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HomeMy WebLinkAboutMINUTES - 06272000 - SD3 s g=�'w TO: BOARD OF SUPERVISORS ' ' { CONTRA .4,itfri COSTA FROM: Finance Committee COUNTY N• +r DATE: June 27, 2000 SUBJECT: Report on the Evaluation of the Policy and Practice of Interdepartmental Char es SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION Recommendations: 1. Accept this report on the evaluation of the policy and practice of interdepartmental charges. 2. Direct the CACI and Auditor-Controller to improve the consistency among departments in how charges are formulated by educating Departments during budget workshops. 3. Direct CAC} and Auditor-Controller to explore changing existing budget line item #2310 "Professional/Specialized Services" to read "Non-County Professional/Specialized Services." 4 direct CAO and Auditor-Controller to explore adding three (3) new budget line items: "Other General Services Charges", uOther Telecommunication Charges," and, "Other Interdepartmental Charges." 5. Direct CAC) to review and up-date the interdepartmental Administrative Bulletin by December 31, 2000. 6. Direct charging Departments to advise customer Departments of charges and the supporting data either electronically or by forwarding a copy of the applicable Interdepartmental Transfer TC-62 form. 7. Encourage the use of service agreements for high cost, complex and lengthy projects among service providers and users. CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR—RECOMMENDATION OF BOARD COMMITTEE APPROVE —OTHER SIGNATURE(S): ACTION OF BOARD ON ZTiX —APPROVED AS RECOMMENDED OTRR VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A ,_4X_ UNANIMOUS(ABSENT o ,2. _ - 1 TRUE AND CORRECT COPY OF AN AYES:® NOES-__.— ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS O THE DATE . Co"z"Et. Rich Seithel - 335-1024 ATTESTED : �"'�.. U PHIL.BATCHELOR,CLERK OF + THE BOARD OF SUPERVISORS X/ AND COUNTY ADMINISTRATOR CC: GAO % Auditor-Controller BY County Departments .- , t 8. Direct CAO to work with General Services Department to develop or secure a software program that would better track and itemize interdepartmental charges. 9. Acknowledge that service provider departments currently do outsource services, and that the decision to outsource is a function of statutory, union, market and cost impact on county operations. BACKGROUNDIREASOWSI FOR RECOMMENDATIONJU When adopting the 1999-2000 Recommended Budget, the Board of Supervisors commented that Interdepartmental charges continue to be an area of concern for many departments and requested staff to evaluate the policy and practice of interdepartmental charges (the "Probation Trailer" example was cited). In an attempt to address these concerns, a committee comprised of representatives from seven departments (Health, General Services, Probation, Auditor-Controller, Department of Information Technology "DoIT", Employment and Human Services, and CAO) was assembled. This committee was charged with four responsibilities: determine nature of department discontent; develop a methodology to collect information pertaining to charges; analyze the information, and make recommendations to improve the interdepartmental charging system. In addition, committee members contacted other Counties to discuss charging methodologies, problems, and successes. The committee then presented its findings to the Finance Committee. The findings included: 1. There is over $97 million in interdepartmental charges. 2. Dolt and General Services are responsible for approximately 85%. 3. Departments feel that they understand the system but would like more cost calculation detail. 4. Departments would like additional budget line items to facilitate expense tracking by isolating outsourced charges. 5. Service Agreements, when appropriate, are preferable. 6. Outsourcing is not widely available due to statutory, union, and other considerations. 7. Other Counties advise they are in a similar, or worse, predicament. 8. Probation Trailer charges were explained and considered appropriate. On April 17, the Finance Committee further analyzed the findings and supported the above-cited recommendations. The recommendations are intended to improve the consistency, predictability, and fairness of interdepartmental charges. They are also intended to improve the monitoring quality of reports and, therein, management decision-making. OFFICE of the COUNTY ADMINISTRATOR � 10TH FLOOR 651 PINE STREET MARTINEZ, CA 84553-1291 Date: April 17, 2000 To: Finance Committee Mark DeSaulnier Joe Canciamilla From: Tony Enea, Sr. Deputy County Administrator Subject: STATUS REPORT ON THE POLICY AND PRACTICE OF INTERDEPARTMENTAL CHARGES Recommendations: 1. Accept this status report on the evaluation of the policy and practice of interdepartmental charges. 2. Direct the CAO and Auditor-Controller to improve the consistency among departments in how departments formulate charges. 1 Explore a short-term solution for improving the supporting documentation for charges. 4. Implement budgetary improvements which: improve accountability in the interdepartmental charging process. separate interdepartmental costs from outside vendor costs clarify the types of charges levied against departments 5. Encourage the use of service agreements for high cost, complex and lengthy projects among service providers and users. 6. Acknowledge that service provider departments currently do outsource services, and that the decision to outsource is a function of statutory, union, market and cost impact on county operations. Sack round: When adopting the 1999-2000 Recommended Budget, the Board of Supervisors commented that Interdepartmental charges continue to be an area of concern for many departments and requested staff to evaluate the policy and practice of I interdepartmental charges (the "Probation Trailer" example was cited). In an attempt to address these concerns, a committee comprised of representatives from seven departments (Health, General Services, Probation, Auditor- Controller, Department of Information Technology "D®IT", Employment and Human Services, and CAO) was assembled. This committee was charged with four responsibilities: determine nature of department discontent; develop a methodology to collect information pertaining to charges; analyze the information, and make recommendations to improve the interdepartmental charging system. In addition, committee members contacted other Counties to discuss charging methodologies, problems, and successes. The committee determined that the most effective way to mine information was to develop a survey to ascertain qualitative and quantitative findings. This survey provided a forum for departments to offer suggestions and air dissatisfactions, as well as, submit quantitative information. (Please refer to Attachment #1 for a copy of the survey) SURVEY RESULTS After the survey results were tabulated, the following was determined. There is over $97 million that is being charged to departments (Health Services and the Employment and Human Services represent 59°!x). Combined, General Services and DoiT are responsible for approximately 85% of the annual charges to all departments. This information allowed us to focus the committee's attention and queries. There were very strong responses to particular questions of the qualitative portion of the survey. Many of the departments felt they understood the system, but that more cost calculation detail is desirable. The survey revealed that departments do not consistently use a standard method of formulating charges. For example, many departments do not use indirect costs. They requested a separate line item to the finance system to help them track interdepartmental charges. Finally, they felt that service agreements would also help in keeping the cost at a more reasonable level. Interestingly, only 11 (37%) of the departments offered suggestions or comments for improvement. (See Attachment #2 for complete survey results) Cost Oats As mentioned above, the survey raised several issues. In addressing the cost detail issue, the committee further determined via interviews and testimonials, that the primary concern is actually the lack of communication between the charging and charged departments. The Auditor-Controller's financial reports do include sufficient cost detail. Unfortunately, this information is not always timely or obvious (it also became apparent that many departments are unaware of the monthly Cost Expenditure Detail Report"). As a courtesy, the charging department should notify what charges are being processed so that the chargee is aware of them before the financial reports are distributed. For example, when a department provides a service for another department, the charges are journaled by using Form TC 62. This form is a two-part form: the original copy is sent to the Auditor's Office and the second copy remains with the 2 charging department. It is recommended that Form TC 62 become a three-part ` form, so that a copy can be forwarded to the charged department. This would help departments reconcile their charges against their reported expenses. Line Item: Many interdepartmental charges are reported on separate line items (i.e. Building {occupancy Cost, data Processing Services, Telephone Service Exchange, etc.), but not ALL interdepartmental charges are reported separately from outside contracting costs. Line Item #2310 (Professional/Specialized Services) is a hybrid of interdepartmental and outside charges. For example, Lease Management, Architectural, and telephone installation charges (that are interdepartmental) are currently appearing in this line item. Departments have indicated that they would prefer that #2310 be limited to outside changes only. Therefore, we recommend that an additional line item be established and suggest that it read "Other interdepartmental charges." Given this, Departments could better identify their cost source. Service Aareements: Departments overwhelmingly supported the Service Agreement concept. They feel strongly that Service Agreements would improve cost and timeliness of service. Doff currently negotiates Service Agreements with their "clients." However, relative to General Services, their scope of service is limited and the volume of work orders is minimal, which lends itself more to Agreements. On the other hand, General Services has very few Service Agreements because of the nature and volume of their work. They advise it would be impractical, if not impossible, to negotiate Service Agreements on all their work. They feel it would severely handicap their operation. They did agree, in principle, to consider Service Agreements on jobs that exceed a given "threshold' (e.g. $25,000). At this time, we encourage service agreements where appropriate. If necessary, the County Administrator's Office would serve as an arbitrator for disputes. (See Attachment#3 for Service Agreement example.) outaou, ►mina After analyzing the submitted survey data, the committee was better positioned to understand and address departmental concerns. In addition, the Board of Supervisors expressed concerns regarding outsourcing alternatives and the competitive pricing of interdepartmental charges. In this vein, particular charging departments were Invited to committee meetings to discuss and explain their charging methodology. As the primary chargers, General Services and DoIT were invited to discuss outsourcing decision points and their interdepartmental charging rate structures. General Services advised that outsourcing and pricing decisions are a function of statutory and union considerations. (Please refer to Attachments #4, #5, #6, and #7) DoIT advised that their services are not as restricted by legal or union issues and that outsourcing for a substitute service is available to departments. However, at this time, it is cost prohibitive for departments to outsource. In addition, General Services is a general fund department with a given "fixed cost." Aggressive outsourcing would result