BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1516|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 1516
Author: Leno (D)
Amended: 5/22/12
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM : 13-0, 4/24/12
AYES: Wright, Anderson, Berryhill, Calderon, Cannella,
Corbett, De Le�n, Evans, Hernandez, Padilla, Walters,
Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Public contracts: bids
SOURCE : Author
DIGEST : This bill prohibits public works contract bid
specifications from requiring a bidder to provide
submission of data substantiating a request or a
substitution of "an equal" item prior to the bid or
proposal submission deadline. This would not apply to
contracts with an agency of the state, a public officer of
the state, or a person charged with the letting of
contracts for an agency of the state.
ANALYSIS : Public Contract Code Section 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
CONTINUED
SB 1516
Page
2
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.
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.
1.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.
2.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.
3.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
CONTINUED
SB 1516
Page
3
cost to taxpayers.
Background
Purpose . The author states 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.
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. According to the author's office, 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/14/12)
California Chapter of American Fence Association
California Fence Contractors' Association
Engineering Contractors' Association
CONTINUED
SB 1516
Page
4
Flasher Barricade Association
Marin Builders Association
DLW:nl 5/22/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED