Contracting Conundrums: Evaluating Procurement Options for Construction and Purchasing

Transcription

1 COMMUNITY COLLEGE FACILITY COALITION PRE-CONFERENCE WORKSHOP Contracting Conundrums: Evaluating Procurement Options for Construction and Purchasing November 13, 2017 Hyatt Regency Sacramento Table of Contents Learning Objectives 3 Standard Purchasing Procedures 4 6 Force Account; Day Labor 7-8 Special Services 9 Special Services;Architectural & Engineering Services Information Technology Procurement 12 Piggyback Procurement CUPCCAA Emergency Contracts Job Order Contracting Questions for Discussion

2 Learning Objectives What can be procured by alternative purchasing procedures? What are standard purchasing procedures? What is scope of labor, materials/equipment,services authorized/prohibited by alternative purchasing procedures? How to implement an alternative purchasing procedure Compliance with legal/statutory requirements District Board Policies/Administrative Procedures Procurement documents Contract documents 3 Standard Purchasing Procedures Public Contract Code What can be procured; by standard purchasing procedures? Sale or lease equipment, materials, supplies non-construction services repairs and non-public project maintenance construction services How are standard procurement procedures implemented? Bidding process if in excess of statutory non-bid limits non-construction purchases, $50K with annual adjustments construction services, $15K Bidding requirements in accordance with any[board] requirements board action, contract award to lowest responsible bidder bid security mandatory for construction services contract bid security as the board requires for non-construction services/goods Bidding requirement exemptions professional services or advice, insurance services purchase or service otherwise exempt day labor or by force account work pursuant to Public Contract Code

3 Standard Purchasing Procedures Change Order Limits Public Contract Code If any change or alteration of a contract governed by the provisions of this article is ordered by the governing board of the community college district, such change or alteration shall be specified in writing and the cost agreed upon between the governing board and the contractor. The board may authorize the contractor to proceed with performance of the change or alteration without the formality of securing bids, if the cost so agreed upon does not exceed the greater of: (a) The amount specified in Section or 20655, whichever is applicable to the original contract; or (b) Ten percent of the original contract price. 5 Standard Purchasing Procedures Change Orders Exceeding 10% Obtain bids per Board Resolution of Necessity Authorizing Change Order Exceeding 10% describe legal authority to contract without bidding describe statutory 10% limit under for change orders without bidding establish that bidding for change order work exceeding 10% is benefit to District describe need for existing contractor to perform change order work authorize/approve change order exceeding 10% 6 3

4 Force Account; Day Labor What Can Be Procured? Facilities repairs, alterations, additions, painting, decorating Repair or build apparatus or equipment Improvements to school grounds Construct new buildings Maintenance Public Contract Code [T]he governing board may make repairs, alterations, additions, or painting, repainting, or decorating upon school buildings, repair or build apparatus or equipment, make improvements on the school grounds, erect new buildings, and perform maintenance as defined in Section by day labor, or by force account, whenever the total number of hours on the job does not exceed 350 hours. 7 Force Account; Day Labor How is Force Account Work Implemented? What is force account? Construction Industry Force Account v. Amador Water Agency, 71 Cal.App.4 th 810 (1999). There is no evidence the Legislature used the term force account in the Public Contract Code with the same narrow meaning given by the Attorney General s analysis of prevailing-wage laws or the State Controller s rules for county budget reports, which is to say a definition limited to the use of a public agency's own employees. (See fn. 3, ante.) Indeed, to the extent the Legislature has considered the definition at all in connection with water agencies, it includes both an agency s own workers and outside personnel working under the agency's supervision. (Ibid.) Thus, force account, as used in section 21451, limited in effect to the Agency's contracts, would apply to contracts with outside personnel working under the Agency's supervision. Procuring Force Account Work Excluded from Section standard procurement bidding procedures (c) This section shall not apply to professional services or advice, insurance services, or any other purchase or service otherwise exempt from this section, or to any works done by day labor or by force account pursuant to Section Board Policy/Administrative Procedures? Authorization for staff procurement of force account within statutory limits Effort to obtain multiple quotes; authorize procurement without obtaining quotes if quotes delay necessary work or not in best interests of District Staff authority to award subject to Board ratification; award to lowest priced quote from responsible bidder Force Account Limits Limits based on time to complete procured services; not dollar value CCD 350 hour limit Public Contract Code 20655(a). [W]henever the total number of hours on the job does not exceed 350 hours. Hours on job include supervision, coordination, administrative, clerical, other support services? What if the hour limits are exceeded? Do other public works requirements apply? 8 4