in a rise in cost/unit. If departments feel they are being inappropriately charged, they can ask for clarification, appeal it or 3 or request CAC? intervention. But departments should be cautioned that, when -3- comparing pricing, like and complete services are truly being compared. For example, a drive-thru oil change versus the complete auto check performed by General Services. Probation Trailer The Probation Department was offered a modular trailer for $1.00 in 1996. General Services was requested to provide an estimate for the installation of this trailer. The trailer was intended to be a classroom for the Boy's Center. Because the modular building was to be used as a classroom, it came under the jurisdiction of CRS (the California Office of Regulation Services). In addition, there was no power available at the site selected by Probation. The original estimate was $106,000 and included providing electrical power, preparing and submitting for ORS approval, hiring additional consultants per ORS regulations, re-roof, repair interior walls, rekey building, providing conduit to connect Juvenile Hall phones and alarm systems, site demolition, and grading, etc. Then, during construction, Probation changed the order to replace the existing fencing with guard rail, add concrete stairs, etc. The final cost was $113,636. In summary, "There is no such thing as a free lunch!" In retrospect, Probation understands the additional costs. (Please refer to Attachment#8) OLHER COUNTIES Three counties were contacted: Alameda, Sacramento and Sonoma. All three experience similar difficulties and frustrations. Some of the highlights are: Alameda County — Alameda's interdepartmental charging system is similar to ours. However, they have an Inter-Governmental Service Fund. Every department has occupancy charges, but only use the 'Work Authorization Requests" for major projects versus Contra Costa where these requests are required for everything regardless of magnitude. Sacramento -- Sacramento is perhaps the most troubled county. For example, they indicated that they have approximately $10 million in interdepartmental charges that they are having trouble reconciling. Sonoma -. Sonoma utilizes a joint CAO-Auditor approach. 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Annually, how much is your department charged by other county departments? 2. % of this amount by departments: General Services DoIT - Other % Name Other % Name Other % Name 3. Annually, how much do you charge other County Departments? $ 4. If you charge your own division(s), what is the annual amount? $ Methodology--Corn2osition of Charge 5. What costing formula do you use to charge departments? (Check most appropriate box.) ❑ Direct Costs (monition: Expenses which can be charged directly as a part of the cost of a product or service, or of a department or operating unit.) ❑ Direct and Indirect(Combination) (Definition: Indirect cost is a cost necessary for the functioning of the organization as a whole, but which cannot be directly assigned to one service.' ❑ Other(explain) 6. Please check which "Direct" Costs are included: ❑ Personnel ® Hourly Rate 0 %of salary 0 Manager ❑ Supervisor 0 Secretarial ❑ Other ❑ Office Supplies C3 Equipment ❑ Vehicle Depreciation/Operation/Maintenance Cl Facility Costs ❑ Other 7. Please check which "Indirect" Costs are included ❑ Personnel D Manager 0 Supervisor ❑ Secretarial © Other support staff M Office,Supplies 0 Data Processing ❑ Equipment ❑ Vehicle Depreciation/Operation/Maintenance ❑ Facility Costs ❑ Facility Replacement 0 Other Asset Replacement ❑ County Indirect Cost (OMB Circular A-87) ❑ Other (OVER) -ate Service Recipient Problems/Concerns As a recipient of services from other departments, please circle your response to the following Statements (range from 1 =strongly disagree to 5=strongly agree): strongly D/ssgr" strongly Agree 8. You understand the county interdepartmental charging system. 1 2 3 4 5 9. More cost calculation detail would improve your satisfaction with interdepartmental charges. 1 2 3 4 5 10. You can satisfactorily reconcile/track charges your department incurs. 1 2 3 4 5 11. Charges are included in a timely manner in the monthly expenditure reports. 1 2 3 4 5 12. Charges could be better tracked if there were specific budget line items by services charged. 1 2 3 4 5 13. Service levels between departments should be negotiated where feasible. 1 2 3 4 5 14. Service agreements between departments would ensure minimal cost overruns. 1 2 3 4 5 15. A formal arbitration process would help resolve cost disputes between providers and receivers. 1 2 3 4 5 16. You are aware of the services that MUST be provided by County departments and those which can be provided by outside service providers. 1 2 3 4 5 17. What criteria do you use to determine when to outsource? 18. Any suggestions/comments? Return to CAO,651 Pine street 10"' Floor,Attn: Rich Selthel by no later than December 30, 1999 .... ................................................... ... ........... ................... ...........................IIIIIN............... N:iii NI. 0: ,IN IX N........... i M as i Emimflin N X.M." 00'.1 1 ISO A ............... Olk IN: X am MA gg 'MINN "n .............. . 0.1 max IN %mi .'NN Nzi. g=M 'N .....IN v....n. x Ww' m M= 04.1no �ih EM= Ng N N N N N N N Ii Na I% IIK: *IK a.� I : IRK % % MI: IN .0:0900 Of IN: NOW Inx R-_ a- n i I.K % N:K - - -W- mm.sm.m- N' �.KX IK:IIX 1,N :N n"MM., -gg 0 gg ?.'-% I.III INn;:N N % �"D SUMMARY: SURVEY RESULTS This survey was intended to ascertain quantitative and qualitative findings regarding the interdepartmental charging system. Departments were requested to quantify the charges they incur, as well as, the charges they inflict. --in addition, questions were asked to elicit feelings regarding their understanding and satisfaction with the current system, and to provide a forum for departments to offer suggestions for improvement or to air their dissatisfaction. Quantitatively, 32 departments responded. Thirty are included in the statistics. Not included are Veteran Services and Retirement. Veteran Services was felt to be statistically insignificant and Retirement is an independent department. The summary results are as follows: ♦ 30 Departments (100%) experience interdepartmental charges s Total amount of charges reported is $97,367,000 ♦ Total amount charged reported is $82,394,000 * 19 Departments (63%) charge other Departments ♦ Primary Departments charged and charging are outlined in attachment A and B. ♦ Regarding charging methodology: • 18 Departments utilize direct cost • 12 Departments utilize indirect cost • Only 4 Departments utilize county indirect cost Qualitatively, 9 questions were asked to determine comfort and satisfaction with the current interdepartmental charging system. Five questions elicited strong responses. These 5 responses are: People feel they understand the system * More cost calculation detail is desirable r Separate budget line items to help identify costs are desirable Service agreements are desirable s It is felt that service agreements would help reduce cost overruns It is very important to note that only 11 of the 30 respondents (37%) felt it necessary to offer suggestions or comments regarding the system and/or how to improve it. qq rh Responses to #18: 1. PitD1"C al s5e[!1tes: I think a great deal of time & thus $$ are spent on the Interpepartmental charge processes for no purpose. General fund costs should be adequately funded directly in the budget and the added cost could be avoided. Also believe that the multiple ways in which charges are calculated often depends on the rec`g. dept.'s needs for claim purposes. Since these are not standard, further problem develop. Standardization would help. 2: Building Ind ecti n: We-s,hgmi, keep the Interdepartmental charging system but improve is by including accurate charges and tracking (better tools). 3. CAQIADMN: I like the dlea of adding more specific expenditure amounts for GSD charges, particularly. 4 CAQ1AAO: Develop and distribute procedures for questions 8,5 and 16 above. 5. . record & Election: Co. service departments need to operate as outsource vendors do. If service is not done to specs or in timely manner, dept. should be allowed to outsource al"ys if we can prove a cost savings/benefit. 6. Dommunity Dev_elgpmen_t: Is-there possibility of (I) Standardizing "charge-out" rates between Depts. (ii) Having reduced rates between similar work groups (Le hard use depts., Human Services Depts. 7. East Cgunly Fire: We are nQLnotified of interdepartmental charges plLx to providing them ourselves on our books. Getting invoices would be preferred. It would be easy to track charges and budget accordingly. 8., Employment A Human Services: Please press for more timely billing supported with the details of expenses. 9.'. LibCary: Fee for service is an adequate methodology for charging departments. Standardize a separate object code for outside contractors. 11. 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'';:}+ :•$h +•:r:•.•l.•:rt:%:$:+. :+•'i•:fiftv:+•}:•Yr.4:???dr:4:•}}i}:•}}}:4:a.•}:.}:•}:.. % }.r f.,•r ;r{.r..vr' •f`{ {� iiif t' .x�>i:;.;4: ...�...... .Y.a' �r.'$'•} '+'{.••' nrra. .?•'ry}ir+��$...v�•�r''':}v:: v:•.v£.v ::•`ri4: r.. .�Yrr.'ice''' +$r'•r:•• {•:;r..;v;:{' }':.+{{r. .....,._ ...tf •+$$:ai�.•... a •.�.+.?+'.'w'•: �f'�f.+ rr..,x.r...:,tR.., .G r '$:$+''/.v`.ar: ................... ::.ta:::::?v....va.r..:v�u....ti...rr./.t2'•�•` or'..'' ,$�'r. ' C..lr:&: r.ri#}'. ur. .........._...._................................ ..r:...... ..r: .�..? +a.. ..a...... •:r::•:::r:rr:::r:::.a.�}•$?:•.... •::$. Contra Costa ontla7StR County S'fL VEN A. S'fEtNBI2ECtIEtz Chief Information Officer Department of •�• - , Information Technology . '��-='�� . '�t� TOM WHITTINGTON rn s ,:5 Deputy CIO,Operations 30 Douglas Drive Martinez, California 94553-4068 y�;a "';;cue JOIN FORBERG 925-313-1200 �' .,�` ,��,v Deputy CIO, Communications Service Level Agreement: Network Administration & Desktop Technology Support Purpose Contra Costa County has many departments and divisions which install, operate and maintain internal automated systems necessary to address unique business requirements, These new systems may require additional support in the farm of professional services to supplement the existing resources allocated to the individual departments or divisions. A Service Level Agreement(SLA)is being offered as a alternative way of doing business. It provides a cost effective,convenient and reliable method for County Departments to support and maintain mission critical systems. This SLA will provide professional support of such systems in a predictable, reliable manner. Policy To ensure a predictable and cost effective level of availability of computers,networks and peripherals during typical working hours,and an expectation of reasonable availability outside those times,departments are required to administer and maintain technology in a prescribed manner. This service provides an acceptable method of achieving this requirement. This Service Level Agreement(SLA)is a contract that documents the services to be provided,the charges to be assessed,and the terms and conditions under which the customer and the Department of Information Technology will operate in order to properly support the County's technology investments. Scope The Department of Information Technology(DoIT)will allocate staff to provide the requested support. Support will be available on a full time basis. The hours available each month may be adjusted upon mutual written consent of both parties. If a situation arises which requires more than the hours per month specified in this Service Level Agreement, the hours will be billed at the additional rate identified in the cost section below,and staff will be assigned on an"as-available"basis. If DoIT cannot provide the additional staff required to meet these exceptional needs, with the consent of the Department or Division,an independent contractor may be engaged to meet