BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 720
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: hall
VERSION: 5/23/11
Analysis by: Art Bauer FISCAL: no
Hearing date: June 21, 2011
SUBJECT:
Uniform construction cost accounting: alternative procedures
DESCRIPTION:
This bill prohibits a county that chooses to comply with the
Uniform Public Construction Cost Accounting Act from utilizing
an alternative contracting procedure that applies to contracts
entered into by county boards of supervisors and county road
commissioners.
ANALYSIS:
Since 1935, state law has specified the conditions governing how
a county road commissioner, or a registered civil engineer under
the direction of the county director of transportation, may use
force account (i.e., county employees), day labor, or contracts
with private firms to perform work on county streets and roads.
In 1983, the Legislature enacted the Uniform Public Construction
Cost Accounting Act (act) to alleviate disputes between public
agencies and the construction industry over what projects should
be put out to bid and what projects should be completed with
county employees. The act achieves this objective in two
principle ways. First, it establishes a process for developing
uniform cost accounting procedures for public construction
projects and for recommending the procedures to the State
Controller for adoption. Second, it establishes the dollar
limits, which the State Controller may adjust over time, for
what work must be done in-house and what work must be contracted
out.
The use of the act is a discretionary decision of county boards
of supervisors, cities, and special districts. The act only
applies to public agencies whose governing boards have elected
by resolution to become subject to the act's uniform
construction cost accounting procedures. (Signatories to the
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act)
Counties that elect to be subject to the act's uniform
construction accounting procedures, they may continue to use the
"road commissioner" procurement procedures established in 1935
for highway construction only. This is known as the "road
commissioner exemption."
The Uniform Public Construction Cost Accounting Act of 1983:
1. Defines "public agency" as a city, county, city and
county, including chartered cities and chartered counties,
any special district, and any other agency of the state for
the local performance of governmental or proprietary
functions within limited boundaries. Included within the
definition is a nonprofit transit corporation that is
wholly owned by a public agency and formed to carry out the
purposes of the public agency.
2. Defines a "public project" as:
a. The construction, reconstruction, erection,
alteration, renovation, improvement, demolition, and
repair work involving any publicly-owned, leased, or
operated facility.
b. Painting or repainting of any publicly-owned,
leased, or operated facility.
c. In the case of a publicly owned utility
system, "public project" includes only the
construction, erection, improvement, or repair of
dams, reservoirs, power plants, and electrical
transmission lines of 230,000 volts and higher.
3. Excludes maintenance work from the definition of a
"public project" and defines "maintenance work" as:
a. Routine, recurring, and usual work for the
preservation or protection of any publicly-owned or
publicly-operated facility for its intended purposes.
b. Minor repainting.
c. Resurfacing of streets and highways at less
than one inch.
d. Landscape maintenance, including mowing,
watering, trimming, pruning, planting, replacement of
plants, and servicing of irrigation and sprinkler
systems.
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e. Work performed to keep, operate, and maintain
publicly owned water, power, or waste disposal
systems, including, but not limited to, dams,
reservoirs, power plants, and electrical transmission
lines of 230,000 volts and higher.
4. Authorizes the governing boards of public agencies to
adopt a resolution agreeing to be subject to uniform cost
accounting procedures established by the act.
5. Establishes the following contracting procedures for
public agencies that have adopted a resolution:
a. Public projects of $25,000 or less may be
performed by agency employees, by force account, by
negotiated contract, or by purchase order.
b. Public projects of $100,000 or less may be let
to contract by informal procedures specified in the
act.
c. Public projects of greater than $100,000 are
let to contract by a formal bidding procedure
specified in the act and must be awarded to the lowest
responsible bidder.
d. The above limits may be, and have been,
adjusted by the Controller to account for inflation.
The current limit for use of agency workforce is
$30,000, the informal bidding limit is up to $120,000,
and the formal bidding procedure must be followed for
construction procurement over $120,000.
6. Establishes procedures for performing work during
emergencies and allows the work to be performed by day
labor, under the direction of the agency, by a contractor,
or by both.
The Road Commissioner Authority
The 1935 Road Commissioner Authority authorizes a county road
commissioner or a county engineer to use an alternative
procurement procedure for street and road purposes that the
Legislature adopted in 1935. This procedure includes the
following contract options:
a. Awarding a contract covering both work and
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material, with the contract let to the lowest
responsible bidder.
b. Purchasing the material and letting a contract
for the performance of the workwith the material
bought at the lowest possible cost and the contract
let to the lowest responsible bidder.
c. Purchasing the material and having the work
done by day labor, in which case advertising for bids
is not required.
d. Authorizing the county road commissioner or a
registered civil engineer under the direction of the
county director of transportation to execute changes
up to $5,000 for any contract of $50,000 or less, or
ten percent for contracts over $50,000 but not to
exceed $250,000. For contracts whose original cost
exceeds $250,000, the extra cost for any change or
addition to the work so ordered cannot exceed $25,000,
plus five percent of the amount of the original
contract costs in excess of $250,000.
e. Purchasing the material and letting a contract
for the work or by letting a contract covering both
work and material without advertising for bids when
the estimated cost of emergency work necessitated by
the imminence or occurrence of a landslide, flood,
storm damage, or other emergency exceeds $25,000 and
the public interest and necessity demand immediate
action to safeguard life, health, or property.
