By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
As a Regional Compliance Manager (RCM) for the Construction Industry Force Account Council (CIFAC), I always need to be quick to react to any public agency that might present a situation where they are in direct violation of the California Public Contract Code (PCC).
The Town Council of the Town of Woodside was set to award a contract for a project to paint the exterior of the Town Hall, Independence Hall, and Community Museum, which would cost approximately $69,000 thereby exceeding their bid threshold.
On June 4, 2020, I received the notification from the Town that the agenda was posted. Like all other agenda notifications, I opened the link to see if any new construction projects were noted. The painting project was mentioned in the consent calendar and I quickly looked for a staff report that accompanies the agenda item. The staff report gives in-depth information related to the project. In this case, the Public Works Director mentioned that the Town had solicited bids from several painting contractors for the project. This information to the trained ear means that the competitive bidding process was not followed. The Town of Woodside participates in the California Uniform Construction Cost Accounting Act, which dictates that any public project their agency wants to perform over $60,000 must be advertised for competitive bids. My next step was to review the information that relates to the agency’s procurement process in its municipal code. I noticed that the Town’s code in regards to the informal and formal bidding procedures bid threshold amounts was incorrectly stated. If the Town had referred to its own incorrect bid thresholds, it might have led them to believe that they could solicit bids without advertising. Lastly, the contractor that the Town wanted to award the contract to was not registered with the Department of Industrial Relations, which is a prerequisite for licensed contractors who want to perform work for California’s public agencies.
Realizing that all these compounded violations would prove to the Town that they were obligated to pull this item from the agenda and advertise this project for bids, I quickly composed an email communication to inform the Town Manager that they had not followed the proper bidding procedure. Mind you, the discovery period and the action of writing the communication to the agency in this investigation all happened within a few hours.
On June 5, 2020, I received a communication from the Public Works Director that the agenda item will be pulled and that the Town will properly bid the project. Fast action was required in order to have the item pulled from the consent agenda because meeting agendas only need to be posted for the public view within 72-hours before the meeting. The Town staff will also correct the informal and formal bid thresholds in their municipal code to reflect the proper amounts.
CIFAC urges our partners, members, and the public, to inform us if you come across a public agency that posts agenda items that may not have been properly bid, and we will rapidly respond to keep them in compliance with the laws.
By Richard Marks, Northern Regional Compliance Manager. -
CIFAC's mission is to ensure that State and local governments comply with the Public Contract Code to promote job opportunities, fair bidding, and transparency.
One avenue to achieve this goal is through partners out in the field who report possible violations to CIFAC Regional Compliance Managers for investigation. However, sometimes a report can come from a community member. Such was the case recently when a concerned tax watchdog citizen contacted me regarding a Northern California City Council Agenda item to approve a contract award for a grind out and paving project. The contract was to be awarded based on a reduction in overall work and cost from the original lowest bid submitted. The citizen wanted to know if the City needed to readvertise the project considering the substantial changes requested.
I was able to locate and review documentation showing that the project was advertised correctly for the solicitation of competitive bids and that the lowest bid received was $609,000. A staff report included with the council meeting agenda indicated that due to the COVID-19 shelter-in-place and business closure restrictions mandated by local health authorities, there was a decrease in projected revenues received, specifically gas tax revenues. The report went on to state that the shortfall of revenue had a direct impact on the availability of funds for needed road projects.
As this situation was unforeseen at the time bids were solicited, staff recommendation was to approve the award of the contract to the lowest bidder and then have the City Engineer work with the contractor on a unit price adjustment to fit the scope of work to a lesser amount of funding available of $348,186.
With regard to the bidding process for public works projects, it is CIFAC's position that the legislative intent regarding Public Contract Code §1100 is clear when it states that one purpose of the code is to provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices. And while Public Contract Code 20103.8 does allow for additives and deductives to be contained within a contract, thereby allowing an agency some flexibility to respond to budgetary concerns, the contract included no such a provision.
I contacted the City's Special Projects Manager and shared CIFAC's concerns regarding the proposed changes to the contract. I explained our position that since the original Request For Proposal did not contain any provision for deductions based on funding availability, this would violate the Public Contract Code. Further, since the change is substantial in the scope of work, it does not allow for a fair opportunity for other contractors to reconsider their bids based on the new work that would be required. I, therefore, recommended that the project needed to be readvertised for competitive bidding. The Special Project Manager agreed with CIFAC's reasoning and decided to support the idea that the project be rebid with a reduced scope of work to match their decreased budget availability. After listening to our position during public comments, the City Council decided unanimously to reject all bids and readvertise the project.
I also received a call from a City staff employee who asked me, "Is CIFAC coming across this very much in other cities and counties where COVID-19 related revenue reductions are affecting public works projects and bidding process?" To find out if this was just an isolated incident, I contacted CIFAC Regional Compliance Managers from different areas of the state and received information that many localities were experiencing the same situation. A comment received from a Southern California Compliance Manager was, "Some of the effects of COVID-19 will be silent, meaning that some agencies will just be postponing putting out projects for bidding right now. The downward loss of City revenue from local taxes and gas tax for transportation projects will be affected. However, there is still some funding earmarked to spend, and that will happen for the balance on the 2020 year, some tied to grants, matching funds, federal funding, SB-1, etc. Those projects will be completed, but going forward, agencies will be revising their budgets for the 2021 year, so I don't believe that we will see the real effects of the COVID-19 until 2021!"
I am currently tracking projects in my area to determine how many public works projects are scaled back in scope or eliminated directly affected by COVID-19 related funding shortages. According to an April 20, 2020 article in the San Jose Mercury News, California lost 11,600 construction jobs due to COVID-19 state and county health compliance restrictions in March of 2020.
Even though this economic downturn will bounce throughout each community's economy, CIFAC's watchful eye will continue to hold agencies accountable, such as this one in Northern California, to provide fair and transparent bidding opportunities for our partners.
By Raquel White, Central Regional Compliance Manager. -
Emergencies are serious, unexpected, and often dangerous situations requiring immediate action. We never know when, how, or where that emergency will occur so we must take the necessary precautions to prepare ourselves.
In the case of an emergency, a public agency pursuant to a four-fifths vote of its governing body, may repair or replace a public facility, take any directly related and immediate action required by that emergency and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids to let contracts. A recent CIFAC investigation discovered unrelated repairs were added to an emergency declaration at the Capitola Wharf.
On February 13, 2020, the City Council declared an emergency as a result of broken pilings on the Capitola Wharf that occurred in January 2020. High surfs damaged two pilings located underneath the boat hoist which compromised the stability of the wharf. An assessment by the Public Works staff and Marine Engineers determined immediate action was necessary to prevent the hoist from falling into the bay. The council encouraged staff to include work from the larger wharf rehabilitation project scheduled next year. This gave me a reason for pause and prompted me to take a closer look at the emergency declaration details.
In addition to the two pilings that failed, the staff added a third piling to the emergency declaration. I notified the Public Works Director of my concerns surrounding the third piling and how in my opinion, it was unrelated to the emergency declaration. I also attended the City of Capitola Council meeting on March 12, 2020, and expressed CIFAC’s concerns about the third piling. The Public Works Director explained that the third piling located on the western side of the wharf broke several years ago, was not directly related to the emergency, and can be repaired in the wharf rehabilitation project scheduled next year. In response to CIFAC’s concerns, staff deleted the third piling from the emergency declaration scope of work. As a result of CIFAC’s involvement, the third piling will be competitively bid with the wharf rehabilitation project.
There is no denying that an emergency occurred that required immediate action. The City appropriately acted by declaring an emergency by a four-fifth votes and reviewing the action at subsequent regularly scheduled meetings to continue work under the emergency declaration pursuant to Public Contract Code section 22050.
Work intended for future projects unrelated to an emergency must be competitively bid, not added to an emergency declaration. Whether intentional or unintentional, agencies will try to add additional work that has nothing to do with an actual emergency to avoid competitively bidding the work. As Regional Compliance Managers we are actively working to increase job opportunities, maintain a level playing field, and ensure public works project are competitively bid.
By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager. -
Piggyback contracting is a commonly used procurement method utilized by Public Agencies, Schools, and Community College Districts. The procurement process allows an agency to obtain equipment, materials, supplies and other personal property using a different agency’s prior contractual agreement.
The typical situation goes like this: Agency A issues a Request for Proposal/Bid and the contract is awarded to the chosen vendor. Agency B decides that they need the same or a similar item so rather than issuing their own Request for Proposal/Bid, they decide to forego the process and instead utilize the previously awarded one with the previously negotiated pricing. This contract may be located anywhere in California, does not need to be recently awarded, nor does it need to be issued by the same type of agency.
As the process evolved over the years, it was misinterpreted by some agencies who included components of construction projects using the piggyback contracting procurement process.
Recently, I investigated several school district projects that were not competitively bid. During these investigations, I found that these projects were procured through piggyback contracts from other agencies. The Public Contract Code section that pertains to school district piggyback contracting only allows it on equipment, materials, supplies and personal property.
California’s Public Contract Code (PCC) Section 20118 clearly defines its use as:
“The governing board of any school district, without advertising for bids, if the board has determined it to be in the best interests of the district, may authorize by contract, lease, requisition, or purchase order, any public corporation or agency, including any county, city, town, or district, to: Lease data-processing equipment, purchase materials, supplies, equipment, automotive vehicles, tractors, and other personal property for the district in the manner in which the public corporation or agency is authorized by law to make the leases or purchases from a vendor”
The PCC’s legal statue does not specifically address construction. Since it is silent concerning construction, many agencies just take the position that the procurement of construction-related materials and projects are allowed.
Well, the short answer is, it depends. If an agency is purchasing roofing material and supplies for a roofing project directly from a vendor via a piggyback contract and they intend to bid-out the installation portion, then that is allowed. However, if they attempt to award the entire roofing project including the materials and installation via the piggyback contracting process to the same contractor acquired through another agency’s contract, then technically no, CIFAC believes that an agency cannot legally use the piggyback process to award a contract directly to a specific contractor in this manner, based on the intended language of PCC Section 20118.
In the past, CIFAC has encountered school districts who were intending to award new or remodeled playground projects using piggyback contracting. Projects that included new playground equipment, site preparation; grading, concrete flatwork, installation of the playground equipment, and poured-in-place rubberized matting. These districts planned to use the very same contractor who previously performed the work for another agency, from whom they intended to piggyback on.
When CIFAC has challenged these districts, advising them that they cannot use the piggyback process in this manner, CIFAC has in many cases received push-back from the district’s legal counsel, citing that they are purchasing equipment, materials and supplies and that any work performed is considered incidental to the purchase of said equipment, materials, etc., per the piggyback procurement process.
In researching the legislative intent with the possibility of seeking to amend the language of PCC Section 20118 to specifically include the words; “excluding construction” CIFAC discovered a January 2006 legal opinion from California’s then Attorney General (AG), Bill Lockyer, who reviewed the legal position of a School District utilizing the piggyback contracting process to acquire a factory-built modular building and components for installation on a permanent foundation. [89 Ops. Cal. Atty. Gen 1 (2006)]
The AG’s opinion concluded: “A school district may not, without advertising for bids, contract with another public agency to acquire factory-built modular building components for the installation on a permanent foundation”
Recently CIFAC asked the Commissioner’s at the California Uniform Construction Cost Accounting Act (CUCCAA) for clarification concerning a school district’s use of piggyback contracting.
CIFAC Question #1: Concerning public works playground reconstruction projects; CIFAC specifically asked if school districts could utilized the piggyback contracting method to procure the product/material and contractor in this manner.
Answer: Choosing to concur with the 2006 State AG’s opinion, the CUCCAA Commissioners stated: “While school districts can piggyback their orders, as noted by the California Attorney General [89 Ops. Cal. Atty. Gen 1 (2006)], that authority is limited to contracts for personal, and not, real property”.
CIFAC Question #2: Regarding districts that are signatory to CUCCAA: Can a District separate all related costs (material, equipment and supplies) from the construction/installation process?
Answer: Agencies subject to the Act are required to follow the uniform construction cost accounting procedures as indicated in the CUCCAA manual, which indicates that all cost elements; personnel/labor, materials, supplies and subcontracts, equipment and overhead associated with the project must be reported at the project level. Agencies may procure these elements separately; however, the cost of each element would be combined to determine the total cost of a public project, and the appropriate contracting procedure to use as outlined in PCC Section 22032 of the Act.
Projects of this nature are considered “permanently” affixed to real property and do not fit into the “personal property” classification as outlined in PCC Section 20118.
Agencies can use the piggyback process to procure equipment, materials, and supplies and if they used agency employees/staff to install the equipment, they could do so only if the entire project cost which includes equipment, labor, materials, supplies and other miscellaneous expenses does not exceed the agency’s bidding threshold.
With that said, if the combined cost or estimated cost of the project exceeds their respective thresholds, then the installation/construction portion would have to be bid-out, and the agency could not self-perform any portion of the project with their own forces.
Additionally, for agencies signatory to CUCCAA, they cannot separate the components or segments of a project for the purpose of evading the legal thresholds. All costs and/or estimates for the entire project determine the CUCCAA dollar threshold that the project should be procured or bid-out at, in order to comply with PCC Section 22032.
Armed with these facts and determinations, CIFAC will be able to justify its position when challenging agencies in the future on the improper use of piggyback contracts.
By Patricia (Patti) Rascon, Southern Regional Compliance Manager. -
One of the most critical aspects of the role of a CIFAC Regional Compliance Manager (RCM) is often reading copious documents related to the scope of work for a project. While the task can be mind numbing at times, our attention to detail determines how the RCM will proceed with an investigation.
The story begins with a Riverside County City that is signatory to the California Uniform Construction Cost Accounting Act (CUCCAA). They were embarking on a half-million-dollar sports park restroom expansion and renovation project. The project scope included the demolition of the existing facility and its replacement with eight unisex single-stall restrooms, a large concession facility, and a dedicated storage area.
While perusing City Council meeting agendas, I came across this agenda item, which appeared to be routine. As a member of a National Purchasing Cooperative, the City intended to utilize that process to procure for the design, fabrication, and installation of a pre-fabricated building. As I dug deeper into the project documentation, I found a different picture. A picture that showed city crews using force account!
ATTENTION TO DETAIL: the scope of work referenced a list of components that the City was to perform with their own forces. Items included the demolition of the existing building, excavation of the utility trenches for placement of the pre-fabricated structure, underground piping for plumbing and electrical, connection of utility piping, flushing of water lines, and pulling wire and the tie off on the electrical panel.
While the benefits of CUCCAA are many, Public Contract Code section 22032 (c) requires public projects of more than two hundred thousand dollars to be let to contract by formal bidding procedure. Additionally, since the project's total cost exceeds CUCCAA's $60,000 threshold, the City cannot self-perform any portion of the project's scope of work.
Based on the information uncovered, CIFAC sought clarification by contacting city staff to express our concerns and object to any use of force account on this project. After educating them on the Public Contract Code requirements, the City assured us that all the components of the project would be bid!
WIN-WIN, CIFAC successfully influenced the agency and the project! Our attention to detail further solidifies our mission to ensure a level playing field and fair bidding opportunities for the construction industry.
By Justin Bochmann, Midstate Regional Compliance Manager. -
A recent CIFAC investigation and influence of the Tuolumne Utilities District (TUD) has led to a win for not only public works contractors, but the public agency as well.
As specialists in all areas of the California Public Contract Code (PCC), CIFAC Regional Compliance Manager's (RCM’s) look beyond violations of advertising requirements and force account usage. The PCC covers nearly every aspect of how a project is to be procured, awarded, and contracted.
In March 2020, TUD issued an Invitation for Bid (IFB) for the Phoenix Lake Restoration & Preservation project. Given its large size and associated price tag, this project drew in contractors from all over California. CIFAC was contacted because the IFB lacked many details in regard to how the lowest responsive bid would be determined. This was of much concern to contractors, as their bidding techniques may be adjusted to meet the additive item requirements. In the absence of a pre-determined base bid, the bid requirements can be open to interpretation, causing much confusion for contractors, and have the potential of subjective favoritism by the public agency.
Because of this, CIFAC began an investigation to determine if the project documents complied with PCC §20103.8, an area of the PCC which outlines how a project must be awarded when additive or deductive items are in play. After a thorough investigation, CIFAC was able to determine that language in the IFB did not specifically indicate which individual items were included as part of the base bid. This greatly increases the probability of bid protests and introduces exposure to potential litigation for the public agency.
After notifying the Board of Directors and management staff of the concerns and violations, TUD initially struggled to admit wrongdoing on their part. It was learned that their intention was to obtain as much work as possible within their budget. The problem, however, is that PCC §20103.8(c) requires a public agency to specifically identify items which will be included in the base contract and to publicly disclose the funding amount for which the contract will be awarded up to, if additive items will be considered. Funding for this project was another subject of confusion for contractors. The solicitation indicated an engineer’s estimate of nearly $8,000,000, which grossly exceeded the TUD’s unspecified budget of approximately $4,250,000.
Through CIFAC’s approach of educating the Board members and management staff, TUD ultimately decided it was in their best interest to clean up the IFB language and competitively re-bid this project. CIFAC offered their resources and expertise to ensure TUD did not violate PCC statutes and also provided recommendations of how to rectify the situation.
CIFAC’s mission of attaining a level playing field and fair bidding opportunities for public works contractors is of utmost importance. This case is an example of how we are able to go beyond traditional measures of preventing illegal force account usage and help promote better public agency practices in other areas of public contracting as well.
CIFAC is the leading authority on the proper use of force account on public construction projects. By force account, I am referring to the Public Contract Code’s definition that describes an agency’s use of their own personnel to perform construction work. You may be surprised to know that many agencies use their internal workforces to perform maintenance, repairs and yes, even new construction work. The Public Contract Code limits the amount of work an agency may self-perform depending on their classification. Construction work in excess of that amount must be bid and performed by contract.
For the past 40 years, CIFAC has monitored and investigated agencies use of force account. Although force account violations remain our core focus, our mission includes defending all levels of fair and equitable bidding.
When we think of the word fair, transparency often comes to mind. Transparency is a crucial component in the bidding process, especially during the advertising phase of a project. In an effort to broaden transparency, CIFAC has sponsored Assembly Bill (AB) 2987.
AB 2987 would modernize the California Uniform Public Construction Cost Accounting Act (CUPCCAA) by authorizing agencies, signatory to the Act, to notice bidding opportunities on their agency website in lieu of noticing in a print newspaper. The measure does not remove or change the additional requirement that Regional and National trade publications be notified. Subject agencies must also adhere to uniform bidding procedures that provide transparency and fairness.
CIFAC believes this advertising modernization will benefit our partners by ensuring advertisements are easily accessible and posted in a timely manner. The new law also provides an additional incentive for agencies to opt-in to the Act, expanding the overall transparency and oversight of the CUPCCAA.
For a full version of the bill text, please click on the link below.
By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
After a hard fought battle, which included valuable support from our industry partners, CIFAC was able to persuade the North Coast Railroad Authority (NCRA) to rescind a resolution (2019-11) that put them out of compliance with the California Public Contract Code (PPC). This recently approved resolution by the Board of Directors, authorized their Executive Director to execute a construction contract and forgo the competitive bidding process. The project is the final phase of the Ukiah Depot infrastructure project, which has an estimated value of $958,000.
In the resolution, the Board attempted to justify its actions by explaining that competitive bidding the project would not produce an advantage to NCRA and would be undesirable and impractical. They even took it a step further and used the Graydon vs. Pasadena ruling that produced limited exception to competitive bidding laws and was not applicable in this case.
The new resolution 2019-12, to rescind the old, passed with a Board member’s vote of 6-0. It was obvious that after the Board received the outpouring of descent, they felt that compliance was the best course of action. Upon the reading of the resolution by the Board, CIFAC insisted that additional language be written in the resolution mentioning that the final phase shall comply with all competitive bidding requirements. The Board quickly agreed and the language was added. CIFAC will continue to monitor the NCRA to ensure their compliance with the PCC.
A big thanks goes out to OE3, Laborers, UCON, AGC, Cement Masons, the North Coast Builders Exchange, Lee Howard Construction, North Bay Building Trades and Riley’s Compliance Consulting for sending letters of concern, condemning the first resolution that violated the PCC. CIFAC would like to express our gratitude to those partners that also attended the Board meetings.
By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager. -
Recently the City of Glendora had a bid opening for their Police Parking Lot Perimeter Security, Plan Project. The project’s scope included enlarging the parking lot footprint with a new eight foot high perimeter wall, fence with sliding gates, new wall mounted lighting, video vehicle intercom, vehicle and pedestrian entry key pads, Asphalt and slurry seal, re-striping of parking stalls and installing wheel stops in the parking lot.
Six companies submitted bid proposals that ranged in the amount of $345,500 to $803,850, however the city only had an adopted budget of $185,000 for this project.
In reviewing the City's Agenda, Morelli discovered that the public works director was making a recommendation to the city council to reject all bids and adopt a resolution requiring a four-fifths vote of the council recommending that they dispense with further complying with the Public Contract Code (PCC) or State Prevailing Wage requirements and declare that the project can be performed more economically by day labor, or the materials and supplies furnished at a lower price in the open market, or bid it out in-formally to a select group of contractors that they had previously worked with.
The director’s staff report and proposed resolution to the city council was incorrectly citing PCC’s 20166 and 20167. PCC 20166 does not indicate that they can dispense with bidding, but rather reject and re-bid and since they had received six bids, they must comply with this PCC requirement. Additionally, PCC 20167 as cited in the director’s staff report was partially correct, but PCC 20167 does not indicate, nor allow the ability to dispense with the paying of prevailing wages, as his staff report was incorrectly indicating they could do.
Morelli contacted the public works director and formally requested that he, One, Pull the agenda item due to improper interpretation of the two PCC’s and Two, Re-bid the project for move favorable bids. Morelli suggested to the director that generally when an agency rejects all the bids the first time around, they usually see more favorable pricing at the re-bid. Morelli additionally suggested that perhaps the city’s estimate and budget for the project could possibly be too low.
A few days later, in reviewing a video of that City Council meeting, Morelli observed that the City did in fact approve to in-formally re-bid the project and they also indicated that they would comply with the prevailing wage requirements.
OUTCOME: Due to CIFAC's investigation, Morelli observed on the City's January 8th, City Council Meeting Agenda, that the public works director did take his advice to re-bid the project and was now recommending the project be awarded to the lowest bidder in the re-bid for $257,000, Not only did CIFAC influence a positive outcome, but also saved the city $88,000 from the previous low bidder on this project. Clearly a win-win for all!
By Patricia (Patti) Rascon, Southern Regional Compliance Manager. -
“What’s good for the goose is good for the gander” right? Most of us are familiar with the Parent-Student Handbook that outlines the school districts expectations for kids and parents alike, but who holds the schools accountable for their behavior?
Education Code (EC) Section 1040 (a) provides that County Boards of Education shall “Adopt rules and regulations not inconsistent with the laws of this state, for their own government”. Simply put, they must follow the rules! A recent investigation with an Orange County School District on a Lease-leaseback project uncovered a discrepancy on an agenda item, which spelled out …WITHOUT ADVERTISING FOR BIDS.
History 101: In January 2017, with the help of CIFAC and their partners, AB 2316 became law and allowed for significant changes to the Lease-Leaseback (LLB) construction program. Notable revisions included specifically deleting the phrase “without advertising for bid” from EC section 17406 and adding a new competitive bidding process to the LLB procedure. In other words, the code now requires a competitive bidding process should the district choose to use this contracting method. This process now includes the adoption and publishing of required procedures, guidelines by the school district, the advertisement of Request of Proposal (RFP), pre-qualification of contractors, proposals submitted in a sealed envelope with each proposal scored based on a best value system, and lastly, subcontractors shall be afforded protections built into the contract.
