BILL ANALYSIS
AB 1409
Page 1
Date of Hearing: May 11, 2009
ASSEMBLY COMMITTEE ON TRANSPORTATION
Mike Eng, Chair
AB 1409 (John Perez) - As Amended: April 29, 2009
SUBJECT : County highways: day labor
SUMMARY : Limits the conditions under which counties may use day
labor or force account. Specifically, this bill provides that
counties may purchase material and have work done by day labor
or force account, only after advertising and requesting bids and
only after the board of supervisors has passed a resolution
finding that either no bids were received or all bids received
exceeded the cost of having work done by day labor or force
account.
(Discussions regarding day labor often refer to "force account"
and "day labor" interchangeably. To clarify, "force account"
means work done by in-house employees; "day labor" is temporary
work and can be done by force account or by individuals hired
for the day.)
EXISTING LAW :
1)Requires a county board of supervisors, for county road work
estimated to be over $20,000, to order plans and
specifications to be developed and prescribes the process for
putting the plans out to bid.
2)Provides that bids are to be publicly opened and a contract
awarded to the lowest responsible bidder, unless the board of
supervisors finds that the bids are too high and that the work
can be done more cheaply by day labor.
3)Provides that whenever a board of supervisors finds that the
estimated expense of any work to be done is worth $25,000 or
less, the board may let a contract covering both work and
materials, or purchase the material and let a contract for the
work, or purchase the materials and do the work by day labor,
without calling for bids.
4)Requires every county board of supervisors to appoint a single
road commissioner for all road districts in the county and
requires that the road commissioner be a registered civil
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engineer. In lieu of a road commissioner, a board of
supervisors may appoint a county director of transportation
who, if not a civil engineer, must have a registered civil
engineer acting within the director's authority.
5)Directs county boards of supervisors to act as the
policymaking body with respect to county highway matters and
to establish policies to be followed by the road commissioner
and his or her department; authorizes county road
commissioners to employ assistants and employees as may be
necessary and stipulates that a road commissioner shall have
sole supervision and jurisdiction over personnel engaged in
work on county roads.
6)Provides, for counties that have appointed a road commissioner
or a registered civil engineer under the direction of a county
director of transportation, any work may be done in any of the
following ways, regardless of the cost of the work:
a) By letting a contract for both work and material, to be
awarded to the lowest responsible;
b) By purchasing the material and letting a contract for
the work, at low bid/cost;
c) By purchasing the material and having the work done by
day labor, in which case bids are not required;
d) By authorizing the county road commissioner (or
registered civil engineer under a county director of
transportation) to authorize contract change orders, within
prescribe limits; or
e) By purchasing the material and letting a contract for
work to be done or by letting a contract covering the work
and material without advertising for bids when the
estimated cost of emergency work necessitated by the
imminence or occurrence of a landslide, flood, storm
damage, or other emergency exceeds $25,000 and the public
interest and necessity demand immediate action to safeguard
life, health, or property.
7)Provides that, for public agencies that elect to become
subject to the uniform construction cost accounting procedures
set forth by the California Uniform Construction Cost
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Accounting Commission, the day force labor limit is $30,000.
8)Makes it unlawful to split or separate into smaller work
orders any project for the purpose circumventing day labor
limits.
FISCAL EFFECT : Unknown
COMMENTS : For most local agencies, state law imposes caps on
the dollar amount of public works projects that can be completed
with local government employees (i.e., force accounts) or day
labor. Projects that exceed the cap generally must be put out
to bid to the private sector and awarded to the lowest
responsible bidder. Similar requirements are in place for state
agencies as well.
Existing law makes an exception, however, for counties that have
road commissioners or that have registered civil engineers
working under the authority of a county transportation director.
These counties have virtually unlimited authority to use day
labor or force account for highway projects. (In fact, in an
Attorney General opinion (11 Op.Atty.Gen. 73), the Attorney
General opined that work on county bridges may be performed
without the necessity of advertising for bids.)
Counties without road commissioners are limited to doing work by
force account or day labor to contracts costing $25,000 or less.
