BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2448|
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THIRD READING
Bill No: AB 2448
Author: Furutani (D)
Amended: 8/11/10 in Assembly
Vote: 21
SENATE EDUCATION COMMITTEE : 8-0, 6/30/10
AYES: Romero, Huff, Alquist, Emmerson, Hancock, Liu,
Price, Simitian
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 63-0, 5/28/10 - See last page for vote
SUBJECT : Public contracts: community college districts:
purchases
SOURCE : Author
DIGEST : This bill, until January 1, 2016, authorizes a
community college district to let any contract for
expenditures greater than $50,000 for the purchase of
supplies and materials in accordance with "best value at
the lowest cost acquisition" policies as adopted by the
local governing board, and clarifies existing law regarding
the authority of a community college governing board to
authorize changes or alterations to a contract without
securing bids for those changes/alterations.
ANALYSIS :
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Existing Law
1.Requires a community college governing board to let any
contract involving an expenditure of $50,000 or more for
purchase of equipment, materials, supplies, repairs and
services, other than construction services, to the lowest
responsible bidder or to reject all bids.
2.Requires that changes or alterations to a contract, and
the associated costs, be specified in writing, and
authorizes a community college governing board to
authorize a contractor to proceed with the change or
alteration without securing bids if the cost agreed upon
does not exceed the greater of the maximum expenditures
authorized under public contract code provisions or 10
percent of the original contract price.
3.Authorizes school districts to consider, in addition to
price, factors such as vendor financing, performance
reliability, standardization, life-cycle costs, delivery
timetables, support logistics, the broadest possible
range of competing products and materials available,
fitness of purchase, manufacturer's warranties, and
similar factors in the award of contracts for technology,
telecommunications, related equipment, software, and
services, in recognition of the highly specialized unique
nature of these items and services, and the rapid
technological changes they undergo. Current law
specifically limits this authority to the procurement of
this type of equipment and prohibits its application to
contracts for construction or the procurement of any
product available in substantial quantities to the
general public.
4.Authorizes municipal utility districts to let contracts
for the purchase of supplies and materials in excess of
$50,000 in accordance with "best value at the lowest cost
acquisition" policies adopted by the local governing
board and outlines specific elements to be included in
these policies.
This bill:
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1.Authorizes community colleges, until January 1, 2016, to
use best value contracting, pursuant to lowest cost
acquisition policies adopted by the local governing
board, for the purchase of supplies and materials when
the expenditure exceeds $50,000 and the district
determines that it can expect long-term savings through:
A. The use of a life cycle cost methodology.
B. The use of more sustainable materials and
supplies.
C. Reduced administrative costs.
2.Requires the best value policies adopted consider all of
the following:
A. Price and service level proposals that reduce
overall operating costs.
B. Supplies and materials standards that support the
district's strategic acquisition and management
program direction.
C. A procedure for protest and resolution.
D. A life cycle of no fewer than three years.
3.Defines "best value at the lowest cost acquisition" as a
competitive procurement process whereby award of a
contract considers any of the following factors:
A. Total cost to the district.
B. Operational cost or benefit.
C. Added value to the district of vendor-added
services.
D. Quality and effectiveness of supplies, materials,
and services.
E. Reliability of delivery or installation schedules.
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F. Terms and conditions of product warranties and
vendor guarantees.
G. Financial stability of the vendor.
H. Vendor quality assurance program.
I. Vendor experience.
J. Consistency of the vendor's program.
K. Economic benefits to the local community,
including, but not limited to, job creation or
retention.
4.Requires the contract to be awarded to the bidder whose
proposal is determined, in writing, to be the best value
to the district based upon the criteria set forth in the
request for proposal.
5.Requires the local governing board to issue written
notice of intent to award, as specified, and to publicly
announce its award, identify the winning bidder, the
winning contractor's price proposal, and the overall
combined rating on the request for proposal evaluation
factors
6.Requires the district to ensure all businesses have a
fair and equitable opportunity to compete for and
participate in district contracts and that
discrimination, as defined in specified law, does not
occur.
7.Requires a district using this authority submit the
following information to the Chancellor of the
California Community Colleges on or before January 1,
2013:
A. The total number of district procurements for
contracts, and the number that were done under the
best value acquisition policies.
B. For any contracts awarded under the best value
acquisition policies, the bid announcement announcing
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the bidder to whom the award was made and that
bidder's scoring rating compared to other bidders.
C. For any comparably sized contracts awarded under
the traditional low bid method in the three years
prior to the adoption of the best value acquisition
policies, the bid award announcement announcing to
whom the contract was awarded and the amount of the
award.
D. The nature of any disputes arising from the use of
best value procurement practices and the status of
those disputes.
E. The district's policies adopted pursuant to
Section 20651.7(a).
F. A summary of any noncost value obtained through
contracts let under the best value acquisition
policies.
8.Requires the Legislative Analyst, on or before July 2,
2013, to request the Chancellor to provide the
information specified in #7 above.
9.Specifies that the Legislative Analyst shall use the
information provided by the Chancellor to report all of
the following:
A. A comparison of the overall cost of best value
acquisition to similar contracts let under
traditional low bid procurement practices.
B. A comparison of the overall benefits of the best
value acquisition to similar contracts let under
traditional low bid procurement practices.
C. A summary of noncost value reported by the
district.