While doing my homework, I discovered that someone failed to make the grade in keeping the purchasing policy up-to-date. Their version from September 2000 read, “Without the benefit of a formal bid”. So what are the consequences for bad behavior? Not receiving the best value for dollars spent, and lost job opportunities for our industry to name a few.
History 102: The CIFAC mission is to create and increase job opportunities for the public works construction industry and this equates holding agencies accountable for their actions. With our involvement, the district acknowledged the errors and pledged to follow the rules.
Lesson learned, passing grade, no detention, gold star!
By Jamie Watkins, Southeastern Regional Compliance Manager. -
At the Construction Industry Force Account Council (CIFAC) one of the ways we ensure agencies are complying with the California Public Contract Code (PCC) is by having a “boots-to-the-ground” approach. We have our Regional Compliance Managers (RCM) attend city council meetings to inform council members and city staff of the work we do. We do this so the agency understands we are watching them and if they have questions about the PCC, they reach out to CIFAC before we have to contact them with a potential violation. The end result is to influence the agency to adhere to the code, resulting in public agency transparency and more job opportunities for our construction industry.
For example; a dialogue was opened between RCM Jamie Watkins and the Rancho Cucamonga City Council about the benefits of becoming signatory to the California Uniform Construction Cost Accounting Act (CUCCAA) otherwise known as the Act. The Council was unfamiliar with the Act so they were informed by Watkins of the higher bidding threshold that would allow the city to perform more work with their own force account if they became signatory. Another advantage of becoming signatory is the ability to use informal bidding procedures for new construction projects between $60K and $200K. The advertising procedures outlined in the Act would require notification to trade journals, opening bid opportunities for a greater number of potential bidders within a larger pool.
For another city, the RCM made contact with the Public Works Director before the city council meeting about an agenda item that was classified as an “emergency” when in fact it was not an emergency. When an agenda item is classified as an “emergency” oftentimes agencies are able to self-perform with there own force account to complete the work or will award a contract without going through the proper bidding procedure. The RCM was able to ask the Director for clarification and inform city staff what a true emergency-order is according to the Code. These are just a few examples of CIFAC out in the field working for the construction industry.
In another instance, a reporting party contacted Watkins with several questions pertaining to the PCC. A city was not competitively bidding a particular public project, but rather using city forces to self-perform the job. After contacting the City for clarification, the reporting party was notified that the project was in the preliminary stages and the agency will place the project out to bid. If CIFAC had not contacted the agency it could have very well gone unnoticed. In this case the RCM with continue to monitor the project in question to make sure the city bids the project.
Our RCM’s are here to provide assistance to agencies to become compliant and if you have any questions in regards to the Public Contract Code please contact us at 1-800-755-3354
By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
Prior to CIFAC's successful legislation to insert California Public Contract Code (PCC 22031 (2) (c)), a county with a "road commissioner," or "transportation director," usually the Public Works Director who had been given the title by an action of the Board of Supervisors, had unlimited ability to perform new construction of all county roads, streets and highways.
This changed in 2011 when CIFAC sponsored and passed bill AB 720, the Road Commissioner legislation. The authority of the "road commissioner" was limited to 30% of the total of new construction from the previous year for counties with a population over 50,000 and who participate in the California Uniform Construction Cost Accounting Act. These limits are calculated from the County Streets and Roads Reports that are submitted to the State Controller's office annually and posted in an official report. In the first year alone, $9 million of work that was scheduled to be performed by county workers in Riverside County was put out to bid.
Shortly after AB 720 was signed into law CIFAC identified four issues for the Legislature to clarify. In 2014 CIFAC helped AB 2752 get signed into law. It is a bill that further clarified that counties shall calculate their eligible force account work on a fiscal year basis; clarifies that counties shall use the State Controller’s Office Annual Streets and Roads Report as of March 1 of each year to set the cap for the following fiscal year; clarifies that counties may comply with the requirement to “declare work” using the road commissioner procedure in three ways prior to commencing work, namely, listing anticipated projects in the annual budget, listing anticipated projects for the fiscal year, and/or on a project-by-project basis.
In 2018 CIFAC continued to support measures to help agencies comply with the reporting requirements that assist in enforcing the “road commissioner cap”. AB 636 was approved which increased the filing time each city and county had to submit a complete report of expenditures for streets and roads for the preceding fiscal year from October 1st to December 1st. This bill also requires the State Controller to publish and make the annual reports from the cities and counties available on their website instead of distributing physical copies. Not only does this provide CIFAC direct access to this important information, it also assists the Regional Compliance Managers with enforcement.
CIFAC monitors these reports and calculates the total each county has spent. With these figures, CIFAC can determine if they have exceeded that amount and if so, they are in violation of the law.
If you have any questions in regards to the County Road Commissioner Authority or the California Public Contract Code, please contact CIFAC at 1-800-755-3354 or visit us on the web at www.cifac.org.
A series of recent expensive failures by the City of Los Angeles public works force account workers highlights one of the main reasons CIFAC exists—to save taxpayers a fortune spent fixing issues caused by incompetence. We believe that public works should be built by private at-risk contractors—under the banner of the California Public Contract Code (PCC) and other applicable laws.
The most recent examples of these pricey failures come to us courtesy of the Los Angeles Department of Water and Power (LADWP) and the Street Services division of the City of L.A. Public Works Department. Within the past year, these two agencies demonstrated a level of incompetence that will end up costing citizens more than $6 million.
While it makes no difference, these tales of two massive agency foul-ups beg for an explanation of the cause—we know about the cost.
In September, the U.S. Environmental Protection Agency (EPA) stuck LADWP with mandatory purchase of millions in “mitigation credits” and an additional fine for violations of the Federal Clean Water Act (CWA). These penalties stem from findings of a 2016 inspection of the Van Norman Complex in the San Fernando Detention Basin. The EPA, the Army Corps of Engineers and the California Department of Fish and Wildlife inquiry found “extensive vegetation clearing and soil displacement on the property.” In 2013 and 2016, almost eight acres of open water and adjacent wetlands in the basin had been graded, filled and channelized without a permit from the U.S. Army Corps of Engineers.
Under the terms of an EPA order, LADWP will purchase $5.3 million in “mitigation credits” at the Peterson Ranch Mitigation Bank for damaging wetlands on its Granada Hills property and pay a $94,000 “administrative” penalty. Mitigation credit “banking” is used by environmental agencies “to preserve, enhance, restore or create a wetland to compensate for adverse impacts to similar nearby ecosystems.” This imaginary currency, paid for with real money, this time supplied by the ratepayers who get water, gas and electric power from LADWP.
While CIFAC repeatedly challenges LADWP’s force account work, we haven’t been able to get the Agency, with 9,400 workers, to hear reason on this issue...but, we keep trying. Mistakes like failing to get an Army Corps 404 permit for what they called “maintenance” work is the latest example of why the work should go to private contractors. If they make mistakes like this, the cost of making things right fall on the companies—not the four million customers of LADWP—which is why they do not.
The L. A. Bureau of Street Services bills itself as the “Custodian of the City’s Street System,” but last year city workers made such a mess of simple sidewalk replacement projects that they will have to be torn out and replaced—paying double for the same work.
This snafu was reported on by a local television station in January 2018 when they ran an expose regarding problems city workers were having to perform the work needed to comply with a settlement of a class action lawsuit (Willits v City of Los Angeles) to make sidewalks compliant with the provisions of the Americans with Disabilities Act.
The settlement which is the largest ADA payout in the city’s history, requires the City to spend at least $1.367 billion over the next 30 years to make its public sidewalk and crosswalk system accessible to persons with mobility disabilities.
It will require the City to install, repair, and upgrade curb ramps; repair sidewalks and walkways damaged by tree roots; repair broken or uneven pavement; correct non-compliant cross-slopes in sidewalks; install tree gates and missing utility covers, and remediate other inaccessible conditions among the main conditions.
As the TV report discovered, the force account employees had significant difficulties meeting the federal standards required to make a sidewalk. They even hired their investigators to measure things like wheelchair ramp sidewalk slope and whether ramps were built across from each other to facilitate disabled travelers getting where they needed to go.
The experts, certified ADA professionals and private civil engineers, all said that much of the work would have to be redone. Again, if a private contractor had failed on a project at such a massive scale they would have to pay for necessary repairs themselves and probably be barred from doing similar projects for the City in the future.
CIFAC is actively trying to get the City of Los Angeles Public Works Department to recognize their inefficiencies and we will continue to advocate the work going to bid.
By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager. -
These are legitimate questions that CIFAC is continually asked, so hopefully after this explanation you will have a better understanding of these two procurement processes.
Job Order Contracting (JOC) JOC’s are an undefined quantity contract used by Universities, Colleges and Counties. School Districts may use JOC’s if they have also entered into a formal project labor agreement. (PLA) Each task is assigned a quantity of units and the bidder develops a price for a single unit. The bidder is then on-call for the length of the contract (Usually 1 year or less) and performs the work the agency is requesting to be performed at that time or as needed. Some JOC’s stipulate that a minimum amount of work will be performed. In some cases, agencies might establish a maximum individual amount of work for a specific task (i.e. $175k for a specific task out of the entire $1 million JOC awarded to the bidder) regardless, the law stipulates that the maximum dollar amount of work that can be performed as $5 million the first year of the agreement. The annual contracts may be awarded for repair, remodeling, or other repetitive work to be done according to unit prices and shall not include design or contract drawings. Specific to Counties, annual contracts may not be awarded for any new construction. Recently, I observed the County of Ventura’s General Services Agency (GSA) award two JOC contracts to a successful bidding contractor for about $4 million each. I contacted the County with my concerns that the individual projects (that make up the JOC) are not to be used for any new construction per the PCC’s definition. The GSA Director assured me that the projects will comply with those provisions. At this point, we are monitoring the agency’s projects to ensure compliance.
Joint Powers Agreement (JPA) JPA's also known as; Joint Powers Authorities or Joint Cooperative Purchasing Agreements, have been around for a long time and are a formal, legal agreement created when two or more public agencies jointly exercise common powers. The purpose is to share a common power and jointly implement programs, deliver services, or in our industry, for contract procurement. It should be noted that while the California Public Contract Code (PCC) provides a definition pertaining to multiple state agencies JPA-cooperative agreements, the PCC does not govern such agreements. Out of state JPA's are now a current trend used by agencies for contract procurement.
National Joint Powers Agreements (NJPA) were designed to streamline the procurement process for participating agencies by developing Request For Proposals (RFP’s) or Invitation For Bids (IFB’s) for agencies with the intent of their competitive solicitations meeting or exceeding local requirements. The RFP solicitation process usually includes public notice/advertising, a pre-proposal conference, RFP official opening and evaluation based upon established scoring criteria. Award of the contract is to the most responsive/responsible vendor/bidder, all handled by the lead agency, which has an established board who oversee the process. These lead agencies are located out of state as are the public agency officials who sit on their board
Agencies utilize the NJPA process because they believe that it saves them time and money over the traditional method. While that can be debated, frankly… the process is just easier for the agency!
A few months back, the City of Port Hueneme had utilized a NJPA for a grouping of several projects. We contacted the City with our concerns about transparency and proper bidding per the PCC, as their staff report didn’t indicate who the bidders were and we wanted to see who actually bid on this contract. By the end of the day, we received a letter from the City’s legal counsel, advising that; they were a Charter City; that they had followed the legal requirements and that the City was totally comfortable in moving forward with the project, despite our objections. The City did provide proof a few days later that there were in fact several southern California bidders for Port Hueneme’s JPA however this is not always the case.
CIFAC has several concerns about both JOC’s and JPA’s. For starters, that they lack transparency, limit the ability of local contractors to bid and both of these methods do not appear to comply with the States standards and statutes per the PCC. What is CIFAC doing about it? Currently we are gathering information, doing research and looking at legal opinions to determine if these methods and their usage are circumventing the California Public Contract Code and if so, is a way to legally challenge this procurement process.
