Welcome to the NIGP/ CAPPO Ninth Annual Cooperative Conference

CUPCCAA and SB854

Presenters: John Finney, Contract Services Manager Tracy Soth, Senior Contract Services Officer

California Uniform Public Construction Cost Accounting Act (CUPCCAA)

Public Contract Code, Sections 22000 – 22050 These sections are known as the “Uniform Public Construction Cost Accounting Act ”

California Uniform Public Construction Cost Accounting Act (CUPCCAA)

It allows local agencies to informally perform public works projects of up to $175,000, if the agencies elect to follow the cost accounting procedures set forth in the Cost Accounting

Policies and Procedures Manual of the California Uniform Construction Cost Accounting Commission.

California Uniform Public Construction Cost Accounting Act (CUPCCAA)

• • • Public projects of $45,000 or less may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order.

Public projects between $45,000 and $175,000 may be let to contract by informal procedures as set forth in the Act.

Public projects of more than $175,000 shall, except as otherwise provided in the Act, be let to contract by formal bidding procedure.

“Public Works” Defined

• Why “public works”? Provides local public agencies an alternative to burdensome and time-consuming formal competitive bidding process on public projects • Public Contract Code – erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind • Labor Code – more extensive, includes above, plus demolition, installation, laying of carpet, and assembly and disassembly of modular office systems… paid for in whole or in part out of public funds; includes

maintenance

• Bidding/Contracting Mechanism – Use Public Contract Code • Prevailing Wages – Use Labor Code

What is NOT a “Public Work”

– Routine, recurring and usual work for the preservation or protection of any publicly owned or publicly operated facility – Minor repainting – Resurfacing of streets & highways at less than 1” – Landscape maintenance

Adopting CUPCCAA

• The governing board must elect by resolution to become subject to the California Uniform Public Construction Cost Accounting Act.

• The agency must notify the State Controller in writing of its election to become subject to the uniform cost accounting procedures and forward a copy of the resolution.

Adopting CUPCCAA

• The agency must adopt a policy outlining informal bidding procedures.

• Once an agency has opted in, it must conform to the uniform cost accounting procedures until the district opts out of the Act by adopting a resolution opting out and forwarding said resolution to the State Controller.

Force Account / Work Done by Purchase Order/Contract

• • • • When estimating for a project up to $45,000; keep in mind that all standard public contract and labor code requirements must be met including but not limited to the requirement to call for prevailing wages, payment bond for projects in excess of $25,000, fingerprinting, certifications, etc.

Change orders are only permitted to a maximum contract total of $45,000.

– Note: Any non-emergency work done by force account in excess of $45,000 is a violation of the Act.

Best practices would include ensuring that you are getting the required scope of work for the best price; therefore, obtaining multiple quotes is desirable.

When internal forces are also bidding on the work; the project cost must include labor, materials, supplies, equipment, and overhead.

Informal Bidding

Projects between $45,000 and $175,000. Project must be let by competitive bid utilizing informal, streamlined procedures utilizing one of two options: – Advertisement by bidders list: All contractors on the list for the category of work being bid as specified in Section 22034 – Advertisement through trade journals and exchanges: All construction trade journals specified in Section 22036

Informal Bidding – Bidder’s List

– Advertisement by bidders list: All contractors on the list for the category of work being bid as specified in Section 22034 (a).

– There is NO exemption to maintaining a list of bidders.

To be in compliance with the Act, an Agency must follow PCC 22034 which outlines the requirements for the qualified Bidder’s List – If an Agency chooses the list, they must maintain the list in accordance with the Manual which includes updating the bidders list at minimum annually by license type, and qualifications.

Informal Bidding

PCC 22034 - All contractors on the list for the category of work being bid OR all construction trade journals specified in Section 22036, or both, shall be mailed* a notice inviting informal bids unless the product or service is proprietary.

– The notice shall be sent at least 10 days prior to bid opening.

– All standard public contract and labor code requirements must be met including but not limited to prevailing wages, payment bond for projects in excess of $25,000, fingerprinting, escrow agreement, DVBE, labor compliance, etc.

– The authority to award informal contracts may be delegated.

– Contracts may be awarded up to $175,000. When all bids received are above $175,000, a contract may be awarded up to $187,500.

Formal Bidding

• Formal bids are let using the standard bid process as outlined in Public Contract Code (for Counties – 20120) • Notice to Contractors – Changes from 10-day to 15-day notice per Government code 6062 • The notice shall be published pursuant to government code 6066 – changes from Bidders List to Trade Journals or a bidders list and trade journals.

• Governing Board must first approve plans and specifications, and must approve final contract award.

“Emergency”

“Emergency”

•

A “sudden, unexpected occurrence

•

that poses a clear and imminent danger,

•

requiring immediate action

•

to prevent or mitigate the loss or impairment of life, health, property or essential public services.” (PCC Section 1102)

Emergency Contracts

In cases of emergency when repair or replacements are necessary • The governing board may proceed at once to replace or repair any public facility without adopting plans, specifications, strain sheets, or working details, or giving notice for bids to let contracts.