D. A general summary and evaluation of the districts'
policies adopted to Section 20651.7(a)
E. Recommendations as to whether the best value at
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lowest cost acquisition procurement authority should
be continued.
10.Sunsets this authority on January 1, 2016.
11.Clarifies existing law regarding the authority of a
community college governing board to authorize
changes/alterations to a contract without securing bids
for those changes/alterations. Specifically, it
clarifies that the cost of all changes or alterations
must not exceed ten percent of the original contract
price.
Comments
This bill provides a somewhat broad authority for districts
to develop a variety of local policies for implementing
best value contracting for supplies and materials. If
successfully implemented by districts, it is very likely
that they will pursue extension or elimination of the 2016
sunset on this authority. While the bill currently
requires reporting of specified information to the
Chancellor's Office by districts that utilize this
authority, the requirement that the Legislative Analyst
(LAO) use this data to generate a report and
recommendations on its use and possible extension were
recently deleted. Even the existing statute on which this
bill's provisions are based requires LAO review of
implementation by municipal utility districts.
Related LAO Study . According to its statutorily required
report on the use of best value procurement by municipal
utility districts, the LAO opines the best value
procurement can provide municipal utility districts with an
important tool. The LAO also noted that, early on, best
value procurements could be time-consuming and cumbersome
as bid evaluation criteria are developed and fine-tuned.
Background
Best Value Contracting for Goods and Services . The
provisions of this bill are patterned after the authority
extended to municipal utility districts which appear to be
the only sector of state government currently authorized to
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use best value contracting for the acquisition of goods and
services. AB 793 (Cox), Chapter 665, Statutes of 2001,
authorized municipal utility districts to use best value
procurement for individual supplies and materials purchased
over $50,000 until 2007. SB 1169 (Cox), Chapter 248,
Statutes of 2006, extended this authority on a limited
basis, making the statute permanent for those that used the
process before January 1, 2006. However, any municipal
utility district that did not use the "best value" contract
process prior to January 1, 2006, but not elects to use the
process, must submit a specified report to the Legislative
Analyst (LAO) on or before January 1, 2011. If best value
contracting is not utilized by a municipal utility district
during this time period, the authority to do so expires on
January 1, 2012.
Best Value Contracting in Construction Projects . Best
value contracting has generally been recognized as a viable
alternative for construction projects. Traditionally,
construction projects have been bid out and awarded based
upon a "lowest-cost" approach. Best value, a competitive
contracting process, allows projects to be awarded to the
contractor offering the best combination of price and
qualifications, instead of just the lowest bid. In
California, for example, design-build best value is a
method of project delivery/procurement based on combining
the requirements for designing and constructing a project
into one contract. In addition to submitting bids for
project cost, prospective design-build teams also submit
technical proposals. The technical proposals are evaluated
based on evaluation criteria, and scores are compiled. The
scores are then used to weigh or adjust the submitted bid
price. The contract is awarded to the design-build team
with the best value.
Best Value Contracting for Technology Equipment . Best
value contracting has also been used for the acquisition of
technology, telecommunications and related equipment.
School districts are granted this authority, but
specifically prohibited from applying this authority to
contracts for construction or to the procurement of any
product available in substantial quantities in the general
public. Similarly, municipal utility districts serving
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more than 250,000 customers have been authorized to use
best value procurement to acquire information technology
and industry specific equipment. This specific authority
was repealed in 2008.
Prior Legislation
This bill is almost identical to AB 2550 (Furutani),
2007-08 Session, which was vetoed by the Governor. In his
veto message, the Governor stated, "I support the notion
that best value contracting is a reasonable alternative for
construction projects which allows projects to be awarded
based on a combination of best price and qualifications
because construction projects represent a large, long term
investment of resources. However, I am concerned that this
legislation may allow subjective methods to govern the
bidding process for procurement of supplies and materials
with a relatively short life cycle, which could be more
open to manipulation and abuse in the bid selection
process."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/11/10)
Kern Community College District
Los Angeles Community College District
Mt. San Jacinto Community College District
San Jose-Evergreen Community College District
West Kern Community College District
Yosemite Community College District
ARGUMENTS IN SUPPORT : According to the author's office,
this bill addresses two problems. First, awarding
contracts on the basis of "lowest responsible bidder" does
not always result in the ability to purchase supplies and
materials in the most effective and economic manner. An
ability to consider criteria other than price 9such as
longevity of product, sustainable characteristics,
operating expenses) and the ability to include additional
discounts and services are necessary. This bill provides
the ability to structure a competitive bid process that
recognizes life cycle cost, sustainable characteristics,
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and efficiency in the acquisition process. Second, the
bill clarifies current law regarding the percentage charge
that triggers the need to secure bids for
changes/alterations by clarifying that the combined total
value of the changes does not exceed 10 percent of the
original contract price.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Block,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Conway, Cook, Coto, Davis, DeVore, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani,
Gaines, Garrick, Gilmore, Hagman, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Knight, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, Norby, V. Manuel Perez,
Portantino, Ruskin, Saldana, Skinner, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NO VOTE RECORDED: Bass, Bill Berryhill, Tom Berryhill,
Blakeslee, Carter, Chesbro, De La Torre, De Leon,
Emmerson, Galgiani, Hall, Jeffries, Salas, Silva, Smyth,
Audra Strickland, Vacancy
CPM:cm 8/11/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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