BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 600|
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THIRD READING
Bill No: SB 600
Author: Rubio (D)
Amended: 5/11/11
Vote: 21
SENATE EDUCATION COMMITTEE : 6-3, 5/4/11
AYES: Lowenthal, Alquist, Hancock, Liu, Price, Vargas
NOES: Runner, Blakeslee, Huff
NO VOTE RECORDED: Simitian, Vacancy
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SUBJECT : School districts bidding requirements
SOURCE : State Building and Construction Trades Council,
AFL-CIO
DIGEST : This bill requires a school district to
pre-qualify prospective bidders, as specified, for any
school facility construction project that receives funds
under the state School Facility Program. This bill also
requires school districts that opt to pre-qualify bidders
for a contract to use specified processes "substantially
similar" to those developed by the Department of Industrial
Relations.
ANALYSIS : Existing law requires the governing board of a
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school district, to competitively bid, and award to the
lowest responsible bidder, any contract for a public
project (as defined) involving an expenditure of $15,000 or
more.
Existing law also authorizes the governing board of the
district to require pre-qualification of prospective
bidders for a contract for a public project. A prospective
bidder may be required to complete and submit to the
district a standardized questionnaire and financial
statement in a form specified by the district, including a
complete statement of the prospective bidder's financial
ability and experience in performing public works. A
school district that establishes a pre-qualification
process is required to adopt and apply a uniform system of
rating bidders on the basis of the completed questionnaires
and financial statements. School districts are authorized
to establish a process for prequalifying prospective
bidders on a quarterly basis and to consider a
prequalification to be valid for up to one calendar year
following the date of initial prequalification.
Existing law establishes the Local Agency Public
Construction Act (applicable to all public entities except
school districts), which, as the result of AB 574
(Hertzberg), Chapter 972, Statutes of 1999, also authorizes
a public entity to require pre-qualification of prospective
bidders for a contract. Generally, these procedures
parallel those that existed for school districts. In
addition, AB 574 established the right of a bidder to
dispute the public entities proposed prequalification
rating and requires an appeal process that includes
notification to the bidder, in writing, of the basis for
disqualification and supporting evidence and the
opportunity for the bidder to rebut this evidence. As
required under AB 574, the Department of Industrial
Relations (DIR), in collaboration and consultation with
affected agencies and interested parties, has developed
model guidelines for rating bidders and drafted a
standardized questionnaire for use by public entities for
the purpose of pre-qualification.
This bill:
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1. Requires a school district, except for school districts
with an average daily attendance of less than 2,500,
that opts to pre-qualify prospective bidders for a
contract to use a rating system and questionnaire
"substantially similar" to the model guidelines for
rating bidders and the standardized questionnaire
developed by the DIR for use by public entities for this
purpose under the Local Agency Public Construction Act
(LAPCA).
2. Requires a school district to pre-qualify prospective
bidders for any school facility construction project
that receives funds under the Leroy Green School
Facilities Act of 1998. More specifically it:
A. Requires a district, except for school districts
with an average daily attendance of less than 2,500,
that does not use the procedures for
pre-qualification established for school districts,
to use the prequalification procedures established
for other public agencies under the LAPCA.
B. For districts that use the school district
procedures for prequalification, requires that the
rating system and questionnaire be "substantially
similar" to those developed by the DIR for use by
other public entities.
C. Requires that subcontractors also be prequalified.
3. Clarifies that the procedures for pre-qualification of
prospective bidders by a school district do not preclude
a local school district governing board from
prequalifying or disqualifying a subcontractor.
4. Clarifies that disqualification of a subcontractor by a
school district governing board does not disqualify an
otherwise prequalified contractor.
Comments
Why only school districts ? AB 574 extended the authority
to pre-qualify contractors to all public agencies.
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Currently, however, no government entity of any type is
required to pre-qualify contractors. California has
authorized over $28 billion in funding for K-12 facilities
since 2002 (Propositions 1D, 55, and 47). According to the
sponsors, no other infrastructure sector is as far reaching
and as geographically diverse as school construction and
pre-qualification is necessary to ensure the state's
substantial investment results in quality public school
construction.