5 Special Services Excluded from Section standard procurement bidding procedures (c) This section shall not apply to professional services or advice, insurance services, or any other purchase or service otherwise exempt from this section, or to any works done by day labor or by force account pursuant to Section What can be procured? Special services and advice: Financial, accounting, engineering, legal, administrative, payroll services Government Code The legislative body of any public or municipal corporation or district may contract with and employ any persons for the furnishing to the corporation or district special services and advice in financial, economic, accounting, engineering, legal, or administrative matters if such persons are specially trained and experienced and competent to perform the special services required. Special Services Procurement Without Bidding Process Cobb v. Pasadena City Board of Education, 134 Cal.App.2d 93(1955): That statute [Government Code 53060] removes all question of the necessity of advertising for bids for special services by a person specially trained and experienced and competent to perform the special services required. Now, a board may pay from any available funds a fair compensation to capable and worthy persons for special services. 9 Special Services; Architectural and Engineering Services Competitive Selection Process Notwithstanding Government Code reference to engineering as special service, procurement of architectural and engineering services subject to Prop 35 (2000) and Prop 35 enactment of Government Code Scope of services subject to Prop 35 Government Code For purposes of Article XXII of the California Constitution and this act, the term architectural and engineering services shall include all architectural, landscape architectural, environmental, engineering, land surveying, and construction project management services. Fair, Competitive Selection Process Government Code All architectural and engineering services shall be procured pursuant to a fair, competitive selection process which prohibits governmental agency employees from participating in the selection process when they have a financial or business relationship with any private entity seeking the contract, and the procedure shall require compliance with all laws regarding political contributions, conflicts of interest or unlawful activities. 10 5

6 Special Services; Architectural and Engineering Qualifications Based Selection Process Not Mandatory QBS process mandatory for state agencies QBS process discretionary for local agencies. Government Code (a) When the selection is by a state agency head the following procedures shall apply: (1) The state agency head shall negotiate a contract with the best qualified firm for architectural, landscape architectural, engineering, environmental, land surveying, and construction project management services at compensation which the state agency head determines is fair and reasonable to the State of California or the political subdivision involved. (2) Should the state agency head be unable to negotiate a satisfactory contract with the firm considered to be the most qualified, at a price the agency head determines to be fair and reasonable to the State of California or the political subdivision involved, negotiations with that firm shall be formally terminated. The state agency head shall then undertake negotiations with the second most qualified firm. Failing accord with the second most qualified firm, the state agency head shall terminate negotiations. The state agency head shall then undertake negotiations with the third most qualified firm. (3) Should the state agency head be unable to negotiate a satisfactory contract with any of the selected firms, the state agency head shall select additional firms in order of their competence and qualification and continue negotiations in accordance with this chapter until an agreement is reached. (b) When the selection is by a local agency head, the local agency head may undertake the procedures described in subdivision (a). 11 Information Technology Procurement; Small Businesses & DVBEs Public Contract Code What Can Be Procured? Goods, Services and Information Technology (a): the governing board of a community college district may award a contract for the acquisition of goods, services, or information technology that has an estimated value of greater than five thousand dollars ($5,000), but less than two hundred fifty thousand dollars ($250,000) How Is Small Business/DVBE Procurement Implemented? Bidders Limited to Small Businesses/DVBEs (a): to a certified small business, including a microbusiness, or to a disabled veteran business enterprise Multiple Quotes (a): if the community college district obtains price quotations from two or more certified small businesses, including microbusinesses, or from two or more disabled veteran business enterprises. Basis for Award of Contract Not defined in Section Award limited to lowest priced quote or discretion to award to any bidder? Board Policy/Administrative Procedure defining basis for award 12 6

