BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 1971
AUTHOR: Bocanegra
AMENDED: June 18, 2014
FISCAL COMM: No HEARING DATE: June 25, 2014
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Best Value Procurement Pilot Program.
SUMMARY
This bill, until January 1, 2020, establishes a pilot program
to authorize the Los Angeles Unified School District and
three other unspecified districts to use a best value
procurement method for public projects that exceed $1
million, and requires submission of specified reports on the
use of this procurement method.
BACKGROUND
Current law requires the governing board of a school
district, to competitively bid, and award to the lowest
responsible bidder, any contract for a public project (as
defined) involving an expenditure of $15,000 or more.
(Public Contract Code � 20111)
Current law, until January 1, authorizes a pilot program at
the University of California (UC) to award construction
contracts on a "best value" basis, rather than just to the
lowest bid. (Public Contract Code �10506.4)
Current law defines "best value," for purposes of the UC, as
a procurement process whereby the lowest responsible bidder
may be selected on the basis of objective criteria with the
resulting selection representing the best combination of
price and qualifications. (Public Contract Code � 10506.5)
ANALYSIS
This bill establishes a pilot program, until January 1, 2020,
to authorize four districts to use a best value procurement
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for projects over $1 million dollars. More specifically it:
1) Authorizes the governing board of the Los Angeles
Unified School district, and three other unspecified
school districts, until January 1, 2017, to use best
value procurement, pursuant to policies adopted and
published by the local governing board, for awarding
construction contracts.
2) Generally outlines the definitions, policies, and
procedures to be followed by school districts consistent
with current law provisions applicable to best value
contracting by the UC (Public Contract Code, Article
3.3, commencing with Section 20119).
3) Additionally requires that:
a) Specified "skilled and trained workforce"
requirements are met.
b) Specified proceeds retention and surety bond
conditions are met.
c) Subcontracting fair practices are followed.
d) Factors such as relevant experience,
skilled and trained workforce and acceptable safety
record meet specified weighting requirements in the
scoring of each bid, specifically assigns
preference points to small businesses, and
prohibits the assignment of more than 50 percent of
the total weight or consideration given to a bid to
be based upon price.
4) Establishes reporting requirements related to the
authority to the use best value under the bill's
provisions. More specifically it:
a) Requires a school district that uses
best value to submit an interim report and a final
report, conducted by an independent third party,
containing specified information on the use of best
value to the Legislative Analyst's Office (LAO) by
July 1, 2017, and January 1, 2019, respectively.
b) Requires the LAO to submit an
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interim report and a final report, on the use of
best value, as specified, to the appropriate policy
and fiscal committees of the Legislature by January
1, 2018, and July 1, 2019, respectively, to
evaluate whether the best value procurement method
should be continued, expanded, or prohibited.
5) Clarifies that the best value procurement method is
optional and that the bill's provisions are not intended
to inhibit a district from letting a contract on the
basis of lowest responsible bidder.
6) Sunsets the provisions of the bill on January 1, 2020.
STAFF COMMENTS
1) Need for the bill . According to the author, this bill
will empower LAUSD to consider qualifications other than
just price. The current lowest bidder process restricts
the ability of school districts to evaluate bidders on
the basis of prior school construction experience,
previous violations of health and safety laws, and
financial stability. This bill can ensure that the
district can consider the bidder's experience or
knowledge to navigate the school construction process
when selecting a contractor, minimizing project delays
and cost overruns.
2) Author's amendments . The author has indicated that it
is his intent to limit the provisions of this bill to
the Los Angeles Unified School District. Staff
recommends the bill be amended to delete references to
other school districts.
The author has also indicated that it is the intent to
define "skilled and trained workforce" and "skilled
journeyperson" for purposes of the bill, by codifying
elements of an agreement currently being developed
between the affected labor groups within the LAUSD. The
author has requested that the current language be
removed from the bill with the intent that similar
language reflecting the final agreement will be
incorporated once it is developed. To accommodate this
intent staff recommends deletion of the sections 20119.1
(k) and (l) on pages 4 and 5.
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3) Best value versus pre-qualification . Current law
authorizes the use of prequalification by any school
district and, until 2019, requires prequalification for
school construction projects that use state general
obligation bond funds. Under prequalification, a
prospective bidder may be required to complete and
submit to the district a standardized questionnaire and
financial statement in a form specified by the district,
including a complete statement of the prospective
bidder's financial ability and experience in performing
public works. It appears that the criteria which this
bill suggests can only be considered via best value
procurement may be able to be considered through
prequalification.
The committee may wish to clarify what additional
considerations are possible under best value procurement
that cannot be achieved through pre-qualification.
4) Best Value Pilot Program . SB 667 (Migden), Chapter 367,
Statutes of 2006, established a pilot program for the
UC. Initially authorized for five years, the bill
allowed the UC San Francisco to award contracts based on
the best value for the university. Under this process,
UC prequalifies bidders, then evaluates the bid based on
answers to a separate best value questionnaire and
assigns a qualification score. UC then divides each
bidder's price by its qualification score. The lowest
resulting cost per quality point represents the best
value bid.
In a report to the Legislature in January 2010, the UC
reported that 23 contracts totaling $158.3 million were
issued under the best value pilot program. Of the 23
contracts, 12 contracts were low bid contracts.
According to the report, the "University Representatives
for all these projects [four completed and two almost
completed projects] have been unanimous in their praise
of this process that has already demonstrated numerous
advantages such as decreased bid protests and
communication problems, decreased the need for multiple
inspections and re-work, decreased disputes, change
order requests, claims and litigation and increased
incentives for contractors to perform their work safety
and to adhere to high labor and quality standards." UC
concludes that the best value pilot program fosters
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better quality work, less labor and safety problems,
better qualified persons/contractors, better on-time
completion, and better on-budget performance. In 2011,
SB 835 (Wolk), Chapter 636, Statutes of 2011, expanded
the authority to all UC campuses and extended the sunset
from January 1, 2012, to January 1, 2017.
The provisions of this bill are generally based upon the
pilot program authorized for the UC, but codifies more
prescriptive requirements around labor, contractors and
subcontractors, and the weighting of certain factors in
the evaluation of bids.
5) Fiscal implications . To the extent this bill results in
the awarding of contracts to other than the lowest
bidder, contracting costs could increase. It is unclear
whether the resultant savings from reduced change orders
and delays would offset these costs. Staff notes that
Legislative Counsel has identified this bill as
non-fiscal. However, the Senate Rules Committee has
referred the bill to the Senate Appropriations
Committee, at their request. If it is the desire of the
committee to move this bill, the bill should be referred
to the Senate Appropriations Committee.
SUPPORT
California Association of School Business Officials
Los Angeles Unified School District
OPPOSITION
Air Conditioning Trade Association
Associated Builders and Contractors - San Diego Chapter
Plumbing-Hearing-Cooling Contractors Association of
California
Western Electrical Contractors Association