BILL NUMBER: AB 2580 CHAPTERED
BILL TEXT
CHAPTER 825
FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2012
APPROVED BY GOVERNOR SEPTEMBER 30, 2012
PASSED THE SENATE AUGUST 20, 2012
PASSED THE ASSEMBLY MAY 21, 2012
AMENDED IN ASSEMBLY APRIL 16, 2012
AMENDED IN ASSEMBLY MARCH 29, 2012
INTRODUCED BY Assembly Member Furutani
FEBRUARY 24, 2012
An act to amend Sections 20919, 20919.1, 20919.3, 20919.4,
20919.5, 20919.6, 20919.9, 20919.12, and 20919.15 of the Public
Contract Code, relating to public contracts, and making an
appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 2580, Furutani. Public contracts: job order contracting.
Existing law authorizes job order contracting, as provided, by the
Los Angeles Unified School District, until December 1, 2012.
Existing law requires the job order contracts to be competitively bid
and awarded to the responsible qualified bidder with the lowest
responsive bid. Existing law requires that the unified school
district create a report of any job order contract procured and
submit an interim report to certain committees in the Legislature and
the Office of Public School Construction, as specified. Existing law
requires the unified school district to provide specified notice of
work for subcontractors, whose bids will be taken by the primary job
order contractor. Existing law requires for contracts awarded
pursuant to these provisions that the Los Angeles Unified School
District pay a fee into the State Public Works Enforcement Fund,
which funds are continuously appropriated for the Department of
Industrial Relations' enforcement of prevailing wage requirements on
public works projects.
This bill would extend the operation of these provisions until
December 31, 2020, and would alter the dates for reporting
requirements, as specified. This bill would require the job order
contracts to be awarded to the most qualified bidder, as provided, so
long as that bidder is in compliance with the unified school
district's project stabilization agreement. This bill would require
the primary job order contractor to provide the specified notice and
take bids for work available for subcontractors. This bill would
further require a primary job order contractor to provide notice and
justification in order to make a substitution to the subcontractor
list and would authorize the district to request a hearing to
evaluate the request. Because any additionally authorized projects
would require payment of fees into the State Public Works Enforcement
Fund, this bill would make an appropriation.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 20919 of the Public Contract Code is amended to
read:
20919. The Legislature finds and declares all of the following:
(a) It is the intent of the Legislature, in enacting this article,
to demonstrate an alternative and optional procedure for bidding of
public works projects that is applicable only to the Los Angeles
Unified School District.
(b) The Los Angeles Unified School District should be able to
utilize cost-effective options for the delivery of public works
projects, in accordance with the national trend, which include
authorizations in California, to allow public entities to utilize job
order contracts as a project delivery method.
(c) The benefits of a job order contract project delivery system
include accelerated completion of the projects, cost savings, and
reduction of construction contracting complexity for the unified
school district.
(d) The job order contracting approach should be used for the
purposes of reducing project cost and expediting project completion.
(e) The Legislature is uncertain of the benefits and advantages of
job order contracting for California school districts and therefore
looks forward to the reports required by Section 20919.12 in order to
fully and competently assess any further exemptions to the school
contracting process.
(f) The availability of job order contracting as a project
delivery method will not preclude the use of traditional methods of
project delivery if a traditional method results in higher cost
savings.
(g) It is the intent of the Legislature that job order contracts
be competitively bid and awarded to the bidder providing the most
qualified responsive bid. It is further the intent of the Legislature
that nothing in the job order contract process or its implementation
be used to disenfranchise any bidder or class of bidders that
otherwise would meet the requirements of this article.
SEC. 2. Section 20919.1 of the Public Contract Code is amended to
read:
20919.1. As used in this chapter:
(a) "Adjustment factor" means the job order contractor's
competitively bid adjustment to the unified school district's prices
as published in the catalog of construction tasks.
(b) "Catalog of construction tasks" means a book containing
specific construction tasks and the unit prices to install or
demolish that construction. The listed tasks shall be based on
generally accepted industry standards and information, where
available, for various items of work to be performed by the job order
contractor. The prices shall include the cost of materials, labor,
and equipment for performing the items of work. The prices shall not
include overhead and profit. All unit prices shall be developed using
local prevailing wages.
(c) "Indefinite quantity" means one or more of the construction
tasks listed in the catalog of construction tasks.
(d) "Job order" means a firm, fixed priced, lump-sum order issued
by the unified school district to a job order contractor for a
definite project scope of work as compiled from the catalog of
construction tasks to be performed pursuant to a job order contract.