the needs of their office. In such cases,DoIT will assist the Department or Division in obtaining such independent contractors. Service Levet Agreement:Network Administration&Desktop Teclutology Support (Revised:Ady 14, 1999) Page I Support will consist of managing and integrating the departmental IT resources, technology, innovation, and business strategy into the relevant manageable IT infrastructure. In addition,planning,configuring, installing, maintaining and monitoring the and mon a predetermined basis for each customer participating in this service. Support will be provided at the customers location. Support will typically occur during normal working hours each scheduled County work day. Customers can request on-site support during a fixed time period on fixed days of(lie week. Due to staffing restrictions, it may not be possible to guarantee all such requests,but every effort will be made to coordinate resources to enable scheduled support at the times requested. The groups involved in this section and their roles and responsibilities are identified in the Roles and Responsibilities section. All hours of operation within this document are under Pacific Time Zone. "M-F'means Monday through Friday. When dedicated staff members are not available,the Department of Information Technology will snake every effort to support the customer in their absence with other staff members. In the case of full time contracts,a designated alternate will be identified and agreed to. Description of Service DoIT will provide trained staff necessary to operate and support personal computers and networks located in specific departments and locations. This service will include Help Desk support, maintenance,administration, troubleshooting,and correction of problems by staff dedicated to specified.Department. In general,support staff will be available in the Data Center for dispatch during standard County work hours and days,and will be available via pager during off-hours. Special arrangements are available to allow appropriate support resources to be on-site during the primary support hours. Customers will typically contact the DoIT Help Desk to request support. DoIT staff will contact customer's Departmental Coordinators/Adininistrators to verify the request prior to responding. It is recommended that all customer requests be routed through the appropriate coordinator/administrator first to expedite service. Departments may contact their assigned DoIT support staff person directly for coordination purposes only. All other calls should be routed through the help desk. This insures all problems will be coordinated and handled in the most efficient and prompt manner possible. Departmental coordinators may contact the assigned staff directly for all full time service contracts. Business Continuity In the event that a critical component or system fails, response will be on a"best effort"basis and will be coordinated between the Customer and DoIT. Departments should actively pursue the processes and activities required to ensure that a business resumption plan is in place for mission critical functions should any critical component fail or become unavailable. In general, requests will be serviced in the following order: 1. Wide area network failures 2. Local area network failures 3. Multi-user computer system failures 4. Individual user system failures 5. Scheduled activities G. Routine procedures or maintenance 7. Unplanned or unscheduled requests not qualifying under categories listed above. Note: Scheduled activities may take precedence over individual system failures if such scheduled activities effect the ability of multiple staff members to perform critical job functions or may result in other significant impacts should the activity be delayed. Except for the first three items listed above,customers subscribing to this service level agreement will take precedence over other customers, Should a severe condition arise,staff assigned to full time contracts will be considered as a last resort, and only after notification and discussion with appropriate departmental coordinator/administrators. Service Levels Inclusions - Department of Information Technology will provide: • A Customer Liaison point of contact e-mail address,phone number and pager number will be provided • An approved Help Desk logging system will be operated at all times. • Documentation will be maintained for all services provided • Professional services, which may include: ❖ Develop an IT strategic plan for the and departments. •S Evaluate business and IT requirements for systems enhancements -:• Direct and participate in system development and implementation activities ❖ Evaluate development and coordination of system analysis,programming,testing, and implementation using approved tools and methodologies ❖ Coordinate system changes and new development activities with other IT functional area to ensure availability of resources fi• Mentor IT personnel,evaluate performance of subordinates,prepare periodic evaluation,set objectives and evaluate progress. i• Support and maintenance of the internal desktop and network systems 4• Design,development and installation of new Networks 4* Coordination,system administration,user support and the day-today operation of internal systems, networks and personal computers ❖ Maintenance and configuration of physical networks and all networking hardware ❖ Hardware and software installations Maintaining up-to-date operating systems and network software releases ❖ Troubleshooting problems 0 Recommending computer and network hardware and related equipment ❖ Installing and relocating computer equipment and software. ❖ Consulting with and advising program management staff'and administrative staff regarding systems and office automation requirements Capacity planning,technology planning,disaster planning and budgeting required to insure an efficient, effective, reliable system 4• Develop,educate and comply with policies and standards for internal systems ❖ Develop and maintains written and on-line documentation. procedures and help files. ❖ Interfacing with vendors' sales and field service personnel to coordinate normal periodic maintenance and arrange for and monitor equipment repairs and purchases. Service Level Agreement:Network Administration&Desktop Tectmology Support (Revised:July 14,1999) Page 3 Exclusions - Department of Information Technology will NOT provide: • Support for unlicensed or unregistered products • Support for products operating in environments which do not meet the recommended minimum configuration standards. Special exceptions and support arrangements may be negotiated in regards to this requirement for system configurations which are not within the control of the customer. • Support for products which violate established policies and procedures • Support for products which are not maintained at their latest (or recommended) release levels • Funding or other commitment for providing physical equipment or software • Support for additions or modifications which might put the system at risk • Support for public domain or non-standard software unless approved by Director of Information Technology(or designee) • Support for individually-owned equipment or services • Support for functions or business processes not directly related to the maintenance and support of Information Technology Service Level Criteria For on-request baser! support.- • All requests are directed to DoIT Help Desk,where they are entered and logged. • Help Desk will verify call with customer administrator/coordinator. • Help Desk will dispatch call to appropriate DoIT contact list for service. • Staff will be assigned based on skills required and availability. • Under normal conditions,customer will receive support contact within 1 hour of dispatch by operations. For on-site and full-time support contracts: • A primary support staff member will be assigned by the DoIT. Every effort will be made to insure that the assigned staff member is suitable for the designated customer. Customer may be asked to participate in interviews and/or assessments of potential staff members for assignment to such contracts in order to insure such suitability. • The primary support staff will be available for 120 hours a month. The primary support staff will arrange for additional resources to fulfil the requirements as written in the Scope section. • The primary support staff's weekly working hours will be divided into approximate percentages for the first six months as follow: 20 percent on meetings,change control, status update, presentation and administration, ❖ 20 percent on IT strategic planning and implementation for the - -djjjp� ❖ 10 percent on the network technical issues and minor updates ❖ 10 percent on the network documentation. ❖ 20 percent on IT strategic planning and implementation for the department ❖ 10 percent on the! 1 network technical issues and minor updates **o10 percent on the network documentation, . ..._r_..., w, ,..,.,r, n,r,..,.,. ,. ,:,..,r.n..t, „ r., r..,,,t,. ,e, H,., ro ,,. .,�• r.,r, rn MOM Faor 4 • The primarti,support stalls wcckly working hours will be divided into the approximate percentages for the rest of the SLA contract as follow: •i• 20 percent on meetings,change control, status update, presentation and administration. ❖ 15 percent on IT strategic planning and implementation for theldlW department •:• 5 percent on tit network technical issues and minor updates 5 percent on tit network documentation. _ ❖ 15 percent on IT strategic planning and implementation for the department ❖ 5 percent on the network technical issues and minor updates ❖ 5 percent on the network documentation. •:• 20 percent on IT strategic planning and implementation for thet network ❖ 5 percent on thenetwork technical issues and minor updates -*o5 percent on the=network documentation. • All requests within the customer's department are directed to the Departmental Administrator/Coordinator. • The Department Administrator for shall be . • The Department Administrator former shall be� • The Departmental Administrator/Coordinator will determine the feasibility of the request,and if appropriate, forward the request to the assigned DoIT staff member. • The Departmental Administrator/Coordinator will be responsible for any changes in work assignments, priorities or other project management issues arising from new or modified requests. The Administrator/Coordinator will maintain a written list of prgjccts and priorities, and provide the DoIT staff member with an updated list whenever changes occur. • The DoIT staff member will notify the DolT Help Desk,where the new request will be entered and logged. The staff member will then initiate action in compliance with the change control process as defined in this document. • Routine updates and status on requests will be communicated to both the customer and the DoIT Help Desk by the assigned DoIT staff member. Measurement of Compliance to Agreed Levels of Service Department Administmtors/Coordinators are expected to report faults when they are encountered to the Help Desk. Compliance will be measured from the data recorded by the DolT Help Desk, 1. Records of use of Help Desk are kept,and summaries are published. 