BILL NUMBER: AB 1853 AMENDED BILL TEXT AMENDED IN SENATE AUGUST 31, 2010 AMENDED IN ASSEMBLY MAY 28, 2010 INTRODUCED BY Assembly MemberHuffmanDe La Torre(Coauthors:Assembly MembersJonesand Torlakson)FEBRUARY 12, 2010 An act to addChapter 2.3 (commencing with Section 2030) to Part 1 of Division 2 of the Public Contract Code, relating to public contracts.Section 32132.6 to the Health and Safety Code, relating to health care districts, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1853, as amended,HuffmanDe La Torre .Public contracts: bid preferences: employee health care expenditures.Corcoran District Hospital: design-build. Existing law provides for local health care districts that are authorized to own and operate certain health facilities, including hospitals. Each health care district has specific duties and powers respecting the creation, administration, and maintenance of the districts, including to purchase, receive, take, hold, lease, use, and enjoy property of every kind and description of property within the district. Existing law permits the Sonoma Valley Health Care District, upon the approval of its board of directors, to use a prescribed design-build procedure set forth in a specific code section when assigning contracts for the construction of a building and improvements directly related to a hospital or health facility building at the Sonoma Valley Hospital. Under existing law, that code section would be repealed on January 1, 2011, unless that date is deleted or extended. This bill would also allow the Corcoran District Hospital, upon approval by its board of directors, to use the above-mentioned design-build procedure described in that code section to award contracts for the construction of an outpatient care facility , but would make these provisions inoperative if the project does not meet specified requirements. Existing law requires that, under the existing design-build procedure, a health care district would be required to pay a fee into the continuously appropriated State Public Works Enforcement Fund, the moneys in which are used by the Department of Industrial relations to enforce applicable prevailing wage and labor requirements. Because this bill would authorize additional fees to be paid into a continuously appropriated fund, the bill would constitute an appropriation. This bill would make legislative findings and declarations as to the necessity of a special statute for the Corcoran District Hospital.Existing law imposes various requirements with respect to contracting by public entities.This bill would require a state agency awarding a public works contract to provide a 2% bid preference to a bidder or subcontractor meeting specified criteria related to providing employee health care coverage. This bill would require a bidder and its subcontractors to submit statements certifying that they qualify for the bid preference, would require the bidder and contractors to continue to make employee health care expenditures, as specified, and would impose civil penalties in connection therewith, as provided. This bill would become operative on January 1, 2012, and would not apply to contracts advertised for bid on or after January 1, 2017.Vote: majority. Appropriation:noyes . Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) Corcoran District Hospital is an essential service to an underprivileged population of approximately 50,000 residents in the City of Corcoran and surrounding areas. (b) This underprivileged population is 63 percent Latino, unemployment is 16 percent, and Corcoran District Hospital is the only medical care available within a distance of more than 20 miles. (c) Corcoran District Hospital is also specially secured and equipped to provide health care services to the 5,500 inmates and 2,300 personnel at Corcoran State Prison. (d) In the fiscal year ending June 20, 2010, Corcoran District Hospital provided health care services to more than 1,100 inmates. The cost to the state for these services will triple if the Corcoran District Hospital is unable to provide these services and they are, instead, supplied by the next closest secure hospital, which is located 65 miles from Corcoran. (e) Corcoran District Hospital is facing a 2013 deadline to update its facility to comply with seismic safety requirements for the facility. (f) Corcoran District Hospital has undertaken a project to expand its facility to include an outpatient care facility that would provide the necessary revenue stream to complete the mandated seismic safety upgrades, which will result in approximately 100 new construction jobs immediately and 10 new health care jobs upon completion of construction. (g) Corcoran District Hospital will use the design-bid-build procedure to construct the new acute care hospital which will result in approximately 200 new construction jobs immediately and 15 new health care jobs upon completion of construction. (h) To accomplish this urgent need, the Corcoran District Hospital has applied for a United States Department of Agriculture rural development loan funded with federal stimulus funds from the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5). (i) These funds are in short supply and funding from the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5) will terminate as of October 1, 2010. (j) However, without legislative approval, the Corcoran District Hospital cannot access these funds. (k) The use of design-build process for Corcoran District Hospital, which would be authorized by this act, pursuant to Section 32132.6 of the Health and Safety Code, would be used solely for construction of an outpatient care facility and not for other infrastructure, including, but not limited to, streets, highways, public rail transit, roads, bridges, other water resources facilities, and related infrastructures. SEC. 2. Section 32132.6 is added to the Health and Safety Code , to read: 32132.6. (a) Notwithstanding Section 32132 or any other provision of law, upon approval by the board of directors of the Corcoran District Hospital, the design-build procedure described in Section 20133 of the Public Contract Code may be used to award contracts for