No single job order may exceed one million dollars ($1,000,000) in
value.
(e) "Job order contract" means a contract, awarded to the most
qualified bidder as described in paragraph (1) of subdivision (b) of
Section 20919.4, between the unified school district and a licensed,
bonded, and general liability insured contractor in which the
contractor agrees to a fixed period, fixed unit price, and indefinite
quantity contract that provides for the use of job orders for public
works or maintenance projects.
(f) "Job order contract technical specifications" means a book,
published by the unified school district, detailing the technical
specifications with regard to quality of materials and workmanship to
be used by the job order contractor in accomplishing the tasks
listed in the catalog of construction tasks.
(g) "Job order contractor" means a licensed, bonded, and general
liability insured contractor awarded a job order contract.
(h) "Offer to perform work" means the job order contractor's
proposal for a specific job order.
(i) "Plans and specifications" means the catalog of construction
tasks and the job order contract technical specifications. The scope
of work to be performed with a job order contract is potentially, but
not necessarily, all the tasks published in the catalog of
construction tasks.
(j) "Project" means the specific requirements and work to be
accomplished by the job order contractor in connection with an
individual job order.
(k) "Project scope of work" means the document and related
drawings, specifications, and writings referenced therein which
together set forth the specific requirements and work to be
accomplished by the job order contractor in connection with an
individual job order.
( l ) "Proposal" means the job order contractor
prepared document quoting those construction tasks listed in the
catalog of construction tasks that the job order contractor requires
to complete the project scope of work, together with the appropriate
quantities of each task. The pricing of each task shall be
accomplished by multiplying the construction task unit price by the
proposed quantity and the contractor's competitively bid adjustment
factor. The proposal shall also contain a schedule for the completion
of a specific project scope of work as requested by the unified
school district. The proposal may also contain approved drawings,
work schedule, permits, or other documentation as the unified school
district may require for a specific job order.
(m) "Public works project" has the same meaning as "public
project," as defined in Section 22002.
(n) "Subcontractor" means any person, firm, or corporation, other
than the employees of the job order contractor, who is bonded and
general liability insured and who contracts to furnish labor, or
labor and materials, at the worksite or in connection with a job
order, whether directly or indirectly on behalf of the job order
contractor.
(o) "Unified school district" means the Los Angeles Unified School
District.
SEC. 3. Section 20919.3 of the Public Contract Code is amended to
read:
20919.3. (a) (1) For contracts for public works projects awarded
prior to the effective date of the regulations adopted by the
Department of Industrial Relations pursuant to subdivision (g) of
Section 1771.5 of the Labor Code, the unified school district shall
establish and enforce for job order contracts a labor compliance
program containing the requirements outlined in Section 1771.5 of the
Labor Code, or it shall contract with a third party to operate a
labor compliance program containing the requirements outlined in that
provision. This requirement does not apply to any project where the
unified school district or the job order contractor has entered into
a collective bargaining agreement or agreements that bind all of the
contractors performing work on the projects.
(2) For contracts for public works projects awarded on or after
the effective date of the regulations adopted by the Department of
Industrial Relations pursuant to subdivision (g) of Section 1771.5 of
the Labor Code, the unified school district shall reimburse the
department for its reasonable and directly related costs of
performing prevailing wage monitoring and enforcement on public works
projects pursuant to rates established by the department as set
forth in subdivision (h) of Section 1771.5 of the Labor Code. All
moneys collected pursuant to this subdivision shall be deposited in
the State Public Works Enforcement Fund created by Section 1771.3 of
the Labor Code, and shall be used only for enforcement of prevailing
wage requirements on those projects.
(3) In lieu of reimbursing the Department of Industrial Relations
for its reasonable and directly related costs of performing
monitoring and enforcement on public works projects, the unified
school district may elect to continue operating an existing
previously approved labor compliance program to monitor and enforce
prevailing wage requirements on the project if it has either not
contracted with a third party to conduct its labor compliance program
and requests and receives approval from the department to continue
its existing program or it enters into a collective bargaining
agreement that binds all of the contractors performing work on the
project and that includes a mechanism for resolving disputes about
the payment of wages.
(b) The unified school district shall prepare an execution plan
for all modernization projects that may be eligible for job order
contracting pursuant to this article. The unified school district
shall select from that plan a sufficient number of projects to be
initiated as job order contracts during each calendar year and shall
determine for each selected project that job order contracting will
reduce the total cost of that project. Job order contracting shall
not be used if the unified school district finds that it will
increase the total cost of the project.
