BILL ANALYSIS                                                                                                                                                                                                    



                                                          AB 749  
                                                         Page 1

Date of Hearing: April 22, 1997

              ASSEMBLY COMMITTEE ON HIGHER EDUCATION
                        Ted Lempert, Chair

           AB 749 (Papan) - As Amended:  March 31, 1997

  SUBJECT  :  University of California:  bidding requirements.

  SUMMARY  :  This bill amends the Public Contract Code Section.   
Specifically,  this bill  :

1) Increases from $50,000 to $100,000 the threshold above which  
   the University is required to competitively bid construction  
   projects.

2)  Increases the thresholds below which the University may use  
its own employees rather than contract out for labor a) from  
$10,000 to $50,000 for painting projects and b) from $20,000 to  
$50,000 for all other projects.

3)  Provides that both the a) $100,000 threshold for competitive  
bidding and the b) $50,000 threshold for using in-house University  
employees may be adjusted at two-year intervals, upward or  
downward, to the nearest $1,000, in accordance with existing  
regulations.

4)  Conform the provision just added to PCC Section 10505 (3) in  
AB 749, which raises the in-house labor limit from $20,000 to  
$50,000 for work done at research facilities in remote and  
sparsely populated areas.  This exemption would be replaced by a  
new $50,000 cap on the use of in-house labor for all University  
work.

5)  Adds "or specialized research" to equipment exempted from the  
in-house labor threshold, clarifying that the installation of  
research equipment such as electron microscopes, x-ray equipment,  
and complex data networks is exempt from the Stull Act thresholds.

6)  Allow the Regents to use a streamlined bidding process for  
projects under $250,000 when they deem the nature of the work so  
warrants, giving the Regents authority similar to that granted in  
1996 to the California State University Trustees in AB 3132. 

  EXISTING LAW  : 

1) In 1976 Californians approved a state Constitutional amendment  
   authorizing the Legislature to establish competitive bidding  
   procedures for the University of California, known as the Stull  
   Act.  The Stull Act established threshold amounts over which  
   the University must competitively bid construction projects  
   when the project cost is greater than $50,000.  Existing law  
   also prohibits the use of University employees on projects with  
   estimated labor costs of greater than $20,000 ($10,000 on  
   painting projects), with some exception.  These threshold  
   amounts were set in 1976 and 1978 respectively. Neither of the  







                                                          AB 749  
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   above thresholds includes an adjustment for inflation.

  FISCAL EFFECT  :  Future savings to the state.

  COMMENTS  :  

1)  According to the sponsors of the bill, the University does not  
seek to avoid competitive bidding.  Instead they are asking for  
flexibility to determine the best method for completing projects  
quickly and efficiently, and the freedom to use that method  
whether it be in-house labor, informal competitive bidding, or  
formal competitive bidding. 

2)  During the recession years of the early 1990's the University  
lost $430 million in state funding.  Capitol outlay projects and  
deferred maintenance received little or no funding.  As a result,  
the construction and maintenance backlog has grown.

3)  The increases in competitive bidding thresholds are increases  
for inflation, and to establish uniformity between UC's formal  
competitive bidding practices and those of other state entities.   
AB 749 adjusts the UC construction competitive bid thresholds to  
reflect the cost of work in today's dollars and to bring them into  
parity with other state entities where appropriate.

4)  State agencies now have a competitive bidding threshold when  
project costs exceed $100,000, PCC 10105, adjusted for inflation.

5)  UC's $20,000 threshold for labor costs, also known as the  
in-house labor threshold, has never been adjusted for inflation.   
This threshold would be $41,000 in 1997 dollars.

6)  Existing law provides limited exemptions to the in-house labor  
thresholds, in recognition of the unique needs created by the  
University's research mission.  It is unclear whether the current  
exemptions for labor used in the construction of diagnostic and  
experimental equipment include the construction of specialized  
research equipment.  AB 749 would clarify they they do.

7)  Under current law, state agencies and the California State  
University Trustees may use an informal, or "streamlined," bidding  
process for projects with a cost below $250,000, enabling them to  
competitively bid projects at a reduced cost and within a shorter  
time frame than with formal bidding.  The Regents only have the  
authority to use informal competitive bidding only for  
construction projects under $50,000.

  REGISTERED SUPPORT / OPPOSITION  :

  Support 

University of California
Community College League of California
Gonsalves & Stronck
PDS Engineering Construction
J.R. Romero Development & Construction Company







                                                          AB 749  
                                                         Page 3

Stephenson Construction Co.
Tradewind Enterprises
Air Mechanical Inc.
Quality Touch Painting
West Coast Mechanical
Morse Diesel
FELIX Corp.
Bob Telliard Contracting
Charles O. Jones, Inc.

  Opposition  

None on file.

  Analysis prepared by  :  Rosa de Anda / ahed / (916) 324-4655