Bottom line… As of now, both of these procurement methods are legal in California. In regards to whether or not the JOC or JPA actually saves the agency money, well that’s a discussion that I think will be debated for some time.
When a public agency decides to move forward with bidding out a public project, advertising requirements come into play.
Different agencies will have different rules to follow based on their individual procurement policies, but all must abide by the requirements set forth in the Public Contract Code (PCC). Depending on the type of public agency, some of these include; notifying a maintained list of qualified contractors, sending bid invitations to construction trade journals, or posting in a local newspaper of general circulation. Advertising requirements such as these are put in place for a reason. Simply put, the wider your outreach, the more likely you are to receive the best price possible. This is important for public agencies, as the money they spend is coming from tax-payers.
In this day and age, expanding your search for a qualified contractor has never been easier. State-wide construction trade journals such as Construction Bidboard (www.eBidboard.com) and Dodge Data & Analytics (www.construction.com) are very useful resources for getting a project in front of a large audience of contractors. These websites post thousands of projects a day and provide details regarding the scope of work and deadlines for bids. In addition, there are numerous local trade journals, builders’ exchanges, and contractor associations spread throughout the state for advertising of projects online and to their memberships as well.
Another option which can be useful to agencies is to maintain a qualified contractors list. Directly reaching out to the contractor by way of mail, fax, or e-mail can draw a contractor’s attention and yield you a higher chance of getting more bids. Agencies who have opted into to the California Uniform Public Construction Cost Accounting Act (the Act) can utilize this method as their sole advertising method on smaller projects (under $175,000). While it is not normally recommended to use only one avenue for outreach, it can be a way to speed up the procurement process on projects that are on a tight timeframe.
The timeless method of advertising a public project is to post in the classifieds of a local newspaper. This has been a method used for many years and can still draw a lot of success. However, combining this type of advertising with one (or both) of the methods listed above will surely get you more responsive and responsible bidders submitting proposals.
CIFAC recommends advertising in every way possible. We monitor public agencies to ensure they are abiding by the advertising requirements outlined in the PCC. Larger outreach not only helps to level the playing field for contractors, but it ends up saving the tax-payer and public agency money in the end. It’s a win-win for all.
Do any of you remember the penny arcade game called Whack-A-Mole?
It’s a real simple game—you have a rubber mallet and you have to hit the “mole” when it pops up out of a hole—with the only problem being that there are lots of holes and the moles travel unseen underground, popping up when you least expect them.
In many ways, it’s a lot like trying to do battle with public entities that are constantly trying to evade the requirements of the Public Contract Code (PCC), California Uniform Construction Cost Accounting Act (CUCCAA) and prevailing wage laws. In recent years we have been challenged by local school districts using a twisted public/private concept called “lease-leaseback,” which led to concerns about corruption and collusion in the selection of contractors in addition to the all the other issues with public construction.
The latest “mole” is the interesting case of California state universities using a private contracting firm to build student housing a few blocks from the campus with only a “possibility” of later acquiring the housing units for “a public purpose.”
Pretty slick, right? The university can claim that it does not own the new housing unit and thus it does not fall under the PCC, CUCCAA, Department of Industrial Relations public works registration or prevailing wage. Because the contractor does not have to play the game under the rules binding California’s public works contractors, nor, in this case even competitively bid the work, they can claim to save the university money while making a better profit margin.
We came across this scheme wrapped around one of these off-campus housing projects in Arcata, home to Cal State Humboldt. CIFAC has been actively working with officials to stop their approval of the construction activities until they meet the laws for public works in California, along with the Humboldt and Del Norte Central Labor Council, AFL CIO and other concerned citizens.
As part of our research on this issue, we found that the contractor on the Humboldt State project has several similar jobs either completed or lined up including:
Promontory, 176 apartments, CSU Monterey Bay
The Vista, 180 units/660 beds, CSU, Stanislaus
The Crossings, 225 units/750 beds, CSU Sacramento
The Post on Nord, 173 units/625 beds, CSU Chico
The Village 240 units/800 beds, Cal State
The Graduate, 260 units/1,039 beds, San Jose State University
On their website, the contractor, which does multi-family residential construction in Texas and Washington also, says it entered this market in 2012 and “is already a preferred provider among California universities.”
Where We Are Now
After six public hearings on the plan, the Arcata City Council found itself deadlocked on the issue and when it came out with a tie vote on August 29th, the matter was declared defeated. Several Council members agreed with CIFAC, that this appeared to be a University project that should be bid with state wages paid.
We are not opposed to the construction of more off-campus housing to support our state universities, just the projects that blatantly attempt an end-run around the laws that protect the public, the contractors and even the agencies involved.
Among the many lessons taught to us in Sacramento is that it is one thing to pass a bill into law, and quite another to make sure that somebody enforces that law.
We got to be “somebody” in the case of Assembly Bill 720 (2011), known as the Road Commissioner Act. AB 720 was a bill that CIFAC and our member firms and associations pushed to end the practice of almost unlimited construction under the 19th Century Public Contract Code rules for counties. We had to come back to the legislature in 2015 to provide a few amendments, mostly agreed to by both sides of the issue, after the real world showed some areas in the process could be improved.
The way Public Contract Code Chapter 630 (that’s where the bill ended up) works is that counties who are a signatory to the California Uniform Public Construction Cost Accounting Act (CUCCAA) may informally bid new construction projects of $45,000 up to $174,999. All projects valued at $175,000 or more shall (must be) put out to formal bidding procedures.
Counties using the Road Commissioner Exemption are not required to bid all construction work done under the Road Commissioner Authority, but the projects must be declared publicly before commencing work. The big stick here is that Road Commissioner work is subject to a 30 percent cap of all force account work done under the Road Commissioner exemption from the previous fiscal year.
Because these counties would be required to limit their force account road work to the numbers found in the prior year’s State Controller’s Annual Streets and Roads Report, it hamstrings their current activities and limits any growth. For instance, if a county did very little road work by force account that did not involve maintenance the prior year, but in the current year faces a situation that requires a large amount of road reconstruction, then that county would be limited to 30 percent of that lower amount from the prior year regardless of the circumstance.
Determining that 30 percent limitation is where CIFAC enforcement comes in. We use what is reported by the State Controller’s office to calculate the 30 percent cap for the coming fiscal. We do the research, and we keep an eye on the counties who have stayed away from CUCCAA guidance.
CIFAC does this annually when the Controller’s Report becomes available. Once a Road Commissioner project is declared, a signatory county may not subtract the value of designated categories or cost elements on that project to stay below their 30 percent threshold for any given year. In plain English, that means you cannot pick a project apart to stay under the cap once it’s declared.
So, CIFAC is doing what was set up to do—protect the interests of private construction companies and their employees—and that means getting a bill passed and then helping to enforce it.
By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager. -
Recently I observed a Public Work’s Director proposing to his City Council, the extension of a contractor’s $300,000 contract for the City’s annual sidewalk, curb, gutter and driveway repair or replacement maintenance contract. In looking at the background information, my concern was whether the project was ever formally put out to bid. Upon further investigation, I was able to determine that this was actually going to be the eighth extension with the same contractor! How can they do that you ask?
Well, Public Agencies do have the flexibility to utilize annual maintenance contracts for regular, repetitive, routine or recurring maintenance. We see annual contracts being used for; landscaping, tree trimming, fire sprinkler service and testing, building maintenance or sidewalk, curb, gutter and driveway repair or replacement.
There are several components that an agency must include in utilizing the annual maintenance contract procurement method.
The agency must still follow the California Public Contract Code (PCC) laws, so initially the annual maintenance contract for the project must be formally bid out.
The Agency must follow the definitions as outlined in PCC 22002, (Maintenance) Which is defined as; Routine, recurring and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes.
In the original contact, the agency can stipulate the term, usually one-year, (I have also seen three to five year contracts) usually with a clause that allows the agency to extend the contract one (or more) years at a time, if both parties agree and the governmental board or city council votes to approve the extension. There may also be clause included that allows either party to terminate the contract, as well.
The Agency (at their option, but not very likely) may also include or allow the contractor a minimal unit price increase, as long as it follows the Consumer Price Index (CPI) and as long as this clause and details are included in the extension agreement.
So back to my concern with the above agency’s awarding the eighth-year renewal contract extension to the contractor. I made a formal Public Records Act request to see the original contract between the City and the contractor. Upon reviewing the contract, it did in fact have all of the required components, so the City was legally within their right to extend the contract. I suggested that perhaps they should at least consider re-bidding it out after no more than three years, believing that the City was more likely to obtain favorable pricing by utilizing the competitive bidding process.
-Bottom line… You can lead a horse to water, but you can’t make him drink!
By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
As a big supporter of local agencies adopting the California Uniform Construction Cost Accounting Act (CUCCAA), The Construction Industry Force Account Council (CIFAC) must take every step to ensure that if an agency is using the provisions in CUCCAA, that they have followed all the proper procedures to become signatory and are in full compliance with the Act. CIFAC supports the Act because it creates an increase in project advertisement and project accounting requirements over the State's General Law. Both of which create greater transparency and in turn, obligates agencies to stay compliant with the Public Contract Code.
Whether it be a County, City/Town, School District or a Special District, all local agencies that want to become signatory to CUCCAA must first pass a resolution through their governing board to become subject to the uniform construction cost accounting procedures. The resolution shall specify that the local agency will meet the requirement prescribed in the Act.
An additional requirement is that an informal bidding ordinance shall be enacted by the participating agency. Informal bidding is not allowed by State General Law but is allowed once an agency becomes signatory to the Act.
The final step, which seems to be overlooked in some cases, is that the agency “opting-in” to CUCCAA, must notify the Office of the State Controller in writing of the election to become subject to the uniform construction cost accounting procedures and include a copy of the resolution.
CIFAC’s Regional Compliance Managers (RCM), both in Northern and Southern California have encountered on numerous occasions, agencies whose governing board have past the resolution to become subject to the Act and have created the informal bidding ordinance, but are out of compliance because they did not take the final step of notifying the Office of the State Controller. In an effort to help with this compliance issue, our RCM will often provide guidance to the agency, directing them on how to become compliant with the Act. If you have any questions in regards to CUCCAA or other Public Contract Code questions please contact CIFAC at 1-800-755-3354 or visit us on the web at www.cifac.org.
By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
Californiacompetitive bidding laws are intended to eliminate the awarding local agency from showing favoritism or in some cases trying to commit fraud and preventing the misuse of public funds. Contracting by local agencies laws are addressed in the California Public Contract Code (PCC), in sections 20100 through 22178. The PCC addresses many specific specifications of the laws surrounding public contracting and should be reviewed if you plan to bid public works projects. For this article, we will focus on the process. One important note, any contractor who bids on or enters into a contract to perform public works projects is required to register with the Department of Industrial Relations.
We’ll start off with some clarification; there are some categories of work that are in some cases, excused from competitive bidding depending on the type of agency. These categories can include specialized personal services, emergency work, maintenance and new projects that don’t reach the local agencies force account limit or bid threshold (dollar amount) that is specified in the PCC, in the city bylaws or charter of the city.
Advertising for Bids
Once a public agency reviews and approves an estimate received by the agency’s City Engineer or a project-engineering consultant, their governing board will vote to give their Public Works Director or designee the authority to advertise for bids. This is one of the major components that creates transparency in this process and allows contractors and the public to view the specifications of the project. Depending on the agency’s own advertising requirements, this can be done in newspapers, centralized community notification boards, and electronic bid-boards online. Contractors submit sealed bids based on the project specifications outlined in the engineers’ estimate. The bids will be publicly opened on a date set by the agency.
Award of Contracts
There are a couple of methods the awarding agencies use, depending on the requirements of the agency, to award a contract. The first, and the most commonly used method, is to award the contract to the lowest responsible and responsive bidder.
