California Assembly Bill AB975 Amended / Bill

 BILL NUMBER: AB 975AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 26, 2015 INTRODUCED BY Assembly Member Frazier FEBRUARY 26, 2015 An act to amend  Section 10701   Sections 20101, 20111.5, and 20111.6 of the Public Contract Code, relating to public contracts. LEGISLATIVE COUNSEL'S DIGEST AB 975, as amended, Frazier.  California State University Contract Law.   Local Agency Public Construction Act: bid criteria.   The Local Agency Public Construction Act authorizes the governing board of any school district, without advertising for bids, to authorize any public corporation or agency, including any county, city, town, or district, to lease data-processing equipment, and to purchase materials, supplies, equipment, automotive vehicles, tractors, and other personal property for the district, as provided. The act requires prospective bidders for a construction contract to complete and submit to the governing board a prequalification questionnaire and financial statement, and requires the board to adopt and apply a uniform system of rating bidders on the basis of completed questionnaires and financial statements.   This bill would also prohibit a public agency, under the act, from disqualifying or penalizing a prospective bidder based on the bidder' s involvement in an affirmative claim filed by the project owner or the fact that the bidder has filed a claim against a project owner, unless the claim is based upon a violation of the Labor Code or has been finally adjudicated and the settlement or award provided on the final judgment or settlement is greater than 20% of the adjusted contract amount against the prospective bidder.   Because this bill would impose new requirements on the governing body of a local school board, it would impose a state-mandated local program.   The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.   This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.   The existing California State University Contract Law sets forth a process through which contracts for projects, as defined, that are entered into with respect to the California State University may be competitively bid, entered into, and executed.   This bill would make nonsubstantive changes to these provisions.  Vote: majority. Appropriation: no. Fiscal committee:  no   yes  . State-mandated local program:  no   yes  . THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:  SECTION 1.   Section 20101 of the   Public Contract Code   is amended to read:  20101. (a) Except as provided in Section 20111.5, a public entity subject to this part may require that each prospective bidder for a contract complete and submit to the entity a standardized questionnaire and financial statement in a form specified by the entity, including a complete statement of the prospective bidder's experience in performing public works. The standardized questionnaire may not require prospective bidders to disclose any violations of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code committed prior to January 1, 1998, if a violation was based on a subcontractor's failure to comply with these provisions and the bidder had no knowledge of the subcontractor's violations. The Department of Industrial Relations, in collaboration with affected agencies and interested parties, shall develop model guidelines for rating bidders, and draft the standardized questionnaire, that may be used by public entities for the purposes of this part. The Department of Industrial Relations, in developing the standardized questionnaire, shall consult with affected public agencies, cities and counties, the construction industry, the surety industry, and other interested parties. The questionnaire and financial statement shall be verified under oath by the bidder in the manner in which civil pleadings in civil actions are verified. The questionnaires and financial statements shall not be public records and shall not be open to public inspection; however, records of the names of contractors applying for prequalification status shall be public records subject to disclosure under Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code. (b) Any public entity requiring prospective bidders to complete and submit questionnaires and financial statements, as described in subdivision (a), shall adopt and apply a uniform system of rating bidders on the basis of the completed questionnaires and financial statements, in order to determine both the minimum requirements permitted for qualification to bid, and the type and size of the contracts upon which each bidder shall be deemed qualified to bid. The uniform system of rating prospective bidders shall be based on objective criteria. (c) A public entity may establish a process for prequalifying prospective bidders pursuant to this section on a quarterly basis and a prequalification pursuant to this process shall be valid for one calendar year following the date of initial prequalification. (d) Any public entity requiring prospective bidders on a public works project to prequalify pursuant to this section shall establish a process that will allow prospective bidders to dispute their proposed prequalification rating prior to the closing time for receipt of bids. The appeal process shall include the following: (1) Upon request of the prospective bidder, the public entity shall provide notification to the prospective bidder in writing of the basis for the prospective bidder's disqualification and any supporting evidence that has been received from others or adduced as a result of an investigation by the public entity. (2) The prospective bidder shall be given the opportunity to rebut any evidence used as a basis for disqualification and to present evidence to the public entity as to why the prospective bidder should be found qualified. (3) If the prospective bidder chooses not to avail itself of this process, the proposed prequalification rating may be adopted without further proceedings. (e) For the purposes of subdivision (a), a financial statement shall not be required from a contractor who has qualified as a Small Business Administration entity pursuant to paragraph (1) of subdivision (d) of Section 14837 of the Government Code, when the bid is no more than 25 percent of the qualifying amount provided in paragraph (1) of subdivision (d) of Section 14837 of the Government Code. (f) Nothing in this section shall preclude an awarding agency from prequalifying or disqualifying a subcontractor. The disqualification of a subcontractor by an awarding agency does not disqualify an otherwise prequalified contractor.  (1) Any public agency requiring prospective bidders to complete and submit questionnaires shall not disqualify or otherwise penalize a prospective bidder through its uniform system of rating bidders based on either of the following:   (A) A prospective bidder is or has been involved in an affirmative claim filed by a project owner through the courts, mediation, or arbitration.   (B) A prospective bidder has filed a claim through the courts, mediation, or arbitration against a project owner.   (2) (A) For purposes of this subdivision, "affirmative claim" or "claim" does not include any claim based on a violation of the Labor Code.   (B) Nothing in this subdivision precludes a public agency from including in its uniform system of rating bidders criteria related to affirmative claims that have been finally adjudicated or settled, provided the settlement or final judgment or award on the affirmative claim is greater than 20 percent of the adjusted contract amount against the prospective bidder.   SEC. 2.   Section 20111.5 of the   Public Contract Code   is amended to read:  20111.5. (a) The governing board of the district may require that each prospective bidder for a contract, as described under Section 20111, 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. The questionnaire and financial statement shall be verified under oath by the bidder in the manner in which civil pleadings in civil actions are verified. The questionnaires and financial statements shall not be public records and shall not be open to public inspection. (b) Any school district requiring prospective bidders to complete and submit questionnaires and financial statements, as described in subdivision (a), shall adopt and apply a uniform system of rating bidders on the basis of the completed questionnaires and financial statements, in order to determine the size of the contracts upon which each bidder shall be deemed qualified to bid. (c) Each prospective bidder on any contract described under Section 20111 shall be furnished by the school district letting the contract with a standardized proposal form that, when completed and executed, shall be submitted as his or her bid. Bids not presented on the forms so furnished shall be disregarded. (d) A proposal form required pursuant to subdivision (c) shall not be accepted from any person or other entity who is required to submit a completed questionnaire and financial statement for prequalification pursuant to subdivision (a), but has not done so at least five days prior to the date fixed for the public opening of sealed bids or has not been prequalified, pursuant to subdivision (b), for at least one day prior to that date. (e) Notwithstanding subdivision (d), any school district may establish a process for prequalifying prospective bidders pursuant to this section on a quarterly basis and may authorize that prequalification to be considered valid for up to one calendar year following the date of initial prequalification.  (f) (1) Any public agency requiring prospective bidders to complete and submit questionnaires shall not disqualify or otherwise penalize a prospective bidder through its uniform system of rating bidders based on either of the following:   (A) A prospective bidder is or has been involved in an affirmative claim filed by a project owner through the courts, mediation, or arbitration.   (B) A prospective bidder has filed a claim through the courts, mediation, or arbitration against a project owner.   (2) (A) For purposes of this subdivision, "affirmative claim" or "claim" does not include any claim based on a violation of the Labor Code.   (B) Nothing in this subdivision precludes a public agency from including in its uniform system of rating bidders criteria related to affirmative claims that have been finally adjudicated or settled, provided the settlement or final judgment or award on the affirmative claim is greater than 20 percent of the adjusted contract amount against the prospective bidder.   SEC. 3.   Section 20111.6 of the   Public Contract Code   is amended to read:  20111.6. (a) This section shall apply only to public projects, as defined in subdivision (c) of Section 22002, for which the governing board of the district uses funds received pursuant to the Leroy F. Greene School Facilities Act of 1998 (Chapter 12.5 (commencing with Section 17070.10) of Part 10 of Division 1 of Title 1 of the Education Code) or any funds from any future state school bond for a public project that involves a projected expenditure of one million dollars ($1,000,000) or more. (b) If the governing board of the district enters into a contract meeting the criteria of subdivision (a), then the governing board of the district shall require that prospective bidders for a construction contract complete and submit to the board of the district a standardized prequalification questionnaire and financial statement. The questionnaire and financial statement shall be verified under oath by the bidder in the manner in which civil pleadings in civil actions are verified. The questionnaires and financial statements shall not be public records and shall not be open to public inspection. (c) The board of the district shall adopt and apply a uniform system of rating bidders on the basis of the completed questionnaires and financial statements. This system shall also apply to a person, firm, or corporation that constructs a building described in Section 17406 or 17407 of the Education Code. (d) The questionnaire and financial statement described in subdivision (b), and the uniform system of rating bidders described in subdivision (c), shall cover, 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. (e) Each prospective bidder shall be furnished by the school district letting the contract with a standardized proposal form that, when completed and executed, shall be submitted as his or her bid. Bids not presented on the forms so furnished shall be disregarded. (f) A proposal form required pursuant