BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: SB 835
AUTHOR: Wolk
AMENDED: March 23, 2011
FISCAL COMM: Yes HEARING DATE: April 27, 2011
URGENCY: No CONSULTANT:Daniel Alvarez
SUBJECT : University of California: Best Value Procedures.
SUMMARY
This bill extends the sunset whereby the University of
California, San Francisco campus can award construction
contracts on a "best value" basis, rather than just to the
lowest bid. The sunset would be extended from January 1, 2012,
to January 1, 2015.
BACKGROUND
Current law authorizes the University of California (UC) to
conduct a pilot program, from January 2007 through December
2011, at their San Francisco campus that allows for construction
contracts to be awarded on a "best value" basis, rather than
just to the lowest bid.
"Best value" means a procurement process whereby the lowest
responsible bidder may be selected on the basis of objective
criteria with the resulting selection representing the best
combination of price and qualifications.
ANALYSIS
This bill:
1) Extends the sunset from January 1, 2012, to January 1,
2015, whereby the UC San Francisco campus is permitted to
award construction contracts on the basis of "best value"
rather than just to the lowest bid.
2) Requires UC to submit a report to the Legislature, by
January 1, 2012, that describes the various aspects of the
implementation of the program, including an assessment of
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project performance and a summary of any delays or
increases in costs.
STAFF COMMENTS
1) Need for the bill . According the University of California,
the sponsor of the bill, "best value" contracting ensures
that there is a match between the price proposed and the
capability of the contractor to perform the work. Use of
the best value method of evaluation to select a contractor
allows the university to take into account both the
proposed price and other defined criteria, including
financial condition, relevant experience and demonstrated
management competency.
2) Additional Background . Chapter 367, Statutes of 2006 (SB
667, Migden) established a five-year pilot program
(1/1/2007 - 12/31/2011) authorizing UCSF to assign a
"qualification score" to each construction contractor's bid
which could, when divided into the bidder's price, impact
determination of the lowest cost per quality point based
upon five factors which impart best value to the
University. The five statutory non-price factors are (1)
financial condition, (2) relevant experience, (3)
demonstrated management competency, (4) labor compliance,
and (5) safety record of the bidder.
3) Interim Report . In February 2010, the UC issued an interim
report on the "Best Value Pilot Program." Since the pilot
was initiated, UCSF reports having awarded 23 contracts
totaling $158.3 million under the program - the executive
summary indicates the following:
a) A decrease in bid protests, communication
problems, disputes, the need for multiple inspections
and re-work, change order requests and claims, and
litigation;
b) An increase in incentives for contractors to
perform high-quality work safely, while adhering to
high-labor standards;
c) Increased likelihood of contractors staffing a
project with their best workers and to choose
subcontractors which are most appropriate for the work
(rather than "low bid");
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d) A reduction in administrative oversight and
contract/project management staff time.
UCSF believes that the Best Value Construction Pilot
Program has demonstrated that this selection method results
in contracts with a higher success rate in terms of price,
quality, and timely completion. Based on the volume of
construction contracts bid in 2009 and 2010 - and applying
the most conservative estimate of savings to that number
based on Pilot Program experience (savings = two percent of
contract value) - UCSF would expect to yield approximately
$30 million in annual savings. In addition, UCSF notes
that savings also accrue from avoiding costs associated
with bid protests, claims, and litigation.
SUPPORT
University of California
OPPOSITION
None on file.