According to the author, the exception provided to counties with
road commissioners dates back to 1982 and was intended to apply
to rural counties that had few contractors capable of making
needed repairs via the traditional open bidding process. The
author is seeking this legislation to "close a loophole in state
law that has allowed large, urban counties to circumvent the
open bidding process by using day laborers?while preserving the
ability for small, rural counties, to continue using day labor
when the public bidding process produces no bids capable of
completing the repair."
Sponsors of this bill hope to see more work directed away from
day labor and toward private sector contractors.
Opponents of this bill argue that counties have been maintaining
their roads for decades using county employees. They argue that
they already put the largest projects out to bid but that they
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still depend on the flexibility in existing law to perform work
on the local highway system. Furthermore, counties argue that
many projects are too small to economically prepare bid
documents and to formally bid projects, which, they assert,
could add 15% to 35% to the overall cost of a contract and from
two months to one year in additional time to complete the
project. Counties also argue that they need the flexibility to
respond to local emergencies and that the formal bidding
requirements would add increase risk to the traveling public as
well as an increase in liability for counties.
Policy question : According to the Assembly Local Government
Committee analysis of this bill, legislation providing broad
authority for road commissioners has been in statute, albeit a
different code, since 1935. Furthermore, this committee has
been unable to substantiate that the intent of the road
commissioner exception was to facilitate rural county road work.
Instead, it would appear that the Legislature's intent was
clearly to grant broad authorities and responsibilities to
counties that had road commissioners compared to those without.
Putting aside arguments about existing law providing a loophole
that is being misused by counties or whether the original
legislation was intended for rural counties only and is no
longer needed, this bill poses an interesting policy question,
"Should day labor/force account limits apply to counties with
road commissioners just as they do for counties without road
commissioners and virtually every other government agency?"
Benefits to contracting out for work over a prescribed threshold
could include:
9)Increased work directed to private sector companies, resulting
in increased competition, and potentially, lower costs.
10)Minimized potential for fraud or cronyism due to the open
bidding process.
11)Greater participation by private companies, resulting in a
healthier private industry.
12)Controlled labor costs (workers are only paid as needed).
Naturally, these benefits must be weighed against disadvantages
such as:
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13)Lack of flexibility in responding to a county's needs.
14)Less work directed toward county government employees.
15)Additional costs to prepare plans and bid documents and
administer the contract, resulting in fewer dollars available
for road work.
16)Inability of rural counties to entice contractors to
participate in public works, particularly for smaller projects
falling just over the day labor limit.
Clearly, counties should not be impeded by formal bidding
procedures in work needed to respond to emergencies or
imminent threats to emergencies. Nor should counties be
required to contract out for routine maintenance and minor
repairs.
This bill provides that counties with road commissioners or
county transportation directors can do work with purchased
material and day labor or force account but only after going
through the contracting bid process that results in either no
bids or too costly bids. The bill does not set a threshold
over which a more formal bidding process should be required.
Potential amendments: If the committee agrees that counties
with road commissioners should no longer be able to do work
with day labor or force account, regardless of costs involved,
and should, instead, put that work out to bid, the bill should
be amended to:
17)Explicitly provide that emergency work is excluded from
formal bidding requirements.
18)Explicitly provide that day labor limits do not apply to
maintenance work, including minor repairs.
19)Prescribe a threshold, such as $25,000, over which formal
bidding would be required.
Double-referred : This bill passed out of Assembly Local
Government Committee 6-1.
REGISTERED SUPPORT / OPPOSITION :
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Support
Construction Industry Force Account Council (sponsor)
Southern California Contractors Association (sponsor)
Associated General Contractors of California
Blaisdell Construction
California Chapter of the American Fence Contractors'
Association
California Fence Contractors' Association
California State Council of Laborers
California-Nevada Conference of Operating Engineers
Construction and General Laborers' Local 185
Eagle Peak Rock and Paving
Engineering & Utility Contractors Association
Engineering Contractors' Association
Flasher/Barricade Association
Golden State Builders Exchange
Marin Builders' Association
Martin General Engineering, Inc.
Northern California District Council of Laborers
PCI
State Building and Construction Trades Council of California
Stimpel-Wiebelhaus Associates, Inc.
Opposition
California State Association of Counties
County of San Luis Obispo Board of Supervisors
Napa County Board of Supervisor
Regional Council of Rural Counties
Riverside County Transportation Department
Sacramento County Board of Supervisors
San Joaquin Public Works
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093