Amended in Senate June 18, 2014

Amended in Assembly May 14, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1971

Introduced by Assembly Member Bocanegra

February 19, 2014

An act to add and repeal Article 3.3 (commencing with Section 20119) of Chapter 1 of Part 3 of Division 2 of the Public Contract Code, relating to best value procurement.

LEGISLATIVE COUNSEL’S DIGEST

AB 1971, as amended, Bocanegra. School districts: best value procurement: pilot program.

The Local Agency Public Construction Act requires the governing board of any school district to let any contract for a public project, as defined, involving an expenditure of $15,000 or more, to the lowest responsible bidder that gives security as the board requires, or else reject all bids.

This bill would establish a pilot program to authorize the Los Angeles Unified School District and 3 other unspecified school districts to use, before January 1, 2017, a best value procurement method for bid evaluation and selection for public projects that exceed $1,000,000. The bill would establish various requirements applicable to the use of the best value procurement method under this authorization. The bill would require a school district that uses the best value procurement method to submit an interim and final report to the Legislative Analyst, and would require the Legislative Analyst to submit an interim and final report to the appropriate policy and fiscal committees of the Legislature on the use of the procurement method pursuant to the bill, in accordance with a specified schedule. These provisions would be repealed on January 1, 2020.

This bill would make legislative findings and declarations as to the necessity of a special statute for a limited number of school districts of varying sizes, including, but not limited to, the Los Angeles Unified School District.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Article 3.3 (commencing with Section 20119) is
added to Chapter 1 of Part 3 of Division 2 of the Public Contract
Code, to read:

 

Article 3.3.  School Districts--Best Value Procurement Pilot
Program

 

20119.  

(a) It is the intent of the Legislature to enable school
districts to use cost-effective options for building and modernizing
school facilities. The Legislature has recognized the merits of the
best value procurement method process in the past by authorizing
its use for projects undertaken by the University of California.

(b) The Legislature also finds and declares that school districts
using the best value procurement method require a clear
understanding of the roles and responsibilities of each participant
in the best value process. As reflected in the University of
California report to the Legislature, the benefits of a best value
procurement method include a reduction in contract delays, change
orders, and claims producing a savings in both contract costs and
administration.

(c) It is the intent of the Legislature to provide an optional,
alternative procedure for bidding and building school construction
projects.

begin delete

(d) In addition, it is the intent of the Legislature that the best
value procurement method is not intended to change in any manner
any guideline, criteria, procedure, or requirement of the governing
board of the school district to let any contract for a project to the
lowest responsible bidder or else reject all bids.

end delete

20119.1.  

As used in this article:

(a) “Best value” means a procurement process whereby the
selected 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.

(b) “Best value contract” means a competitively bid contract
entered into pursuant to the provisions of this article.

(c) “Best value contractor” means a properly licensed person,
firm, or corporation that submits a bid for, begin delete or end delete begin insert and end insert is awarded, a
best value contract.

(d) “Demonstrated management competency” means the
experience, competency, capability, and capacity of the proposed
management staffing to complete projects of similar size, scope,
or complexity.

(e) “Financial condition” means the financial resources needed
to perform the contract. The criteria used to evaluate a bidder’s
financial condition shall include, at a minimum, capacity to obtain
all required payment bonds, and required insurance.

(f) “Labor compliance” means the ability to comply with, and
past performance with, contract and statutory requirements for the
payment of wages and qualifications of the workforce. The criteria
used to evaluate a bidder’s labor compliance shall include, at a
minimum, the bidder’s ability to comply with the apprenticeship
requirements of the California Apprenticeship Council and the
Department of Industrial Relations, its past conformance with such
requirements, and its past conformance with requirements to pay
prevailing wages on public works projects.

(g) “Project” has the same meaning as “public project” as
defined in subdivision (c) of Section 22002.