Here is what that means; a responsible bidder must be a licensed contractor who has not been barred from government contracts for prior misconduct. In addition, a responsible bidder must have the equipment and skills necessary to perform the work in question or have a sub-contractor who has those particular skills. If the bidder is deemed not responsible because they do not meet the above criteria, the public agency need not award the contract to the lowest bidder.
The next requirement in the first method is that the bid be responsive. Quite simply, the bid must be an offer to provide the goods and services that are being bid upon and the bid must comply with all procedures that are set forth in the requirements of the bid documents. For example, a bid, which excludes a portion of the work, which was outlined in the specifications, is deemed non-responsive.
The second, less commonly used method to award a contract is to use the “best value system.” 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. CIFAC currently see it used in relationship to design-build projects and lease leaseback contracts but it may be used with design-bid-build delivery.
The public agency has authority and discretion to reject all bids and to re-advertise. This usually takes place when all bids exceed the amount the agency has budgeted for the work. The public agency may reject any bids presented, if the agency, prior to rejecting all bids furnishes written notice to bidders. The notice shall inform the bidders of the agency’s intention to reject the bid and shall be mailed at least two business days prior to the hearing at which the agency intends to reject the bid.
Finally, CIFAC can help contractors review the bidding process if they feel that the agency is not complying with their own competitive bidding regulations. If a protest to the awarding agency is require, the contractor should draft a letter immediately as to the reason for the protest. The contractor protesting should go before the agencies governing body at the time they will vote on awarding or rejecting the bid to argue their case. If the protesting bidder is unsuccessful, it may want to consider seeking court intervention. Such court intervention should be sought within a few days of the public entity voting to award the contract to another bidder.
By Jamie Watkins, Southeastern Regional Compliance Manager. -
As Regional Compliance Managers we have opportunities to meet many of our partners at networking events. These occasions have allowed us to introduce ourselves, share what we do and build relationships. Most people are intrigued by our organization and want to know more. Networking is critical with the work we do and here are three reasons why:
1. WE CAN SHARE OUR KNOWLEDGE WITH PEOPLE IN THE CONSTRUCTION INDUSTRY
When we have the chance to attend network-meeting events, we are able to share what exactly CIFAC’s mission and purpose is and how our organization can help make sure state and local government agencies are complying with the Public Contract Code. We share the importance of following the code and how it creates more job opportunities, fair bidding and transparency. Most people are not aware of the legislation CIFAC has passed and how we have countlessly influenced agencies to abide with the code. We are also able to share the different ways agencies violate the Public Contract Code, which then leads to more conversations on how we, here at CIFAC, can counteract that.
2. NETWORKING LEADS TO REFERRALS
Oftentimes when we meet people at construction industry associations, many contractors and labor unions share with us issues they have had with the bidding process. We are able to discuss face-to-face concerns and share how we can help. Our partners are our eyes and ears in the field and they see firsthand the problems in the community. We are able to explain the process with each investigation we conduct and what the next step is in resolving the problems.
3. ESTABLISH MEANINGFUL CONNECTIONS FOR THE FUTURE
When the CIFAC team connects with people in our construction industry, we are able to have conversations on the importance and significance of the work we do developing strong relationships with our supporters. The more we network and get our name out, the more we can help when our partners see something that is out of compliance and refer to us to investigate. Our ultimate goal is transparency with our supporters and hold the public works industry accountable for code compliance.
This month, Governor Brown signed AB 2249, the State Controller sponsored bill that raises the bid threshold limits for California Uniform (Public) Construction Cost Accounting Act (Act) participating public agencies commencing January 1, 2019 for public projects.
Here is the background of the bill, as reported by the State: The Public Contract Code specifies the procedures that public agencies must follow when they build public works projects, including limits on project costs. The Act was enacted in 1983 as an alternative to these general requirements by allowing increased bid limits as long as participating agencies follow uniform accounting standards and bidding procedures. A voluntary program that is available to all public entities in the State, the Act allows public projects costing $45,000 or less to be performed by the public agency’s force account, by negotiated contract, or by purchase order. Projects costing $175,000 or less can use informal bidding procedures set forth in the Act. Projects that cost more than $175,000 must be put out to bid under formal bidding procedures.
The California Uniform Construction Cost Accounting Commission (Commission) administers the Act and provides technical support to public agencies by prescribing uniform construction cost accounting procedures for agencies that opt in. The Commission also reviews public complaints and recommends audits when the criteria of the Act are not fulfilled. In addition, the Commission conducts meetings open to the public, provides a manual for use by public agencies who are signatory and maintains a Commission web page on the Controller's website. Commissioners also facilitate and participate in outreach and training to participating agencies, candidate agencies, and professional organizations.
The Act requires the Commission to review the force account and bid limits every five years to account changes in public construction costs. If the Commission recommends higher limits, the Controller promulgates the new limits and the Legislature amends the Act to reflect the adjusted amounts. This last occurred via AB 720 (Hall). The Commission on September 28, 2017, passed a resolution recommending that the Controller increase the bid limit to $60,000 from the previous $45,000 limit and to $200,000 from the previous $175,000 limit.
CIFAC monitors agencies to ensure they follow the Act’s requirements and has filed complaints against agencies that are found to be out of compliance.
As of last year, there were 121 “charter cities” out of the 485 municipalities in California...and right now it looks like another two want to join that list-- City of Carson (Los Angeles County) and City of El Cerrito (Contra Costa County).
July 17th El Cerrito’s city council put the question on the ballot for the November general election. The real driving issue for the city is to be able to raise taxes on their own. In this case, the city wants to create a “real property transfer tax,” levying residents about $12 for every $1,000 on the price of any house sold in the city limits.
The really unusual part is that El Cerrito already receives half the money from the Contra Costa County “real property transfer tax.” There is no word yet on whether that arrangement will continue but you can be sure the county will not stop collecting this additional fee in El Cerrito whether the city of 25,400 enacts its charter proposal or not.
City officials say the additional taxes will go into the general fund, “to be used for improving city resources such as parks, after school programs and public safety,” according to news reports.
“An online survey offered to residents found 58 percent supported both the charter and tax, though the issues received only 33 percent and 43 percent respectively when surveyed separately,” according to the East Bay Times.
CIFAC has been monitoring the El Cerrito effort since it surfaced and we have received pledges from the city to continue to follow the Public Contract Code (PCC). We will stay on top of this issue.
Different Story in Carson
Carson is looking to abandon the PCC and create their own procurement requirements. This is obviously a concern to CIFAC. We have spoken to the city, strongly suggesting they adopt the California Uniform Construction Cost Accounting Act (CUCCA) and we sent formal letters with the same message.
At this point, we’re not sure what Carson is going to do on our issues, but, if they fail to adopt protections for the construct process we will likely oppose those actions. The charters we worked on with our network in the past that were defeated included Grover Beach and Arroyo Grande. We also were able to stop Porterville (who is already charter) from exempting the PCC.
The city has yet to adopt a charter but they have produced a 65-page draft and they plan to get it before the city council for approval August 7th. To get it on the November ballot the city must send the council resolution of approval by August 10th, the last day for local jurisdictions to file a resolution with the L.A. County Board of Supervisors requesting consolidation with the General Election.
Cities that adopt their charter may adopt their procedures for matters that are considered “municipal affairs,” which is an important phrase if actually undefined in the code. Almost every law suit involving city charter issues ends up with judges trying to decide what a “municipal affair” is. The California Constitution grants charter cities the power to “make and enforce all ordinances and resolutions concerning municipal affairs” (California Constitution Article XI, Section 5(a))—the “home rule” provision. Typical examples that have evolved in the Home Rule of municipal affairs since its passage in 1879, include the manner of conducting local elections and the city’s dealings with its municipal officers and employees, local taxes and sometimes construction matters including force account work.
The municipal affairs that CIFAC is concerned with is whether the city adopts a fair and open contracting process—follows the PCC, provides full complete plans, advertises for bids, awards projects to the lowest responsible bidder and makes sure the winning contractor performs as bid and meets prevailing wage requirements since all “municipal affairs” would involve tax payer money.
No promises except this—CIFAC always works for the benefit of the California construction industry to make sure those provisions stated above are adhered to.
The Construction Industry Force Account Council (CIFAC) is a compliance organization that works to help private construction contractors get their legal, fair share of public work.
To do this, we investigate California public agencies (hundreds of them) and their projects (thousands of them) to ensure compliance with state bidding laws. In the 40-years of our efforts, there are some common assumptions (excuses) from agencies that we have come across that we would like to share.
Force Account Labor is free: Agencies who use internal staff to perform construction work have reasoned that because they already have staff on their payroll, that the labor to do the work is at no cost.
Splitting a project into multiple parts equals separate projects: A project may be competitively bid in multiple pieces, but it is the aggregate value that determines the type of bidding required. A project may not be split to avoid exceeding the bid threshold.
Labor costs exclusively determine a project value: The total value of a project includes the cost of equipment, labor, and materials.
Advertising is not required: It is rarely allowed to dispense with advertising and only under special conditions. Most agencies must advertise projects online, in newspapers, trade journals and by posting their bid notices in public places for at least two weeks before the bid due date.
Using Change Orders for any contractual change: A change order may be issued for unforeseen conditions but may not be used for the addition of work that was not in the original project scope.
A contract was not necessary; we’ve worked with this contractor before: Although a sign of trust and respect, handshake deals are not permissible! Public agencies must execute a written agreement to ensure protections for both parties.
Soliciting bids without plans and specifications: This is allowed, but only under certain situations, such as a design-build project or for informally bid projects under the California Uniform Construction Cost Accounting Act. Written plans and specifications ensure you get the project you bid.
Failing to provide documents upon a Public Records Request: Government Code ensures agencies provide public records upon a request and provide a written response within a ten-day period upon receipt of that request.
Awarding a contract without proper due diligence: There are many complexities to a bid that must be reviewed to ensure compliance with the project plans and specifications. You must ensure the contractor is properly licensed, bonded and experienced to perform the work.
Allowing subcontractor substitutions without proper notification to the listed subcontractor in the bid package: Subcontractors listing in a bid happens for a reason; it is a contractual agreement to perform the work. There are allowances for substitutions, but you must follow the proper procedures first before approving any subcontractor changes.
These Top Ten force account violations aren’t the only things we work on, but they usually provide what we call “a good start,” when CIFAC begins investigating complaints.
Let us hear from you if you have any questions about projects in your area so that we can go to work for you.
As CIFAC’s President, I saw 2017 as a year of change, progress and success. Turning work around, building our team and holding the line on force account limits were all goals well realized.
In the spring, CIFAC moved our headquarters to a more centralized location from Martinez to Fairfield. The new office at Martin Plaza is west of Highway 80 at the Waterman/Travis AFB Parkway exit. Midway between the San Francisco Bay Area and Sacramento, the location gives easy access to our industry partners coming from either direction. We invite you to drop in anytime at 2420 Martin Road, Suite 250, Fairfield, CA 94534.
Halfway through the year, our longtime Executive Director Cathryn Hilliard retired after 20 years of service and our new Executive Director and former Regional Compliance Manager Michelle Tucker quickly stepped into the position.
Beginning July 1, Michelle traveled all over the State meeting with our partners and lining up mutual goals and objectives to advance job creation. She also hired two new Regional Compliance Managers, Justin Bochmann to cover her former Central California territory and Tony Morelli for the Southwestern quarter of the State. There were other notable changes in industry leadership at the end of 2017 as we said goodbye and thanks to Tom Holsman at AGC, Jim Reed at CCC and Mando Esparza at SCDCL.
In 2017, SB 1, the Road Repair and Accountability Act of 2017, together with various regional and local bond measures passed and authorized more than $100 billion in funds for public works; there was a clear directive from our Executive Committee and myself to expand CIFAC services at the local level. The White House Council of Economic Advisors says that for every $1 billion spent, 13,000 jobs are generated. We are working closely with our industry partners at the local level to make sure that the work is bid to the private sector.