2. The reports from the problem reporting and tracking system show performance in this respect. DoIT will provide monthly reports of performance measurement data in accordance with the approved Help Desk logging system and operational procedures logs. This data will include detailed information regarding service requests and problem incidents. DoIT will provide monthly'summaries of all reports to customers, and optionally, access to help desk reporting software. DoIT will compare annually all measurements of service-level achievements with those stated in the Agreements, and will expect to discuss these in report form with the customer. Service t.evcl Agreement:Network Administration&Desktop Technology Support (Rcviscd:July 14,1999) Page 5 .. lord J. Operational Framework • With respect to this particular Service Level Agreement, it is expressly understood the DoIT individual providing services to the and th will have an active role in the formulation and integration of business and information technology strategies. Therefore, it is expected this individual will be included in the formulation and implementation of department business strategies of the supported departments. The secondary role of this support person is to provide day-to-day technical services to departmental networks and desktops, • Departments must assign a single official point of contact(Departmental Administrator/Coordinator). Tasks, assignments and projects must be coordinated and/or approved by such contact prior to DoIT staff performing work. • Departments will provide adequate workspace and resources for those functions which must be performed at the various sites supported under this agreement. • All systems must be configured to a standard acceptable to the DoIT. Special exceptions and support arrangements may be negotiated in regards to this requirement for system configurations which are not within the control of the customer. • Current,comprehensive documentittion will be maintained for all systems. • Departments will insure adequate funding exists to maintain, upgrade and replace equipment as necessary to maintain current release levels of products in use. • Departments will insure that all systems are housed and maintained in a secure environment. • All elements of the system or network must be physically accessible and housed in locations which meet county standards. • Departments will be responsible for insuring that only authorized departmental staff perform system or network administration functions. Change Control Many services which operate on desktop technology are now mission critical to the operation of various Departmental functions.It is critical that these services are high quality,and that they do not change suddenly or at unpredictable times. This also requires that new services or new components are introduced in a manner that does not affect existing operational systems. If it is necessary to interrupt any service,prior notification is given wherever possible,and interruptions are scheduled to minimize their impact on users. Major changes will only be made during periods outside of normal business hours,and only with prior notification and approval of all involved administrators. Other changes,especially those required to rectify problems,will be carried out at the joint discretion of the customer,DoIT staff', and relevant project team members or other County staff. Changes which are transparent to users and which are made to remove inadequacies in systems software,will be performed as the need arises. Any changes made by departmental staff or other service providers must be pre-planned and approved by DoIT,as well as fully documented upon completion. It is critical that all changes be coordinated through the Departmental Administrator/Coordinator, and perrormed in a well-controlled environment which minimizes the impact on the system(s). Cost Cost is based on the number of hours scheduled for each month. The customer will be billed for the contracted number of hours each month, regardless of whether they are used or not. If the customer exceeds the contractual amount,support will be provided on an as-available basis. Customer agrees to continue service for 36 months following execution of this agreement. These costs represent labor costs for services rendered. All other costs are the responsibility of the customer. Standard Support: $75.00/Hour Additional Support: $ 115.00/Hour Outside Contractor Support: $Cost+ 10% The standard rate of$75.00 is subject to change on an annual basis,based on DoIT. Customers will be notified of any rate changes during departmental budget hearings prior to the budget year when the rate changes would occur. The"Additional Support"rate is computed as the standard rate plus 50%, rounded up to the nearest$5 increment. This reflects the time and one-half rate we must pay employees for overtime purposes. It would therefore also adjust should the standard rate change. Any costs,beyond the standard monthly costs,must be approved by the Department Head or Assistant Department Head in advance of the services. DoIT will provide qualified staff,and maintain staff proficiency through on-going training and certification programs for standard technologies. Should customers require a special,or unique,knowledge or skill,it will be the customer's responsibility to provide the training costs, labor charges and expenses to obtain such knowledge for the assigned DoIT staff member. After receiving such training, DoIT will make the qualified staff member available for a period of not less than I year, or less if suitable cross-training and support can be arranged at no additional cost to the customer. .Penalties or Credits: 5%credit of monthly fee for each day service is delayed. Roles, Responsibilities and Procedures Department of Information Technology DoIT will be responsible for providing qualified staff to respond to customer requests as specified in this agreement. In the case of full-time contracts(120 hours/month),a primary and secondary support staff assignment will be made. Should the specified support staff'member be unavailable,DoIT will provide alternate staff suitable for resolving the situation on a best effort basis. DoIT will assign a Customer Liaison or point of contact for coordinating activities with each department. Administrative concerns,performance issues and general management activities will be coordinated by this individual. It is particularly important that this Liaison be involved in projects where continuity may be important, such as joint planning,long-term projects,or in resolution of long-standing or difficult problems. Individual Departments Departments are expected to procure and install technology solutions which are appropriate to the business functions being solved. In addition,departments are required to provide adequate resources to assure that the items identified in the"Operational Framework" section are addressed, as well all other requirements identified in this service level agreement. Service I..cvcl Agreement:Network Administration fie Desktop Teclumology Support (Rcviscd:July 14, 1949) Page 7 Sof Departments will also identify their official Departmental Administrator/Coordinator, who will act as project manager and primary point orcontact. They must also identify the individual who will serve as backup should the primary contact not be available. Departmental Administrators & Coordinators Major changes to the network infrastructure and departmental network servers will only be made during periods outside of normal business hours,and only with prior approval by DoIT. Other changes,especially those required to rectify problems, will be carried out at the discretion of the Department and DoIT. The departmental administrator/coordinator will notify DoIT of all changes as they occur. The departmental administrator/coordinator will insure that all servers and workstations are equipped with virus protection software that is current and functional,and have a mechanism in place to receive updates on a routine basis. Individual Departmental End Users Users should contact their departmental administrators or coordinators to request specific services or repairs. This will enable the department to utilize this resource in the most effective manner possible. This will also ensure that activities which are of a high priority to the department are addressed in order of importance. End users may not make modifications to configurations,standard software, or other components of their system without prior approval of the departmental administrator/coordinator. End users are expected to keep the environment where equipment resides in a clean,organized and accessible manner. Users are expected to support and comply with all applicable policies,procedures and legal requirements regarding (lie use of such technology. In addition,users are expected to obtain proper and adequate training required for them to use the technology in the most efficient and effective manner possible. Users are also expected to familiarizc themselves with any documentation and information relevant to their work,as well as any Departmental support arrangements. User training and ongoing user support are essential when implementing a technology-based office solution. Formal classroom training is available from many qualified vendors. In addition,supplemental training can be provided through a variety of media,including videotapes,on-line tutorials,software manuals,and instructional books. Modifications to Service Service may be modified upon(lie mutual,written, approved consent of the parties involved. Approvals Department Heads,Directors,or other administrators with budget signatory authority may request authorization to participate in this service. Departmental Administrator's are required to notify DoIT of any additions, modifications or deletions to systems who are participating in this service. Send requests to DoIT for processing. Information Security Requirement Departments agree to assign a functional representative and DoIT agrees to assign a technical representative to attend the Information Security Administration Committee(ISAQ meeting conducted by Contra Costa County. These three representatives will work together to implement agreed to procedures resulting from the ISAC meetings. Service Leval Agreenu t:Network Administration&Desktop Tecluiology support (Revised:July 14,1999) Page v �a sjv Network Administration & Desktop Technology Support Department Name Title Telephone (and Extension)Number Isom County Address Electronic Mail Address: Number of Hours of Support Requested (Monthly) 60 Hours Monthly Requested Days/Times for Fixed Support(Optional) 8:OOAM--S:OOPM Off-hours Pager Support (Optional) Effective Time Period: This agreement lasts from 07/01199 through 06/30/02 1 agree to comply with all Contra Costa County policies governing appropriateness of use and content information supplied on or through the electronic mail system. I understand that the Department of Information Technology,beyond reasonable care to operate tate remote backup system components and related communications links, is not responsible for continuity or quality of service from any other source. I understand that the Department of Information Technology may interrupt service to any source without notice for security,operational,or policy reasons. When possible,advance notice will be provided. I also agree to continue this service for 36 months following execution of this agreement. I agree to abide by all copyright/trademark licensing regulations and laws. Departmental Administrator Date Departmental Director(or designee) Date Director of Information Technology(or designee) Date COMMENTS: Service Levet Ag=nent:Network Administration&Desktop Technology support (Revived:July 14,1999) page 9 ! � f f t f !! ! } f i F ! l .1 f f r �F 'f f ! CONSTRUCTION CONTRACTING FOR PUBLIC ENTITIES H. JAMES WULFSEERG JEFFREY A. SYKES ERIC J. FIR cTMAN WULFSBERG REESE & SYKES PROFESSIONAL CORPORATION 300 Lakeside Drive, 24th Floor Oakland,California 94612 (510) 835-9100 THOMAS J. DR.ISCOLL O'BRIENKRE177BERG, 1`NC. 1425 Market Street, Suite LL Denver,Colorado 80202 (303) 534-7202 Copyright Wulfsberg Reese&Sykes,PC 2000. All rights reserved. 9904-30412027334.1 n 0.10 TABLE OF CONTENTS ` % Pa Ze L INTRODUCTION 1 IL RULES,REQUIREMENTS AND PROHIBITIONS IMPOSED BY THE CALIFORNIA PUBLIC CONTRACTING STATUTES 1 A. When Public Contracting Statutes Apply...................................................2 r B. Sources of Public Contracting Law...................................................„.........2 C. Statutes Affecting Project Planning.........................................................3 1• C�i{yQA...............................i.............................i....................................