(c) No later than June 30, 2017, the unified school district shall
submit an interim report on all job order contract projects
completed by December 31, 2016, to the Office of Public School
Construction in the Department of General Services and the Senate
Committee on Business, Professions and Economic Development and the
Assembly Committee on Business, Professions and Consumer Protection
and the Senate and Assembly Committees on Education. The interim
report shall be prepared by an independent third party and the
unified school district shall pay for the cost of the report. The
report shall include the information specified in subdivisions (a)
through (h) of Section 20919.12.
SEC. 4. Section 20919.4 of the Public Contract Code is amended to
read:
20919.4. Bidding for job order contracts shall progress as
follows:
(a) (1) The unified school district shall prepare a set of
documents for each job order contract. The documents shall include a
catalog of construction tasks and preestablished unit prices, job
order contract technical specifications, and any other information
deemed necessary to describe adequately the unified school district's
needs.
(2) Any architect, engineer, or consultant retained by the unified
school district to assist in the development of the job order
contract documents shall not be eligible to participate in the
preparation of a bid with any job order contractor.
(b) Based on the documents prepared under subdivision (a), the
unified school district shall prepare a request for bid that invites
prequalified job order contractors to submit competitive sealed bids
in the manner prescribed by the unified school district.
(1) (A) The prequalified job order contractors shall, as
determined by the unified school district, bid one or more adjustment
factors to the unit prices listed in the catalog of construction
tasks based on the job order contract technical specifications.
Awards shall be made to the prequalified bidder that the unified
school district determines to be the most qualified based upon
preestablished criteria made by the unified school district. The
prequalified bidder must be in compliance with the unified school
district's project stabilization agreement.
(B) Compliance shall constitute no more than three major
violations on any unified school district projects within the last
three years. If a contractor has more than three violations within a
three-year period of time, the unified school district shall seek
administrative review of the violations. Violations will include, but
are not limited to, the following:
(i) Failure to register core workers with the appropriate building
trade union.
(ii) Failure to assign apprentices in accordance with Section
1777.5 of the Labor Code.
(iii) Failure to comply with the requirements of subdivision (c)
of Section 20919.5.
(iv) Incorrect assignment of work in accordance with the unified
school district project stabilization agreement.
(2) The unified school district may award multiple job order
contracts. Each job order contract shall be awarded to the most
qualified prequalified bidder described in paragraph (1).
(3) The request for bids may encourage the participation of local
construction firms and the use of local subcontractors.
(c) (1) The unified school district shall establish a procedure to
prequalify job order contractors using a standard questionnaire that
includes, at a minimum, the issues covered by the standardized
questionnaire and model guidelines for rating bidders developed by
the Department of Industrial Relations pursuant to subdivision (a) of
Section 20101. This questionnaire shall require information
including, but not limited to, all of the following:
(A) If the job order contractor is a partnership, limited
partnership, or other association, a listing of all of the partners
or association members known at the time of bid submission who will
participate in the job order contract.
(B) Evidence that the members of the job order contractor have the
capacity to complete projects of similar size, scope, or complexity,
and that proposed key personnel have sufficient experience and
training to competently manage the construction of the project, as
well as a financial statement that assures the unified school
district that the job order contractor has the capacity to complete
the project.
(C) The licenses, registration, and credentials required to
perform construction, including, but not limited to, information on
the revocation or suspension of any license, credential, or
registration.
(D) Evidence that establishes that the job order contractor has
the capacity to obtain all required payment and performance bonding
and liability insurance.
(E) Information concerning workers' compensation experience
history, worker safety programs, and apprenticeship programs.
(i) An acceptable safety record as determined by the unified
school district. In its determination, the unified school district
shall consider, but is not required to find, a contractor's safety
record as 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/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
contractor is a party to an alternative dispute resolution system as
provided for in Section 3201.5 of the Labor Code.
(ii) Skilled labor force availability as determined by the
existence of an agreement with a registered apprenticeship program,
approved by the California Apprenticeship Council, that has graduated
apprentices in each of the preceding five years. This graduation
training for any craft that was first deemed by the Department of
Labor and the Department of Industrial Relations to be an
apprenticeable craft within the five years prior to the effective
date of this article.
(F) A full disclosure regarding all of the following that are
applicable:
(i) Any serious or willful violation of Part 1 (commencing with
Section 6300) of Division 5 of the Labor Code or the federal
Occupational Safety and Health Act of 1970 (Public Law 91-596),
settled against any member of the job order contractor.