CIFAC’s Commitment to our members and supporters:
Coordinating on mutual goals that support the industry
Supporting their events and activities
Getting results in record time
In 2018, there will be big improvements to our Facebook and email pages. Look for your photos as our Regional Compliance Managers (RCMs) are now supporting member activities and posting more photos of events on our cifac.org website, Facebook and via email.
CIFAC’s new computer Investigations Tracking Program is in full use as of 2017 and gives RCMs field access to all the records so they immediately have the data they need to turn work around, as speed is essential at the front end of projects to get them out to bid.
Northern and Southern California investigation highlights include CIFAC’s influencing the City of Carson in Southern California to use proper bidding for a $5.1 million storm drain and storm capture management system. Discrepancies on their website made the process highly questionable.
In Northern California, CIFAC influenced the City of Colma to bid its $10 million Town Hall Renovation Project. The project was awarded to a Carpenter signatory contractor, using signatory subcontractors.
The City of Stockton was influenced to rebid a $600,000 District-wide plumbing contract after improper procedures were used during the initial bid phase and was awarded to an unlicensed contractor.
For years, the City of Ukiah, the only city in the State to be sanctioned twice by the California Uniform Construction Cost Accounting Commission (CUCCAC), has been skirting the law. This time it was the installation of manhole covers throughout the City that were done so improperly that it earned Ukiah a Cal OSHA violation! Executive Director Tucker has been working for more than two years on the details with CIFAC Board member and Ukiah contractor Lee Howard. Howard and Tucker appeared before the City Council to warn them that this could be a third strike. When a jurisdiction gets a third strike, they lose the elevated $45,000 force account limit and it reverts back to $5,000.
For other examples of CIFAC victories, I refer you to the monthly progress reports. If you are not already on the list for these free monthly updates, please send your email address to firstname.lastname@example.org.
Our legislative program is key to CIFAC’s successes. Eddie Bernacchi, our Sacramento legislative advocate, helped us deflect another slough of bills who tried to raise the force account levels of public agencies so they could keep much more work in-house. One of the most interesting in the last session was his work with the Golden Gate Bridge, Highway and Transportation District. SB 622 would have raised the limit for all construction projects from $5,000 to $100,000 (other than vessel repair which already had a $100,000 limit). CIFAC opposed the bill and after discussions among CIFAC members, a GGBHT District Board member, the District General Manager, and CIFAC Executive Director, Bernacchi was able to get that provision removed from the bill.
CIFAC staff joined the support team for SB 1, the Road Repair and Accountability Act of 2017. We participated in support rallies put on by Governor Brown in both Northern and Southern California.
SB 591 was signed into law, which successfully closed the loophole some districts were using to circumvent having to advertise and fairly award Lease-leaseback projects.
I am committed to having a full compliment of staff, “boots on the ground,” to make sure that every opportunity for getting work out to our contractors and union members is first and foremost. I feel confident that we will finally have the resources we need in the next year or two to improve business development opportunities, enhance existing CIFAC programs and launch a more aggressive electronic media program. All of this is about jobs for our members now and in the future.
New staff promises more energy, fresh perspectives and a revitalized feel to CIFAC. Our focus has never been stronger and with the future addition of two more compliance managers, we will be able to turn more work around for the industry. Paramount to our success is ensuring that CIFAC has enough staff to pursue our mission of monitoring and enforcing the Public Contract Code.
Outreach efforts will be increased, with staff attending more meetings and industry related events. Facebook postings and website updates will be more frequent. The use of Constant Contact, an email marketing program will allow us to significantly increase our communications to our industry members, that include news articles, industry alerts, progress reports and other relevant news.
Public funding for projects is at an all-time high, along with unprecedented man-hour projections from our partners. This presents new challenges as we continue to see an influx of public works projects and work feverishly to monitor the awarding agencies for compliance. The passage of the Road Repair Accountability Act or SB1 will bring millions of dollars to agencies for road construction, reconstruction and maintenance projects. CIFAC intends on diligently monitoring these agencies and their projects to ensure compliance with the Public Contract Code.
Along with increased public funding, means more agencies will try to self-perform work or pursue legislation to increase their bid threshold. CIFAC’s Executive Director or Legislative Advocate continuously monitor and analyze new legislation and changing conditions for their effect on industry priorities.
Our contribution to the public works construction industry is significant and we strive to increase those numbers as the year unfolds.
SACRAMENTO – The California Legislature wrapped up the 2017 legislative session on October 15th which was the deadline for Governor Brown to sign or veto legislation.
This year CIFAC championed legislation (AB 1019) to ensure proper funding and staffing for the California Uniform Public Construction Cost Accounting Commission which oversees the California Uniform Public Construction Cost Accounting Act and the public agencies who are subject to it. Unfortunately, despite support for the measure from public agencies and the construction industry, both labor and management, the measure was vetoed by Governor Brown. In his veto message the Governor sited that the State Controller should have the authority to allocate resources to commissions under his office. The veto of AB 1019 was disappointing, we will need to regroup and consult with the State Controller’s Office on next steps to ensure proper staffing of the California Uniform Public Construction Cost Accounting Commission.
Outside of the veto of AB 1019, CIFAC had another very successful legislative year. The biggest industry win came with the passage of SB 1, securing $5.2 billion annually for state and local transportation infrastructure. The passage of SB 1 positions CIFAC in an important role, to ensure the proper use and contracting out of those new funds.
We also brought home a victory in the area of further limiting the unfair use of lease-leaseback school construction procurement, which should save CIFAC staff time when monitoring and investigating these types of projects.
In addition, and as always, CIFAC took the leading role in defending force account limits.
Enclosed is a list of the key bills CIFAC took positions on in 2017 and the outcome.
LEGISLATION CIFAC SUPPORTED
AB 1019 – California Uniform Public Construction Cost Accounting Act. Commission Funding: Would have guaranteed staffing of the Act’s administrators, the California Uniform Public Construction Cost Accounting Commission, by the State Controller’s Office. This would have ensured that audits of public agencies who are out of compliance with the Act were performed timely.
Status: Dead – Vetoed by Governor
GOVERNOR'S VETO MESSAGE:
To the Members of the California State Assembly:
I am returning Assembly Bill 1019 without my signature.
This bill requires the State Controller's Office to make staff available to support the California Uniform Construction Cost Accounting Commission.
The need for this bill is unclear. I am confident that the State Controller's Office is more than capable of dedicating the necessary staff to support the Commission and its work without the mandate called for in this bill.
Edmund G. Brown Jr.
SB 1 - Transportation Funding: In April of 2017, the California State legislature passed and Governor Brown signed into law SB 1, the Road Repair & Accountability Act.
SB 1 will provide approximately $5.2 billion annually for California roads, highways and transit systems. Half the money will be for state transportation and half for local roads. The revenue collection will begin November 2017.
The money will be allocated as follows and totals $52.4 billion: (10-year outlook)
State investment programs (50%)
Fix-it-First Highways $15 billion
Bridge and Culvert Repair $4 billion
Trade Corridor Investments $3 billion
Solutions for Congested Commute Corridors $2.5 billion
Parks Funding for Ag, Off-Highway Vehicle & Boating $800 million
STIP (State Share) $275 million
Freeway Service Patrol $250 million
California Public Universities Transportation Research $70 million
Local/Regional investment programs (50%)
Fix-it-First Local Roads $15 billion
Transit Capital and Operations $7.5 billion
Local Partnership Funds $2 billion
Active Transportation Program Bicycle and Pedestrian Investments $1 billion
STIP (Local Share) $825 million
Local Planning Grants $250 million
The money will be generated as follows and will total $52.4 billion: (10-year outlook)
Zero Emissions Vehicles (ZEV) Fee Commencing in 2020 $200 million
One-Time Repayment of Transportation Loans
Repaying Outstanding Loans from the General Fund: $706 million
AB 591 – School Property: Lease: County Boards of Education: Closes a loophole some school districts were using to circumvent recently enacted laws that require that schools using the lease-leaseback project procurement method advertise for bids and establish a competitive selections process for awarding lease-leaseback contracts.
Status: Signed into law
SB 256 – Public Contracts: Criminal Offenses and Statute of Limitations: Would criminalize as misdemeanors certain violations of public contract law dealing with competitive bidding and would allow the commencement of the prosecution of those crimes and other, similar crimes within 3 years from the date of the offense.
Status: Held in Senate Appropriations Committee
SB 634 – Santa Clarita Valley Water Agency: Reorganizes Castaic Lake Water Agency and Newhall County Water District into the Santa Clarita Valley Water Agency and applies the requirements of the Public Contract Code to the new agency.
Status: Signed into law
LEGISLATION CIFAC OPPOSED
AB 636 – Local Streets and Roads: Expenditure Reports: Current law requires each city and county to submit to the Controller a complete report of expenditures for street and road purposes by October 1 of each year relative to the preceding fiscal year ending on June 30. This bill would instead require the report to be submitted to the Controller within 7 months after the close of the fiscal year adopted by a county, city, or city and county.
Status: Held in Senate Rules Committee
AB 1250 – Counties and Cities: Contracts for Services: Establishes specific standards for the use of services contracts by counties and cities. Beginning January 1, 2018, the bill would only allow a county or county agency, or a city or city agency, to contract for services currently or customarily performed by their current employees when specified conditions are met. Among other things, the bill would require the county or city to clearly demonstrate that the proposed contract will result in actual overall costs savings to the county or city and also to show that the contract does not cause the displacement of county or city workers. CIFAC opposed the bill and was able to secure amendments exempting construction, alteration, demolition, installation, repair, or maintenance work from the provisions of the measure.
Status: Held in Senate Appropriations Committee
SB 622 – Transportation District: Contracts: Requires a bridge and highway district to advertise for contracts for all vessel repair, maintenance, and alteration work if the estimated expenditure exceeds $1,000,000, and for all other construction, repair, maintenance, and alteration work, and all similar work, if the estimated expenditure exceeds $5,000, in at least one newspaper and one trade paper of general circulation. CIFAC opposed the bill as originally drafted which would have raised the force account limit on construction, repair and maintenance from $5,000 to $100,000. At our request that provision of the bill was removed.
Status: Signed into law
LEGISLATION CIFAC ACTIVELY MONITORED
AB 618 – Job Order Contracting: Community College Districts: Authorizes community college districts to enter into job order contracts, an alternative construction contracting agreement currently available to school districts, until January 1, 2022.
Status: Signed into law
SB 851 – Local Agency Projects: Extends the sunset date on the authority of counties to use construction manager at-risk contracting, extends construction manager at-risk contracting authority to the City of San Diego, and allows the Santa Clara Valley Water District to use the design-build procurement method.
Status: Signed into law
AB 1424 – University of California: Best Value Construction Contracting Program: Eliminates the sunset on the University of California's authority to use the best value procurement method for construction contracting.
There appears to be much confusion surrounding public project definitions. CIFAC Compliance Managers often hear “the Labor Commissioner made a decision that this is a public project so why didn’t it bid”. The Labor Code (LC) finds that most projects with more than a dollar of public money is classified as a public project with minimal exceptions.
The Labor Code, which outlines the requirements for the payment of prevailing wages defines a public project as the “construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds” and includes the design and pre-construction phases of work.
Just because a construction project is funded through public funds does not mean that the Public Contract Code (PCC) applies.
The PCC definition varies depending on the type of agency. There are over 100 different types of agencies listed, including state agencies like Caltrans and local agencies such as cities, counties and school districts. There are some basic factors that indicate a project may be subject to the PCC such as if the public agency is handling the procurement of contractors on a project, whether the funds are public or private, the classification of work involved and the cost value of the work.
Private non-profit organizations, associations or joint powers authorities are not required to follow the Public Contract Code although their funding is commonly public money.
If you have any questions about the applicability of the PCC or are concerned about a project in your area, please contact CIFAC.
