BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 835|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
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THIRD READING
Bill No: SB 835
Author: Wolk (D)
Amended: 3/23/11
Vote: 21
SENATE EDUCATION COMMITTEE : 10-0, 4/27/11
AYES: Lowenthal, Runner, Alquist, Blakeslee, Hancock,
Huff, Liu, Price, Simitian, Vargas
NO VOTE RECORDED: Vacancy
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/9/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
SUBJECT : University of California: best value
procedures
SOURCE : University of California
DIGEST : This bill extends, from January 1, 2012 to
January 1, 2015, a pilot program authorizing the University
of California to award contracts based on the best value
procedures and requires the University of California to
submit a report on the pilot program before January 1,
2012.
ANALYSIS : 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
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"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.
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 project performance and a summary of any
delays or increases in costs.
Comments
Additional Background . SB 667 (Migden), Chapter 367,
Statutes of 2006, 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.
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:
1.A decrease in bid protests, communication problems,
disputes, the need for multiple inspections and re-work,
change order requests and claims, and litigation.
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2.An increase in incentives for contractors to perform
high-quality work safely, while adhering to high-labor
standards.
3.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")/
4.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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
Sunset extension Minor reporting cost one time;
unknown, General
likely major savings
through 1/1/2015
over competitive (low
bid) bidding process
SUPPORT : (Verified 5/10/11)
University of California (source)
ARGUMENTS IN SUPPORT : According the University of
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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.
CPM:cm 5/10/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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