(h) “Qualifications” means financial condition, relevant
experience, demonstrated management competency, labor
compliance, begin insert end insert begin insert skilled and trained workforce, end insert the safety record of
the bidder, and begin delete to the extent relevant, the preceding qualifications
as they pertain to all subcontractors proposed to be used by the
bidder for designated portions of the work. end delete begin insert if required by the
bidding document, some or all of the preceding qualifications as
they pertain to subcontractors proposed to be used by the bidder
for designated portions of the work. end insert

(i) “Relevant experience” means the experience, competency,
capability, and capacity to complete projects of similar size, scope,
or complexity.

(j) “Safety record” shall be deemed “acceptable” if its experience
modification rate for the most recent three-year period is an average
of 1.00 or less, and its average total recordable injury or illness
rate and average lost work rate for the most recent three-year period
do not exceed the applicable statistical standards for its business
category, or if the bidder is a party to an alternative dispute
resolution system as provided for in Section 3201.5 of the Labor
Code. begin delete If the experience modification rate for the most recent
three-year period is or was 1.00 or higher, a bidder may attach a
letter of explanation that the school district may review and take
into consideration when evaluating the bidder’s acceptable safety
record. end delete

(k) (1) “Skilled and trained workforce” means a workforce that
meets both of the following criteria, as applicable:

(A) All the workers are either registered apprentices or skilled
journeypersons.

begin delete

(B) (i) As of January 1, 2015, at least 30 percent of the skilled
journeypersons are graduates of an apprenticeship program for the
applicable occupation that was either approved by the Chief of the
Division of Apprenticeship Standards pursuant to Section 3075 of
the Labor Code or located outside California and approved for
federal purposes pursuant to the apprenticeship regulations adopted
by the federal Secretary of Labor.

(ii)

end delete

begin insert (B) end insert begin insert   end insert begin insert (i end insert begin insert ) end insert  As of January 1, begin delete 2016, end delete begin insert 2015, end insert at least 45 percent of the
skilled journeypersons are graduates of an apprenticeship program
for the applicable occupation that was either approved by the Chief
of the Division of Apprenticeship Standards pursuant to Section
3075 of the Labor Code or located outside California and approved
for federal purposes pursuant to the apprenticeship regulations
adopted by the federal Secretary of Labor.

begin delete

(iii) 

end delete

begin insert ( end insert begin insert ii) end insert begin insert   end insert As of January 1, begin delete 2017, end delete begin insert 2016, end insert at least 60 percent of the
skilled journeypersons are graduates of an apprenticeship program
for the applicable occupation that was either approved by the Chief
of the Division of Apprenticeship Standards pursuant to Section
3075 of the Labor Code or located outside California and approved
for federal purposes pursuant to the apprenticeship regulations
adopted by the federal Secretary of Labor.

(2) A school district and a contractor are not required to track
the percentage of journeypersons that are graduates of an
apprenticeship program if the governing board of the school district
has entered into a project labor agreement that will bind all
contractors and subcontractors performing work on the project begin delete and
complies with Section 2500 end delete .

begin insert

(l) “Skilled journeyperson” means a worker who meets either
of the following criteria:

end insert begin insert

(1) The worker either graduated from an apprenticeship for the
applicable occupation that was approved by the Chief of the
Division of Apprenticeship Standards or adheres to the
apprenticeship regulations adopted by the federal Secretary of
Labor.

end insert begin insert

(2) The worker has at least as many hours of on-the-job
experience in the applicable occupation that would be required
to graduate from an apprenticeship program for the applicable
occupation that is approved by the Chief of the Division of
Apprenticeship Standards.

end insert

20119.2.  

(a) This article provides for a pilot program for four
school districts of different sizes to use best value procurement
for projects over one million dollars ($1,000,000).

(b) The governing boards of the following four school districts,
for projects over one million dollars ($1,000,000), before January
1, 2017, may use the best value procurement method in accordance
with this article:

(1) The Los Angeles Unified School District.

(2)  begin delete A small school district, end delete ____.

(3)  begin delete A medium-sized school district, end delete ____.

(4)  begin delete A large school district, end delete ____.

(c) The governing board of any school district shall let any
contract for a project pursuant to this article to the selected bidder
that represents the best value or else reject all bids.

