BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 2440
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: lowenthal
VERSION:
6/18/2012
Analysis by: Art Bauer FISCAL: yes
Hearing date: July 3, 2012
SUBJECT:
Los Angeles County Metropolitan Transportation Authority:
contracting
DESCRIPTION:
This bill lifts the dollar limits on certain purchases and
expands the design-build authority of the Los Angeles County
Metropolitan Transportation Authority (MTA) to use the "best
value" methodology for the selection of contractors.
ANALYSIS:
Existing law establishes various dollar thresholds governing
MTA's purchasing of supplies and the construction of facilities.
In addition, existing law authorizes MTA's Inspector General to
prepare a prequalification questionnaire for firms desiring to
do business with MTA, including construction firms, engineering
firms, law firms, product vendors, and other business entities.
MTA may, under existing law, enter into design-build contracts
under various conditions governing the size of the contract and
publication of notice.
MTA may also use "best value" when selecting vendors and
contractors. Existing law defines "best value" as the overall
combination of quality, price, and other elements of a proposal
that, when considered together, provide the greatest overall
benefit in response to the requirements described in the
solicitation documents. Existing law also authorizes MTC to
establish a small business preference program for contracts with
a value in excess of $100,000.
Existing law protects the rights of subcontractors by preventing
prime contractors from removing a subcontractor from a project
after an award has been made simply because the prime found a
less expensive subcontractor. This provision applies only to
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design-bid-build procurement process and not to design-build
procurement.
This bill :
1.Repeals the requirement that MTA's Inspector General prepare a
prequalification questionnaire unique only to MTA for any
business seeking to provide goods or services and instead
authorizes MTA to use a standardized prequalification
questionnaire consistent with general provisions of the Public
Contracts Code.
2.Raises the threshold from $100,000 to $150,000 for purchases
of supplies, equipment, and material that may be selected
under a best value methodology.
3.Raises the threshold from $100,000 to $150,000 for an informal
procurement process that relies on price quotations from at
least three bidders.
4.Authorizes MTA to award design-build contracts by a best value
competitive bidding process that includes both price and
selection criteria.
5.Requires MTA to advertise a request for bids or proposals for
a design-build project valued at $10 million or more at least
60 days prior to the submittal of bid documents.
6.Requires MTA to advertise a request for bids or proposals for
a design-build project valued at $10 million or less at least
30 days prior to the submittal of bid documents.
7.Requires the contractor on a design-build contract to
competitively bid those portions of the design work that can
be subcontracted.
8.Requires a design-build 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 engaged
by a prime contractor.
9.Removes the $100,000 threshold for contracts to which the 5
percent small business preference applies, resulting in all
contracts having a small business preference.
10. Repeals the requirement that MTA adopt a change order
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procedure for its contracts.
COMMENTS:
1.Purpose . MTA is embarking on a large highway and rail transit
development program with funds generated from the cent
sales tax enacted in 2008. This bill is intended to clarify
existing law regarding various contracting procedures and
requirements in order to achieve a more efficient procurement
process for both construction contracts and the contacts for
materials and supplies.
2.Important changes in procurement practices .
a. MTA's Inspector General has been required to develop a
prequalification questionnaire for prospective contractors
for many years. With large, complex projects, the
questionnaires can be extensive. By allowing MTA to use
the uniform questionnaire, it simplifies the process for
contractors by reducing the time necessary to complete this
requirement, because the information requested will be
common to all large public works projects. In addition,
this bill removes the potential for a conflict of interest
should the Inspector General need to investigate an issue
related to the questionnaire.
b. Another change relates to increasing the threshold from
$100,000 to $150,000 for purchasing supplies and equipment
by using the best value method and allowing the use of an
informal bidding process based on a minimum of three
quotations. These changes conform to recent changes in in
the Federal Transit Administration's contracting practices
when federal funds are involved.
c. To facilitate design-build procurement, this bill
clarifies that MTA can award design-build contracts based
on a combination of price and best value.
d. To ensure the best price associated with aspects of a
design-build contract and to encourage the use of small
business enterprises, MTA is requiring contractors on
design-build contracts to competitively bid subcontracts
and to report to MTA the subcontracting firms. This is
important because the design-build teams select
subcontractors not at the time the contract is awarded, but
at the time a design is completed. The listing of the
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subcontractors prevents the prime contractor from
"shopping" for a subcontractor in hopes of getting a lower
price after a subcontractor is selected.
e. Another important change relating to small business
opportunities removes the requirement that the 5 perent
small business preference will be given on contracts above
$100,000. This allows the application to construction
contracts of a lower value, thus creating greater
opportunities for small business participation in MTA's
construction program.
f. Finally, MTA recently reorganized and now separates
procurement and contract administration from construction
management within its agency. Existing law requires
certain legal and accounting reviews that delay the
processing of change orders and that are unnecessary except
for in the case of the largest changes. MTA's
reorganization creates an arrangement that is more
consistent with that of other large public works agencies.
It establishes internal checks and balances by removing the
inherent conflict when the construction organization
assesses the validity of change orders it issues. With
change order management in the procurement division, MTA
believes this creates a neutral environment and therefore
it can process changes orders more expeditiously.
1.Referred to Appropriations Committee . Previous versions of
this bill were not keyed for Appropriations Committee.
Because the current version of the bill includes amendments
related to the value of contracting thresholds, the bill will
now be referred to the Appropriations Committee.
Assembly Votes:
Floor: 54-20
Trans: 11-0
Loc Gov: 7-1
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 27, 2012)
SUPPORT: Los Angeles County Metropolitan Transportation
Authority (sponsor)
American Council of Engineering Companies
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California
OPPOSED: None received.