• The governing board may direct the work to be done by day labor, by contractor, or by a combination of the two.

Emergency Contracts

In cases of emergency when repair or replacements are necessary • The governing board, By a four-fifths vote may: – repair or replace a public facility – take any directly related and immediate action required – by that emergency procure the necessary equipment, services, and supplies for those purposes

All without giving notice for bids to let contracts

Emergency Contracts

• In cases of emergency when repair or replacements are necessary The authority to enter emergency contracts may be delegated by a four-fifths vote of the governing board – as long as the designee takes the action to the governing – board within 7 days or at its next regularly scheduled meeting which shall be no more than 14 days after the action was taken – The designee must report at each following meeting until the action is terminated (contract completed) 

Code is in conflict with boards that meet on a monthly basis.

CUPCCAA Benefits

• Increased force account limits • Informal bidding procedures for projects within $45,000 -$175,000 • Reduce number of formal bids • Expedited contracting for small projects

Common Concerns • Cost accounting policy and procedures • Informal bidding procedures • Accounting review procedures

Type of Project Materials and Supplies

Section 2 – Contracting Options

Summary Table of Public Works Contracting Methods and Authority

Project Cost Contracting Options Awarding Authority <=$3,500 Purchase Order (no bids required) Purchasing Agent

New Construction

<=$6,500 <=$45,000 >$45,000 and <=$175,000 >$175,000 >=$2,500,000

Roadwork (SacDOT only) Maintenance, Repair, Remodeling, Minor Alterations (including Roadways and Bridges)

<30% of force account work as of January 1 $ Limits Above <=$3,000,000 adjusted annually since 1998 to reflect % change in California CPI (now +/-$4,464,000) <=$25,000

Roadways/Bridges – Maintenance and Repair (SacDOT only)

<=$50,000

Emergency

>$45,000 $ Limits Above Any $ limit Purchase Order (no bids required) Formal Bid Informal Bid (CUPCCAA) Force Account Purchase Order (CUPCCAA) Negotiated Contract Formal Bid Informal Bid (CUPCCAA) Formal Bid Formal Bid Design-Build Force Account subject to prior notice Same Options as Above JOC Negotiated Contract 48-Hour Informal Bid Force Account subject to prior notice Same Options as Above Emergency Contract Purchasing Agent Board* Chief Deputy CE / Designee Performed by County Staff Purchasing Agent Varies Board* Chief Deputy CE / Designee Board* Board* Road Commissioner / Board Same as Above Board for Initial Award; Tasks: <=$50,000 Director, DGS <=$100,000 Chief Deputy CE, ISA >$100,000 CEO / designee Chief Deputy CE / Designee Purchasing Agent Chief Deputy CE / Designee Purchasing Agent Road Commissioner / Board Same as Above Board** Statute PCC 20131 SCC 2.56

PCC 20131 SCC 2.56

PCC 22000 et seq SCC 2.56, 2.61.058

PCC 22000 et seq SCC 2.61.058, 2.155

PCC 22000 et seq PCC 22000 et seq PCC 20133 PCC 20395, 22031 Same as Above PCC 20128.5

RSO# 2013-0296 PCC 20394 SCC 2.61.053, 2.61.054

PCC 20394.5

SCC 2.61.055

PCC 20395, 22031 PCC 22035, 22050 SCC 2.61.056

Developing Procedures

1. Contracting Method 2. Plans and Specifications 3. Risk Assessment and Insurance 4. Payment and Performance Bonds 5. Prevailing Wages 6. Notice to Contractors 7. Bid Form and Bidding 8. Protests/Requests for Relief/Substitutions 9. Award of Contract 10. Contract Administration and Management 11. Change Orders 12. Compensation 13. Project Completion 14. Records Retention

Performance & Payment Bonds

• Payment bonds are required for projects exceeding $25,000 (Civil Code Sections 9550, 9552). • Performance bonds are required for construction projects (PCC Section 20129(b)). • Contracting via Purchase Order does not cancel the requirement for payment and performance bonds. (Note: stop payment notices apply to purchase orders, so payment bonds are needed with purchase orders.) • Performance bonds are the leverage to get work completed if the contractor defaults and to get warranty work done.

Prevailing Wages

• Prevailing wages are required for all public works projects exceeding $1,000… • With our (Sac County) Labor Compliance Program, the threshold increases to $15,000 for maintenance and repair projects and to $25,000 for construction projects. • For federally funded projects, notwithstanding our LCP, the threshold is $2,000. • How to determine if prevailing wages are required?

Senate Bill 854

IMMEDIATE CHANGES

•

Duty to notify DIR when awarding a contract for a public works project, using the online PWC-100 form .

– This requirement, found in Labor Code Section 1773.3, now applies to all public works projects. Previously it applied to projects costing greater than $30,000.