✓wy 2. Brown Act.......i..............i...............i..........................•....•....................4 3. Zoning and Building Ordinances.....................................................5 4. General Plan Requirements.............................................................5 5. Conflicts of Intermit...........i..............................i................................5 D. Statutes Terms Required by Public Contracting Statutes...........i..i.i}.f..........i..ii.Hi.i.i..i............u................................................5 1. (H;}azarpd}�jo►usi Material and Unforeseen /�. { `5w/ondiNVns........i....i................................iii................................i......5 2. Resolution of Construction Claims.................................i...........«...6 i 3.Y License Requiirement..........i.. ............ii.......i....i........................iN....M7 4. Workers'Compensation Certificate...............i.............................*.1 5. PrevailingWages..i..MiY..........i........ii.i............i...............................8 1+ 6. Payment Bond ...i......................w.................................................. .Q i. Working Hours Restrictions.....i....i.i.i...i.i....i................NNN.........f }{ 8. Payroll {RJe�c�ords......s.s.i...+.s....i...w.r.........................s............................9� . 9. i'"rppl{IY L1.i7MIMi..M9iNYM.M1...iN..M.eMi..+iM.f1.i..Ni.i.....ifNYNiYM.H .................... 1 t 10. Trench Shoring 11. ■/��■ S 11. Utility 12. Substitution of Securities for Retention......i...............................10 13. Antitrust Claim Assignment i.......................iN..f......iii.i....0....0........11 E. Contracting Statutes Prohibited By Public Cont`acting S atutes..ii..........i......ii.............i......i.....ii.................................11 1. Full Release and/or Indemnification...........i..............................II 2. Absolute Power to Decide Disputes............................................11 I3. Requirement of Waiver of Claims..............................................12 4. Responsibility for Agency Delays...........i...................................12 5. Tidal Wave and Earthquake Liability.......................................12 i 6. Specification of Brands and Proprietary Specifications...........13 i - i- F. Bidding Procedures and Bidding Documents ` Required By Public Contracting Statutes NN.............................................13 1. Bidding..............................................................................................13 2. Exceptions to Competitive Bidding...............................................14 3. Form of Bids and Securities............................................................15 4. Noncollusion Certificate...............N.................................................15 5. Alternative Bidding Procedures.....................................................17 6. Licensing Requirements........NN.....NN.................:..............•............17 7. Time and Place of Bids.............NN.NN.N......N...................................18 8. Subcontractors......................N.N...N..NN..N..N.N................................18 G. Contract Administration Practices Required and Prohibited by Public Contracting Statutes N........N....................................18 1. Late Payment Interest Rate.N.NNNN....................NN...NN..NN...........18 2. Progress Payments in Excess of 95%N...............NNN.............NN....19 3. Dispute Resolution Procedures NN.N.N.............:......•.NN..................19 4. Changing Environmental Considerations..................... ..........NN 19 5. Liquidated Damages and Bonuses..NN.NN............................NNNNN 20 6. SubcontractorSubstitution Bearings.........................................20 III. BIDDING PROCEDURES AND CONTRACT REQUIREMENTS THAT PROTECT PUBLIC ENTITIES AND COMPLY WITH PUBLIC CONTRACTING STATUTES 21 A. Bidding: Placing Responsibilities on Bidders..NN:...NNN....................NN..21 1. Site Investigations NN..N..NN......NNNN.....NN.NNNN.NN.NNN........NN......21 2. Underground Conditions.NN.........N.N..NN.........N N........................22 3. Document Review.........N........N......«...N......................+................NN 23 4. Existing Conditions..N...N.......N.....N........N....N.................................23 5. AddendaNNNNNi.NNNNNN.N.i.iN..Ni.iN1N..ii.i.NNN.NN..N.NNNNiN..iN.iiNNl23 6. Substitutions.NNN.NNNNNN...iiiiNfiiN.N..NNNN..NN.N...N.N.NNi....NNiNN24 B. Managing the Competitive Bidding Process.N..........................N NN.NNNN.24 1. Introduction..N..NN...........i.N.N....N..NN.........................NN..............24 2. Exercising the Right to Reject All BidsNNN..............NN.................25 3. Not Considering and/or Rejecting the Non-responsive BidN.............N..N..NNN.N.....N............................*...25 4. Specific Defects Rendering Bids Non- responsive....i......N.N.N.NN........N.........N..N.............................NNN.....26 5. Rejecting the Non-responsible Bidder NN.....N................................26 6. Bid Protests......NN.N..........N...N.N.NN...N.NN....NNN.........................27 C. Scheduling and p{Cost Reporting ...N...N..........NN.NNN................&4.........NN...27 ■/ M1. _+PSchedulingMethods...N.N...N.NN.N...............NNN.NNN.............28 9904-30412027334.1 - ii - S.Z>3 2. Allocating Schedule Float...............................................................28 3. "Accepting" vs. "Approving" Project Schedules...........................................................................................29 4. Schedule Development Sequence and Reporting..........................................................................................29 5. Using the Schedule to Evaluate Change Ordersand Claims...........................................................................30 6. Drafting and Enforcing Scheduling Requirements...................................................................................30 7. Multi-Prime Coordination Disclaimers.........................................31 D. Requiring and Managing Project Documentation...................................32 1. Cost Records.....................................................................................32 2. Communications and Records.......................................................33 3. Format and Content of Correspondence:.....................................33 E. Preserving the Architect's Responsibility for Its Design.•.......r.......r..•......•................................................................................34 F. Insurance,Indemnification and Risk of Loss...........................................35 1. Common Insurance Requirements................................................35 2. Common Indemnification Requirements.....................................36 3. Performance and Payment Bonds.................................................37 4. Risk of Loss Allocation and Jobsite Care, Custodyand Control.......................................................................38 G. Terminating the Contractor...........r............................................................39 1. Factors to Consider...........r......................»............,......................39 2. Defining procedures,rights and duties.........................................40 3. Termination for convenience..........................................................41 H. Withholding Payments Under the New Prompt Payment Statutes.r.......rrr.rrsr.rN..w..sr..........w..r....r...........................rs.ww......41 I. Claims and Change Order Procedures........r.r.r...................r........r.........42 1. Notice.................................................................................................42 2. Change Order Procedures..............................................................43 IV. FALSE CLAM AND ALTERNATIVE DISPUTE RESOLUTION 44 A. Using the California False CIaims Act.......................................................44 1. Public Enforcement.........................................................................45 2. Private Enforcement........................................................................45 3. Voluntary Disclosure.......................................................................45 B. Alternative Dispute Resolution....................................................................46 V. COMPLYING WITH THE CALIFORNIA ENVIRONMENTAL QUALITY ACT 47 A. Implementation Procedures........................................................................48 B. Compliance: An Overview.........................................................................48 C. Is It Exempt?.................................................................................................49 D. The Initial Study...........................................................................................51 E. Choosing Between Negative Declarations or EIR....................................51 4 f +i 1 i i I r 1 - iv- I. INTRODUCTION California public entities undertaking construction projects face comprehensive public contracting statutes and environmental laws, and a contentious claims environment. These factors pose legal and practical challenges unique to public construction, including: • Complying(in the planning stage)with statutes such as the Brown Act, zoning and building ordinances, general plan requirements, the California Environmental Quality Act(CEQA), and conflict of interest prohibitions. • Drafting construction contracts that comply with public contracting statutes and incorporate necessary requirements regarding schedules,cost reports,claims reports,insurance, and the allocation of risk for differing site conditions. • Conducting bidding,issuing addenda, and awarding contracts that comply with public contracting statutes,and follow recognized standards of good practice. • Proactive construction administration,using the project schedule,and , compliance with public contracting statutes. • Early identification of issues and claims,proactive response, and contractor-designer-construction manager interface. This seminar addresses each of these issues. The text focuses on the basic California public contracting laws and principles of construction practice,which set parameters during each phase of the work. The text generally discusses the issues in the order they may arise on a construction project, and uses a brief checklist approach to assist in verifying statutory compliance. The text hies to avoid extensive legal discussions and focus on practical,usable material. Many legal issues.turn on subtle points of applicable statutes and case law;the authors recommend having specially retained legal counsel review specific issues before making a legal judgment regarding any material discussed in this text. II, RULES$REQUIREMENTS AND PROHIBITIONS IMPOSED BY THE CALIFORNIA PUBLIC CONTRACTING STATUTES This section deals primarily with local agency construction contracts, and the principal statutes affecting them. Local agencies include cities, counties and districts of all types. This section also discusses the principal statutes affecting housing authority contracting. By definition,housing authorities are not "local agencies" (they are "state agencies"),but they are subject to many of the same requirements as local agencies: - 1 - 33 A. When Public Contracting Statutes Apply Public contracting statutes apply, generally, to "public works contracts," defined as "an agreement for the erection, construction, alteration, repair, or improvement of any ' public structure, building, road, or other public improvement of any kind."' Courts broadly construe this definition as including all types of"alterations" to public structures and any contract having as its primary purpose the performance of public works construction.z - An "alteration, repair or improvement" of a public structure includes the