construction of an outpatient care facility, funded in part by funds provided pursuant to the federal American Recovery and Reinvestment Act of 2009 (Public Law 111-5) and administered by the United States Department of Agriculture, Rural Development, to which Corcoran District Hospital made final application in May 2010. (b) For purposes of this section, all references in Section 20133 of the Public Contract Code to "county" and "board of supervisors" shall mean the Corcoran District Hospital and its board of directors. (c) An outpatient care facility utilizing the design-build process authorized by subdivision (a) shall be reviewed and inspected in accordance with the standards and requirements of the Alfred E. Alquist Hospital Facilities Seismic Safety Act of 1983 (Chapter 1 (commencing with Section 129675) of Part 7 of Division 107). (d) Subdivisions (a) to (c), inclusive, shall become inoperative if the outpatient care facility authorized by subdivision (a) does not meet both of the following requirements: (1) Funding for the outpatient care facility is obligated by the United States Department of Agriculture, Rural Development by October 1, 2010. (2) Construction on the outpatient care facility begins by March 1, 2011. SEC. 3. The Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances served by the Corcoran District Hospital.SECTION 1.Chapter 2.3 (commencing with Section 2030) is added to Part 1 of Division 2 of the Public Contract Code, to read: CHAPTER 2.3. EMPLOYEE HEALTH CARE COVERAGE BID PREFERENCE 2030. The Legislature finds and declares that the state and the state's political subdivisions incur substantial direct and indirect expenses when employers do not pay for employee health care expenses. Accordingly, it makes economic sense for state agencies to offer a bid preference to contractors that pay for employee health care expenses for employees in California. 2031. Whenever a statute requires a state agency to award a public works contract to the lowest bidder or lowest responsible bidder, the state agency shall provide a 2-percent bid preference to a bidder that qualifies for the employee health care expenditure bid preference. This preference shall be calculated by reducing the bid by 2 percent of the amount of the bid for purposes of comparing the bid with competing bids. 2032. A bidder shall be entitled to claim the employee health care expenditure bid preference only if the bidder and all of the bidder's listed subcontractors each qualify for the bid preference. 2033. (a) A bidder, or a subcontractor, qualifies for the employee health care expenditure bid preference if, during the 12-month period immediately preceding submission of the bid, the bidder, or subcontractor, provided credible health care coverage. A bidder, or a subcontractor, that employed employees in California for more than three months but fewer than 12 months immediately preceding submission of the bid qualifies for the employee health care expenditure bid preference if, during that period of time, the bidder, or subcontractor, provided credible health care coverage. (b) The bidder, or subcontractor, shall provide credible health care coverage for not less than one year following acceptance of the bid. (c) In the event of the failure of a bidder, or subcontractor, to comply with subdivision (b), that bidder, or subcontractor, shall pay the state agency an amount equal to twice the cost that the bidder, or subcontractor, would have incurred for health care, if it had complied with the provisions of subdivision (b). A bidder shall not be liable for a subcontractor's failure to comply with subdivision (b). 2034. (a) A bidder may claim an employee health care expenditure bid preference by submitting separate statements from the bidder and all of the bidder's listed subcontractors, each certifying that it qualifies for the bid preference. The Department of General Services, working with the Department of Industrial Relations, shall develop a form for this purpose, and a bidder that seeks the bid preference under this chapter, and all the bidder's listed subcontractors, shall use that form. (b) A person or entity that knowingly provides false information in the certification required by this section shall be subject to a civil penalty for each violation in the minimum amount of two thousand five hundred dollars ($2,500) and the maximum amount of twenty-five thousand dollars ($25,000). An action for a civil penalty under this section may be brought by any public prosecutor in the name of the people of the State of California. 2035. (a) If the winning bidder has claimed an employee health care expenditure bid preference, at the request of the state agency, the bidder and the bidder's listed subcontractors shall supply to the state agency records sufficient to show that the bidder is entitled to the preference. The failure to supply the records within a reasonable time shall result in denial of the bid preference. (b) If the winning bidder is denied the employee health care expenditure bid preference because of the failure of a listed subcontractor to establish its entitlement to the bid preference, the winning bidder shall be granted 14 days to substitute a new subcontractor that is entitled to the bid preference, and the original subcontractor shall be liable to the winning bidder for any reasonable increase in the cost of the new subcontract. 2036. For purposes of this chapter, the following terms have the following meanings: (a) "Credible health care coverage" means any group policy, contract, or program that is written or administered by a disability insurer, health care service plan, fraternal benefits society, self-insured employer plan, or any other entity, in this state or elsewhere, and that arranges or provides medical, hospital, and surgical coverage not designated to supplement other private or governmental plans. (b) "State agency" means a department, division, board, bureau, commission, or agency of the executive branch of government. 2037. This chapter shall become operative on January 1, 2012. 2038. This chapter shall not apply to contract advertised for bid on or after January 1, 2017.