Senate Bill 854

•

IMMEDIATE CHANGES Elimination of the obligation to pay DIR for compliance monitoring on state bond-funded projects and other projects that required use of DIR's Compliance Monitoring Unit (CMU).

–

DIR will continue to monitor compliance on these projects but will not charge awarding bodies for any services provided on or after June 20, 2014 [the effective date of SB 854].

–

The alternative of using a DIR-approved Labor Compliance Program (LCP) or a project labor agreement in lieu of the CMU on one of these projects has also been eliminated. However, for ongoing projects that were using one of the alternatives, monitoring should continue until the project is completed.

Senate Bill 854

PHASED-IN CHANGES I. Public Works Contractor Registration Program

o

All contractors and subcontractors who bid or work on a public works project must register and pay an annual fee

to DIR.

o July 1, 2014: Registration program became effective and first o o contractors registered. Initial registrations will be valid through June 30, 2015. March 1, 2015: No contractor or subcontractor may be listed on a bid proposal for a public works project unless registered with DIR.

April 1, 2015: No contractor or subcontractor may work on a public works project unless registered with DIR.

Senate Bill 854

PHASED-IN CHANGES I. Public Works Contractor Registration Program

•

Once the registration requirement becomes mandatory (March 1, 2015 for bids and April 1, 2015 for work), an awarding body may not accept a bid or enter into a contract for public work with an unregistered contractor.

o DIR maintains an up-to-date listing of registered contractors .

o There are exceptions to the registration requirement for bidders o in circumstances where a CSLB license would not be required at the time of bidding.

Additional exceptions and protections are included in the registration laws to limit bid challenges, allow some violations to be cured through payment of penalty fees, and allow unregistered contractors to be replaced with registered ones.

Senate Bill 854

•

PHASED-IN CHANGES II. NOTICE REQUIREMENTS

January 1, 2015: The call for bids and contract documents must include the following information: – – – No contractor or subcontractor may be listed on a bid proposal for a public works project (submitted on or after March 1, 2015) unless registered with the Department of Industrial Relations pursuant to Labor Code section 1725.5 [with limited exceptions from this requirement for bid purposes only under Labor Code section 1771.1(a)].

No contractor or subcontractor may be awarded a contract for public work on a public works project (awarded on or after April 1, 2015) unless registered with the Department of Industrial Relations pursuant to Labor Code section 1725.5.

This project is subject to compliance monitoring and enforcement by the Department of Industrial Relations.

Senate Bill 854

PHASED-IN CHANGES

• III. FURNISHING OF ELECTRONIC CERTIFIED PAYROLL RECORDS TO LABOR COMMISSIONER

All contractors and subcontractors must furnish electronic certified payroll records directly to the Labor Commissioner (aka Division of Labor

Standards Enforcement). The phase-in timetable for this requirement is as follows: June 20, 2014 [immediate]: Any project that was being monitored by the CMU/Labor Commissioner prior to the adoption of SB 854 will continue to be monitored by the Labor Commissioner afterward; and the contractors on those projects must continue to furnish certified payroll records to the Labor Commissioner until the project is complete.

April 1, 2015: For all new projects awarded on or after this date, the contractors and subcontractors must furnish electronic certified payroll records to the Labor Commissioner.

Anytime: For projects besides those listed above, the Labor Commissioner may at any time require the contractors and subcontractors to furnish electronic certified payroll records. The Labor Commissioner anticipates requiring this for

green energy school projects that receive Proposition 39 funding.

Senate Bill 854

PHASED-IN CHANGES

• • III. FURNISHING OF ELECTRONIC CERTIFIED PAYROLL RECORDS TO LABOR COMMISSIONER

All contractors and subcontractors must furnish electronic certified payroll records directly to the Labor Commissioner (aka Division of Labor

Standards Enforcement). The phase-in timetable for this requirement is as follows (continued): January 1, 2016: The requirement to furnish electronic certified payroll records to the Labor Commissioner will apply to all public works projects, whether new or ongoing.

Exceptions: The Labor Commissioner may (but is not required to) excuse contractors and subcontractors from furnishing electronic certified payroll records to the Labor Commissioner on a project that is under the jurisdiction of one of the four legacy DIR-approved labor compliance programs (Caltrans, City of Los Angeles, Los Angeles Unified School District, and County of Sacramento) or that is covered by a qualifying project labor agreement.

These new requirements will apply to all public works that are subject to the prevailing wage requirements of the Labor Code, without regard to funding source.

Questions?

Contact information: • John Finney, Contract Services Manager 916-876-6368 [email protected]

• Tracy Soth, Senior Contract Services Officer 916-876-6285 [email protected]

Questions?

Contact information: • Public Contract Code www.leginfo.ca.gov/cgi-bin/calawquery?codesection=pcc • California State Controller http://www.sco.ca.gov/ard_cuccac.html

• Local Government Policies – Lilian Apgar (State Controllers office) 3301 C Street, Suite 740 Sacramento [email protected]

The End