BILL ANALYSIS �
AB 2440
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2440 (Lowenthal) - As Amended: April 12, 2012
SUBJECT : Los Angeles County Metropolitan Transportation
Authority: contracting.
SUMMARY : Expands the design-build authority of the Los Angeles
County Metropolitan Transportation Authority (MTA) to permit the
use of "best value" methodology and shorten notice requirements
for projects costing under $10 million dollars, and raises
certain contracting thresholds for other uses of the "best
value" method. Specifically, this bill :
1)Repeals provisions unique to MTA that require its inspector
general to prepare a prequalification questionnaire for any
business seeking to provide goods or services under contract
with MTA.
2)Raises the threshold from $100,000 to $150,000 for purchases
of supplies, equipment and materials that may be selected
under a "best value" methodology.
3)Raises the threshold from $25,000 to $150,000 for construction
of facilities that may be selected under a "best value"
methodology.
4)Raises the upper threshold from $100,000 to $150,000 under
which MTA can use an informal procurement process based on a
minimum of three quotations.
5)Authorizes MTA to award design-build contracts based on a
competitive bidding process that employs selection criteria in
addition to cost.
6)Requires, for design-build contracts estimated to cost over
$10 million, a request for bids or proposal to be advertised
at least 60 days in advance.
7)Requires, for design-build contracts estimated to cost under
$10 million, a request for bids or proposal to be advertised
at least 30 days in advance.
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8)Requires the contractor on a design-build contract to
competitively bid those portions of the design work that can
be subcontracted.
9)Requires the contractor to provide to MTA a list of
subcontractors whose work is over one-half of one percent of
the total project cost, as soon as subcontractors are
identified.
10)Provides that, once subcontractors are listed, they should
have the same rights as provided for in the Subletting and
Subcontracting Fair Practices Act.
11)Repeals the requirement that MTA adopt a change order
procedure for its contracts.
12)Makes various other technical or non-substantive changes.
EXISTING LAW :
1)Establishes MTA as the successor agency to the Southern
California Rapid Transit District and the Los Angeles County
Transportation Commission and prescribes its membership and
duties.
2)Directs MTA to require its general counsel to develop a
prequalification questionnaire to be completed by any business
entity seeking to contract with the authority.
3)Sets forth provisions governing MTA's contracting authority,
including the authority for contracts for supplies, equipment,
and material over $100,000, to award the contract to the
lowest responsible bidder or, at MTA's discretion, to the
bidder that provides the best value.
4)Requires MTA to award contracts over $25,000 for facility
construction based on lowest responsible bid.
5)Requires MTA to obtain a minimum of three bids, either written
or oral, whenever the estimated contract price is between
$3,000 and $100,000.
6)Authorizes MTA to enter into design-build contracts for
transit projects and for facilities on property it owns;
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requires MTA to advertise requests for bids at least 60 days.
7)Requires MTA to adopt a change order procedure for its
contracts.
FISCAL EFFECT : None
COMMENTS :
1)This bill makes a variety of changes to MTA's contracting
authority, including minor expansions of MTA's use of
design-build and 'best value' contracting methodologies. This
bill is sponsored by MTA.
2)MTA was created pursuant to AB 152 (Katz), Chapter 60,
Statutes of 1992, through the consolidation of the Los Angeles
County Transportation Commission and the Southern California
Rapid Transit District. The agency is now the third-largest
public transportation system in the United States by
ridership, serving a 1,433 square mile area and employing more
than 9,200 people. MTA operates roughly 2,000 buses during
peak hours and 79.1 miles of urban rail service. The agency
is the primary transit provider for the City of Los Angeles.
3)This bill contains four separate provisions related to MTA's
public contracting authority.
Section 1 of the bill deletes the requirement that MTA's
inspector general develop a pre-qualification questionnaire
for prospective contractors. According to the author,
"Subsequently, in 1999 AB 574 was passed creating a more
general authority for prequalification in Public Contract Code
Section 20101 which applies to all 'public entities.'
