BILL ANALYSIS �
AB 1565
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1565 (Fuentes)
As Amended July 6, 2012
Majority vote
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|ASSEMBLY: |53-22|(May 30, 2012) |SENATE: |26-10|(August 28, |
| | | | | |2012) |
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Original Committee Reference: B.,P. & C.P.
SUMMARY : Requires prequalification for school public works
projects costing $1 million or more and funded by specified
funds. Requires the prequalification questionnaire and uniform
system a school district uses to rate bidders on those public
works projects to contain at a minimum, issues covered by the
questionnaire and guidelines for rating bidders developed by the
Department of Industrial Relations (DIR).
The Senate amendments :
1)Require a school district to use prequalification for any
school facility construction project costing $1 million or
more and receiving funds from the Leroy Green School
Facilities Act of 1998 or any future school bond. Further
requires:
a) Prospective bidders to submit to the school district a
standardized questionnaire and financial statement, under
oath, which shall not be public records or open to
inspection;
b) The school district to adopt and apply a uniform system
of rating bidders;
c) The questionnaire, financial statement, and uniform
system of rating bidders to contain at a minimum, issues
covered by the standardized questionnaire and model
guidelines for rating bidders developed by the DIR; and,
d) That a bid accompanying a proposal form shall not be
accepted from a bidder who has not both submitted a
completed questionnaire and financial statement for
prequalification at least 10 days prior to the public bid
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opening date and been prequalified at least five days prior
to the public bid opening date.
2)Authorize a school board to establish a prequalification
process on a quarterly or annual basis, and stipulates that
the prequalification shall be valid for one calendar year from
the date of initial prequalification.
3)Specify that the provisions of this bill do not preclude a
local school district governing board from prequalifying or
disqualifying a subcontractor.
4)Specify that bidders shall include the general contractor, and
if utilized, all electrical, mechanical and plumbing
subcontractors, as specified, instead of subcontractors who
perform more than 3% of the total project cost. Further
requires that the school district make available a list of all
prequalified electrical, mechanical and plumbing
subcontractors to bidders at least five days prior to the
public bid opening date.
5)Delete prequalification criteria for school districts that opt
to prequalify and related reporting requirements.
6)Delete the requirement that subcontractors be prequalified.
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,
b) Contracts costing $15,000 or more for construction
projects.
2)Requires a school district utilizing prequalification for
public works projects to adopt and apply a uniform system of
rating bidders based on completed questionnaires and financial
statements 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
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to people who have not both submitted a questionnaire and
financial statement for prequalification at least five
calendar days prior to the public bid opening date and been
prequalified at least one calendar day prior to the public bid
opening date.
AS PASSED BY THE ASSEMBLY , this bill required prequalification
for school construction projects and required the
prequalification questionnaire and uniform system of rating
bidders to contain substantially similar information, questions,
and requirements to the questionnaire and guidelines for rating
bidders developed by the DIR.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
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. (About one-third of school districts
meet the enrollment threshold mandated under this bill.)
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.
COMMENTS : Prequalification can be used by public entities to
prequalify interested bidders prior to the actual bid.
Interested bidders are required to submit a questionnaire,
financial statement, a notarized statement from a surety, and
proof of insurance. Prequalification enables public entities to
score a contractor based on previous performance, compliance
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with health, safety, and labor laws, and the completion of
recent projects. 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 wishing 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 applied to all
cities, counties, and special districts, but did not apply to
K-12 school districts.
Existing law 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
put out for bid by that particular 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 or require that an expenditure amount
trigger the use of the prequalification process.
This bill, as amended in the Senate, is consistent with Assembly
actions.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
AB 1565
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FN: 0005524