BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2580|
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THIRD READING
Bill No: AB 2580
Author: Furutani (D)
Amended: 4/16/12 in Assembly
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM. : 9-4, 6/26/12
AYES: Wright, Calderon, Cannella, Corbett, De Le�n, Evans,
Hernandez, Padilla, Yee
NOES: Anderson, Berryhill, Walters, Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/6/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 51-26, 5/21/12 - See last page for vote
SUBJECT : Public contracts: job order contracting: Los
Angeles Unified School District
SOURCE : Los Angeles Unified School District
DIGEST : This bill extends the sunset date on the Los
Angeles Unified School Districts (LAUSD) job order
contracting (JOC) pilot project from December 1, 2012, to
December 31, 2020.
ANALYSIS : Existing law authorizes JOC, as provided, by
the LAUSD, until December 1, 2012. Existing law requires
the job order contracts to be competitively bid and awarded
to the responsible qualified bidder with the lowest
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responsive bid. Existing law requires that the LAUSD
create a report of any job order contract procured and
submit an interim report to certain committees in the
Legislature and the Office of Public School Construction,
as specified. Existing law requires the LAUSD to provide
specified notice of work for subcontractors, whose bids
will be taken by the primary job order contractor.
Existing law requires for contracts awarded pursuant to
these provisions that the LAUSD pay a fee into the State
Public Works Enforcement Fund, which funds are continuously
appropriated for the Department of Industrial Relations'
enforcement of prevailing wage requirements on public works
projects.
This bill:
1. Extends the sunset date on the LAUSD's JOC pilot project
from December 1, 2012, to December 31, 2020.
2. Requires the LAUSD, by June 30, 2017, to submit an
interim report on all job order contract projects
completed by December 31, 2016, to the Department of
General Services (DGS) and the Legislature.
3. Requires the LAUSD, by December 31, 2019, to submit a
report describing each job order contract procured and
the work completed under each contract by June 30, 2019,
as specified, to the DGS and the Legislature.
4. Requires the LAUSD to award job order contracts to the
most qualified bidder, instead of the lowest responsive
bidder, who is prequalified and compliant with the
LAUSD's project stabilization agreement (PSA).
5. Specifies that PSA compliance shall constitute no more
than three major violations on any LAUSD project within
the past three years. If the contractor has more than
three violations, the LAUSD shall seek administrative
review of those violations. Violations include, but are
not limited to, the following:
A. Failure to register core workers with the
appropriate building trade union;
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B. Failure to assign apprentices, as specified;
C. Failure to comply with job order contract terms,
including contract amount thresholds, contract
duration limits, and notification requirements before
work commences, as specified; and,
D. Incorrect assignment of work in accordance with
the LAUSD's PSA.
6. Prohibits a job order contractor from working on a job
contract within seven days of issuance, and requires the
job contractor to provide at least seven days' notice to
add or substitute any subcontractor.
7. Requires that any job order changes be compliant with
existing law on allowable job order change amount
thresholds, as specified.
8. Requires the primary job order contractor, instead of
LAUSD, to provide public notice of available work to be
subcontracted by trade, and to notify the LAUSD of the
subcontractor selected. Requires the notification to:
A. Include every subcontractor for all tiers and
establish the authorized subcontractor list for the
job order. Prohibits the commencement of work prior
to seven days' notice of the established subcontract
list and any additions of any subcontractor to the
job order;
B. Identify the scope of the work to be performed by
each subcontractor to the job order by craft. If a
subcontractor performs multiple crafts, the job order
contractor shall identify the work of each craft to
be performed; and,
c. List any substitute subcontractors and the
justification for the substitution, with seven days'
notice. Allows the LAUSD to request a hearing to
evaluate the substitution request, in accordance with
the Subletting and Subcontracting Fair Practices Act
(Act).
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9. Authorizes the LAUSD to terminate the job order or a
contractor's authorization to proceed with awarded work
subject to the LAUSD's specified administrative due
process, if LAUSD determines the contractor violated the
Act.
10.Authorizes the LAUSD to declare the contract ineligible
for future job orders and deny a contractor's
prequalification status for a period of time it
determines, if LAUSD determines the contractor violated
the Act.
11.Sunsets the provisions this bill on December 31, 2020.
12.Redefines "job order contract" to mean a contract
awarded to the most qualified bidder, as specified.
13.Makes technical and clarifying changes.
14.Makes legislative findings and declarations related to
the JOC project delivery system being LAUSD-specific to
reduce project costs and expedite project completion,
that the contracts shall be awarded to the most
qualified responsible bidder, and that availability of
JOC as a project delivery method shall not preclude the
use of traditional methods of project delivery if a
traditional method results in higher cost savings.
Comments
According to the author's office, "JOC is set to sunset on
December 1, 2012. The JOC provision was established as a
pilot program to study the benefits of an alternative and
optional procedure for bidding public works projects. The
LAUSD is seeking to extend the pilot program for the LAUSD,
as there are a few areas of improvement that need to be
addressed."
This bill extends the sunset date on the LAUSD's JOC pilot
project from December 1, 2012, to December 31, 2020,
creates a compliance system for JOC, requires that job
order contracts be awarded to the most qualified bidder,
and incorporates prevailing wage, apprenticeship, and
notification requirements.
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JOC is a contracting procedure intended to accelerate
completion of projects, lower costs, and reduce the
complexity of the contracting process. JOC 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.
JOC 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. JOC 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.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, because
any additionally authorized projects would be require
payment of fees into the State Public Works Enforcement
Fund, a continuously appropriated fund, this bill makes an
appropriation.
Extending this sunset would not result in significant
state costs.
SUPPORT : (Verified 8/8/12)
Los Angeles Unified School District (source)
State Building and Construction Trades Council of
California
OPPOSITION : (Verified 8/8/12)
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Associated Builders and Contractors of California
Plumbing-Heating-Cooling Contractors Association of
California
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : According to the sponsor, the
LAUSD, this bill extends a successful program that is
designed to accelerate the completion of public works
projects, provide cost savings, and reduce construction
complexity. Since 2005, the LAUSD has completed 3,300 job
orders totaling more than $300 million. Throughout this
period of time and throughout these projects, the LAUSD has
seen how successful JOC can be.
ARGUMENTS IN OPPOSITION : Opponents to this bill state
that it perpetuates an unfair contracting system for a
school district that has shown an abysmal ability to manage
its resources. The opponents also object to provisions in
the JOC that call for project labor agreements (aka
"project stabilization agreements" in the JOC).
ASSEMBLY FLOOR : 51-26, 5/21/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes,
Furutani, Galgiani, Gatto, Gordon, Gorell, Hall, Hayashi,
Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mendoza, Mitchell, Monning, Pan, V. Manuel P�rez,
Portantino, Skinner, Solorio, Swanson, Torres,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Grove, Hagman, Halderman, Harkey,
Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell,
Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao,
Wagner
NO VOTE RECORDED: Fletcher, Roger Hern�ndez, Perea
DLW/RJG:k 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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