7 Piggyback Procurement What Can Be Procured? DGS/CMAS Purchases; Multiple Award Schedules Purchase materials, equipment or supplies through DGS Public Contract Code Nothing in this code shall preclude the governing board of any community college district from purchasing materials, equipment or supplies through the Department of General Services pursuant to Section of the Government Code. Purchase materials, supplies, equipment, automobiles, tractors, personal property through other public agencies Public Contract Code [T]he governing board of any community college district without advertising for bids, and when that 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. UC/CSU Contracts Public Contract Code Nothing in this code shall preclude the governing board of a community college district from purchasing materials, equipment, supplies, or services under the same terms and conditions as are specified in a contract lawfully awarded by the University of California or the California State University. 13 Piggyback Procurement What Can Be Procured? Limitations Attorney General Opinion No (2006) We therefore conclude that a school district may not, without advertising for bids, contract with another public agency to acquire factory-built modular building components for installation on a permanent foundation. Steelgard, Inc. v. Jannsen, 171 Cal.App.3d 79 (1985) It is a reasonable conclusion that these portable classrooms are within the definition of materials or supplies which involve only incidental on-site installation and that they are therefore not within the purview of the State Contract Act. They are prefabricated in factories. Only a small portion of the time, cost, and labor involves on-site installation. Both by statutory definition and in reality, the buildings are easily relocatable, installed on wood rather than permanent foundations. 14 7

8 Piggyback Procurement How Are Piggyback Procurements Implemented? Piggybackable Bid Does a public agency bid allow other public agencies to piggyback purchase from the successful bidder? Is my District included in the public agencies allowed to piggyback purchase? Was the piggyback contract bid in compliance with applicable bidding requirements? Did the agency issuing the piggyback contract bid award the piggyback contract in accordance with applicable law and bid criteria? What is the duration of the piggyback back; can the piggyback purchase be completed prior to expiration of the piggyback? Piggyback Contract Is the scope of purchase under the piggyback contract an allowable piggyback bid for my District? Do the products offered under the piggyback contract conform to purchasing objective? Is pricing for products offered under the piggyback contract fair and reasonable? Are the terms of the piggyback contract acceptable to my District; are the contract terms consistent with my District s procurement/contract requirements? Does the piggyback bid allow other agencies to modify the terms of the piggyback contract? Is there an administrative fee or other charge due the originating agency for use of a piggyback contract? 15 CUPCCAA The California Uniform Public Construction Cost Accounting Act ( CUPCCAA or Act ) was established in (Pub. Contract Code 22000, et seq.) Local agencies may opt into CUPCCAA entirely voluntary Cities and Counties Community College Districts School Districts Special Districts 16 8

9 Some Reasons to Opt Into CUPCCAA Allows participating agencies to: Proceed without bidding on projects costing up to $45,000 Use informal bid process for projects of $45, to $175,000 Use formal bid process for projects over $175,000 Use agency employees force account labor in specific circumstances 17 CUPCCAA Getting Started Special rules apply for agencies under CUPCCAA. (Pub. Contract Code 22030, et seq.) To opt into CUPCCAA, local agencies must take the following steps: Adopt the uniform cost accounting procedures by resolution and notify the state Controller; Board must enact an informal bidding ordinance to govern selection of contractors for projects subject to informal bidding; Compile a list of contractors by category of work - trade. (Pub. Contract Code 22030, 22032, ) 18 9

10 Projects up to $45,000: No bid process required; No Bid and Informal Bid Projects No public notice notice inviting bids required; Agency may perform the work by negotiated contract with a contractor of choice, or by purchase order, or using its own employees - force account. (Pub. Contract Code 22032, subd. (a).) Projects over $45,000 up to $175,000 require compliance with adopted informal bidding ordinance AND applicable notice requirements. The agency MAY maintain a list of qualified contractors by category of work pursuant to minimum criteria established by the Commission and mail, fax or notices inviting bids not less than 10 calendar days before bids are due ; OR mail, fax, or a notice inviting informal bids to all construction trade journals specified in Section (Pub. Contract Code 22034(a).) Notably, no time limit is set in Section (suggest compliance with 15 calendar days before bid deadline set by Section 22037). 19 Informal Bid Projects (cont.) Board may delegate authority to award informally bid contracts to the public works director, general manager, purchasing agent, or other appropriate person. (Pub. Contract Code 22304(c).) If all bids received are over $175,000 and the agency s cost estimate was reasonable, the Board may by 4/5ths vote pass a resolution and award a contract up to $187,500 or less to the lowest responsible bidder. (Pub. Contract Code 22034(d).) 20 10