(ii) Any debarment, disqualification, or removal from a federal,
state, or local government public works project.
(iii) Any instance where the job order contractor, or its owners,
officers, or managing employees submitted a bid on a public works
project and were found to be nonresponsive, or were found by an
awarding body not to be a responsible bidder.
(iv) Any instance where the job order contractor, or its owners,
officers, or managing employees defaulted on a construction contract.
(v) Any violations of the Contractors' State License Law (Chapter
9 (commencing with Section 7000) of Division 3 of the Business and
Professions Code), excluding alleged violations of federal or state
law regarding the payment of wages, benefits, apprenticeship
requirements, or personal income tax withholding, or of Federal
Insurance Contribution Act (FICA) withholding requirements settled
against any member of the job order contractor.
(vi) Any bankruptcy or receivership of any member of the job order
contractor, including, but not limited to, information concerning
any work completed by a surety.
(vii) Any settled adverse claims, disputes, or lawsuits between
the owner of a public works project and any member of the job order
contractor during the five years preceding submission of a bid under
this article, in which the claim, settlement, or judgment exceeds
fifty thousand dollars ($50,000). Information shall also be provided
concerning any work completed by a surety during this period.
(G) In the case of a partnership or any association that is not a
legal entity, a copy of the agreement creating the partnership or
association and specifying that all partners or association members
agree to be fully liable for the performance under the job order
contract.
(2) The information required under this subdivision shall be
verified under oath by the entity and its members in the manner in
which civil pleadings in civil actions are verified. Information that
is not a public record under the California Public Records Act
(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1
of the Government Code) shall not be open to public inspection.
SEC. 5. Section 20919.5 of the Public Contract Code is amended to
read:
20919.5. (a) The maximum total dollar amount that may be awarded
under a single job order contract shall not exceed five million
dollars ($5,000,000) in the first term of the job order contract and,
if extended or renewed, ten million dollars ($10,000,000) over the
maximum two terms of the job order contract adjusted annually to
reflect the percentage change in the California Consumer Price Index.
(b) Job order contracts may be executed for an initial contract
term of no more than 12 months, with the option of extending or
renewing the job order contract for two 12-month periods. The term of
the job order contract shall be for the contract term or whenever
the maximum value of the contract is achieved, whichever is less. All
extensions or renewals shall be priced as provided in the request
for bids. The extension or renewal shall be mutually agreed to by the
unified school district and the job order contractor.
(c) The unified school district may issue job orders to the job
order contractor that has been awarded the job order contract. The
job order issued to the job order contractor shall not commence for
seven days from the time the job order was issued and the job order
contractor shall provide a minimum of seven days notice for the
addition of any subcontractor or substitution of any subcontractor as
described in subdivision (e) of Section 20919.6. The job order shall
be based on a project scope of work prepared by the unified school
district as well as a proposal from the job order contractor who is
awarded the job order contract. No single job order may exceed one
million dollars ($1,000,000).
(d) It is unlawful to split or separate into smaller job orders
any project for the purpose of evading the cost limitation provisions
of this chapter.
(e) All work performed under the job order contract shall be
covered by a project stabilization agreement.
(f) Any change or alteration to a job order shall be in compliance
with Section 20118.4.
SEC. 6. Section 20919.6 of the Public Contract Code is amended to
read:
20919.6. (a) All work bid under the job order shall comply with
Chapter 4 (commencing with Section 4100) of Part 1 and is subject to
all of the penalties and provisions set forth in that chapter.
(b) For purposes of Article 60.3, if the primary job order
contractor chooses to use subcontractors, the primary job order
contractor is required to verify that the subcontractors possess the
appropriate licenses and credentials required to perform
construction.
(c) Notwithstanding subdivision (a), the primary job order
contractor may use subcontractors that are not listed at the time the
job order is issued if the work to be performed under that job order
is less than ten thousand dollars ($10,000).
(d) If the primary job order contractor chooses to use a
subcontractor that is not listed at the time of bid to perform work
on a job order, both of the following apply:
(1) The primary job order contractor shall provide public notice
of the availability of work to be subcontracted by trade. The public
notice shall include the scope of work; the project location; the
name, address, and the telephone number of the primary job order
contractor; and the closing date, time, and location for sealed bids
to be submitted.