Limits flexibility . Under current law, schools districts
may pre-qualify contractors if they choose and are
authorized to develop their own rating systems and
questionnaires for this purpose. This bill requires a
school district that opts to pre-qualify bidders for a
contract, whether it accepts state bond funds or not, to
use a questionnaire and uniform rating system that is
"substantially similar" to that developed by the DIR. A
school district that does use state bond funds is required
to pre-qualify all bidders, including subcontractors, for
that project and required to use the DIR developed models
for evaluating and rating bidders, as specified.
Some school districts do use pre-qualification and employ
questionnaires and rating systems which are similar to
those developed by the DIR (Los Angeles Unified School
District �LAUSD], for example).
Prior Legislation
SB 258 (Oropeza), Session of 2009-10, would have required
school districts to prequalify contractors on public works
projects exceeding $1 million, pursuant to specified
procedures. Passed the Senate with a vote of 23-15 on June
1, 2010. (Held under submission in Assembly Appropriations
Committee)
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
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Major Provisions 2011-12 2012-13 2013-14 Fund
Pre-qualification of Substantial ongoing cost
pressure General*
bidders
*Proposition 1D and all future K-12 construction bonds
SUPPORT : (Verified 5/26/11)
State Building and Construction Trades Council, AFL-CIO
(source)
Associated General Contractors
California Labor Federation
California Legislative Conference of the Plumbing, Heating,
and Piping Industry
National Electrical Contractors Association - California
Chapter
PW Construction, Inc.
OPPOSITION : (Verified 5/26/11)
Association of California Construction Managers
California Association of School Business Officials
Clovis Unified School District
Coalition for Adequate School Housing
County School Facilities Consortium
Kern Union High School District
Small School Districts' Association
Torrance Unified School District
Wiseburn School District
ARGUMENTS IN SUPPORT : According to the author's office,
"With the recent economic downturn many school districts
have been receiving bids from contractors who have never
worked on public works projects, particularly large school
construction projects. Under current law, school districts
that do not use prequalification are compelled to award a
contract to the lowest bidder even if that contractor is
unqualified, does not have the financial fortitude to
finish the projects, and may file an exorbitant amount of
change orders because they under bid the project. In many
instances this also leads to cutting corners that produce
defects, prevailing wage violations and unsafe working
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conditions for workers." According to the author, this
bill allows school districts to continue to utilize the
lowest responsible bidder contracting method which protects
tax dollars, while ensuring that the bidding pool is made
up of competent and qualified contractors.
Writing in support, the California Labor Federation states,
"SB 600 institutes a proven and effective process for
contractors bidding on school construction projects to
guarantee they meet trustworthiness, quality, fitness,
capacity, and experience standards in order to qualify to
bid. Prequalification provides the school district with a
useful tool to ensure school projects are built on time,
within budget and to the highest quality standard."
ARGUMENTS IN OPPOSITION : In opposition, the County
School Facilities Consortium writes, "As written, this bill
will add significantly to the cost of school construction
and modernization therefore utilizing more capital
resources, such as state and local bonds, while also
requiring the need to spend general fund dollars on new,
additional and unnecessary administrative functions."
In opposition, the Small School Districts' Association
contends, "Small school districts, most of which are rural,
do not have a significant number of bidders for their
projects. Establishing a prequalification program could
further restrict the bidding pool and increase the cost of
school projects. Small school districts also have the
small local school bond capacity. The combination of
higher costs and small bond capacity means these school
districts will have greater problems ensuring adequate
funding for school facilities."
The Torrance Unified School District, in opposition,
states, "SB 600 limits flexibility and will result in
higher administrative costs to school districts and will
not result in any offsetting efficiencies. State law
should be making it easier for school districts to get
construction contracts, not more difficult, as school
projects are often one of the only bright lights in a local
economy."
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CPM:kc 5/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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