Removing the �MTA] specific law would reduce the burden on
prospective bidders of having
to comply with �MTA]-unique requirements and would eliminate a
potential conflict raised by the requirement in PUC 130051.21
(a) that the �MTA] Inspector General to draft the
pre-qualification questionnaire, which leaves the office of
the IG in the position of inspecting its own work product."
Section 2 of the bill raises three contracting thresholds: a)
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for the purchase of supplies, equipment and materials that may
be selected under a "best value" methodology, the limit goes
from $100,000 to $150,000; b) for the construction of
facilities that may be selected under a "best value"
methodology, the limit goes from $100,000 to $150,000; and, c)
for contracts where MTA may use an informal procurement
process based on a minimum of three quotations, the upper
threshold goes from $100,000 to $150,000. According to the
author, "�t]hese changes will allow �MTA] to take advantage of
the streamlining opportunities offered by its federal funding
partners by conforming state law to recent changes made
federal contracting thresholds."
Section 3 of the bill makes a number of changes to MTA's
design-build authority statute (Public Utilities Code 130242).
First, it gives MTA authority to utilize "best value"
methodology (i.e. using selection criteria other than cost) in
contract selection. The bill further specifies that for
contracts estimated to cost under $10 million dollars, MTA
need only publish a notice requesting bids or proposals at
least 30 days before receipt (contracts in excess of $10
million dollars must still advertise for 60 days.) Finally,
AB 2440 requires the contractor to competitively bid those
portions of the design-work that can be subcontracted, and to
provide MTA with a list of subcontractors whose work is over
of 1% of the total project cost. Listed subcontractors shall
have the same rights provided in the Subletting and
Subcontracting Fair Practices Act.
Relative to the shorter 30 day bid/proposal notice for
projects under $10 million dollars, the author states that
"�t]he notice period in this section refers only to the
timeframe under which a solicitation is advertised. This does
not impact the timeframe that proposers have to both review
the solicitation documents and respond to the proposal. �MTA]
uses a variety of methods to publish proposals including
posting on our webpage and a 60 day look-ahead at upcoming
projects. These methods are more effective in providing
notice of solicitations, are more effective in targeting
potential bidders. Additionally, bidders use these methods to
identify potential opportunities rather than broad
non-targeted newspaper advertising."
Section 4 simply deletes the requirement that MTA adopt a
change order procedure for contracts. According to the
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author, "�t]his provision was written at a time when �MTA's]
contract administration function was under the control of its
construction department. Since then, however, �MTA] is
required by law to have an 'independent professional
procurement staff.' Consequently, this provision is no longer
necessary to ensure that change orders are review
appropriately."
4)AB 2755 (B. Lowenthal, 2009) contained many provisions similar
to this bill, namely the increases in the 'best value'
methodology thresholds and the delegation of design-build
approval authority. After being set for hearing twice, the
bill was held in the Assembly Transportation Committee without
a vote.
AB 1471 (Eng), Chapter 536, Statutes of 2009, corrected
certain provisions governing MTA's procurement authority,
authorizes the governing board of MTA to delegate to
management certain powers and responsibilities, and increased
the minimum bid threshold from $2,500 to $3,000 before
triggering the requirement for MTA to obtain at least three
quotes prior to making an expenditure.
SB 1687 (Murray), Chapter 814, Statutes of 2006, raised MTA's
formal bidding threshold from $40,000 to $100,000.
5)Support arguments : According to MTA, "�m]any laws pertaining
to �MTA's] procurement process are outdated and have created
unnecessary burdens on our ability to efficiently deliver
transportation projects in the County of Los Angeles. �This
bill] will allow �MTA] to streamline the process by which we
award contracts and deliver transit and highway projects in
Los Angeles County."
Opposition arguments . Groups opposing public sector
design-build authority in general might oppose this bill
because of its expansion of design-build authority. Others
might disagree with this bill's expansion of contracting using
'best value' methodology. Finally, a theoretical opponent
might contest the bill purely on the grounds that the sponsor
has not established a concrete and genuine need for the
provisions of this bill.
6)This bill is double-referred to the Committee on
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Transportation.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles County Metropolitan Transportation Authority
�SPONSOR]
Opposition
None on file
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958