installation of fixtures such as machinery, telephone equipment and wiring.3 This may create problems for unwary public entities that acImihister technology supply and installation contracts as procurement, instead of construction. The failure to comply with applicable public contracting statutes creates the potential for liability on many aspects of this type of contract. B. Sources of Public Contracting Law Most of the public contracting statutes are contained in the Public Contract Code. The Public Resources Code, Business and Professions Code, Civil Code, Government Code, Labor Code, Code of Regulations, and the enabling acts of special districts also cover public contracting. This section discusses statutes from each of these codes. The Public Contract Code is divided into the following parts: • Broad policy statements (generally Sections 100-102),set forth legislative declarations regarding the need for uniformity in the laws. These broad statements do not impose specific requirements on public agencies.d • Part One(generally Sections 1100-9203),entitled "Administrative Provisions,"covers requirements applicable to all agencies: the state, cities,counties and special districts. • Part Two(generally Sections 10100-19100), entitled the"State Contract Act," covers state agencies. Part Three(generally Sections 20100 -22102), entitled the"Local Agency Public Construction Act,"covers various categories of local agencies. Public Contract Cade Section 1101. ZFor example,a court determined that a lease for pasture land irrigated with reclaimed water was a Public works contract,since its primary purpose was disposal of sludge and reclaimed water which,absent the lease agreement,the water district would have otherwise performed. Bovdston v Napa Sanitation District(1990)222 Cal.App.3d 1362, 1368. g 344 Ca1.Jur 3d Mechanic's Liens,§38,pp.96-97;see,Civil Code Sections 3100 and 3106;Public Contract Code Section 1101 and Section 7103,subdivision(e). ;San Diear►Service Authority for Frcom ay tore cies v_ Superior Court 1466, 1470. (1988) 19$Ca1.App.3d - 2 - Some of these provisions are applicable to all local agencies,s while others are limited to particular agencies, such as school districts,counties,' public utility districts,8 municipal water districts and transit districts.i4 • Part Four(Sections 22200 - 22201) covers arbitration of public works contract claims. • Part Five(Section 22300) covers withheld contract funds. The division of the Public Contract Code into several Parts affects the resolution of many types of issues and disputes. Public entities or opposing lawyers often rely on the wrong code sections when dealing with public contracting issues. For example, contractors often argue that housing authorities must comply with the local agency dispute resolution procedures for claims less than$375,000; housing authorities, however, are not subject to "local agency" requirements because they are "state agencies."I 1 C. . Statutes Affecting Project Planning Five types of statutes affect project planning by public entities: • The California Environmental Quality Act("CEQA") • The Ralph M.Brown Act(the"Brown Act") • Local zoning and building ordinances • Local general plan requirements • Prohibitions on conflicts of interest. Noncompliance with any of these statutes can result in a court injunction restraining the public entity from going forward with a construction project. Where a public works project encounters community opposition,these statutes often become the focus of efforts to stop or delay the construction project. 1. CEQA The California Environmental Quality Acte requires an analysis for any"project" which may have a significant effect on the environment, leading to a negative declaration or an environmental impact report. The term "project" is broadly defined, and specifically includes: sSee,g.g.,Public Contract Code Sections 20100-20104.70 and Sections 20185-20189. 'Public Contract Code Sections 20110-20118.4. 'Public Contract Code Sections 20120-20150.14. 'Public Contract Code Sections 20200-20207.7. "Public Contract Code Sections 20640-2064$.4. °Public Contract Code sections 20220-20381. #'Housing Authority 2 the OVofLos Angeles v.City of Los Angeles(1952)38 C.3d 853; Housing Aythorjty of ft City of Dakland Y.C&of atctand(1963)222 C.al.App.2d 771. Public Resources Code Section 21000 gi M. - 3 - "An activity directly undertaken by any public agency including but not limited to ' public works construction and related activities, clearing or grading of land, improvements to existing public structures, ...'"13 Unless exempt, a project cannot be "approved" until the environmental process is completed.14 With respect to public projects, CEQA Guidelines provide that environmental documentation "should be prepared as early as feasible in the planning process" and that "CEQA compliance should be completed prior to acquisition of a site for a public project."15 Because CEQA is important, this text discusses it in detail in Section V, infra. 2. Brown Act The public agency's governing board must comply with the Brown Actio when 1 approving plans and specifications,calling for bids,or awarding contracts. The act requires the public agency's legislative body deliberate and make decisions, in open public meetings.t7 The agency must prepare and post in advance an agenda describing the items of business it will transact or discuss at the meeting.18 Any interested person may commence a court proceeding against the agency to obtain a judicial determination that an action taken by its legislative body in violation of the Brown Act "is null and void."'9 (The statute establishes time limits for protesting the } governing body's decision and for taking steps to cure it.) Thus, the validity of an action awarding a bid or approving a contract may be subject to contest for Brown Act i violations. v An action cannot be declared null and void if- "The f"The action taken gave rise to a contractual obligation, including a contract let by competitive bid ...,upon which a party has,in good faith...,detrimentally relied.„20 Under this provision the agency may avoid invalidation of a contract. A lawsuit may hold up the contract until the relevant good faith and reliance have been established. A Brown Act claim,however, must pertain to"action”by the public body and meet prescribed time limits.21 "Code of Regulations,Title 14,Section 15378,subdivision(a)(1). "Public Resources Code Section 21151. tsCode of Regulations,Title 14,Section 15004,subdivision(b)(1);see,McQueen v.Board of DireclQrs pf Mid-PenimWa&,ZiQrAl QM,Spa=Dist (1989)202 Cal.App.3d 1136, 1147. Government Code sections 54950-54962. "Government Code sections 54950 and 54953. t°Government Code section 54954.2. "Government Code section 54960.1. 2°Government Code section 54960.1,subdivision(dx3). 21 Y.Cir of 90ando Rcach(1999)70 Cal.App.4* 1109. -4 - 'S 4 3. Zoning and Building Ordinances Generally, the local agency must "comply with all applicable building ordinances and zoning ordinances of the county or city in the which territory of the local agency is situated.'' This requirement does not apply to a facility for "the production, generation, storage, or transmission ofwater."Z3 Also exempt from building code requirements, but not zoning code requirements, are facilities "for the production, generation, storage, or transmission of... waste water. ,24 4. General Plan Requirements If a county or city has adopted a General Plan, the local agency may not construct or authorize "a public building or structure" until it submits to the planning agency having jurisdiction, the location,purpose and extent of the project and the planning agency has reported as to the project's conformity with the General Plan. $ The planning agency has 40 days to review the matter, and failure to do so constitutes a finding of conformity. If the planning agency disapproves the project,it may be overruled by the local agency.26 5. Conflicts of Interest Under Government Code Section 1090, where an officer or member of the public agency's governing board has a financial interest in the contract,the contract is void. For financial interests not covered by section 1090, the requirements of the Political Reform Act of 197428 may apply. These provisions require disclosure of any interest in the contract and abstention from voting on the contract. Violation may result in an action for injunctive relief to restrain the execution of any official action pending final adjudication. D. Contract Terms Required by Public Contracting Statutes Public contracting statutes,particularly the Public Contract Code and Labor Code, require that public works contracts contain numerous terms and conditions,a few of which are discussed below. 1. Hazardous Material and Unforeseen Conditions Section 7104 of the Public Contract Code requires that public works contracts involving excavations deeper than four feet contain a clause regarding hazardous 22t iovern went Cade Section 53491. 23 Id.(emphasis added). 24GoveMment Cade Section 53491 (emphasis added). 25Governrrment Cade Section 65442,subdivision(c). 27See,lhg on v�(1985)38 CaUd 633,645-646. ''Government Code section 81000,,Ig Mg. "Government Cade section 91443. 5 T7 material, materially different site conditions, and latent physical conditions. The statute also applies to: "Unknown physical conditions at the site of any unusual nature, different materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the contract.00 This section requires the contractor to notify the public entity, in writing, of any such condition. It also requires the public entity to promptly investigate, and issue a change-order, if necessary. In event of a dispute, the contractor is not excused'from any scheduled completion date,but must proceed with all work to be performed under the contract. The contractor retains rights given under the contract,or by law, for resolution of the dispute. Courts have not yet interpreted this statute,which raises several unresolved issues. The statute obligates the public entity, in clear cases of differing site conditions, to issue change orders. It leaves unclear the public entity's obligations in cases where conditions are not shown at all, or in cases involving certain disclaimers, site investigations,contractual risk shifting, foreseeable underground conditions, and underground facilities(pipes, sewers, etc.). Until a court interprets this statute,much uncertainty exists regarding permissible risk shifting and risk definition for differing site conditions. 2. Resolution of Construction Claims The Public Contract Code establishes detailed procedures for resolving contractor claims of$375,000 or less.31 The Code requires the contractor to file a written claim with the local agency. If the claim is less than$50,000,the agency must respond in writing within 45 days of receipt of the claim or within 30 days,request additional documentation. The agency must respond 15 days after receipt of the additional documentation,or within a period of time no greater than that taken by the contractor,whichever is greater. For claims between$50,000 and$375,000,the agency must respond in writing within 60 days of receipt of the claim,or within 30 days,request additional documentation. The agency must respond 30 days after receipt of the additional documentation,or within a period of time no greater than that taken by the contractor, whichever is greater. If the contractor disputes the agency's response, the contractor may,within 15 days,demand an informal conference to meet and confer,scheduled within 30 days of the demand. If the conference proves unsuccessful,the contractor may file a claim under the gr "Public Contract Code section 7104,subdivision(ax3). 'public Contract Code sections 20104-20104.6. 