BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 975


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          Date of Hearing:  May 20, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          975 (Frazier) - As Amended May 4, 2015


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          |Policy       |Local Government               |Vote:|8 - 0        |
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          |             |Education                      |     |7 - 0        |
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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          No


          SUMMARY:  


          This bill prohibits local public agencies and school districts  
          from disqualifying prospective bidders on public works contracts  
          through its uniform system of rating bidders, based solely on  








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          whether a prospective bidder has filed a claim against a project  
          owner through the courts, mediation, or arbitration. 


          FISCAL EFFECT:


          Unknown, likely very minor and non-reimbursable costs to local  
          agencies and school districts to modify an optional  
          prequalification process.  


          COMMENTS:


          1)Purpose.  According to the author, "AB 975 is intended to  
            address a troubling trend involving public works construction  
            pre-qualification questionnaires.  Specifically, a number of  
            public agencies have begun disqualifying, or significantly  
            penalizing through their pre-qualification process, any  
            contractor who has been involved, or is involved, in any claim  
            with a public agency.



          2)Background.  The Local Agency Public Construction (LAPC) Act  
            applies to all cities, counties and special districts, and  
            allows, but does not require, public agencies to establish a  
            process to evaluate and pre-qualify prospective bidders on  
            public works projects.  An agency may choose to require  
            prospective bidders to submit a standardized questionnaire and  
            a financial statement, which includes the prospective bidder's  
            experience in performing public works.  If the agency selects  
            this procedure, it must adopt a uniform rating system to  
            determine the minimum requirements permitted for qualification  
            to bid and the type and size of contracts for which each  
            bidder is eligible to bid.  It also must offer an appeals  
            process to allow prospective bidders to dispute their proposed  
            pre-qualification rating.  








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            The LAPC Act directs the Department of Industrial Relations  
            (DIR) to develop a model questionnaire and guidelines for a  
            uniform rating system that can be used by public agencies.   
            The DIR questionnaire requires contractors to provide detailed  
            information regarding the company and its financial status,  
            including whether the company has been in bankruptcy or  
            involved in a civil lawsuit, licensing information, prior  
            contracting experience (whether the contractor has completed  
            other public works projects), whether the contractor has been  
            involved or been found to have violated any federal, state or  
            local laws, and whether the contractor has violated any labor  
            and health and safety laws, including prevailing wage.  





            Like other local agencies, school districts have the option to  
            evaluate and pre-qualify prospective bidders on public works  
            projects. This includes the flexibility to design the  
            prequalification questionnaire as they deem appropriate, as  
            long as the questionnaire covers the issues contained in a  
            model questionnaire designed by the DIR.  


          3)Related Legislation.  AB 566 (O'Donnell), pending referral in  
            the Senate, requires, until January 1, 2019, school districts  
            to require prospective bidders on public contracts to submit a  
            pre-qualification questionnaire and financial statement, if  
            the expenditure of the project is $1 million or more,  
            regardless of the funding source, and the ADA of the school  
            district is more than 2,500 (among other provisions).



          4)Previous Legislation.  AB 1581 (Buchanan), Chapter 408,  








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            Statutes of 2014, required, until January 1, 2019, school  
            districts entering into lease/leaseback or lease-to-own  
            contracts to require prospective bidders to submit a  
            pre-qualification questionnaire and financial statement, if  
            the project is funded with state bond funds, the expenditure  
            of the project is 
          $1 million or more, and the ADA of the school district is more  
            than 2,500.  



             a)   AB 1565 (Fuentes), Chapter 808, Statutes of 2012,  
               required, beginning with contracts awarded on or after  
               January 1, 2014 and until January 1, 2019, school districts  
               to require prospective bidders on public contracts to  
               submit a pre-qualification questionnaire and financial  
               statement, if the project is funded with state bond funds,  
               the expenditure of the project is $1 million or more, and  
               the ADA of the school district is more than 2,500.



             b)   AB 281 (Burmudez) of 2003 would have prohibited the  
               bidder pre-qualification form that is required under the  
               LAPC Act from disqualifying a bidder solely based on the  
               bidder's financial capacity, provided that the bidder  
               otherwise qualifies for the public works contract.  This  
               bill was referred to the Assembly Local Government  
               Committee, but was never heard.



             c)   AB 574 (Hertzberg), Chapter 972, Statutes of 1999,  
               defined the term "responsible bidder" as it relates to  
               public contracts, authorized public entities to require  
               prospective bidders to complete pre-qualification  
               questionnaires and financial statements, and required DIR  
               to develop a model questionnaire and guidelines for rating  
               bidders. 








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             d)   AB 611 (Villaraigosa), Chapter 390, Statutes of 1997,  
               allowed school districts to pre-qualify bidders on a  
               quarterly basis and allowed the pre-qualification to be  
               valid for up to one calendar year.






          Analysis Prepared by:Jennifer Swenson / APPR. / (916)  
          319-2081