By Jamie Watkins, Southeastern Regional Compliance Manager. -
Here at CIFAC one of the ways Regional Compliance Managers monitor state and local government agencies, is by reviewing city agendas looking for any items that may be out of compliance with the Public Contract Code. I was recently sent notification of a City in my region advertising a Request for Proposal (RFP) for “on call painting services.” The three-year contract was described as maintenance work to preserve city owned facilities. Determining “maintenance” as distinguished from “new construction” is not a black and white decision, but rather a gray area. The Public Contract Code states maintenance work and new construction is:
Maintenance Work (PCC section 22002), maintenance work “is routine, recurring work for preservation or protection of any publicly owned facility. Minor repainting is allowed, as well as the work to maintain publicly owned facilities.” Maintenance is touch up, work for example painting a portion of the building, painting doors, or door frames
New Construction. (PCC section 22002(c)) specifies that new construction “is the renovation, improvements, demolition and repair work involving any publicly owned, or operated facility.” Painting or repainting can be considered new construction based on the scope of the project. New construction for example could be considered painting an entire building.
Although there are many unknown facts about the scope of the project, if the work turns out to be specifically maintenance it is important to know maintenance work does not have a cap and multi-year maintenance contracts are legal. Agencies are not required to bid maintenance work, however we encourage them to do so. If the project turns out to be new work per the definition of new construction, then the project should follow the competitive bidding process.
With this in mind, I will continue to monitor upcoming city agendas for clarification on the project. CIFAC can be a resource for the contractors, as well as cities explaining Public Contract Code requirements, fair bidding, and transparency.
By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager. -
During the second week of January, 2018, I noticed that the City of Arcadia was intending to award a $223,939 contract for their Fire Station No. 105 roof restoration project to a Southern California roofing contractor.
Upon additional research, I determined that this was being procured through the U.S. Communities Government Purchasing Alliances Cooperative Purchasing Program or National Joint Powers Agreement (NJPA) with the bidding and awarding process being handled by U.S. Communities. (The use of NJPA’s or Cooperative Agency Purchasing agreements are totally legal per the State of California’s Government Code Sections; 6500 and 6502)
Arcadia’s Staff report listed four Southern California roofing contractors who through U.S. Communities JPA, bid on this project with bids ranging from $223,939 to $446,594. Unable to find any local source for the advertising of this project, including the City’s own website, I wondered how or if the advertising and awarding process had even been properly conducted? That started my investigation to acquire more information from the City to verify that the advertising and awarding process was being followed as required.
Sending the City a formal request for information, (knowing that Arcadia is a Charter City and as such can determine their own Charter/Municipal Code policy’s concerning contracting) I asked anyway for information concerning the advertising and awarding process on this project and additionally requested that they please table the awarding of this contract until the City was able to respond to my concerns. The City replied that they would table the awarding of the contract out of an abundance of caution until they could look into CIFAC’s concerns and would get back to me.
Approximately 10 days later, I received the City’s written response: (Summarized)
“The City of Arcadia’s Staff and Attorney have reviewed CIFAC’s concerns and believes CIFAC’s allegations are without merit.
As CIFAC may be aware, the City of Arcadia is a charter city generally subject to its charter, municipal code and other applicable laws. The procurement for the project is to be completed pursuant to the U.S. Communities cooperative procurement program.
In addition to the City’s authority to enter into JPA type cooperative agreements, City staff also diligently reviews and analyzes all proposed procurements, including this one. In this case, City staff also required the vendor to document multiple subcontractor pricing for installers to further verify the competitive pricing and savings to the City.
Based on due diligence completed by City staff, the City has determined that the proposed cooperative purchasing arrangement to be used for the project is the most economical and efficient method for procuring the project materials/services. Accordingly, City staff has also determined that there is no competitive advantage to be gained by further and/or additional competitive bidding of the project in light of these facts. Therefore based on all of the above reasons, the City is satisfied that it may lawfully proceed with the cooperative procurement contemplated for the project.”
End of story? I thought so, but on May 10th, I’m looking at Arcadia’s May 15th City Council Agenda items, when I’m suddenly transported back into the Twilight Zone! Low an behold, I see an agenda item seeking approval from the City Council to award a contract for the City’s Fire Station No.105 Roof restoration project to a different contractor in the amount of $107,553.00. Apparently the City had second thoughts and decided to re-evaluate the costs for this project. The City recently approved and purchased the specified roofing materials to be delivered directly for $74,488 and then put out a notice inviting bids for the installation portion of the project. Four bidders submitted bids, with the project being awarded to a local area contractor for $107,553. Total project cost this time around… $182,021 vs. $223,939. A cost savings to the City and its Citizens of $41,917!
That being said, I can’t help but wonder if my original inquiry helped to plant the seeds of doubt about the actual savings the City believed they were going to gain by utilizing the National JPA Cooperative Purchasing Program? I don’t believe in coincidence, but rather choose to believe that CIFAC’s inquiry ultimately affected a positive outcome for all concerned.
Oh and one final note, I reached out by email to Arcadia’s Public Works Director to thank him for competitively bidding out the contracting portion themselves and congratulate him on the cost savings for this project. Yep… you guessed it, no reply!
By Patricia (Patti) Rascon Southern Regional Compliance Manager. –
Just like any valuable tradesperson, the Regional Compliance Manager (RCM) team at CIFAC relies on many tools of the trade to empower us to complete our jobs. While we continuously monitor agendas in our respective regions to pinpoint force account violations, we also rely on alerts from our industry partners (boots on the ground), networking contacts, educational events and occasionally, Google Alerts. With that being said nothing beats being at the right place at the right time!
What happens when a Public Works department admits to self-performing paving work at a depth over one inch because… “It’s just easier than bidding it out”? Yes, this actually occurred at an event I was attending! This information can and did set the wheels in motion for a closer look.
Straightforward information in problem solving includes the Five W’s: Who, What, Where, When and Why. In this scenario we know who and why. During the preliminary stages of my investigation, I located the issuance of two purchase orders for “Bulk Street Materials”. In of itself, this is a common practice, but when you factor in the purchase of a new grading tractor, a heavy duty loader and the admission of self-performing work, it definitely warrants an investigation! With a public records request in place, the missing blanks of what, where and when will soon be revealed to me, and will ultimately determine the outcome for this agency.
CIFAC values our industry partners and we strive to maintain integrity with all agencies concerning bidding, force account and the like. If you see something, say something, we are just a phone call or click away at www.cifac.org
By Matthew (Matt) Hilliard, Bay Area Regional Compliance Manager. -
Our members, partners and supporters are frequently asking; “What’s the difference between a public agency’s force account limit and their bid threshold.” The person asking the question tends to be confused because they think they are one and the same.
Here's the difference by definition.
The Force Account limit 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. Labor cost calculations are based on the entity’s actual cost of labor. Force account limits do not apply to maintenance work.
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.
Here’s where limits and thresholds get a little tricky, but we are available to help.
California State Law (General Law) defined in the California Public Contract Code (PCC) sets the force account limits and bid thresholds for public agencies. They vary by type of agency. For example, a general law city has a force account limit of $5,000, while a county has a $4,000 limit if their population is less than 500,000 and $6,500 if it is above 500,000. All new work over that amount must be formally advertised for competitive bid. School Districts and Special Districts have different force account limits.
Charter Cities can write their own rules but the local voters must approve these rules. They may set force account limits and bidding thresholds at different levels. CIFAC will always encourage Cities to follow general law when it comes to the public contracting section of their Charter.
Then there are public agencies that are signatory to the California Uniform Construction Cost Accounting Act (CUCCAA). They can self-perform the work to $45,000 and use informal bidding up to $175,000, above which they must advertise for formal bidding.
As you have read, the definitions of force account limits and bid thresholds are clearly different and there are a variety of formulas Counties, Cities and Special Districts use. That is why CIFAC exists. We use our expert knowledge of the Public Contract Code to help you with your questions and get you the answers you need.
The California Uniform Construction Cost Accounting Act, or CUCCAA, is a term that gets thrown around a lot when talking about local public agencies, but what is it?
The Act is legislation enacted in 1983 to help promote “uniformity of the cost accounting standards and bidding procedures on construction work performed or contracted by public entities in the state.” Section 22001. The Act is a voluntary program available to all public entities in the State, but only applies to those public agencies that have “opted in” to the provisions set forth by the Act. The Act can be found in its entirety under Public Contract Code section 22000 et seq.
It allows local agencies to perform work with their force account up to $45,000. It also allows the agencies to informally bid a project up to $175,000. Because local agencies choose to become a signatory to the Act, they can leave the Act whenever they like.
Many participants praise the Act because it gives them more leeway to get public works projects done by speeding up the awards process, improving timelines for project completion, and has eliminated considerable amounts of red tape related to bidding projects. This benefits contractors because it means more public works projects are going out to bid, equating to more work for the construction industry.
There is a commission within the California State Controller’s office that oversees the Act and ensures local agencies are following the provisions outlined in Public Contract Code sections 22000 to 22045. The Commission is made up of seven members from the private sector and seven members in the public sector, and they receive no pay for being a part of the commission.
Should an agency be found out of compliance with CUCCAA, a formal complaint can be filed and the Commission will investigate the complaint and then deliver a verdict on whether the agency was in the wrong.
When an agency is found to be out of compliance, the Commission will issue a “strike” against the agency. If an agency receives three strikes over a 10 year period they are disqualified from the Act and must wait three years before they can file to be part of the Act again.
Overall, the Act gives public agencies that participate benefits as a tradeoff for additional compliance measures. The Commission and the ability to file a complaint against an agency is an additional tool to help bring an agency out of compliance with the Public Contract Code back into compliance.
By Justin Bochmann, Central Regional Compliance Manager. -
Recent CIFAC investigation provides a perfect example of how projects valued close to the force account limit should be bid out.
Overview: In February, CIFAC’s Central Regional Compliance Manager, Justin Bochmann, investigated a waterline extension project taking place in the city of Valley Springs. This particular project was done by a negotiated contract instead of being put out to bid. One of the first things he checked when starting this investigation was the PWC-100 form on the Department of Industrial Relations (DIR) website. This provided a good bit of information on the project, including the awarded contract amount. Through this form, Bochmann learned that this project was only a few hundred dollars shy of the agency’s $45,000 force account limit, giving him reason to request more information from the awarding agency pertaining to actual cost of the project. After obtaining the requested documents, Bochmann was able to conclude that the total project cost had actually gone over the agency’s $45,000 force account limit, which put them in violation of Public Contract Code (PCC) Section 22042 (b): Exceeded the force account limits.
The Details: During the course of his investigation, Bochmann identified certain costs associated with the project that were not listed in the original construction contract. These were directly associated with the project, occurred during the time of construction, and were necessary for the completion of it. The agency did not include these costs on the PWC-100 form because they were not done by the actual contractor performing construction of the project, but instead by the engineering firm tasked with designing the project. The agency was unaware that this needed to be included in the total project cost, and it ultimately led to the project going over their force account limit.
The Takeaway: When agencies decide to design and construct a public works project, there are strict dollar limits for the ability to use force account and when informal or formal bidding procedures are required. Because this particular agency adopted the California Uniform Public Construction Cost Accounting Act (CUCCAA), they are provided a $45,000 limit to use their own force for construction or to negotiate a contract. With a lot of construction projects, unforeseen costs arise during the course of construction. Sometimes this comes in the form of additional construction needed to complete the project that was not included in the original scope. Other times, agencies may run into problems with easement or similarly related land use issues. In this case, it was the latter. Because the original construction contract was only a few hundred dollars shy of their limit, it left them with very little wiggle room for additional costs to be incurred. As a general rule of thumb, if the cost estimate of a project is approaching the force account limit, it should be put out to bid. This can prevent any future headaches for the agency and eliminate the possibility of violating the Public Contract Code. Unfortunately for this agency, they learned the hard way and an investigation by CIFAC was able to bring this to light.
By Patricia (Patti) Rascon, Southern Regional Compliance Manager. -
Enacted in 1983, the California Uniform Public Construction Cost Accounting Act (referred to as the ACT) provides public agencies economic benefits and greater freedom to expedite public works projects. Their Policies and Procedures Manual offers a plethora of information, and provides systematic instructions for adoption or discontinuance of the ACT.
