BILL ANALYSIS �
AB 2447
Page 1
Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2447 (Cooley) - As Introduced: February 21, 2014
SUBJECT : Public contracts: Sacramento Regional Transit
District.
SUMMARY : Raises the bid threshold, from $5,000 to $25,000, over
which the Sacramento Regional Transit District (RT) must award
construction contracts for transit works or transit facilities
to the lowest responsible bidder.
EXISTING LAW :
1)Generally requires, pursuant to the Public Contract Code (PCC)
and with many specific exceptions, public agencies to obtain
competitively bid contracts for construction projects that
cost more than $15,000. This amount varies depending on the
public agency and whether it is a city, county, special
district, or school, and other variables. This limit is
commonly referred to as the "force account."
2)Requires RT to award contracts for the construction of transit
works or transit facilities that exceed $5,000 to the lowest
responsible bidder after competitive bidding, except in an
emergency, as specified.
3)Establishes the California Uniform Public Construction Cost
Accounting Act (CUPCCA), which authorizes public agencies to
voluntarily use their own employees on construction projects
that cost up to $30,000, and to use informal competitive
bidding procedures for construction projects that cost up to
$125,000, if they agree to cost accounting procedures pursuant
to the CUPCCA.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill . This bill raises the cost limit above
which RT must use formal bidding procedures for transit works
or transit facilities, from $5,000 to $25,000. This bill is
sponsored by RT.
AB 2447
Page 2
2)Author's statement . According to the author, "Sacramento
Regional Transit is currently required to utilize a formal
competitive bidding procedure for public works contracts over
$5,000. This generally requires five weeks of bid time and
costs an estimated $1,000 - $2,000 to process these
contracts?This bill will allow RT to streamline its contract
award process for smaller projects by raising the competitive
bidding threshold to $25,000. This informal competitive
process will allow RT to move forward on smaller projects more
efficiently."
3)Background . The PCC establishes procedures local officials
must follow when constructing public works projects, including
cost thresholds that trigger bidding procedures.
Current law applicable to construction contracts entered into
by RT, which was established in 1984, is $5,000. This bill
raises that cap to $25,000.
4)The CUPCCA . The CUPCCA was created in 1984 as a voluntary
program intended to provide flexibility in the execution of
public works projects, accelerate project delivery, and
provide uniformity in the cost accounting standards for
construction contracts that are used to determine when
projects must be put out for bid.
The CUPCCA allows public agencies to use their own employees
for construction projects that cost up to $30,000 if they
agree to the project cost accounting standards prescribed by
the CUPCCA. If they do not agree to the standards prescribed
by the CUPCCA, public agencies are required to let out for bid
construction projects that will cost more than $15,000,
although this amount can vary widely depending on the public
agency. The CUPCCA also allows participating public agencies
to use informal competitive bidding procedures for projects
that will cost up to $125,000.
Generally, public agencies that do not participate under the
provisions of the CUPCCA may use informal bidding procedures
for contracts that cost up to their force account limit.
Participating agencies include cities, counties, community
college districts, school districts, and special districts.
5)Policy consideration . A number of transit districts' bid
AB 2447
Page 3
thresholds for construction contracts are set at $10,000. The
Committee may wish to consider if raising RT's threshold to
$25,000 is appropriate, or whether a more modest increase
would be more prudent and more consistent with the existing
threshold for other transit districts.
6)Previous legislation . SB 959 (Kehoe), Chapter 557, Statutes
of 2005, increased the threshold amount for procurement and
bidding for various purchases and services for the San Diego
Metropolitan Transit Development Board, including an increase
on the bid amount for construction contracts from $20,000 to
$50,000.
7)Arguments in support . The Sacramento Regional Transit
District, sponsor of this bill, states, "Utilizing an informal
competitive process maintains competition while allowing RT to
move forward on smaller projects more cost-effectively and
rapidly and is consistent with other public agencies'
authority. In the informal competitive process for projects
under the threshold, RT seeks three quotations that permit
prices and other terms to be compared, and then awards the
contract to the bidder who submitted the lowest qualified
quotation."
8)Arguments in opposition . The California State Council of
Laborers, in opposition, writes, "By raising the competitive
bid threshold of force account limits, AB 2447 would
significantly reduce the number of projects put out to bid.
These transit projects for many local construction contractors
have been 'the only game in town' due to the economic downturn
that wiped out the commercial and residential markets. As an
alternative to
AB 2447, we respectfully urge Regional Transit to consider
voluntarily signing up for the CUPCCA. CUPCCA is a great
alternative and provides many cost-cutting benefits to public
agencies including, higher force account limits, alternative
bid procedures and expedited contracting for smaller
projects."
REGISTERED SUPPORT / OPPOSITION :
Support
Sacramento Regional Transit District [SPONSOR]
AB 2447
Page 4
Opposition
State Building and Construction Trades Council
Construction Industry Force Account Council
California Chapters of the National Electrical Contractors
Association
California Legislative Conference of the Plumbing, Heating and
Piping Industry
Air Conditioning Sheet Metal Association
Air-conditioning & Refrigeration Contractors Association
California State Council of Laborers
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958