Terminology

BEST VALUE: Best Value means a value determined by objective criteria, including, but not limited to, price, features, functions, life cycle costs, and other criteria deemed appropriate by the entity.  The use of “best value” is limited.  We currently see it used in relationship to design-build projects, but it can be used with design-bid-build delivery.

BID SPLITTING: Bid splitting occurs when an entity breaks a project into multiple parts to stay under the agency’s force account and bidding limit. A project is all of the work done at a single location. For example, site work, foundations, wiring and the installation of a modular building would be one project. These could bid separately, but all would have to be bid and none of the work done by force account.

BID THRESHOLD: The bid threshold is the dollar amount at which an entity, if they are going to use a contractor, must bid out the work.  This is sometimes set by a local ordinance, but is commonly used with charter cities.  It may, but does not need to be the same as their force account limit. An example is a local government agency signatory to the California Uniform Construction Cost Accounting Act. Their bid threshold is $45,000, as is also their force account limit. Under that amount they can self-perform the work, or hire contractors. It will depend on their local policy.

COMPETITIVE BIDDING (TRADITIONAL): The public agency (owner) designs the project, provides specifications, and advertises giving submission deadlines and opening dates. All subcontractors must be listed. This is the most common form of competitive bidding.

CONTRACT CHANGE ORDERS: Contract Change Orders are written when there needs to be changes to the original contract. The change orders must fall within the original scope of the work. These are brought about by unforeseen circumstances. If it is not in the original scope of work, the changes would have to be competitively bid. The percent of the change order allowed varies with different entities.

CUCCAA: The California Uniform Public Construction Cost Accounting Act created a commission to resolve disputes between public entities and construction companies without having to go to court. The commission is referred to as CUCCAC (the California Uniform Cost Accounting Commission).This Act raises the force account limit of a public agency to $45,000 before they must informally or formally competitively bid. Informal bidding is only allowed on projects under $175,000. Above $175,000 projects must be formally bid. In exchange for higher limits, the public agency must follow certain accounting rules. The regulations also require strict advertising guidelines on all projects. An agency can elect to become signatory to CUCCAA by passing a resolution and by passing an informal bidding ordinance. They then must file this with the State Controller’s office. If they violate the Act and the violation is sustained by the Commission, they risk losing the higher bidding limit.

DAY LABOR: Workers hired by a public agency that are paid at an hourly rate and assigned to a specific project.

DESIGN-BUILD: Design-Build is a bidding alternative by which the contractor, architect and owner work together to design and build the project. They can be awarded by a “best value” system or competitive bidding method.  It is important to know that there must be an objective selection process when using Design-build.  A contractor who participates in the process of developing a scope of work is not allowed to be part of the team.  These projects are supposed to be “hard” cost and not subject to change orders. Any non roadwork project over $1 million qualifies, for cities. The threshold for counties is $2.5 million. The law allows for a limited number of waste-water treatment plants over the next 5 years. There are a limited number of transportation projects being done by Caltrans by this method. Please contact your field representative with any questions about this delivery method.

FORCE ACCOUNT: This is the limit of work that a public agency can do with its own forces before they must go out for competitive bids. Force account is the dollar value of labor, materials and equipment at the rate the public agencies charge themselves. You do not calculate any entity’s labor cost of a project using prevailing wages. Labor cost calculations are based on the entity’s actual cost of labor. Force account limits do not apply to maintenance work.

LEASE LEASE-BACK (LL-B): LL-B is an alternate method of delivery for school districts allowed by the Education code. It allows a school, for one dollar ($1.00), to lease property and buildings to a contractor without bidding or advertising. The school then leases the usable space back while the contractor is working on the new buildings or modernization. When complete, the school district purchases back the property. There are some rules that must be followed. The LL-B must be for facility construction.

MAINTENANCE: Routine, reoccurring, and usual work for the preservation or protection of any publicly owned or operated facility for its intended purposes. Minor repainting is allowed. Resurfacing of streets and highways at less than one inch is allowed. Work performed to keep, operate and maintain publicly owned utilities are also allowed.

MANDATORY PRE-BID MEETINGS: There must be at least five (5) full days notice to a mandatory pre-bid meeting. Only those contractors who attend are allowed to bid on a project. Subcontractor attendance must be clarified by the owner before bid and is subject to the same advertising.

