BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 258|
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THIRD READING
Bill No: SB 258
Author: Oropeza (D)
Amended: 5/14/09
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 7-3,
4/27/09
AYES: Negrete McLeod, Corbett, Correa, Florez, Oropeza,
Romero, Yee
NOES: Wyland, Aanestad, Walters
SENATE APPROPRIATIONS COMMITTEE : 8-4, 5/11/09
AYES: Kehoe, Corbett, DeSaulnier, Hancock, Leno, Oropeza,
Wolk, Yee
NOES: Cox, Denham, Runner, Walters
NO VOTE RECORDED: Wyland
SUBJECT : Contractors: public works
SOURCE : California Chapters of the National Electrical
Contractors
Association
Construction Employees Association
State Building and Construction Trades Council
DIGEST : This bill establishes a public works
certification requirement under an unnamed state certifying
agency for licensed contractors and subcontractors who
perform public works projects.
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ANALYSIS : Existing law, the Business and Professions
Code:
1. Provides for the licensure and regulation of more than
250,000 contractors under the Contractors State License
Law (Contractors Law) by the Contractors' State License
Board (CSLB) within the Department of Consumer Affairs.
2. Authorizes the CSLB to adopt regulations to set various
application, licensure, and renewal fees, not to exceed
specified limits, and provides for the deposit of those
fees in the Contractors License Fund.
3. Requires the CSLB to initiate disciplinary action
against a licensee upon certified notification of the
Labor Commissioner's finding of the licensee's willful
and deliberate violation of the Labor Code.
4. Authorizes the CSLB to adopt regulations to establish
specialty classifications of contractors, and provides
that in public works contracts, the awarding authority
shall determine the license classification necessary to
perform the project.
5. Requires contractors to obtain special certifications
from the CSLB in order to perform asbestos-related work
or to engage in hazardous substance removal or remedial
action, as specified.
Existing law, the Public Contract Code:
1. Authorizes a public entity to require that each
prospective bidder for a contract complete and submit a
standardized questionnaire and financial statement,
including a complete statement of the prospective
bidder's experience in performing public works.
2. Requires the Department of Industrial Relations, in
collaboration with affected agencies and interested
parties, to develop model guidelines for rating bidders,
and draft the standardized questionnaire, that may be
used by public entities for these purposes.
3. Requires the questionnaire and financial statement to be
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verified under oath by the bidder in the manner in which
civil pleadings in civil actions are verified.
4. Authorizes a public entity to establish a process for
prequalifying prospective bidders on a quarterly basis
and makes a prequalification valid for one calendar year
following the date of initial prequalification.
This bill:
1. States legislative intent to certify that only the most
qualified contractors perform on public works projects
in order to promote the safety of California's publicly
owned facilities and ensure the best use of tax dollars.
2. Establishes within the Contractors Law, beginning
January 1, 2012, that a contractor is prohibited from
performing work as a contractor or subcontractor on a
public work contracted by the state or a state agency,
or any other public agency, unless the contractor has
obtained a public works certification from a state
certifying agency to be determined by the Legislature.
3. Provides that to obtain the public works certification,
the license qualifier shall submit the public works
certification prequalification document developed and
administered by the agency and receive certification
from the agency.
4. Authorizes the agency to deny or revoke a public works
certification for a contractor's failure to comply with
the laws which apply to public works, or for committing
any acts which are grounds for license denial, and
requires revocation of a public works certification to
be subject to the Administrative Procedures Act.
5. Specifies that the above provisions shall not be
construed to:
A. Affect the requirements relating to specialty
contractors.
B. Restrict the state or any other public agency
from imposing additional requirements on contractors
in awarding public works contracts.
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C. Expand the enforcement authority of the agency.
1. Defines certain terms relative to the bill:
A. "Public agency" is a city, county, city and
county, including chartered cities and chartered
counties, the University of California and any
special district, and any other agency of the state
for the local performance of governmental or
proprietary functions within limited boundaries.
"Public agency" also includes a nonprofit transit
corporation owned by a public agency, as specified.
B. "Public work" is any work that is subject to
the requirements of Chapter 1 (commencing with
Section 1720) of Part 7 of Division 2 of the Labor
Code.
1. Provides that the certifying agency shall do all of the
following:
A. By January 1, 2011, establish and validate
minimum standards for the competency and
prequalification of all contractors performing work
on public works projects through a system of
prequalification certification.
B. By March 1, 2010, establish advisory committees
as necessary to carry out these functions. Provides
that the committees shall be made up of contractor
representation from both the general contractor
community and the subcontractor community with at
least one representative from the following
organizations on all committees or panels:
Associated General Contractors, Construction
Employers Association, California Legislative
Conference of the Plumbing, Heating and Piping
Industry, and the National Electrical Contractors
Association, and at least one representative from
organized labor designated by California Building
and Construction Trades Council.
C. By July 1, 2011, adopt regulations to enforce
these provisions.
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D. Issue certification cards to contractors who
have been prequalified and certified pursuant under
the bill.