11 Projects Over $175,000: Formal Bid Process Required The agency s Board or designated representative must adopt plans, specifications, and working details for all projects subject to the formal bidding process. (Pub. Contract Code ) Notice inviting formal bids must be published in a newspaper and sent electronically, if available, and mailed to all construction trade journals. (14 calendar days and 15 calendar days, respectively) (Pub. Contract Code ) If the agency elects to award a contract, it must be awarded to the lowest responsible bidder. (Pub. Contract Code, 22038(b).) The agency may reject all bids presented if it determines that the project may be performed more economically by its own employees. (Pub. Contract Code, 22038(a).) If the agency does reject all bids, it may abandon the project, re-advertise the project for bid, or, by 4/5 vote of the Board, declare that the project may be performed more economically by its own employees. (Pub. Contract Code, 22038(a).) 21 General CUPCCAA Procedural Requirements Agencies must award to the lowest responsible bidder, or may reject all bids. (Pub. Contract Code 22038(b).) The agency may reject all bids if it determines that the project may be more economically performed by its own employees. (Pub. Contract Code, 22038(a).) If the agency does reject all bids, it may abandon the project, re-advertise the project for bids, or, by 4/5 vote of its Board, declare that the project may be performed more economically by its own employees. (Pub. Contract Code, 22038(a).) If no bids are received through the formal or informal bid process, the project may be performed by employees of the agency, by force account or by negotiated contract with a contractor of the agency s choice. (Pub. Contract Code, 22038(c).) 22 11

12 Additional CUPCCAA Procedural Requirements According to Public Contract Code section 22038: (a) In its discretion, the public agency may reject any bids presented, if the agency, prior to rejecting all bids and declaring that the project can be more economically performed by employees of the agency, furnishes a written notice to an apparent low bidder. The notice shall inform the bidder 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. If after the first invitation of bids all bids are rejected, after reevaluating its cost estimates of the project, the public agency shall have the option of either of the following: (1) Abandoning the project or re-advertising for bids in the manner described by this article. (2) By passage of a resolution by a four-fifths vote of its governing body declaring that the project can be performed more economically by the employees of the public agency, may have the project done by force account without further complying with this article. 23 In Case of Bid Protest Contractors may protest the agency s decision regarding award of contract. Best Practices: Include a bid protest procedure in the bid documents Hold bid opening early enough to allow time for handling of bid protest and potential rebid Forward protest to other contractors involved for their responses Always respond in writing Consult with legal counsel promptly after receipt Observe all applicable procedures Consider option to reject all bids Notice of non-responsiveness Due process hearing for non-responsibility 24 12

13 What Can Be Procured? Emergency Contracts Public Contract Code Repairs, alterations, work or improvement for any facility Emergency work necessary for: (i) continuation of existing classes; (ii) mitigate/eliminate potential personal/property damage Public Contract Code 20654(a). In an emergency when any repairs, alterations, work, or improvement is necessary to any facility of the college, or to permit the continuance of existing college classes, or to avoid danger to life or property, the board may by unanimous vote, with the approval of the county superintendent of schools, do either of the following: How Are Emergency Procurements Implemented? Unanimous Board vote; declaration of emergency and authorization to procure required services/work under emergency procurement procedures of COE Superintendent approval to proceed with emergency procurement What Alternative Procedures Can Be Used For Emergency Work/Services? Contract for emergency work/services without bidding process Emergency work/services completed by force account 25 What is an Emergency? Public Contract Code 1102 Emergency, as used in this code, means 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

