BILL ANALYSIS
SB 258
Page A
Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 258 (Oropeza) - As Amended: June 10, 2010
SENATE VOTE : (vote not relevant)
SUBJECT : Public contracts: school districts: bidding
requirements.
SUMMARY : Requires the prequalification questionnaire and
uniform system a school district uses to rate bidders on a
public works project to contain substantially similar
information, questions, and requirements to the questionnaire
and guidelines for rating bidders developed by the Department of
Industrial Relations (DIR), and requires prequalification for
school public works projects costing $1 million or more.
Specifically, this bill :
1)Requires, when the school district board requires contractors
to prequalify for a project, that the questionnaire and
uniform system of rating bidders contain substantially similar
information, questions, and requirements to the standardized
questionnaire and model guidelines for rating bidders
developed by the DIR.
2)Mandates the school district to use prequalification for
public works projects costing $1 million or more, allows the
school district board to use the uniform system of rating
bidders adopted by the school district board, or requires, if
the school district board has not adopted a system, to use the
standardized questionnaire and model guidelines for rating
bidders developed by the DIR.
EXISTING LAW :
1)Allows the school district to use the prequalification process
for the following public works contracts:
a) Contracts costing $50,000 or more for equipment,
materials, supplies, non-construction services, and
non-maintenance repairs; or,
SB 258
Page B
b) Contracts costing $15,000 or more for construction
projects.
2)Requires a school district using prequalification for public
works projects to adopt and apply a uniform system of rating
biddings on the basis of completed questionnaires and
financial statements in order to determine the size of the
contracts upon which each bidder shall be deemed qualified to
bid.
3)Prohibits school districts from furnishing bid proposal forms
to people who have not submitted a questionnaire and financial
statement for prequalification at least five calendar days
prior to the public bid opening date and have been
prequalified at least one day prior to the public bid opening
date.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "With
the economic downturn, school districts are receiving bids from
contractors who have never worked on a public works project, are
unfamiliar with the additional rules and regulations relating to
public works projects, and have never bid on projects worth over
$1 million. This only adds to the risk that a contractor will
not be able to complete a project as expected, which comes at
the expense of the school district and the taxpayer.
"A prequalification process seeks to mitigate against as many of
these risks as possible. A properly designed pre-qualification
process like the one developed by the DIR leads to a fair and
objective evaluation procedure which produces a list of
qualified contractors who can ensure the project is built on
time, within budget, without workplace violations, and at an
expected quality level. This bill establishes a
prequalification process for school district projects valued
over $1 million."
Background . AB 574 (Hertzberg), Chapter 972, Statutes of 1999,
allowed many public agencies to require licensed contractors
that wish to bid on public works jobs to prequalify for the
right to bid on a specific public works project, or on public
works project undertaken by a public agency during a specified
SB 258
Page C
period of time. AB 574 further authorized public entities to
require prospective bidders to complete questionnaires and
required the DIR, in collaboration with affected agencies and
interested parties, to develop a standardized questionnaire and
model guidelines for rating bidders that public entities may
use. AB 574 applies to all cities, counties, and special
districts, but does not apply to K-12 school districts.
Existing law does not require, but authorizes every public
agency to adopt a prequalification system. Current law allows a
public agency to establish two different kinds of
prequalification procedures for public works projects. A public
agency may establish a prequalification procedure linked to a
single project or adopt a procedure by which a contractor may
qualify to bid on projects which are put out for bid by that
agency for a period of one year after the date of initial
prequalification.
A public agency that requires prequalification must use a
standardized questionnaire and financial statement, adopt and
apply an objective uniform system of rating bidders based on
completed questionnaires and financial statements, and create an
appeals process to allow a contractor denied prequalification to
challenge that determination.
Current law does not mandate a public entity to utilize the
prequalification process nor requires that an expenditure amount
trigger the use of the prequalification process.
Support . According to the sponsor, the State Building and
Construction Trades Council of California, "Billions in local
and state school bonds have been approved by voters in recent
years to address the critical need to modernize and build new
school facilities throughout California. School districts are
charged with spending public taxpayer dollars in the most
efficient, effective manner and public works contractors should
be among the state's most responsible and attentive contractors.