to subdivision (e) shall not be accepted from any person or other entity that is required to submit a completed questionnaire and financial statement for prequalification pursuant to subdivision (b) or from any person or other entity that uses a subcontractor that is required to submit a completed questionnaire and financial statement for prequalification pursuant to subdivision (b), but has not done so at least 10 business days prior to the date fixed for the public opening of sealed bids or has not been prequalified for at least five business days prior to that date. The district may require the completed questionnaire and financial statement for prequalification to be submitted more than 10 business days prior to the fixed date for the public opening of sealed bids. The district may also require the prequalification more than five business days prior to the fixed date. (g) (1) The board of the district may establish a process for prequalifying prospective bidders pursuant to this section on a quarterly or annual basis and a prequalification pursuant to this process shall be valid for one calendar year following the date of initial prequalification. (2) The board shall establish a process to prequalify a person, firm, or corporation, including, but not limited to, the prime contractor and, if used, an electrical, mechanical, and plumbing subcontractor, to construct a building described in Section 17406 or 17407 of the Education Code on a quarterly or annual basis. A prequalification pursuant to this process shall be valid for one calendar year following the date of initial prequalification. (h) This section shall not preclude the governing board of the district from prequalifying or disqualifying a subcontractor of any specialty classification described in Section 7058 of the Business and Professions Code. (i) For purposes of this section, bidders shall include both of the following: (1) A prime contractor, as defined in Section 4113, that is either of the following: (A) A general engineering contractor described in Section 7056 of the Business and Professions Code. (B) A general building contractor described in Section 7057 of the Business and Professions Code. (2) If utilized, each electrical, mechanical, and plumbing contractor, whether as a prime contractor or as a subcontractor, as defined in Section 4113. (j) If a public project covered by this section includes electrical, mechanical, or plumbing components that will be performed by electrical, mechanical, or plumbing contractors, a list of prequalified general contractors and electrical, mechanical, and plumbing subcontractors shall be made available by the school district to all bidders at least five business days prior to the dates fixed for the public opening of sealed bids. The district may require the list to be made available more than five business days prior to the fixed dates for the public opening of sealed bids. (k) For purposes of this section, electrical, mechanical, and plumbing subcontractors are contractors licensed pursuant to Section 7058 of the Business and Professions Code, specifically contractors holding C-4, C-7, C-10, C-16, C-20, C-34, C-36, C-38, C-42, C-43, and C-46 licenses, pursuant to regulations of the Contractors' State License Board. (l) This section shall not apply to a school district with an average daily attendance of less than 2,500.  (m) (1) Any public agency requiring prospective bidders to complete and submit questionnaires shall not disqualify or otherwise penalize a prospective bidder through its uniform system of rating bidders based on either of the following:   (A) A prospective bidder is or has been involved in an affirmative claim filed by a project owner through the courts, mediation, or arbitration.   (B) A prospective bidder has filed a claim through the courts, mediation, or arbitration against a project owner.   (2) (A) For purposes of this subdivision, "affirmative claim" or "claim" does not include any claim based on a violation of the Labor Code.   (B) Nothing in this subdivision precludes a public agency from including in its uniform system of rating bidders criteria related to affirmative claims that have been finally adjudicated or settled, provided the settlement or final judgment or award on the affirmative claim is greater than twenty percent of the adjusted contract amount against the prospective bidder.   (m)   (n)  (1) This section shall apply only to contracts awarded on or after January 1, 2014. (2) The amendments made to this section by the act adding this paragraph shall apply only to contracts awarded on or after January 1, 2015.  (n)   (o)  (1) On or before January 1, 2018, the Director of Industrial Relations shall (A) submit a report to the Legislature evaluating whether, during the years this section has applied to contracts, violations of the Labor Code on school district projects have decreased as compared to the same number of years immediately preceding the enactment of this section, and (B) recommend improvements to the system for prequalifying contractors and subcontractors on school district projects. (2) A report to be submitted pursuant to this subdivision shall be submitted in compliance with Section 9795 of the Government Code.  (o)   (p)  This section shall become inoperative on January 1, 2019, and, as of July 1, 2019, is repealed.  SEC. 4.   If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.   SECTION 1.   Section 10701 of the Public Contract Code is amended to read: 10701. As used in this chapter: (a) "Project" includes the erection, construction, alteration, painting, repair, or improvement of a state structure, building, road, or other state improvement of any kind. "Project" includes a project located on California State University property and performed pursuant to a contract entered into or awarded by an auxiliary organization, as defined in Section 89901 of the Education Code, and funded in whole or in part by public funds. (b) "Service contract" means a contract for services in connection with a project other than a project contract, and includes, but is not limited to, contracts for architectural, engineering, planning, testing, general studies, or feasibility services. (c) "Trustees" means the Trustees of the California State University and their designees.