(d) The bidder may be selected on the basis of the best value to
the governing board of the school district. In order to implement
this method of selection, the governing board of the school district
shall adopt and publish procedures and required guidelines for
evaluating the qualifications of the bidders that ensure the best
value selections by the school district are conducted in a fair and
impartial manner. These procedures and guidelines shall conform
to this article and shall be mandatory for the school district when
using best value selection.

(e) If the governing board of the school district deems it to be
for the best interest of the school district, the governing board of
the school district begin insert , end insert on the refusal or failure of the begin delete successful end delete
begin insert selected end insert bidder for a project to execute a tendered contract, may
award it to the second begin insert lowest scored end insert bidder that represents the best
value. If the second bidder fails or refuses to execute the contract,
the governing board of the school district may likewise award it
to the third begin insert lowest scored end insert bidder.

begin insert

(f) (1) If the district elects to award a project pursuant to this
section, retention proceeds withheld by the district from the
selected best value contractor shall not exceed 5 percent if a
performance and payment bond, issued by an admitted surety
insurer, is required in the solicitation of bids.

end insert begin insert

(2) In a contract between the selected best value contractor and
a subcontractor, and in a contract between a subcontractor and
any subcontractor thereunder, the percentage of the retention
proceeds withheld shall not exceed the percentage specified in the
contract between the district and the selected best value contractor.
If the selected best value contractor provides written notice to a
subcontractor that, prior to or at the time the bid is requested, a
bond may be required and the subcontractor subsequently is unable
or refuses to furnish a bond to the selected best value contractor,
then the selected best value contractor may withhold retention
proceeds in excess of the percentage specified in the contract
between the district and the selected best value contractor from
any payment made by the selected best value contractor to the
subcontractor.

end insert begin insert

(g) All subcontractors bidding on contracts pursuant to this
chapter shall be afforded the protection contained in Chapter 4
(commencing with Section 4100).

end insert

20119.3.  

The governing board of the school district shall
proceed in accordance with the following when awarding best
value contracts under this article:

(a) The begin delete governing board of the end delete school district shall prepare a
solicitation for bids and give notice pursuant to Section 20112.

(b) The begin delete governing board of the end delete school district shall establish a
procedure to prequalify bidders begin delete pursuant to Sections 20101 and
20111.6 end delete begin insert as required by this code end insert . Information submitted by the
bidder as part of the evaluation process shall not be open to public
inspection to the extent that information is exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government
Code).

(c) Each solicitation for bids shall do all of the following:

(1) Invite prequalified bidders to submit sealed bids in the
manner prescribed by this article.

(2) Include a section identifying and describing the following:

(A) Criteria that the begin delete governing board of the end delete school district will
consider in evaluating the qualifications of the bidders.

(B) The methodology and rating or weighting system that will
be used by the begin delete governing board of the end delete school district in evaluating
bids.

(C) The relative importance or weight assigned to the criteria
for evaluating the qualifications of bidders identified in the request
for bids.

(d) Final evaluation of the begin delete best value contractor end delete begin insert bidders end insert shall
be done in a manner that prevents the identity of the bidders and
the cost or price information from being revealed begin delete to the committee end delete
begin insert in end insert evaluating the qualifications of the bidders prior to completion begin delete and announcement of that committee’s decision. A meeting to
evaluate bids shall be open to the public. end delete begin insert of qualification scoring. end insert

20119.4.  

Selection of the best value contractor shall be made
as follows:

(a) (1) The begin delete governing board of the end delete school district shall evaluate
the qualifications of the bidders based solely upon the criteria set
forth in the solicitation documents, and shall assign a qualification
score to each bid.

(2) Factors in determining a qualification score shall include,
but are not limited to, begin delete price, end delete relevant experience, skilled and trained
workforce, and acceptable safety record and shall be weighted in
accordance with the following:

(A) At least 50 percent of the total weight or consideration shall
be given to the following factors: relevant begin delete expertise end delete begin insert experience end insert ,
skilled and trained workforce, and acceptable safety record. begin delete A
factor listed in this subparagraph shall not make up less than 15
percent of the total weight or consideration. end delete begin insert A factor listed above
shall make up at least 15 percent of the total weight or
consideration. Other factors may be included, in addition to
relevant experience, skilled and trained workforce, and acceptable
safety record, in determining a qualification score. end insert

(B) No more than 50 percent of the total weight or consideration
shall be given to price. A bidder that qualifies as a certified small
business shall receive a 5-percent bid preference.