"This bill institutes a proven and effective process for
contractors bidding on school contraction projects to guarantee
they meet truthworthiness, quality, fitness, capacity and
experience standards in order to qualify to bid.
Prequalification provides the school district with a useful tool
to ensure school projects are built on time, within budget and
to the highest quality standard.
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Page D
"Prequalification provides the school district with a useful
tool to ensure school projects are built on time, within budget
and to the highest quality standard. The public depends on
these contractors for the safety and quality of facilities that
millions of students, teachers and other school personnel
utilize year-round. By utilizing the standard prequalification
document developed by the DIR in collaboration with industry
stakeholders, this bill will help minimize the risk of awarding
a contract to an unqualified and inexperienced contractor.
School districts already using the prequalification similar to
that of the DIR would not be subject to this requirement."
Opposition . According to the Small School Districts Association
(SSDA), "This bill would require all school projects that are
greater than $1 million to use pre-qualification. Small, rural
school districts, particularly in rural counties such as
Siskiyou, Modoc, Del Norte, Plumas, Inyo, Mono and other such
rural counties have significant difficulty in finding
contractors under the current process. SSDA believes that
requiring pre-qualifications will further limit the pool of
potential contractors and further increase costs. Most small
school districts have almost no administrative support; it has
been severely reduced given the current school funding crisis.
Many small districts simply have a superintendent/principal, a
single person doing two jobs for their school district. Without
sacrificing instructional leadership responsibilities, this
individual does not have the time to go through a new
prequalification mandate for needed school facility projects."
According to California's Coalition for Adequate School Housing,
"This bill targets only school districts and county offices of
education as the public agencies to be mandated to use the
pre-qualification process. The option to use pre-qualification
of bidders is current law and has been utilized in the past by
some school districts and county offices of education in bidding
construction projects that were awarded to a single general
contractor... The requirement that all school districts and
county offices of education prequalification documents contain
'substantially similar information, questions, and requirements'
as the DIR document does not allow school districts and county
offices of education to develop their own prequalification
documents based on their local bid market or other local
technical or experiential concerns for a given project.
SB 258
Page E
"Since the late 1980's, the use of multi-prime contracts has
become more common; through this process, a school district will
hire a construction manager who assists the district in bidding
the project through multiple bids and awarding multiple
contracts that involve 30 to 40 prime contractors. The
multi-prime bidding process gives greater control to the school
district and provides opportunities for efficiencies and
therefore cost savings."
Previous legislation . AB 2614 (Levine) of 2004 prohibits the
acceptance of contract bid proposals from a bidder who is
required to submit a completed questionnaire and financial
statement, but has not done so at least 15 days prior to the
public bid opening date. This bill was vetoed with the
following veto message: "The law already allows school districts
to require that the information be submitted earlier than the
stated five days and therefore this change is both unnecessary
and would reduce school district flexibility."
AB 574 (Hertzberg), Chapter 972, Statutes of 1999, defined the
term "responsible bidder" as it relates to public contracts,
authorized public entities to require prospective bidders to
complete questionnaires with specified information, and required
the DIR to develop a standardized questionnaire and model
guidelines for rating bidders that public entities may use.
REGISTERED SUPPORT / OPPOSITION :
Support
National Electrical Contractors Association (sponsor)
State Building and Construction Trades Council (sponsor)
California Legislative Conference of the Plumbing, Heating and
Piping Industry
Opposition
Association for California School Administrators
Association of California Construction Managers
California Association of School Business Officials
California's Coalition for Adequate School Housing
California Construction Management
Castaic Union School District
Contra Costa County Superintendents' Coalition
Fresno Unified School District
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Page F
Riverside County Schools Advocacy Association
Riverside County Superintendent of Schools
Rocklin Unified School District
School Facility Manufacturers' Association
Small School Districts' Association
Visalia Unified School District
Westside Union School District
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301