BILL ANALYSIS �
AB 1565
Page 1
ASSEMBLY THIRD READING
AB 1565 (Fuentes)
As Amended May 25, 2012
Majority vote
BUSINESS & PROFESSIONS 7-2 EDUCATION 8-1
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Brownley, Ammiano, |
| |Allen, Butler, | |Buchanan, |
| |Eng, Hill, Ma | |Butler, Carter, Eng, |
| | | |Halderman, |
| | | |Williams |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Hagman, Smyth |Nays:|Norby |
| | | | |
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APPROPRIATIONS 12-5
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|Ayes:|Fuentes, Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, Davis, | | |
| |Gatto, Ammiano, Hill, | | |
| |Lara, Mitchell, Solorio | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | |
| |Nielsen, Norby, Wagner | | |
| | | | |
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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. Specifically, this bill :
1)Requires, when the school district board requires contractors
to prequalify for a project, that the questionnaire and
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uniform system of rating bidders contain substantially similar
information, questions, and requirements to the standardized
questionnaire and model guidelines for rating bidders
developed by DIR.
2)Requires a school district to use prequalification for any
school facility construction project over $1 million that
receives funds under the Leroy Green School Facilities Act of
1998, and further requires:
a) For contracts awarded on or after January 1, 2014, until
January 1, 2019, the school district board to use the
uniform system of rating bidders adopted by the school
district board, or if the school district board has not
adopted a system, to use the standardized questionnaire and
model guidelines for rating bidders developed by DIR; and,
b) Requires that subcontractors also be prequalified.
3)Requires, on or before January 1, 2018, the DIR to submit a
report to the Legislature evaluating whether, during the years
the provisions of this bill applied to contracts, violations
of the Labor Code on school district projects have decreased
as compared to the same number of years immediately preceding
the enactment of this bill, and recommend improvements to the
system for prequalifying contracts and subcontractors on
school district projects.
4)Stipulates that the disqualification of a subcontractor by the
governing board of the district does not disqualify an
otherwise prequalified contractor.
5)Exempts school districts with an average daily attendance of
less than 2,500 from the provisions of this bill.
6)Sunsets the provisions of this bill on January 1, 2019.
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,
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materials, supplies, non-construction services, and
non-maintenance repairs; or,
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 : According to the Assembly Appropriations
Committee:
1)Unknown, but significant ongoing state-reimbursable General
Fund (Propisition 98) costs to school districts related to
establishing and administering the prequalification
process-likely as an additional contract cost for construction
management consultants. Additional costs would be incurred to
address appeals from contractors denied qualification. If
this process added 0.1% to 0.5% to project costs, for every
$500 million in state-funded school construction projects,
state mandated costs would be $500,000 to $2.5 million.
2)To the extent this process eliminates unqualified contractors
who would otherwise be the winning bidder, districts might
avoid certain costs associated with an underperforming
contractor, such as time delays or inferior construction, and
any associated legal costs.
3)The DIR will incur minor one-time costs ($75,000 or less) to
determine any impact of the prequalification process on Labor
Code violations and to make any recommendations for improving
the process.
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COMMENTS : According to the author's office, "Since state law
requires the use of the lowest bidder, many unqualified
contractors are being awarded school construction projects with
little or no experience and who lack the financial fortitude to
accomplish a project on time and on budget. Under current law,
the selected contractors may file a significant amount of change
orders that increases the cost of the project. In many
instances, this also leads to cutting corners that produce
defects, prevailing wage violations, and unsafe working
conditions for workers."
Prequalification can be used by public entities used to
prequalify interested bidders prior to the actual bid. Bidders
are required to submit a questionnaire, financial statements, a
notarized statement from a surety, and proof of insurance.
Prequalification enables public entities to score a contractor
based previous performance, compliance with health, safety, and
labor laws, and the completion of recent projects and the
quality of performance. Prequalification also allows public
entities to determine whether a contractor has previously worked
on school construction projects or has a record of litigation
and criminal convictions related to construction work.
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. 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.
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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.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0003931