed by the words "or equal."
Existing law requires that these bid specifications provide
a period of time prior to or after, or prior to and after,
the award of the contract to allow the contractor to submit
data that demonstrates that a product or services to be
provided under the contract is equal to the services or
product identified in the bid specification.
Background
According to the author's office, "Public Contract Code
Section 3400 is known as the 'or-equal statute.' Its
purpose is to give taxpayers the benefit of
contractor/manufacturer ingenuity that reduces the cost of
construction while providing the same functionality of the
product or construction method specified by the public
agency who is bidding-out the work. It does so by
encouraging ingenious contractors/manufacturers to bid jobs
at a lower price, in anticipation of getting their
ingenious or-equal product or method approved by a public
entity.
"To help ensure that the "or-equal clause" achieved its
goals for the public, the law was amended in 2001 to allow
a contractor up to 35 days after the award of the contract
to submit his documentation to the entity justifying that
the material or method was equal to or greater than that
which was specified in the Request For Proposal. In the
end, taxpayers have benefited tremendously by the reduced
costs of the construction of the public project due to
Public Contract Code Section 3400.
"Unfortunately, while Public Contract Code Section 3400 has
served the public well for many years, there is at least
one local agency that requires the receipt of or-equal
submittals before bid day, and provides that the only way
to get approval is by the issuance of an addendum to the
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bid package before bid day; thus allowing every competitor
the opportunity to take advantage of the
contractor's/manufacturer's ingenuity that allows it to
lower its bid.
"Ingenuity that leads to a lower bid is NOT an UNFAIR
advantage - it is a classic FAIR advantage. It is an
advantage that benefits society at-large by encouraging
ingenuity. It is an advantage that benefits taxpayers by
leading to lower prices for the same functionality. It is
exactly the kind of "good public policy" that we want
bidders to use to lower bids.
"AB 1086 strengthens and reaffirms legislative intent
behind Public Contract Code Section 3400 - the 'or-equal
statute,' by inserting legislative findings to clarify the
intent of the code section to encourage product and service
development at a decreased cost to taxpayers."
Comments
Current law provides the conditions under which a public
agency can issue a bid specification of a certain product
if the awarding authority makes a finding that a particular
material or service is designated by a brand or trade name
in order to obtain a necessary item that is only available
from one source or to respond to a local or state declared
emergency.
Under current law, a state agency, political subdivision,
municipal corporation, district, or public officer
responsible for letting a public works contract is
prohibited from drafting bid in a manner that limits the
bidding, directly or indirectly, to any one specific
concern, or calling for a designated material, product,
thing, or service by specific brand or trade name unless
the specification is followed by the words "or equal" so
that bidders may furnish any equal material, product,
thing, or service.
Current law provides that contract specifications shall
provide a period of time after the award of the contract
for submission of data substantiating a request for a
substitution of "an equal" item. If no time period is
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specified in the contract, data may be submitted any time
within 35 days after the award of the contract.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/8/09)
California Fence Contractors Association (co-source)
Engineering Contractors Association (co-source)
Marin Builders Association (co-source)
Flasher Barricade Association (co-source)
American Fence Association, California Chapter (co-source)
Associated General Contractors
California State Council of Laborers
Engineering & Utility Contractors Association
Southern California Contractors Association
ARGUMENTS IN SUPPORT : Proponents argue that, "AB 1086 is
a much needed measure to clarify one of the threshold
tenets of the competitive bidding process. Providing an
entity with methods such as value engineering or products
that provide the same exact function at a lesser price go
to the foundation of the Public Contract Code. The entire
purpose of the competitive bid process is to provide the
best value to the taxpayer.
"The 'or equal' statute guarantees that benefit. The
statute authorizes substitutions for products that have
better than or equal functions as the product required in
the bid specification. This ensures the bidding process is
open and competitive. The statute has the added benefit of
protecting taxpayers against sole source products and
services. Sole source contracting is highly susceptible to
fraud, favoritism, and cronyism."
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
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Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,
Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jeffries, Jones, Knight,
Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,
Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NO VOTE RECORDED: Block
TSM:nl 7/8/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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