BILL ANALYSIS �
Bill No: SB
1516
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
SB 1516 Author: Leno
As Amended: April 9, 2012
Hearing Date: April 24, 2012
Consultant: Paul Donahue
SUBJECT
Public contracts: bid specifications - equal items
EXISTING LAW
1)Prohibits a state or local agency or public officer
charged with letting of contracts for any public works
project from drafting bid specifications for that
contract:
a) In a manner that directly or indirectly limits the
bidding to any one specific concern; or
b) Calling for a designated material, product, thing,
or service by specific brand or trade name, unless the
specification is followed by the words "or equal" so
that bidders may furnish any equal material, product,
thing, or service.
2)Requires bid specifications to provide time prior to
(and/or) after the award of the contract to allow the
contractor to submit data demonstrating that a product he
or she will provide under the contract is equal to the
product identified in the bid specification.
3)Requires the specifying public agency, if it is aware of
an equal product manufactured in this state, to name that
product in the bid specification.
SB 1516 (Leno) continued
Page 2
4)Declares legislative intent to encourage contractors and
manufacturers to develop and implement new and ingenious
materials, products, and services that function as well,
in all essential respects, as materials, products, and
services that are required by a contract, but at a lower
cost to taxpayers.
DESCRIPTION
This bill would prohibit these bid specifications from
requiring a bidder to provide submission of data
substantiating a request for a substitution of "an equal"
item prior to the bid or proposal submission deadline.
BACKGROUND
1)Public Contract Code � 3400 is known as the "or-equal
statute" that encourages contractors/manufacturers to
propose creative alternatives that are equal to or
greater than the contract requirements originally given
by the agency, and at a lower price. Its purpose is to
give taxpayers the benefit of contractor/manufacturer
ingenuity that reduces the cost of construction while
providing the same functionality of the product or
construction method specified by the public agency that
is bidding out the work.
To help ensure that the "or-equal clause" achieved its
goal, the law was amended in 2001 to allow a contractor
up to 35 days after the award of the contract to submit
documentation to the entity demonstrating that the
material or method was equal to or greater than that
which was specified in the Request for Proposals.
2)Purpose : The author and the sponsors state that
taxpayers have benefitted tremendously under this law
because it has led to reduced costs of construction of
public projects. The sponsors state that at least one
local agency requires receipt of "or-equal" submittals
before bid day by way of issuance of an addendum to the
bid package before bid day. The sponsors contend that,
when a local agency receives an effective and cost-saving
"or-equal" submittal prior to the bid deadline, the
agency may circulate the idea to other bidders, thereby
giving competitors an opportunity to take advantage of
the contractor's/manufacturer's ingenuity at an even
lower bid.
SB 1516 (Leno) continued
Page 3
Although the public agency states that this requirement
allows the agency sufficient time to evaluate a product's
equality, and issue an addendum to all bidders in order
to prevent one bidder from having an unfair advantage
over another, the sponsors believe that ingenuity that
leads to a lower bid is not an unfair advantage, but a
benefit to taxpayers. Sponsors state that, because
contractors/manufacturers may have their creative
proposals essentially stolen from them, some bidders
elect not to submit "or-equal" proposals.
According to the author, this bill closes this unfair
loophole that discourages bidders from submitting
creative "or-equal" bids by requiring "or-equal"
proposals to be submitted either at the time of the bid
or up to 35 days thereafter. This will encourage
innovation contemplated by the statute, and reduce costs
to the public without reducing quality.
PRIOR/RELATED LEGISLATION
AB 1086 (Miller) Chapter 132, Statutes of 2009 . Makes
findings and declarations regarding the intent to encourage
contractors and manufacturers to develop and implement new
and ingenious materials, products, and services at a lower
cost to taxpayers.
AB 2666 (Mountjoy) 2001-2002 Session . Would have
authorized a bid specification of a certain product if the
awarding authority makes a finding that a particular
material or service is designated by a brand under any of
certain specified circumstances. (Held in Committee)
AB 1442 (Pescetti) - Chapter 267, Statutes of 2001 .
Expanded the law governing contractors' ability to submit
information justifying the substitution of products deemed
to be equal to products specified in bids for contracts
with public agencies.
AB 2156 (Pescetti) - Chapter 690, Statutes of 2000 .
Requires, with respect to state agencies, specifications to
provide a period of time for submission of data prior to or
after the award of the contract, and provides that if no
time period is specified, data may be submitted for 35 days
after the award of the contract.
SB 1516 (Leno) continued
Page 4
AB 2084 (Miller), Chapter 857, Statutes of 1998 . Modified
several provisions of public works contracting law.
SUPPORT:
California Chapter of American Fence Association
California Fence Contractors' Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders Association
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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