(b)  begin delete The award of the contract shall be made to the bidder whose
bid is determined, by the school district in writing, to be the best
value to the governing board of the school district. end delete To determine
the best value contractor, the begin delete governing board of the end delete school district
shall divide each bidder’s price by its qualifications score. begin delete The
lowest resulting cost per quality point will represent the best value
bid. end delete begin insert A preference of up to 5 percent shall be applied to the price
of a bid submitted by a small business, as defined by the school
district, before dividing the bidder’s price by its qualification score.
The lowest resulting cost per quality point will represent the best
value bid. The award of the contract shall be made to the bidder
whose bid is determined, by the school district in writing, to be
the best value to the school district. end insert

(c) The begin delete governing board of the end delete school district shall issue a
written decision of its contract award begin insert or else reject all bids end insert .

(d) Upon issuance of a contract award, the begin delete governing board of
the end delete school district shall publicly announce its award identifying
begin insert the project, the project price, end insert the best value contractor to which
the award is made, begin delete the project, the project price, and the selected
best value contractor’s score based on the qualifications criteria
for evaluating the bidders listed in the request for bids. The notice
of award shall be made public and include the score of the selected
best value contractor in relation to all other responsive bidders and
their respective prices. The names of the remaining responsive
bidders may be concealed upon the request of the bidders, in which
case the governing board of the school district shall determine an
alternative method for publicly announcing its award of the
contract. end delete begin insert as well as the prices, qualification scores, and resulting
costs per qualification point for all responsive bidders. end insert The contract
file shall include documentation sufficient to support the decision
to award.

20119.5.  

(a) (1) A school district that uses the best value
procurement method pursuant to this article shall submit to the
Legislative Analyst the following reports completed by an
independent third party:

(A) An interim report on or before July 1, 2017.

(B) A final report on or before January 1, 2019.

(2) A report shall include, but is not limited to, the following
information:

(A) A description of the projects awarded using the best value
procedures.

(B) The contract award amounts.

(C) The best value contractors awarded the projects.

(D) A description of any written protests concerning any aspect
of the solicitation, bid, or award of the best value contracts,
including the resolution of the protests.

(E) A description of the prequalification process.

(F) The criteria used to evaluate the bids, including the
weighting of the criteria and an assessment of the effectiveness of
the methodology.

(G) If a project awarded under this article has been completed,
an assessment of the project performance, to include a summary
of any delays or cost increases.

(b) (1) The Legislative Analyst shall submit an interim report
to the appropriate policy and fiscal committees of the Legislature
on the use of the best value procurement method by school districts
on or before January 1, 2018, and a final report on or before July
1, 2019. The report may include the information provided from
the school district reports pursuant to subdivision (a) and any
pertinent information that the Legislative Analyst deems instructive
in evaluating whether the best value procurement method should
be continued, expanded, or prohibited.

(2) The requirement for submitting a report imposed pursuant
to this subdivision is inoperative on January 1, 2020, pursuant to
Section 10231.5 of the Government Code.

begin insert

begin insert 20119.6. end insert   

Except as otherwise provided in this article, the best
value procurement method is not intended to change any guideline,
criterion, procedure, or requirement of the governing board of the
school district to let a contract for a project to the lowest
responsible bidder or else reject all bids.

end insert

begin delete 20119.6. end delete
begin insert 20119.7. end insert   

This article shall remain in effect only until January
1, 2020, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2020, deletes or extends
that date.

SEC. 2.  

The Legislature finds and declares that a special law
is necessary and that a general law cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution because of the need to establish a pilot project for a
limited number of school districts of varying sizes, including, but
not limited to, the Los Angeles Unified School District, to
determine the potential benefits and consequences of using best
value procurement to facilitate infrastructure improvements and
ease fiscal impacts.