This bill:
1. Limits the discretion of a county that is a signatory to
the act from using its road commissioner exemption by
placing a cap on the value of new construction and
reconstruction contracted for under the road commissioner
exemption to 20 percent of the value of all work performed
by force account as reported in the Controller's Streets
and Roads Annual Report as of January 1 of each year.
Maintenance and emergency work, however, is exempt from
this limitation.
2. Increases force account cap that allows signatories to
use their own work force from $30,000 to $45,000 and
increases the formal bidding threshold under the act from
$125,000 to $175,000.
COMMENTS:
AB 720 (HALL) Page 5
1. Purpose . According to the proponents, the bill brings
into alignment conflicting provisions between the act and
the road commissioner authority by placing a threshold on
the amount of new road construction projects counties may
perform themselves before they have to put the work out to
bid.
2. Background . The act was established to ensure a fair,
open, and transparent bidding and accounting procedures for
all local public agencies-cities, counties, school
districts, special districts- that are signatories to the
act and adhere to its rules, in exchange for more flexible
bidding and advertising procedures. Thirty-four of the
state's fifty-eight counties are signatories, including
small counties such as Trinity and Alpine and large
counties like Riverside and Contra Costa. From the
prospective of contractors, the act creates uniformity in
the construction procurement market.
The road commissioner authority, established in 1935, was
an early effort at legislating uniform contracting
procedure for county public works programs. A notable
feature of the road commissioner authority is it does not
include a dollar cap above which the counties must seek
competitive bids. A unique feature of the act, which only
counties enjoy, is that counties that are signatories to it
may also select to procure construction services under the
terms of the road commissioner authority. Many smaller
counties use the road commissioner authority because their
projects are modest in value and the local construction
industry may have limited capacity. A few larger counties
who are signatories to the act continue to use the road
commissioner authority notably Riverside County, which is
in a metropolitan region.
3. How this bill affects contracting . This bill limits the
discretion of a county that is a signatory to the act by
placing a cap on the dollar value of the new construction
or reconstruction projects performed by its own workforce.
The cap is calculated as follows: a county may use its own
workforce provided the value of work it performs does not
exceed 20 percent of the total value of all work performed
by its employees, except for the cost of maintenance and
emergency work, from the previous year. For example, if a
county in year one uses its workforce to construct $500,000
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of new construction and reconstruction projects, the county
in year two would be allowed to use its workforce to
construct $100,000 of eligible construction projects. Any
amount above the $100,000 cap would have to be put out to
contract. Year after year the amount available to a county
to use its own workforce would diminish.
4. Arguments for the bill . The Construction Industry Force
Account Council argues that by permitting counties to
become signatories to the act and at the same time to
continue to use the pre-existing authority of the road
commissioner provision, the purpose of the act "to ensure a
fair, open and transparent bidding and accounting
procedures for public agencies" is undermined.
5. Arguments against the bill . The California State
Association of Counties (CSAC) believes this bill limits
counties' ability to determine "when it is most efficient
and cost-effective to use their own forces for new road
construction and road reconstruction projects." The
counties further argue that requiring competitive
procurement on small projects is costly and not
cost-effective. Counties also point out that when they use
their own workforce, the materials are purchased from the
private vendors. Counties also argue that rural counties
and remote unincorporated areas of large counties do not
have an active contractor presence. Finally, counties
contend that that the skill level of road crews will
decline because of this bill as there will be insufficient
work to maintain a workforce to execute routine maintenance
and emergency work.
6. Double referred . Rules Committee has also referred this
bill to the Governance and Finance Committee.
Assembly Votes:
Floor: 48-18
L Gov: 7-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 15, 2011)
SUPPORT: Associated General Contractors
California Chapter of the American Fence
Association
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California Chapters of the National electrical
Contractors Association
California Fence Contractors Association
California Landscape and Irrigation Council
California-Nevada Conference of Operating
Engineers
California State Council of Laborers
California State Pipes Trade Council
Construction and General Laborers' Local 185
Construction Industry Force Account Council
D.T. Benton Construction, Inc.
Flasher Barricade Association
Golden State Builders Exchange
International Brotherhood Electrical Workers
Marin Builders Association
Sierra Mountain Construction, Inc.
State Building and Construction Trades of
California
Western State Council of Sheet Metal Workers
OPPOSED: California State Association of Counties
California Emergency Services Association
Regional Council of Rural Counties
Urban Counties Caucus
The following counties: Alpine, Del Norte,
Glenn, Humboldt, Imperial,
Kings, Los Angeles, Madera, Marin, Mendocino,
Mono, Napa
Orange, San Mateo, Plumas, Sacramento, San
Bernardino, Santa Clara,
Sierra, Solano, Riverside, Stanislaus, Trinity,
Yolo and Yuba