6 - Government Code, and bring a civil action.32 (Note: the Government Code statute of limitations does not commence until the conference to resolve the claim proves unsuccessful.) (ince the contractor files its civil action, the court must direct the matter to a non- binding mediation, unless waived by stipulation of the parties. If mediation fails, the matter must be submitted to judicial arbitration.33 If a party appeals the arbitration award and fails to obtain a more favorable judgment, the appealing party must pay the other party's attorneys' fees and costs. The statute further provides that no agency shall fail to pay.money which is- undisputed. sundisputed. The agency cannot use earned funds as leverage to resolve the controversy.34 3. License Requirement The contractor's licensing requirements must"be included in any plans prepared for a public project acid in any notice inviting bids required pursuant to" the Public Contract Code.35 The plans and the notice inviting bids must specify the license requirements. By its terms, this requirement applies only to prime contractors and not to subcontractors.36' A contractor cannot recover damages for loss of a contract due to the failure of a public entity to comply with the statute.3 On contracts involving Federal funds, the public entity cannot invalidate bids of unlicensed contractors. it cannot award the construction contract to the low bidder, however,until the contractor secures its license.3$ 4. Workers' Compensation Certificate Every public works contract must contain a clause which provides that, in accordance with Section 3700 of the Labor Code,the contractor must secure worker's compensation coverage for its employees.39 Upon award of a public works contract, and prior to performing any work,the contractor must execute a certification in the form expressly set out in Section 1861 of the Labor Code.40 The statute does not require including the form of certificate in the contract documents, and the public agency need not include it. "Public Contract Code Section 20104.2. 33Public Contract Code Section 20104.4. 34Public Contract Code Section 20104.6. 33Public Contract Code Section 3300(emphasis added). "Under the Subcontracting Act,Public Contract Code Sections 4100.0 M,contractors must list subcontractors holding valid licenses for the work. Src 3r� ,Public Contract Code Section 4104. "Public Contract Code Section'20103.5. 391abor Code Section 1860. iOLabor Code Section 1861 ("I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers'compensation or to undertake self- insurance in accordance with the provisions of that code,and I will comply with such provisions before commencing the performance of the work of this contract"). - 7 - a 5. Prevailing Wages Contractors must pay prevailing wages on all public works projects in excess of $1,000.41 The public entity must "specify in a call for bids for the contract, and in the bid specifications, and in the contract itself' the prevailing wages or "may, in such call for .j bids,bid specifications, and contract, include a statement that copies of the prevailing rate of per diem wages are on file at its principal office.,,42 if the public entity uses the latter alternative, the awarding body must cause a copy of the prevailing wages to be posted at each job site.43 The public entity has the responsibility to specify appropriate classifications of prevailing wages, and to secure specially established rates from the Division of Labor Standards Enforcement where appropriate. The public entity's failure to post the prevailing wage schedule does not relieve the contractor of the duty to pay the prevailing wage rate.44 Contractors must pay prevailing wages whether or not required in the construction contract.4$ The Director of the Department of Industrial Relations may make the determination whether a given project is for a public work,and subject to the prevailing wage law.45 The Department of Industrial Relations may recover unpaid wages from the contractor and the contractor's payment bond surety.47 6. Payment Bond On any public works contract in excess of$25,000,the general contractor must obtain a bond assuring payment of laborers,suppliers and certain taxes.48 The minimum size of the bond depends upon the size of the project. These minimums and coverage requirements are fixed by statute.49 A similar statute governs contracts of state entities, except a bond is required if the expenditure exceeds$5,000. The public entity's failure to require a public works payment bond entitles subcontractors to demand the public entity withhold payment to the general contractor until the general contractor obtains the bond." In addition,case law indicates that the ".Labor Code Section 1771. 42Labor Code Section.1773.2(emphasis added). '"Id. Applicable regulations can be found in Title 8 of the Code of Regulations Section 16000,sl ivi ikon 2f Labor Standards Enfammsnt v Ericsson Information Systems Inc (1990)221 Cal.App 3d 114, 125. m, coon Co.v.Aubry(1992) 1 CalAth 976,988. 46For example,in jam,tWj3,a public hospital district entered into an agreement with a third Party corporation to expand the,hospital facilities,which in turn appointed the district as its agent for all purposes on the construction project. no district hired a private contractor to construct the project,without entering into the statutorily required stipulation that the contractor pay its employees the prevailing wage rates(Labor Code§1720 gJ 1W. The court held that the Director properly determined that the prevailing wage laws applied. `m spartptient of Industrial Relations v Fidelity Roof Co.(1997)60 Cal.AppAth 411. "Civil Code Section 3247("a public entity shall state in iq oll fQr bid—s for any suchrcontract that a payment bond is required")(emphasis added). "'Civil Code Section 3248. SBPublic Contract Code Section 7103. "Civil Code Section 3251. 8 - 7� s public entity may have direct liability to subcontractors and suppliers on a failure to require a public works payment bond.52 7. Working Hours Restrictions Eight hours of labor is a legal day's work. "A stipulation of that effect shall be made part of all contracts to which the State or any municipal corporation therein is a party."SJ Any worker's time of service is restricted to eight hours during any calendar day, and 40 hours during a calendar week, unless overtime compensation is paid at not less one and one-half times the basic rate of pay.54 The contractor must pay a penalty of $25 for each day a worker is employed in violation of these provisions. "In awarding any contract for public work, the awarding body shall cause to be inserted-therein a stipulation to this effect."55 8. Payroll Records Each contractor and subcontractor must keep accurate payroll records of employees on public contracts and certify these records upon request. They must make their payroll records available for inspection by employees, the public agency, the Division of Labor Standards Enforcement, and the Division of Apprenticeships Standards.s The Labor Code spells out the method and time of production and the penalties for violation.5 9. Apprentices There are also extensive rules regarding the employment of apprentices." The Labor Code spells out the method and time of production and penalties for violation.59 10. Trench Shoring Public works contracts in excess of$25,000 involving the excavation of any trench deeper than five feet must contain a clause: "requiring submission by the contractor and acceptance by the awarding body or by a registered civil or structural engineer, employed by the awarding body,to whom authority to accept has '2See also,C.A.Magistrotti v.Mc1'�.., d Irk',Dist,(1972)27 C41.App.3d 270,274. 531abor Cotte Section 1810(emphasis added). 'Labor Code Sections,18 11 and 1815. "Labor Code Se=ction 1813(emphasis added). "Labor Code Section 1776. "Labor Code Section 1776,subdivision(h)("The body awarding the contractha all cause to be inserted in the contract stipulations to effectuate this section. These stipulations shall fix the responsibility for compliance with this section on the prime contractor")(emphasis added). ''Labor Code Section 1777.5. r "Labor Code Section 1777.5.subdivision(d)("rhe body awarding the contract 1W cause to be inserted in the contract stipulations to effectuate this section. The stipulations shall fix the responsibility of compliance with this section for all apprenticeable occupations with the prime contractor")(emphasis added). - 9 - been delegated, in advance of excavation, of a detailed plan showing the design of shoring, bracing, sloping, or other provisions to be made for worker protection from the hazard of caving ground during the excavation of such trench or trenches. If such plan varies from the shoring system standards, the plan shall be prepared by a registered civil or structural engineer." The State, counties and cities must set out shoring requirements as a separate bid item." 11. Utility Relocation The public agency is responsible for the timely removal,relocation or protection of existing main or trunkline utility facilities, if not identified in the plans and specifications and made part of the invitation for bids. Crovenunent Code Section 4215 provides. "The contract documents shall include provisions to compensate the contractor for the costs of locating,repairing damage not due to the failure of the contractor to exercise reasonable care, and removing or relocating such utility facilities not indicated in the plans and specifications with reasonable accuracy,and for equipment on the project necessarily idled during such work. The f contract documents shall include provisions that the contractor << shall not be assessed liquidated damages for delay in completion of the project,when such delay was caused by the failure of the public agency or the owner of the utility to provide for removal or relocation of such utility facilities." (Emphasis added.) 12. Substitution of Securities for Retention In lieu of the owner's retaining a Portion of progress payments due a contractor, the contractor may elect to deposit qualifying securities equivalent to the amount to be withheld. Upon such deposit under an escrow agreement,the funds must be released.62 The Public Contract Code specifies the exact form of escrow agreement.63 Provisions permitting such substitution of securities "sem be included in any invitation for bid and in any contract documents."64 A"failure to include these provisions in bid and contract documents shall void any provisions for performance retentions in a public agency contract."63 Moreover,the escrow agreement for depositing I 1 sOL.abor Code Section 6705. "See,Labor Code Section 6707. _ 'Public Contract Code Section 22300. Public Contract Code section 22300,subdivision(e). `'`Public Contract Code Section 22300,subdivision(a)(emphasis added). b3public Contract Code Section 22300,subdivision(c)(emphasis added). �I _ 10 such securities "shall be null, void, and unenfor_c_eable" unless it is substantially similar to the form set out in the code.66 13. Antitrust Claim Assignment In entering into a public works contract to supply goods, services or materials, the contractor or subcontractor must offer and agree to assign to the awarding body any antitrust claim arising from the purchase of goods, services or materials. This provision "shall be included in full in the specifications for the public works contract or in the general provisions incorporated therein and shall be included in full in the public works contract or in the general provisions incorporated therein.#169 E. Contract Terms Prohibited By Public Contracting Statutes The Public Contract Code and Civil Code contain important limitations on permissible clauses in public works contracts. These statutes declare the offending provisions "null and void,"but courts have yet to rule on whether offending provisions are invalid altogether or only invalid to the extent of the statutory violation. 