BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 835|
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UNFINISHED BUSINESS
Bill No: SB 835
Author: Wolk (D)
Amended: 6/20/11
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
SENATE FLOOR : 37-0, 05/16/11
AYES: Alquist, Anderson, Berryhill, Blakeslee, Calderon,
Cannella, Corbett, Correa, De Le�n, DeSaulnier, Dutton,
Emmerson, Evans, Fuller, Gaines, Hancock, Harman,
Hernandez, Huff, Kehoe, La Malfa, Leno, Lieu, Liu,
Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio,
Runner, Simitian, Steinberg, Vargas, Wolk, Wright, Yee
NO VOTE RECORDED: Strickland, Walters, Wyland
ASSEMBLY FLOOR : 50-23, 8/29/11 - See last page for vote
SENATE EDUCATION COMMITTEE : 6-3, 9/1/11 (pursuant to
29.10)
AYES: Lowenthal, Hancock, Liu, Price, Simitian, Vargas
NOES: Runner, Blakeslee, Huff
NO VOTE RECORDED: Alquist, Vacancy
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SB 835
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SUBJECT : University of California: best value
procedures
SOURCE : University of California
DIGEST : This bill expands the Best Value Construction
Contract Pilot Program (Best Value Pilot Program) to all
University of California campus construction projects
statewide valued over $1 million, and extends the sunset
date of the Best Value Pilot Program to January 1, 2017.
ANALYSIS :
Existing law:
1.Establishes, until January 1, 2012, the Best Value Pilot
Program authorizing the University of California (UC),
San Francisco (UCSF) to award contracts based on best
value procedures.
2.Requires the Regents of the UC to submit a report to the
Legislature regarding the pilot program, as specified, by
January 1, 2010.
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 Regents of the UC will adopt and
publish guidelines for evaluating the qualifications of
bidders when awarding contracts based on best value
procedures.
3. Requires the Regents of the UC 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 to January 1, 2017.
5. Redefines "best value" to mean a procurement process
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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.
Comments
According to the author's office, "The pilot program for
best value construction at UCSF is set to expire on January
1, 2012. SB 835 will extend the sunset date to January 1,
2017, and expand the pilot to all the UC campuses."
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
bidders does not always deliver the project on time and at
the bid amount.
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:
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1.A decrease in bid protests, communication problems,
disputes, the need for multiple inspections and re-work,
change order requests and claims, and litigation.
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 8/29/11)
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University of California (source)
Associated General Contractors
National Electrical Contractors Association - California
Chapter
California Legislative Conference of the Plumbing, Heating
and Piping Industry
OPPOSITION : (Verified 8/29/11)
Southern California Contractors Association
ARGUMENTS IN SUPPORT : 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.
ARGUMENTS IN OPPOSITION : In opposition, the Southern
California Contractors Association (SCCA) states, "SB 835
appears to give the University of California additional
authority and procedures to award construction contracts
through so-called 'best value' criteria."
SCCA continues, "This is a dangerous precedent. The
selection of a contractor based on its qualifications is an
invitation to corruption. The lowest responsible bidder is
an objective standard devoid of any interpretation - the
lowest bid wins the project. On the contrary, the
introduction of a subjective 'best value' standard requires
the UC to determine which contractor has the 'best value."
ASSEMBLY FLOOR : 50-23, 8/29/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer,
Fletcher, Fong, Fuentes, Gatto, Gordon, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Lara, Bonnie
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Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, Perea, V.
Manuel P�rez, Portantino, Skinner, Solorio, Swanson,
Wieckowski, Williams, Yamada, John A. P�rez
NOES: Achadjian, Donnelly, Beth Gaines, Garrick, Grove,
Hagman, Halderman, Harkey, Jeffries, Jones, Knight,
Logue, Mansoor, Miller, Morrell, Nestande, Nielsen,
Norby, Olsen, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Conway, Cook, Furutani, Galgiani,
Gorell, Hall, Torres
CPM:cm 9/1/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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