Best Value means a value determined by objective criteria, including, but not limited to, price, features, functions, life cycle costs, and other criteria deemed appropriate by the entity. The use of “best value” is limited. We currently see it used in relationship to design-build projects and lease leaseback contracts but it may be used with design-bid-build delivery.
Bid splitting occurs when an entity breaks a project into multiple parts to stay under the agency’s force account and bidding limit. A project is all of the work done at a single location. For example, site work, foundations, wiring and the installation of a modular building would be one project. These could bid separately, but all would have to be bid and none of the work completed by force account.
The bid threshold is the dollar amount at which an entity, if they are going to use a contractor, must bid out the work. This is sometimes set by a local ordinance, but is commonly used with charter cities. It may, but does not need to be the same as their force account limit. An example is a local government agency signatory to the California Uniform Construction Cost Accounting Act. Their bid threshold is $60,000, as is also their force account limit. Under that amount they can self-perform the work, or hire contractors. It will depend on their local policy.
A charter city is a city in which the governing system is defined by the city’s own charter document rather than by state or regional laws. The charter sets up the rules by which the city is run and defines the duties of the city council and the city manager or equivalent. It may or may not address public works and bidding laws. Charters must be drafted and ratified by a vote of the citizens within that jurisdiction city’s boundaries. Amendments to the charter also require a vote of the citizens unless the original charter allows it to be done by ordinance.
COMPETITIVE BIDDING (TRADITIONAL)
The public agency (owner) designs the project, provides specifications, and advertises the project giving submission deadlines and bid opening dates. All subcontractors performing more than ½ of one percent or $10,000 in the case of roads or bridges, must be listed. This is the most common form of competitive bidding.
CONTRACT CHANGE ORDERS
Contract Change Orders are written when there needs to be changes to the original contract. The change orders must fall within the original scope of the work. These are brought about by unforeseen circumstances. If it is not in the original scope of work, the changes would have to be competitively bid. The percent of the change order allowed varies with different entities.
Contractors are subject to an annual registration with the Department of Industrial Relations and annual renewal fee set initially at $300. The fee is non-refundable and applies to all contractors and subcontractors who intend to bid or perform work on public works projects (as defined under the Labor Code).
CONSTRUCTION MANAGER/GENERAL CONTRACTOR
This alternative delivery method is currently authorized for use by Caltrans, regional transportation agencies and the San Diego Associations of Government. This is a best value procurement process in which a construction manager is procured to provide preconstruction services during the design phase of the project and construction services during the construction phase of the project. The execution of the design and the construction of the project may be in sequential phases or concurrent phases.
The California Uniform Public Construction Cost Accounting Act is a state act that any public agency can participate in. It raises the force account limit of a public agency to $60,000 before they must informally or formally competitively bid projects. Informal bidding is only allowed on projects under $200,000. Above $200,000 projects must be formally bid. In exchange for higher limits, the public agency must follow certain accounting rules. The regulations also require strict advertising guidelines on all projects. An agency can elect to become signatory to CUCCAA by passing a resolution and by adopting an informal bidding ordinance. They then must file this with the State Controller’s Office. The Act also created a Commission to resolve disputes between public entities and construction companies without having to go to court. The Commission is referred to as CUCCAC (the California Uniform Cost Accounting Commission). If agencies violate the Act and the Commission sustains the violation, they risk losing the higher bidding limit.
Workers hired by a public agency that are paid at an hourly rate and assigned to a specific project or department. Sometimes you will see this referred to as extra help, seasonal worker or casual help.
Design-Build is a bidding alternative by which the contractor, architect and owner work together to design and build the project. They can be awarded by a “best value” system or competitive bidding method. It is important to know that there must be an objective selection process when using Design-build. These projects are supposed to be “hard” costs and not subject to change orders. Any non-roadwork project over $1 million qualifies, for cities, counties and various special districts. The design-build entity must provide an enforceable commitment to the local agency that the entity and its subcontractors at every tier will use a skilled and trained workforce to perform all work on the project or contract that falls within an apprenticeable occupation in the building and construction trades.
FORCE ACCOUNT LIMIT
This is the limit of work that a public agency can do with its own forces before they must go out for competitive bids. Force account is the dollar value of labor, materials and equipment at the rate the public agencies charge themselves. You do not calculate any entity’s labor cost of a project using prevailing wages. Labor cost calculations are based on the entity’s actual cost of labor. Force account limits do not apply to maintenance work.
JOB ORDER CONTRACTING (JOC)
A JOC is an undefined quantity contract allowed to be used by Universities, Colleges and Counties. School districts may use JOC’s if they enter into a project labor agreement. Each task is assigned a quantity of units. The bidder develops a price for a single unit. The bidder is then on-call for the length of the contract and performs the work he is requested to perform at the time. Some JOC’s stipulate a minimum amount of work will be performed. The law stipulates the maximum dollar amount of work that can be performed.
JOINT POWERS AGREEMENT (JPA)
JPA is an agreement between two or more public agencies allowing for joint governance on certain matters. Each JPA explains in detail what is covered under the agreement. The Public Contract Code does not cover JPA language at this time. Please notify CIFAC if you see any pending agreements that may deal with construction activities.