(2) The primary job order contractor shall take sealed bids from
the subcontractors solicited for the proposal. These bids shall be
publicly opened at a prescribed time and place by the primary job
order contractor. After the bids are opened, the job order contractor
shall notify the unified school district which subcontractor was
selected.
(3) The notification shall include every subcontractor for all
tiers and must establish the authorized subcontractor list for the
job order. Work shall not commence prior to seven days notice of the
established subcontractor list and the subsequent addition of any
subcontractor to the job order.
(4) The notification shall identify the scope of the work to be
performed by each subcontractor to the job order, broken down by
craft. If a subcontractor performs multiple crafts, the job order
contractor shall identify the work of each craft to be performed.
(e) If the primary job order contractor chooses to make a
substitution to the subcontractor list, the primary job order
contractor shall provide a minimum of seven days' notice to the
unified school district along with justification as to the need for
the substitution. The unified school district may request a hearing
to evaluate the substitution request, which shall be in accordance
with Chapter 4 (commencing with Section 4100) of Part 1.
(f) If the unified school district determines that there has been
a violation of Chapter 4 (commencing with Section 4100) of Part 1,
including bid shopping by the primary job order contractor, the
unified school district may terminate the job order or the contractor
may lose authorization to proceed with awarded work subject to the
unified school district's administrative due process review,
established pursuant to the project stabilization agreement. If the
unified school district determines that a job order contractor has
violated any provision set forth in Chapter 4 (commencing with
Section 4100) of Part 1, the unified school district may declare the
contractor ineligible for future job orders and may result in a loss
of prequalification status for a period of time to be determined by
the unified school district.
SEC. 7. Section 20919.9 of the Public Contract Code is amended to
read:
20919.9. For purposes of employment of apprentices on job order
contracts, when the individual job order involves more than thirty
thousand dollars ($30,000) or 20 working days, all general
contractors or subcontractors shall at all times be in compliance
with Section 1777.5 of the Labor Code and shall comply with the
following:
(a) Prior to commencing work on an individual job order, every
contractor shall submit job order award information to an applicable
apprenticeship program that can supply apprentices to the site of the
job order. The information submitted shall include an estimate of
the journeyman hours to be performed under the contract, the number
of apprenticeships proposed to be employed, and the approximate dates
the apprentices would be employed. A copy of this information shall
also be submitted to the awarding agency if requested by the awarding
agency.
(b) The ratio of work performed by apprentices to journeymen
employed in a particular craft or trade on the job order may be no
higher than the ratio stipulated in the apprenticeship standard under
which the apprenticeship program operates where the job order
contractor agrees to be bound by those standards but, except as
otherwise provided in Section 1777.5 of the Labor Code, in no case
shall the ratio be less than one hour of apprenticeship work for
every five hours of journeyman work.
(c) Every apprentice employed under the job order contract shall
be paid the prevailing rate of per diem wages for apprentices in the
trade to which he or she is registered and shall be employed only at
the work of the craft or trade to which he or she is registered.
(d) Every apprentice employed under the job order contract shall
be hired from the local joint labor management apprenticeship
committee that has jurisdiction in the geographic area of the
project.
SEC. 8. Section 20919.12 of the Public Contract Code is amended to
read:
20919.12. If the unified school district adopts the job order
contracting process, the unified school district shall submit to the
Office of Public School Construction in the Department of General
Services, the Senate Committee on Business, Professions and Economic
Development and Assembly Committee on Business, Professions and
Consumer Protection, the Senate and Assembly Committees on Education,
and the Joint Legislative Budget Committee before December 31, 2019,
a report containing a description of each job order contract
procured, and the work under each contract completed on or before
June 30, 2019. The report shall be prepared by an independent third
party and the unified school district shall pay for the cost of the
report. The report shall include, but not be limited to, all of the
following information:
(a) A listing of all projects completed under each job order
contract.
(b) The job order contractor that was awarded each contract.
(c) The estimated and actual project costs.
(d) The estimated procurement time savings.
(e) A description of any written protests concerning any aspect of
the solicitation, bid, proposal, or award of the job order contract,
including, but not limited to, the resolution of the protests.
(f) An assessment of the prequalification process and criteria.
(g) A description of the labor force compliance program required
under Section 20919.4, and an assessment of the impact on a project
where compliance with that program is required.
(h) Recommendations regarding the most appropriate uses for the
job order contract process.
SEC. 9. Section 20919.15 of the Public Contract Code is
amended to read:
20919.15. This article shall remain in effect only until December
31, 2020, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 31, 2020, deletes or extends
that date.