14 What Can Be Procured? Emergency Contracts CUPCCAA Emergency Contracting Equipment, services and supplies Emergency work necessary to repair or replace public facilities Other directly related and immediate action required by emergency Public Contract Code 22050(a)(1). 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. How Are Emergency Procurements Implemented? Required Actions 4/5 Board vote; declaration of emergency Board finding that bidding process will delay implementation of necessary emergency actions Board authority to delegate emergency actions to District staff Public Contract Code 22050(a)(2). Before a governing body takes any action pursuant to paragraph (1), it shall make a finding, based on substantial evidence set forth in the minutes of its meeting, that the emergency will not permit a delay resulting from a competitive solicitation for bids, and that the action is necessary to respond to the emergency. What Alternative Procedures Can Be Used For Emergency Work/Services? Contract for emergency work/services without bidding process Continuing Board review and authorization of emergency actions; Board termination of emergency actions Public Contract Code 22050(c)(1). If the governing body orders any action specified in subdivision (a), the governing body shall review the emergency action at its next regularly scheduled meeting and, except as specified below, at every regularly scheduled meeting thereafter until the action is terminated, todetermine, by a four-fifths vote, that there is a need to continue the action. 27 AB 618 CCD Job Order Contracting; Job Order Contracting Defined; Legislative Objectives Indefinite quantity contract for public works or maintenance projects over a fixed period of time with fixed unit pricing (d): Job order contract most qualified bidder who is licensed, bonded and general liability insured Fixed time Fixed unit prices Applicable to public works and maintenance projects (c): Job order means a firm, fixed priced, lump sum order issued by the school district to a job order contractor for a definite scope of work as compiled from the unit price catalog to be performed pursuant to a job order contract. Legislative Intent ( (b)(c)(d)) Expedite project completion; cost reduction; streamlined alternative bid/contract process Effective January 1, 2018; Sunset January 1, 2022 ( ) 28 14

15 PLA/PSA REQUIRED AB 618 CCD Job Order Contracting; Essential Requirements (f): It is further the intent of the legislature that districts use the job order contract process pursuant to this article only if the district has entered into a project labor agreement that meets the requirements of Section 2500 for all its public works projects (a): The community college district may utilize job order contracting pursuant to this article only if the community college district has entered into a project labor agreement or agreements that will apply to all public works awarded through job order contracting and to all other public works of the community college district that exceed a monetary threshold set by the community college district through at least December 31, 2021, regardless of what contracting procedure is used to award that work (f): All work performed under a job order contract shall be covered by a project labor agreement (d): The community college district shall designate one individual to act as a monitor to inspect job sites for labor compliance violations at the request of the designated labor representative in its project labor agreement (b)(1)(A): The prequalified bidders shall be in compliance with a community college district s project labor agreement. 29 AB 618 CCD Job Order Contracting; Essential Requirements MAINTENANCE PROJECTS EXECUTION PLAN (b): The community college district shall prepare an execution plan for all modernization projects that may be eligible for job order contracting pursuant to this article. The community college district shall select from that plan a sufficient number of projects to be initiated as job order contracts during each calendar year and shall determine for each selected project that job order contracting will reduce the total cost of that project. Job order contracting shall not be used if the community college district finds that it will increase the total cost of the project. UNIT PRICE CATALOG DEFINE TASKS, PRICING & SPECIFICATIONS Unit Price Catalog ( (q)): book containing specific construction tasks and unit prices to install or demolish that construction. The listed tasks shall be based on generally accepted industry standards for various items of work to be performed by the job order contractor. The prices shall include the cost of materials, labor, and equipment for performing the items of work. The prices shall not include overhead and profit. All unit prices shall be developed using local prevailing wages

