BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 835
                                                                  Page  1

          Date of Hearing:   July 13, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     SB 835 (Wolk) - As Amended:  June 20, 2011 

          Policy Committee:                              Business and 
          Professions  Vote:                            6-1

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill extends and expands the University of California's 
          (UC's) pilot program to award construction contracts based on 
          "best value" rather than lowest bid. Specifically, this bill:

          1)Extends the pilot program sunset date from January 1, 2012 to 
            January 1, 2017.

          2)Expands the pilot program to all UC campuses for construction 
            projects exceeding $1 million. (The currently program is 
            limited to projects of any value at the San Francisco campus 
            (UCSF) only.)

          3)Requires the UC Regents to report specified information 
            regarding the pilot program to the Legislature by January 1, 
            2016.

           FISCAL EFFECT  

          1)Based on the results to date of the pilot program at UCSF, the 
            university should realize significant annual savings, 
            potentially in the tens of millions, in contract and contract 
            administration costs for the next five years.

          2)Costs for the required report are minor and absorbable.

           COMMENTS  

           1)Background  . SB 667 (Migden)/Chapter 367 of 2006, established 
            the five-year Best Value Pilot Program at UCSF. Under this 
            program, UC prequalifies bidders, then evaluates the bid and 








                                                                  SB 835
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            assigns a qualification score 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, and the lowest resulting cost per quality 
            point represents the best value bid. 

            Under this program, UCSF has awarded 30 construction contracts 
            totaling $960 million (out of 228 contracts totaling $1.3 
            billion entered into during the same period). According to UC, 
            the pilot program has demonstrated the following advantages:  
            a decrease in bid protests, communication problems, disputes, 
            the need for multiple inspections and rework, change order 
            requests and claims, and litigation; increased incentives for 
            contractors to perform high-quality work safely, while 
            adhering to high-strike standards; increasing likelihood of 
            contractors staffing a project with their best workers and 
            selection of subcontractors most appropriate for the work; and 
            reduced administrative oversight and contract or project 
            management staff time.

           2)Purpose  . UC believes that, based on results from the pilot 
            program to date, expanding the best value program systemwide 
            will result in savings of at least $30 million annually.

          Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081