E. Make information on certified contractors
publicly available.
1. The public works prequalification certification shall be
developed according to professionally accepted
principles for prequalification and should adhere as
closely as possible to the guidelines set forth in the
Public Contract Code (see Existing law, the Public
Contract Code, above). The certification shall not be
based on a per-project basis and shall be based on a
per-applicant basis.
2. Establishes fees which shall be deposited into the
Public Works Certification Fund, as follows:
A. By January 1, 2011, requires the certifying
agency to establish fees necessary to implement the
public works certification, and charge each
applicant the fee.
B. Until December 31, 2014, establishes a public
works certification examination fee of not more than
$65, after which the fee shall be not more than
$125.
1. Creates the Public Works Certification Fund within the
State Treasury, which upon appropriation by the
Legislature to the certifying agency may only be used
for the costs to prequalify and certify contractors and
subcontractors, and issue certification cards.
Prior Legislation
This bill is essentially the same as last year's SB 1698
(Romero) which was vetoed by the Governor. That bill would
have prohibited a contractor from performing work as a
contractor or a subcontractor on a public work unless the
contractor obtained a public works certification from the
CSLB. The bill required CSLB to develop a certification
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examination and required the qualifier for certification to
pass the license exam. The bill authorized the CSLB to
charge a fee in an amount sufficient to pay for the costs
of administering the examination.
SB 1698 passed the Senate by a vote of 24-14. In his veto
message, the Governor stated:
I believe that sufficient safeguards are already in
place to prevent contractors from bidding on public
works projects if they fail to comply with current
Labor Code provisions. This bill would create
barriers to small business by adding additional
requirements to become a qualified bidder on public
works projects, while providing little additional
value to the public works process. By creating this
barrier, competition on public works projects could be
reduced, that may result in increased bid and project
costs.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
New certification for public
works contractors
licensing $389 $688 $377 Special*
$115 ongoing
enforcement $0 $161 $321
$321 ongoing
testing $60
Application fee ($825) ($825)($130)Special*
(revenue) ($130) ongoing
* Public Works Certification Fund
SUPPORT : (Verified 5/14/09)
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California Chapters of the National Electrical Contractors
Association (co-source)
Construction Employers Association (co-source)
State Building and Construction Trades Council (co-source)
Air Conditioning Sheet Metal Association
Air-conditioning & Refrigeration Contractors Association
California Labor Federation
California Legislative Conference of the Plumbing, Heating
and Piping
Industry
OPPOSITION : (Verified 5/14/09)
Associated Builders and Contractors
Associated General Contractors of California
California Landscape Contractors Association
California Professional Association of Specialty
Contractors
El Dorado Irrigation District
Engineering and Utility Contractors Association
ARGUMENTS IN SUPPORT : According to the author's office,
many contractors are unaware of the additional rules
regarding public works projects. This results in those
contractors who abide by the laws to be at a competitive
disadvantage relative to those contractors who fail to
comply with current labor laws and regulations. In short,
the good actors are punished for obeying the law.
The author further states, with infrastructure projects
funded by the bonds voters passed in 2006, and the federal
stimulus dollars coming to California, it is now more
important than ever to ensure that all contractors bidding
on these public work projects are knowledge about the
process and applicable laws and regulations.
The State Building and Construction Trades Council argue
that unlike general contracting law, public works contracts
require specific protocols as their projects are being
constructed. For instance, construction workers must be
paid the local prevailing wage, the contractor must
maintain certified payrolls under penalty of law, and the
contractor must maintain special surety bonds.
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Other supporters contend that current law requires public
agencies to use the contractor or contractors who submit
the lowest responsible bid on public works projects. These
requirements are in statute for good reason, as they ensure
competitive bid prices, protect against corruption and
guarantee equity in the bidding process. This places
agencies in a position of having to use contractors that
might have submitted the low bid, but do not have the
experience, knowledge of public work requirements or
financial stability to complete the project. Providing a
state minimum standard of competency for contractors who
wish to bid on public works projects would correct this
issue.
ARGUMENTS IN OPPOSITION : Opponents of this bill do not
see the need for this legislation, and argue that public
agencies already have the authority to pre-screen bidders
on public works projects to assure that the prime
contractor and subcontractor have the requisite experience,
knowledge of public works contracting law, and financial
capacity to perform.
California Landscape Contractors Association (CLCA) sees
the bill as being inconsistent with the goal of encouraging
greater small business participation in government
contracting and states: "Requiring smaller contractors to
obtain special ? certification before bidding on public
works projects erects yet another barrier that discourages
participation in taxpayer-financed works of improvement."
Associated Builders and Contractors (ABC) argues that the
bill is unneeded because of the existing certification
authorization, but contends that any type of certification
issues for public works is more appropriately placed in the
Department of Industrial Relations. However, ABC suggests
before embarking on a new certification program, some
demonstration of the existence of a problem needs to be
provided, "particularly since certification proposals often
have the unintended impact of restricting competition and
choices for consumers and ultimately, for taxpayers."
JA:nl 5/15/09 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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