BILL ANALYSIS
SB 258
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Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 258 (Oropeza) - As Amended: June 10, 2010
Policy Committee: Business and
Professions Vote: 7-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill requires school districts to prequalify contractors on
public works projects exceeding $1 million, pursuant to
specified procedures. Specifically, this bill:
1)Requires a school district, when requiring contractors to
prequalify on any public works project, to use a
prequalification questionnaire and a rating system that, at a
minimum, are substantially similar to standard forms developed
by the Department of Industrial Relations (DIR) pursuant to
current law.
2)Requires every school district to prequalify contractors for
all projects exceeding $1 million, using either a district
questionnaire rating system meeting the requirements in (1) or
using the DIR standard questionnaire and rating system.
FISCAL EFFECT
1)Unknown, but significant ongoing state-reimbursable General
Fund (Proposition 98) costs to school districts related to
establishing and administering the prequalification
process-likely as an additional contract cost for construction
management consultants-for projects exceeding $1 million.
Additional costs would be incurred to address appeals from
contractors denied qualification. If this process added 0.5%
to project costs, for every $500 million in school
construction projects exceeding $1 million, state mandated
costs would be $2.5 million.
2)To the extent this process eliminated unqualified contractors
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who would otherwise be the winning bidder, districts might
avoid certain costs associated with an underperforming
contractor, such as time delays or inferior construction.
COMMENTS
1)Background . AB 574 (Hertzberg)/Chapter 972 of 1999 authorized
certain public agencies to prequalify contractors wishing to
bid on public works projects. AB 574 further 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 for
prequalification. AB 574 applied to cities, counties, and
special districts, but not to school districts, which already
had statutory authority to prequalify contractors. Currently,
no government entity of any type is required to prequalify
contractors.
2)Purpose . According to the author's office, given current
economic conditions, school districts are receiving bids from
contractors with little or no experience with public works,
which increases the risk that contractors will not be able to
successfully complete projects. This bill is sponsored by the
State Building and Construction Trades Council, which argues
that the prequalification process, using the standard
documents developed by DIR, "will help minimize the risk of
awarding a contract to an unqualified and inexperienced
contractor."
3)Another School Mandate ? The state currently owes school
districts about $3 billion in deferred mandate payments.
Moreover, annual state costs for district mandates total
almost $200 million. Given these significant costs, and the
state's massive structural budget deficit, is this an
appropriate time to enact yet another state reimbursable
mandate on school districts?
4)This bill was a gut and amend in the Assembly, and was not
heard in the Senate.
5)Opposition . The Coalition of Adequate School Housing
(C.A.S.H.) notes that, for large construction projects, school
districts, in lieu of having a single prime contractor,
typically hire a construction manager to coordinate the
bidding and oversight of 30-40 separate, trade-specific
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contracts. C.A.S.H. argues that mandating prequalification
would result in significant administrative costs to review
huge volumes of documentation-given the large number of
contracts involved-or would dissuade districts from using the
construction management approach.
The California School Boards Association, the California
Association of School Business Officials, and the Small School
Districts Association also oppose.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081