NEW CONSTRUCTION: Construction, reconstruction, erection, alteration, renovation, improvements, demolition and repair work involving any publicly owned, leased or operated facility. Painting or repainting of any publicly owned, leased or operated facility. Paving of one inch (1”) or greater. In the case of a publicly owned utility system, new construction shall include only the construction, erection, improvement or repair of dams, reservoirs, power plants and electrical transmission lines of 230,000 volts and higher.

PIGGY-BACK PURCHASING: Piggy-back purchasing is the procedure that allows local public agencies to group together, with one among them acting as lead agency, to get the lowest price on the purchase of computers, supplies and other personal property. By pooling their purchasing power they can reduce unit costs based on quantity. A common practice is for another public agency to come in after the initial purchase and ask for, and get, the same price. CIFAC contends it is intended only for personal property and not for labor, on-site work, or the purchase or the installation of buildings (real property). The California Attorney General has confirmed CIFAC’s opinion.

PRE-QUALIFICATION: This is the method that an entity can use to sort through bidders prior to going out to bid. It must be done ahead of time to allow a contractor the opportunity to protest, if he/she is disqualified. Pre-qualification must follow specific guidelines and be fair and impartial. There are separate prequalification packages for different entities. These can be found in the Public Contract Code or on the Department of Industrial Relations (DIR) website. CIFAC does not support “pre-qualification” at the time of bid. This can become too subjective for obtaining fair competitive bidding.

JOB ORDER CONTRACTING (JOC): A JOC is an undefined quantity contract allowed to be used by Universities, Colleges and Counties. It is not allowed for cities or elementary school districts.   Each task is assigned a quantity of units. The bidder develops a price for a single unit.  The bidder is then on-call for the length of the contract and performs the work he is requested to perform at the time. Some JOC’s stipulate a minimum amount of work will be performed.  The law stipulates the maximum amount of work than can be performed.  New construction work is not allowed.

JOINT POWERS AGREEMENT: JPA is an agreement between two or more public agencies allowing for joint governance on certain matters. Each JPA explains in detail what is covered under the agreement.  The Public Contract Code does not cover JPA language at this time.  Please notify CIFAC if you see any pending agreements that may deal with construction activities.

RELIEF OF BIDDER: A bidder can withdraw his/her bid if he/she notifies the entity in writing within five (5) business days of the bid opening. A mistake must have been made that materially affected the bid and must have been made when filling out the bid form.

RESPONSIVE BIDDER: A responsive bidder is a bidder who responds to ALL of the requirements put forth in a bid solicitation. This includes, but is not limited to, Disabled Veteran Business Enterprise goals, bonds, special licenses and signatures. A public agency is allowed to waive minor irregularities. Minor irregularities are not defined and each case needs to be reviewed.

RESPONSIBLE BIDDER: A responsible bidder is a bidder who meets the criteria set by the agency. Contractors must show that they are trustworthy, competent and able to perform the work required, and who holds a current State contractors license for the work to be done. An agency can declare a contractor non-responsible, but it is rarely done. More agencies are relying on pre-qualifications. An agency that has had problems with a contractor in prior contracts may be more inclined to use this section. Bonding companies maintain that the bond proves a contractor is a responsible bidder.

REVERSE AUCTION: Reverse auction is a delivery method that CIFAC does not believe is legal for public works construction.  Reverse auction allows bidders to see other bids during the bidding process. The bidder can then adjust his bid lower and this continues until the cut off point.  The low bidder is determined by whoever cut their price the most. Section 10293(c) of the Public Contract Code prohibits the use of reverse auction on public works construction projects.

RFP, RFQ (Request for Proposals, Request for Qualifications): RFP is used for certain professional services. You might see a RFQ in the case of an Engineering firm, Project Manager, Construction Manager, Architect or other personal services. Though these do not have to be competitively bid, it is our belief that it is good policy to advertise and publicly discuss the proposals or qualifications prior to signing a contract. With more LL-B, design build and other alternative delivery methods, there are more RFP & RFQ’s being issued. Please contact us if you see a possible misuse of these requests.

VOLUNTEER LABOR: Volunteer labor is defined in the Labor Code.  A volunteer must be exactly that, a willing volunteer.  A person may not be employed on the project and then volunteer part of his time.  Anyone being paid on the public works project must be paid prevailing wages.

Disclaimer: This list of commonly used terms is provided as a helpful tool and is not meant to be used as a legal reference document.  As with most things, there are exceptions, rule changes and new precedents.  If you would like more information about any of the items listed, or other related terminology, please call CIFAC at 1-800-755-3354.