BILL ANALYSIS �
SB 835
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Date of Hearing: June 28, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 835 (Wolk) - As Amended: June 20, 2011
SENATE VOTE : 37-0
SUBJECT : Public contracts: University of California: pilot
program: best value procedures.
SUMMARY : Expands the Best Value Construction Contract Pilot
Program (Best Value Pilot Program) to all University of
California (UC) campus construction projects statewide valued
over $1 million, and extends the sunset date of the Best Value
Pilot Program to January 1, 2017. Specifically, this bill :
1)Expands the Best Value Pilot Program to all UC campus
construction projects statewide and only for construction
projects valued over $1 million.
2)Clarifies that the UC Regents will adopt and publish
guidelines for evaluating the qualifications of bidders when
awarding contracts based on best value procedures.
3)Requires the UC Regents to submit a report to the Legislature
regarding the Best Value Pilot Program, as specified, by
January 1, 2016.
4)Sunsets the Best Value Pilot Program on January 1, 2017.
5)Redefines "best value" to mean a procurement process whereby
the lowest responsible bidder may be selected on the basis of
objective criteria for evaluating the qualifications of
bidders with the resulting selection representing the best
combination of price and qualifications.
6)Redefines "University" to mean all UC campuses, including the
medical centers.
7)Makes technical and clarifying changes.
EXISTING LAW :
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1)Establishes, until January 1, 2012, a Best Value Pilot Program
authorizing the University of California, San Francisco (UCSF)
to award contracts based on best value procedures.
2)Requires UC Regents to submit a report to the Legislature
regarding the pilot program, as specified, by January 1, 2010.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "The
pilot program for best value construction at UCSF is set to
expire January 1, 2012. SB 835 will extend the sunset date to
January 1, 2017, and expand the pilot to all the UC campuses."
Background . UC is generally required by existing state law to
let any contract for a construction project to the lowest
responsible bidder. The sponsor, UC, has discovered that for
many projects, particularly complex projects such as large
research facilities and medical centers, the lowest bidder does
not always deliver the project on time and at the bid amount.
SB 667 (Migden), Chapter 367, Statutes of 2006, established the
Best Value Pilot Program at UCSF. This five-year pilot program
authorized UCSF to use best value selection. Under this
process, UC prequalifies bidders, then evaluates the bid and
assigns a qualification score is based upon five factors, which
include the bidder's financial condition, relevant experience,
demonstrated management competency, labor compliance, and safety
record. UC then divides each bidder's price by its
qualification score. The lowest resulting cost per quality
point represents the best value bid.
Since the Best Value Pilot Program was initiated, UCSF was
awarded 30 contracts totaling $960 million under the program
(out of a total of 228 construction contracts totaling $1.3
billion entered into during the same period), and their
experience with these projects have demonstrated that best value
selection has been advantageous to UCSF by: decreasing bid
protests, communication problems, disputes, the need for
multiple inspections and rework, change order requests and
claims, and litigation; increasing incentives for contractors to
perform high-quality work safely, while adhering to high-strike
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standards; increasing the likelihood of contractors staffing a
project with their best workers and selection of subcontractors
most appropriate for the work; and, reducing administrative
oversight and contract or project management staff time.
Previous Legislation . SB 667 (Migden), Chapter 367, Statutes of
2006, authorized UC to conduct a pilot program at UCSF that
allows for construction contracts to be awarded on "best value,"
rather than the lowest bid.
Support . According to the sponsor, UC, "Use of best value has
generated significant savings. Using the volume of construction
contracts in the years and applying the most conservative
estimate of savings based on the experience of the pilot, the UC
would expect to save a minimum of $30 million annually were the
�Best Value Pilot Program] to be extended to all campuses.
"Moreover, �UC also accrues savings] from cost avoidance
resulting from lack of bid protests, claims, and litigation.
Project delays can create significant 'downstream expenses,'
like delayed renovation of facilities, postponement of move-in
dates for faculty and researchers, and other hindrances. By
utilizing the best value approach, UC will be able to avoid
these additional costs as well.
"The Best Value Pilot Program has demonstrated this method of
contractor selection results in a higher success rate in terms
of price, quality, and timely completion of capital projects.
Extending the sunset on this program and expanding the �Best
Value Pilot Program] to serve all campuses would allow UC to use
best value for complex projects, such as those requiring a
contractor with unique skills or those where the performance of
the contractor is critical in minimizing disruption to ongoing
instruction, research, or healthcare activities."
REGISTERED SUPPORT / OPPOSITION :
Support
University of California (sponsor)
Opposition
None on file.
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Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301