LEASE LEASE-BACK (LL-B)
LL-B is an alternate method of delivery for school districts allowed by the Education Code. It allows a school, for one dollar ($1.00), to lease property and buildings to a contractor. The school then leases the usable space back while the contractor is working on the new buildings or modernization. When complete, the school district purchases back the property. The district must use a competitive solicitation process and award is based on a best value system. There are specific rules that must be followed including the pre-qualification of the prime contractor, electrical, mechanical and plumbing subcontractors and a commitment that the entity and its subcontractors at every tier will use a skilled and trained workforce. Skilled and trained workforce means a workforce where all of the workers working on the project are either skilled journey-persons or apprentices registered in an apprenticeship program approved by the Chief of the DAS under the DIR. Skilled journey-person is defined as either someone who has graduated from a state approved apprenticeship program or a program approved for federal purposes, or someone who has as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program. The entity and its subcontractors at every tier must also agree to employ skilled journey-persons who are graduates of a state approved apprenticeship program for the applicable occupation according to the following composition and timeline.
The Public Contract Code requires each agency to define the appropriate contractor license classification needed to perform work on a public project
Routine, recurring, and usual work for the preservation or protection of any publicly owned or operated facility for its intended purposes. Minor repainting is allowed. Resurfacing of streets and highways at less than one inch is allowed. Work performed to keep, operate and maintain publicly owned utilities is also allowed.
MANDATORY PRE-BID MEETINGS
There must be at least five (5) full days’ notice to a mandatory pre-bid meeting. Only those contractors who attend are allowed to bid on a project. Subcontractor attendance must be clarified by the owner before bid and is subject to the same advertising.
Construction, reconstruction, erection, alteration, renovation, improvements, demolition and repair work involving any publicly owned, leased or operated facility. Painting or repainting of any publicly owned, leased or operated facility. Paving of one inch (1”) or greater. In the case of a publicly owned utility system, new construction shall include only the construction, erection, improvement or repair of dams, reservoirs, power plants and electrical transmission lines of 230,000 volts and higher.
Piggy-back purchasing is the procedure that allows local public agencies to group together, with one among them acting as lead agency, to get the lowest price on the purchase of computers, supplies and other personal property. By pooling their purchasing power they can reduce unit costs based on quantity. A common practice is for another public agency to come in after the initial purchase and ask for, and get, the same price. CIFAC contends it is intended only for personal property and not for labor, on-site work, or the purchase or the installation of buildings (real property). The California Attorney General has confirmed CIFAC’s opinion.
This is the method that an entity can use to sort through bidders prior to going out to bid. It must be done ahead of time to allow a contractor the opportunity to protest, if he/she is disqualified. Pre-qualification must follow specific guidelines and be fair and impartial. There are separate pre-qualification packages for different entities. These can be found in the Public Contract Code or on the Department of Industrial Relations (DIR) website. CIFAC does not support “pre-qualification” at the time of bid. This can become too subjective for obtaining fair competitive bidding.
The agency awarding the contract for a public works project must notify the Department of Industrial Relations (DIR) within five days of awarding the contract. This requirement applies to all public works projects that are subject to the prevailing wage requirements of the Labor Code, regardless of size or funding source.
RELIEF OF BIDDER
A bidder can withdraw his/her bid if he/she notifies the entity in writing within five (5) business days of the bid opening. A mistake must have been made that materially affected the bid and must have been made when filling out the bid form.
A responsive bidder is a bidder who responds to ALL of the requirements put forth in a bid solicitation. This includes, but is not limited to, Disabled Veteran Business Enterprise goals, bonds, special licenses and signatures. A public agency is allowed to waive minor irregularities. Minor irregularities are not defined and each case needs to be reviewed.
A responsible bidder is a bidder who meets the criteria set by the agency. Contractors must show that they are trustworthy, competent and able to perform the work required, and who holds a current State contractor’s license for the work to be done, in addition to an active registration with the Department of Industrial Relations. An agency can declare a contractor non-responsible, but it is rarely done. Contractors deemed non-responsible are entitled to a hearing. More agencies are relying on pre-qualifications. An agency that has had problems with a contractor in prior contracts may be more inclined to use this section. Bonding companies maintain that the bond proves a contractor is a responsible bidder.
RFP, RFQ (Request for Proposals, Request for Qualifications)
RFP is used for certain professional services. You might see a RFQ in the case of an Engineering firm, Project Manager, Construction Manager, Architect or other personal services. Though these do not have to be competitively bid, it is our belief that it is good policy to advertise and publicly discuss the proposals or qualifications prior to signing a contract. With more LL-B, design build and other alternative delivery methods, there are more RFP & RFQ’s being issued. Please contact us if you see a possible misuse of these requests.
A licensed contractor who has a contract as an “independent contractor” and not an employee with a general contractor to provide some portion of the work or services on a project which the contractor has agreed to perform.
SUBLETTING AND SUBCONTRACTING
Prime contractors are required to list the name, the location of the place of business, and the California contractor license number of each subcontractor who will perform work or labor or render service to the prime contractor in or about the construction of the work or improvement, or a subcontractor licensed by the State of California who, under subcontract to the prime contractor, specially fabricates and installs a portion of the work or improvement according to detailed drawings contained in the plans and specifications, in an amount in excess of one-half of 1 percent of the prime contractor’s total bid or, in the case of bids or offers for the construction of streets or highways, including bridges, in excess of one-half of 1 percent of the prime contractor’s total bid or ten thousand dollar ($10,000), whichever is greater must be listed in bids for public works. There are limited instances where a subcontractor may be substituted or added.
Volunteer labor is defined in the Labor Code. A volunteer must be exactly that, a willing volunteer. A person may not be employed on the project and then volunteer part of his time. Anyone being paid on the public works project must be paid prevailing wages. Disclaimer: This list of commonly used terms is provided as a helpful tool and is not meant to be used as a legal reference document. As with most things, there are exceptions, rule changes and new precedents. If you would like more information about any of the items listed, or other related terminology, please call CIFAC at 1-800-755-3354.