BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2580 (Furutani) - Public contracts: job order contracting.
Amended: April 16, 2012 Policy Vote: GO 9-4
Urgency: No Mandate: No
Hearing Date: August 6, 2012 Consultant:
Bob Franzoia
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 2580 would extend the sunset from December 1,
2012 to December 31, 2020 on Los Angeles Unified School
District's (LAUSD) job order contracting pilot project. This
bill would also require LAUSD to report specified job order
contract information.
Fiscal Impact: Because any additionally authorized projects
would be require payment of fees into the State Public Works
Enforcement Fund, a continuously appropriated fund, this bill
would make an appropriation.
Extending this sunset would not result in significant state
costs.
Background: Job order contracting is a contracting procedure
intended to accelerate completion of projects, lower costs, and
reduce the complexity of the contracting process. Job order
contracting allows for the awarding of a competitively bid
contract based upon published construction tasks and unit
prices. Rather than bid a total price for the project, a
contractor will bid an adjustment factor, which reflects
specified costs, to the published unit prices. The unit price,
multiplied by the adjustment factor, equals the final price for
any future task. Awards must be made to the lowest responsible
pre-qualified bidder. The contractor is generally informed of a
range for the total contract value, with the owner being
obligated to award only the minimum amount during the term of
the contract. Once a contract is awarded, the contractor is
given projects in a work order format. The owner is able to
evaluate the performance of the contractor based upon the work
orders, and, if unsatisfactory, retains the ability to terminate
the job order contract once the minimum dollar value of the
AB 2580 (Furutani)
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range for the contract value is met.
Job order contracting is generally believed to be well suited to
repetitive jobs and situations in which owners know that many
small tasks will arise, but the timing, type of work, and
quantity of work are unknown at the time the contract is signed.
These jobs typically have minimal design requirements, and
design work is typically accomplished quickly by the job order
contractor's in-house design staff. Job order contracting is
not generally viewed as an appropriate method of contracting for
large, complex construction projects that require extensive or
innovative design or are likely to encounter changes and
revisions during construction.
The LAUSD reports stated that for "job orders completed through
November 1, 2011, actual project costs were reduced by an
average of 9.26 percent as compared to the estimates and the
procurement time. The procurement time savings varied among
projects, but overall, produced significant time savings and
provided the LAUSD with a valuable procurement tool."
Related Legislation: AB 2362 (Horton) Chapter 570/2006 extended
the sunset date on the LAUSD job order contracting pilot project
from December 1, 2007, to December 1, 2012.
AB 14 (Horton) Chapter 889/2003 authorized the LAUSD job order
contract pilot program, and required an interim report on the
job order contracting program to the Legislature and the Office
of Public School Construction within the Department of General
Services by June 30, 2005.