BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2440|
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THIRD READING
Bill No: AB 2440
Author: Bonnie Lowenthal (D)
Amended: 6/18/12 in Senate
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 8-0, 7/3/12
AYES: DeSaulnier, Gaines, Kehoe, Lowenthal, Pavley, Rubio,
Simitian, Wyland
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 54-20, 5/31/12 - See last page for vote
SUBJECT : Los Angeles County Metropolitan Transportation
Authority:
contracting
SOURCE : Los Angeles County Metropolitan Transportation
Authority
DIGEST : 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
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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.
Under existing law, MTA may 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 MTA 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 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
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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 five percent small business preference applies,
resulting in all contracts having a small business
preference.
10.Repeals the requirement that MTA adopt a change order
procedure for its contracts.
Comments
MTA is embarking on a large highway and rail transit
development program with funds generated from the half-cent
sales tax enacted in 2008. This bill intends 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.
Important changes in procurement practices . MTA's
Inspector General has been required to develop a
prequalification questionnaire for prospective contractors
for many years. With large, complex projects, the
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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.
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.
To facilitate design-build procurement, this bill clarifies
that MTA can award design-build contracts based on a
combination of price and best value.
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
subcontractors prevents the prime contractor from
"shopping" for a subcontractor in hopes of getting a lower
price after a subcontractor is selected.
Another important change relating to small business
opportunities removes the requirement that the five percent
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.
Finally, MTA recently reorganized and now separates
procurement and contract administration from construction
management within its agency. Existing law requires
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/7/12)
Los Angeles County Metropolitan Transportation Authority
(source)
American Council of Engineering Companies California
OPPOSITION : (Verified 8/7/12)
National Right to Work Committee
ASSEMBLY FLOOR : 54-20, 5/31/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Block, Blumenfield, Bonilla, Bradford, Brownley,
Buchanan, Butler, Campos, Carter, Cedillo, Chesbro,
Davis, Dickinson, Eng, Feuer, Fletcher, Fong, Fuentes,
Furutani, Galgiani, Gatto, Gordon, Gorell, Hall, Hayashi,
Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mitchell, Monning, Nestande, Norby, Pan, Perea, V. Manuel
P�rez, Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Bill Berryhill, Conway, Donnelly, Beth Gaines,
Garrick, Grove, Hagman, Halderman, Harkey, Jeffries,
Jones, Knight, Logue, Miller, Morrell, Nielsen, Olsen,
Silva, Smyth, Wagner
NO VOTE RECORDED: Charles Calderon, Cook, Roger Hern�ndez,
Mansoor, Mendoza, Valadao
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JJA:d 8/7/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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