16 AB 618 CCD Job Order Contracting; Bidding Job Order Contracts PRE-QUALIFIED BIDDERS (c)(1): A community college district shall establish a procedure to prequalify job order contractors using a standard questionnaire that includes, at a minimum, the issues covered by the standardized questionnaire and model guidelines for rating bidders developed by the Department of Industrial Relations pursuant to subdivision (a) of Section REQUEST FOR BID TO PRE-QUALIFIED BIDDERS (b): Based on the documents prepared under subdivision (a), [ unit price catalog and preestablished unit prices, job order contract technical specification, and any other information deemed necessary to describe adequately the school district s needs] a community college district shall prepare a request for bid that invites prequalified job order contractors to submit competitive sealed bids in the manner prescribed by the community college district. AWARD OF JOB ORDER CONTRACTS (b)(1)(A): The pre-qualified job order contractors, as determined by a community college district, shall bid one or more adjustment factors to the unit prices listed in the unit price catalog based on the job order contract technical specifications. Awards shall be made to the prequalified bidders that the community college district determines to be the most qualified based upon preestablised criteria made by a community college district. The prequalified bidders must be in compliance with a community college district s project labor agreement. 31 AB 618 CCD Job Order Contracting; Job Order Contracts TERM 1 year with maximum 2-1 year renewals, subject to dollar limits (b): Job order contracts may be executed for an initial contract term of no more than 12 months, with the option of extending or renewing the job order contract for two 12-month periods. The term of the job order contract shall be for the contract term or whenever the maximum dollar value of the contact is achieved, whichever is less. All extensions or renewals shall be priced as provided in the request for bids. The extension or renewal shall be mutually agreed to by the community college district and the job order contractor. DOLLAR LIMITS $5M 1 st Term; $10M maximum for renewal terms; $1M maximum per project (a): The maximum total dollar amount that may be awarded under a single job order contract shall not exceed five million dollars ($5,000,000) in the first term of the job order contract and, if extended or renewed pursuant to subdivision (b), a maximum of ten million dollars ($10,000,000) over the subsequent two terms of the job order contract (c): No single job order contract shall exceed one million dollars ($1,000,000) (g): Any change or alteration to a job order [contract] shall be in compliance with Section

17 AB 618 CCD Job Order Contracting; Job Order Projects; Estimate; Pricing Verification; Alternative Delivery DISTRICT ESTIMATE & CONTRACTOR PROPOSED PRICING (a): Prepare for each individual order developed under a job order contract an independent community college district estimate. The estimate will be prepared prior to receipt of the contractor s offer to perform work and will be compared to the contractor s proposed price to determine the reasonableness of that price before issuance of any job order. The basis for any adjustment to the community college district estimate is to be documented. If the contractor s proposal for a given job order is found to be unreasonable, not cost effective, or undesirable, the community college district is under no obligation to issue the job order to the job order contractor, and may instead utilize any other available procurement procedures. MANAGEMENT REVIEW (b): The community college district shall not issue a job order until the job order has been reviewed and approved by the appropriate level of management. 33 Questions for Discussion Common Contracting Pitfalls Maria, can you please share the top common facilities contracting pitfalls that your observe in your Purchasing role? Jerry, what can Facilities Departments do to anticipate or respond to these challenges? 34 17

18 Questions for Discussion Bidding What are the options? The work can t wait for three months to bid. I don t want to deal with a low bid contractor. Can t we just sole source it? Do we have to include an or equal provision in our specifications? How do we ensure we get what we want? 35 Questions for Discussion In emergency situations, when the District becomes an Emergency Operation Center, is the public agency still bound by the bid threshold limit? A District issues a Request for Qualifications and Proposals to provide a Design-Build approach for network cabling infrastructure. Can they use Design- Build, or is that for new construction only? Is the work subject to DIR prevailing wage monitoring? 36 18

19 Questions for Discussion Does all our work have to be prevailing wage? The Facilities Department is cutting some trees inhouse. They will hire a vendor to bring a wood chipper to chip the wood. Is this service subject to DIR prevailing wage monitoring, or is it a general service? 37 PANEL CONTACT INFORMATION Maria Bernardino San Joaquin Delta College Director of Purchasing and Contract Services mbernardino@deltacollege.edu Patrick A. Gunn Attorney at Law patrickgunnesq@gmail.com Jerry Marchbank Coast Community College District Senior Director, Facilities/Planning/Construction jmarchbank@mail.cccd.edu Sherman Wong Public Agency Law Group Attorney swong@palg.net 38 19