Regional Compliance Manger’s regularly refer to the List of Participating Agencies while investigating potential violations of the ACT. Two scenarios come into play; they have opted in or opted out. It is not as simple as “Abracadabra”, the Office of the State Controller must be notified in writing, and in other words, “selective” adherence to the terms of the ACT is a violation.
Alerted to the City self-performing the building of a pony wall around the perimeter of a basketball court, my initial investigation confirmed the issuance of a RFP and the award of a contract for a new basketball court. The pony wall was not included in the original scope of work. Classified as General Law, their force account limit was $5000. In discussions with the Interim Public Works Director, I asked for all cost accounting documentation relating to the wall (since it was likely they exceeded their limit). Apparently, we were unaware they were signatory, and the conversation segued to becoming as such. Because CIFAC is all about educating agencies, I provided him with the link to the California Uniform Public Construction Cost Accounting Act, and offered my assistance should he need any additional information.
Along with the financial documentation, I received a copy of the resolution approved by the City Council opting into the ACT. What? My initial research confirmed they were not signatory. After contacting the State Controller’s Office, I determined the city neglected to file the paperwork with them, I notified the City Clerk, paperwork was filed and they are compliant.
Things are not always what they seem, and not unlike the Magic show, “sleight-of-hand” can intervene, the devil is in the details.
By Anthony (Tony) Morelli, Southwestern Regional Compliance Manager.
It was recently brought to my attention that the Public Works Director for the City of Pismo Beach would ask the City Council to approve an upcoming agenda item regarding a change order for a grading and paving contractor, in the amount of $137,380.00.
Upon additional research, I discovered that the intended change order was for their Bello Veterans’ Hall Parking Lot Project. This was located on the same street as their Bello Street Paving Project currently underway by a grading and paving contractor per his original contract issued by the city for $124,554.00. Somewhere along the way, city staff asked the contractor for a quote to also pave, stripe and install wheel stops in their Bello Veteran’s Hall Parking Lot. The contractor provided an additional estimate to do the extra work for $137,380.
I reached out to the city to inform them that they really needed to bid-out the Bello Veteran’s Hall Parking Lot Project, since it obviously was a separate project and not a part of the original scope of work issued to the paving contractor. I further advised the city that contract change orders are generally written when their needs to be changes to the original contract, usually brought about by unforeseen circumstances and MUST fall within the original scope of the work.
After a letter from CIFAC, the City of Ukiah decided to bid a $71,000 paving and sidewalk project. This work had previously been listed in a change order, but CIFAC was able to convince the agency to bid the work.
On January 17, CIFAC was contacted about a change order pertaining to the work being done at the Grace Hudson Museum. The person said they were concerned because the paving and sidewalk work listed in the change order was not part of the original scope of work.
CIFAC looked into the matter and agreed. CIFAC wrote the Ukiah City Manager and City Council a letter outlining her concerns and submitted it a few hours ahead of the meeting. The item was pulled from the consent calendar at the January 17 meeting.
On February 2, CIFAC received an email from the Director of Purchasing. She explained that even though the City’s attorney said they were within their right to add the work via a change order, the City would be putting the project out to bid. CIFAC checked the February 7 City Council agenda, and noted the project is listed as an agenda item with the recommendation to put the work out to bid.
CIFAC was very happy with the outcome. “Area contractors now get the opportunity to bid a project not listed in the original scope of work instead of the work being performed via a change order,”.
“I greatly appreciate the City of Ukiah vetting my concerns and making a decision that ultimately benefits the community”.
One of the most frequent calls we get at the CIFAC office is from a contractor wondering what the requirements are to be able to bid on public works projects. As money's raining down from SB1, the November 2014 Prop.1 water bond and another bond issue on the ballot June 5th, we’re sure we are going to be getting a lot more of these calls.
To help these contractors, we are offering this simplified list of requirements for bidding and performing any construction project in the state that includes taxpayer funding. The fundamental requirement leads to a host of more complicated questions but the basics are the basics everywhere.
It all starts with the Public Contract Code, the section of California law that establishes the rules of the road for public works contractors and their customers. Public Contract Code (PCC) applies in one respect or another to virtually all-public entities in California.
Public Contract Code §1100 contains an express declaration of legislative intent, stating that the purpose of the Code is to:
To clarify the law with respect to competitive bidding requirements.
To ensure full compliance with competitive bidding statutes as a means of protecting the public from misuse of public funds.
To provide all qualified bidders with a fair opportunity to enter the bidding process, thereby stimulating competition in a manner conducive to sound fiscal practices.
To eliminate favoritism, fraud, and corruption in the awarding of public contracts.
The importance of competitive bidding stems from the California Constitution and more than 140 years of California Supreme Court precedents.
First Things First
Therefore, if you want to bid public works in California, there are, as you might expect a bunch of rules.
The first rule is that you must be a licensed contractor, meeting the requirements of the Contractors State License Board (CSLB). In California, anyone who contracts to perform construction work that is valued at $500 or more in combined labor and materials costs must hold a current, valid license from the CSLB.
Your license will not say “Public Works,” of course but, instead, cover one of the two big categories; General Engineering (A) or Building (B) for general contractors or one of the 40+ specialty trade licenses (C) and the more exotic hazardous materials categories allowing you to perform work as a subcontractor in your specialty.
We hear you now saying “I’ve already got a license, so I’m good to go!” but the question is, do you have the correct license, as specified in the Request For Proposals (RFP) issued by the agency for whom you want to work. In either case, your work starts at the licensing website www.cslb.ca.gov and for more specialized information visit http://www.cslb.ca.gov/About_Us/Library/Licensing_Classifications/.
CSLB is more than a licensing agency, they are also an enforcement agency and here are the two big areas where CSLB is concerned with public works.
Bids that don’t include all work needed
Failure of contractors to complete work in a timely fashion
First, it is imperative that contractors provide awarding agencies bids that reflect the entire known work at the time of the bid. It is not appropriate for a contractor to low-ball a bid to get a job, and then try to increase the contract amount later with change orders. Disciplinary action has been taken in this area.
Second, CSLB is seeing an increasing number of public works jobs that are not being finished on time. Business &Professions Code §7119 requires that a contractor show due diligence in completing contracted work. Not doing so also gives CSLB a cause to take disciplinary action against a license.
No Rest for the Weary
After acquiring the proper license, your next step will be registration as a Public Works Contractor with the state Department of Industrial Relations (DIR) for any work performed that costs at least $15,000.
That means your next stop is at https://www.dir.ca.gov/public-works/contractors.html where the state labor agency runs you through the gauntlet of registration, paying a $400 fee for the privilege and learning the mandatory steps you must meet after you’ve registered.
The simple list is pay prevailing wages, follow apprenticeship requirements, maintain, and submit certified payroll records, but none of these requirements are simple. If you are signatory with any of the basic construction trade unions this will be familiar ground, but make sure you are following the DIR guidance.
Finally, the work is performed for a local agency/government/special district and the rules vary from town to school board to publically owned utility, etc., so the “Know Thy Customer” requirement for every business applies.
There have been many lawsuits filed over the years to determine what “public funds” means, but in essence, it is any job that has a cent of tax money in the funding, from a parking lot of a movie theater in the Mohave Desert to the massive bridge replacement in the Long Beach harbor; all are “publically funded.
If you have completed all the necessary CSLB and DIR steps, you still face challenges at the local level, starting with “prequalification.” All large public agencies and many smaller ones have prequalification requirements for their work. It has been in the PCC since 1999 for agency work and school districts.
Over the years, these criteria have morphed into a tangled web of differing standards so it is the contractor’s job to make sure they understand the local requirements in each jurisdiction.
This is an area where CIFAC does a lot of work, making sure that cities and other agencies follow the law. One area of major concern is in the actions of charter cities that often try to subvert the spirit if not the letter of the code.
Friends in the Business
Our final word of advice for contractors interested in bidding public works is that they join a trade association in their area, one of the many specialty groups that gather like-oriented contractors (plumbers, electricians, etc.) or one of the larger, broader groups that represent contractors across a broad array of interests.
Trade associations are more than a social club. Many are your representatives in union negotiations. Many will stand in your place regarding disagreements about the bidding and other practices of public works agencies. All of them concentrate the political power of your industry in Sacramento, county courthouses and city halls around the state to deliver collective efforts to improve the lot of contractors. Most of them provide educational programs about changes in laws and regulations that affect your business and share that information through their communications programs.
CIFAC works with many of the trade associations to help their members with these issues. If you are not a member, you should be. Become a member today.
By Patricia Rascon, Southwestern Regional Compliance Manager
What is ADEA and how does it potentially benefit our construction industry? ADEA is the acronym for the Age Discrimination in Employment Act of 1967. By crushing the stereotypes that prevent companies from recognizing the variety of strengths they currently have, such as wisdom, experience and reliability, older workers can be part of the solution to ease the skilled worker shortage the construction industry.
Fifty years ago, with the enactment of ADEA, it-opened opportunities for older workers by disallowing most age limits and the requirement of equal treatment of workers without regard to age. Victoria A. Lipnic, Acting Chair for the U.S. Equal Employment Opportunity Commission wrote, “The ADEA is based on the principal that ability matters-not age. No one should be denied a job or should lose a job based on the assumptions of stereotypes. Age is just a number. It doesn’t define one’s ability, potential or value. That is the purpose and promise of the ADEA.”
Fast forward to November 2016, and in the publication of Engineering News-Record (ENR), there was a call-to-action for more mentoring in the construction industry. The caption, “Eat lunch where you don’t belong”, suggested that one should immerse him or her self into the company with something as simple as eating lunch with their colleagues, talking shop with them and learning about what they do. With the workforce still comprised of older workers, companies and apprentices alike can take advantage of the mentor/mentee relationship opportunities.
As a twenty-year member with the National Association of Women in Construction (NAWIC), I have benefited from many opportunities to tap into the experiences of those who came before me. I have not only gained more knowledge about the construction industry, I continue to make life long friends who continue to share their knowledge with me. Mentoring comes in many forms, and the benefits are many. Building relationships are key and I believe we should pay it forward. I challenge you to reflect on how you started your career, your successes and failures and think about how YOU can reinvest and pave the way for someone else.
Winston Churchill once said, “We make a living by what we get, but we make a life by what we give.”
Over the past several months, California has received a lot of rain. In many areas of the state, the record rainfall and snow pack totals are enough to lift them out of drought status.
At the same time, many areas in Northern California also saw a slew of emergency declarations pass by county and city governments in regards to damage caused by storms over the course of several weeks. One of the most notable emergency declarations to pass was the one at Oroville Dam, which led to the evacuation of people in three different counties, as officials feared a catastrophic failure of the emergency spillway.
Fortunately, California has survived this tumultuous storm season. Now that spring is officially upon us, many of the emergency declaration projects are underway. Here are five things you need to know about Pubic Contract Code Section 22050, Emergency Contracting Procedures:
In the case of an emergency, a public agency may repair or replace a public facility, take any directly related and immediate action required by the emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids as long as the declaration is passed by a four-fifths vote of the governing body.
Before a governing body declares an emergency, they have to explain their findings based on substantial evidence that the situation will not allow the agency to competitively bid the project, and that the action is necessary to respond to the emergency.
The governing body can also appoint an official, such as a chief administrative officer, city manager, public works director, etc., to declare emergencies so long as the governing body has passed an ordinance giving the person the power to do so.
Should the official declare the emergency, they have to bring the evidence to the governing board at its next meeting on why the project constitutes an emergency. The governing board also has to take action to pass the declaration by a four-fifths vote.
If the governing body, or the person with authority, orders any action on the emergency project, the governing body has to review the emergency action at its next regularly scheduled meeting and at every regularly scheduled meeting thereafter, to continue the action or to terminate the declaration.
Occasionally, agencies try to sneak in additional work that has nothing to do with the actual emergency in order to avoid competitively bidding the work per the Pubic Contract Code. Should you ever have a question about emergency declarations, or a concern about a specific emergency declaration, please contact the CIFAC compliance manager in your area.