1. Pull Release and/or Indemnification The Civil Code declares"void and unenforceable" any provision in any public works contract that purports"to impose on the contractor,or relieve the public agency from,liability for the active Me liaence of the public agency."69 2. Absolute Power to Decide Disputes A provision in a public works contract designating the agency,or its engineer, as the final arbiter of all disputes,and that the contractor is bound by the agency's or its engineer's decisions,is ineffective. Civil Code Section 1574 provides: "Any dispute arising from a construction contract with a public agency,which contract contains a provision that one party to the contract or one party's agent or employee shall decide any disputes arising under that contract,shall be resolved by submitting the dispute to independent arbitration,if mutually agreeable,otherwise by litigation in a court of competent jurisdiction." (Emphasis added.) "Public Contract Code Section 22300,subdivision(e)(emphasis added). 67Public Contract Code Section 7103.5. "Public Contract Code Section 7103.5,subdivision(c)(emphasis added). "Civil Code section 2782,subdivision(b)(emphasis added). For construction contracjls generally,Civil Code Section 2782,subdivision(a)disallows indemnification for"the sale negligence or willful misconduct of the promisee." Civil Code Section 2782,subdivision(b)immediately follows this section and,although this section does not expressly prohibit"indemnification"agreements extending to a public entity`s active negligence,may be interpreted to do so. - 11 - 3. Requirement of Waiver of CIaims Provisions in public works contracts providing that acceptance of a payment otherwise due the contractor is a waiver or release of all other claims against the public entity are unenforceable. Such provisions "are against public policy and null and void.01 The contract can include a provision which provides that payment of undisputed amounts can be conditioned upon a release of all claims related to those amounts, with disputed claims being specifically excluded.71 _ 4. Responsibility for Agency Delays Public works contracts may not make the contractor responsible for delays caused by the public agency, which delays are unreasonable and not within the contemplation of the parties.72 Contract provisions which limit the contractor to an extension of time for such delays "shall not be construed to preclude the recovery of damages by the contractor or subcontractor."73 Furthermore,the Public Contract Code provides: "No public agency may require the waiver, alteration, or limitation of the applicability of this section. Any such waiver, alteration, or limitation is void. This section shall not be construed to void any r. provision in a construction contract which requires notice of delays,provides for arbitration or other procedure for settlement, or provides for liquidated damages.04 A general effect of this statute is to invalidate the standard "no damage for delay clause." This statute should not affect or invalidate contract provisions reciting the industry standard that no damage or compensation shall be due on concurrent delays,i.e., separate delay events,concurrent in time, each due to different parties. A California Court of Appeals recently enforced this statute to permit recovery of damages for delay from a city despite a no-damages-for-delay clause.75 5, Tidal Wave and Earthquake Liability Public works contracts cannot make the contractor responsible for repairing or restoring damage,in excess of five percent of the contract amount,caused by tidal waves or earthquakes over 3.5 on the Richter Scale.76 The public agency can require the contractor to obtain insurance to indemnify the public agency for such damage if the insurance premium is a separate bid item. ,i i 7°Public Contract Code Section 7100(emphasis added). 71id 72Public Contract Code Section 7102. 74 I +� 7 —(emphasis added). Howard Contracting,Inc v G A MacDonald Construction Co Inc (1999)71 Ca1.App.46 38. 7aPublic Contract Code Section 7103. - 12 - The foregoing prohibitions are not applicable "to construction contracts financed by revenue bonds."' The statute, however, does not define the term "revenue bonds." 6. Specification of Brands and Proprietary Specifications The law generally prohibits public construction specifications from limiting bidding to any one specific concern, or calling for a designated material or project by a specific brand or trade name, unless the specification lists at least two brands or trade names and is followed by the words "or equal.,78 Compliance procedures and exceptions are set out in the statute. F. Bidding Procedures and Bidding Documents Required By Public Contracting Statutes 1. Bidding The Public Contract Code requires competitive bidding for almost every category of procurement,and nearly every type of local public agency.79 In the rare instance where the Public Contract Code or other legislation does not expressly require a public entity to competitively bid, the public entity does not have to competitively bid the procurement. ° Accordingly, each agency should examine the laws applicable to it to. determine if and when competitive bidding is required. If competitive bidding is required, compliance with the relevant statute is mandatory. Different public entities have different competitive bidding requirements.81 Non-compliance voids the contract, and the public entity may not pay the contractor.92 The public entity may not accept any bids that deviate from specifications, even if substantially lower in price.83 Public entities generally have the right to reject all bids and rebid. However, if the public entity acts arbitrarily and disregards applicable regulations in letting a public "Public Contract Code Section 7105,subdivision(a). Public Contract Code Section 3400. 79See,�.g.,Public Contract Code Sections 10300,20111 and 20584;Associated Building Contractors Y.Contra Costa Water Dist.(1995)37 Cal.App.4th 466,470.) See,59 Ops.Cal.Atty.Gen.242,244-245(1976);San Diego Service Authority for F_cew y Emagencies V.SRtperior Court(1988) 198 Ca1.App.3d 1466, 1469. That case involved a local"service authority"established pursuant to Section 2550 of the Streets and Highway Code known as"SAFE." The court held that since the enabling legislation did not require bidding,and SAFE was not addressed in the Public Contract Code specifically,competitive bidding was not necessary. The court held that unless mandated by the legislature,competitive bidding is not required. See,also,Associated Building Contractors,LuM 37 Cal.App.4th at 471,where county water districts issuing construction(as opposed to maintenance or operations)contracts,funded by the Revenue Bond Law of 1941 (Government Code §54300,V ems.)were held not to be required to award the contract to the lowest responsible bidder. IFor example,school districts are subject to stricter rules for equipment procurement procurement than other public agencies. See Public Contract Code Section 20111. S2See,Miller v. cKinnon(1942)20 Cal.2d 83,87-88. i'Konica Business Machines USA Inc v Regents of the UUivrU'ty of California(1988)206 Ca1.App.3d.449,456("contracts awarded without strict compliance with bidding requirements will be set aside"). - 13 - 4/ works contract, a recent court decision has held the public entity responsible under a theory of"promissory estoppel" to pay the wrongfully rejected bidder lost profits, compensatory damages and attorney's fees.84 In this decision, the public entity had applied an arbitrary and undisclosed"discount"to*various types of disadvantaged business participation credits, to disqualify the low bidder and award the contract to the second low bidder, on a partially federally funded project. The court found the award of damages proper notwithstanding the fact that the record did not establish an intent to defraud.' 2. Exceptions to Competitive Bidding Even where required,the courts have recognized two broad categories of exceptions to competitive bidding: • Emergencies; and • Where the nature of the subject of the contract is such that competitive proposals "would be unavailing or would not produce an advantage," and the advertisement for competitive bid would thus be "undesirable, impractical, or impossible."886 The application of these exceptions depends on the facts of case. The following types of cases have qualified under this standard: • Contracts for personal services,depending upon a peculiar skill or ability, such as contracts for professional services such as law, architecture or engineering;97 • Contracts for services or the construction of public improvements by a government regulated monopoly;88 • Contracts for experimental or unique products and/or services,such as a non-profit corporation contracting to operate a zoo at no cost to the public entity; Contracts for the acquisition or disposition of property for a particular use and with a special value to one person;90 u Lajhn&-M& Wil on Y..Lis Angeles Con MetrcMlitan T---r Pid �A�*y(Febnutry 17, 1999)69 CalAppAa 1458. id. See,I.g.,Cydon v Pasad=_Redevelgpinent Aaancv(1980) 104 Cal.App.3d 631,635-636; Li�cl s d i t*Coy Citylonn8 Bnch(1930)210 Cal.348,354-355. 57Kennadv v.Ross(1946)28 Cal.2d 569;San Franciscov__$ovd(1941) 17 Ca1.2d 606,620; l le v Boyle(1919)43 Cal-App.39. Las AA ales Gym,v Los AMIes(1920) 188 Cal.307,319;C2v=of&Iversid2 v, W192gk 1972)22 Cal.App.3d 863. " )lryt City ot"t�s 11++srwtra(1961) 197 Cal.App.2d 685,694. 909ra! 0 C`o�»*v water District v.Ban_natt(1958) 156 Cal.App.2d 745,753-54;,skin v, staveland,Inc,(1977)68 Cal.App.3d 490,498(NB:this case involves the City and County of San - 14- • Contracts for construction that are part of a larger publicly financed redevelopment, including private development, where the public portion of the development must be completed in a short time span in order for the redevelopment agency to meet its financing obligations.91 Courts have recently permitted public entities to utilize their own personnel on a force account basis, even in excess of established bid limits.92 3. Form of Bids and Securities Generally, contractors must present bids on local agency construction under sealed cover and accompanied by bidder's security in the form of cash, a cashier's check, a certified check or a bidder's bond.93 Most agencies require that a check or bidder's bond accompany the sealed bid. Under the statute, agencies must accept cash; although unlikely to occur,bidding documents should provide for this option. The same statutes require the agency to return the unsuccessful bidder's security"in a reasonable period of time,"but in no event "beyond.60 days from the time the award is made." 4. Noncollusion Certificate Under Section 7106 of the Public Contract Code,bidders on all public works contracts must execute and submit a non-collusion affidavit. The statute sets forth the form of affidavit,but defines no penalties on the failure of the contracting agency to use it. The form of the affidavit is specific(the title of the affidavit provides that it is "to be executed by bidder and submitted with the bid"): (..continued) Francisco). 9'Graydon y.Pasadena Redevelopment Agency,sMVM, 104 Cal.App.3d at 636-37. 922CConstruetion Indust Force Ac unt Council v.Amador County water Agency(199§)71 Cal.App.4*810. "See,.C.g.,Public Contract Code Section 20192(municipal utility districts),Section,20564.5 (irrigation districts),and Section 20642.5(municipal water districts). - 15 - NONCOLLUSION AFFIDAVIT TO BE EXECUTED BY BIDDER AND SUBMITTED WITH BID State of California ) } ss. County of ) being first duly sworn, deposes and says that he or she is of the party making the foregoing bid that the bid is not made in the interest of, or on behalf of, any undisclosed person,partnership, company, association, organization, or corporation; that the bid is genuine and not collusive or sham; that the bidder has not directly or indirectly induced or solicited any other bidder to put in a false or sham bid, and has not directly or indirectly colluded, conspired, connived, or agreed with any bidder or anyone else to put in a sham bid,or that anyone shall refrain from bidding; that the bidder has not in any manner, directly or indirectly, sought by agreement, communication, or conference with anyone to fix the bid price of the bidder or any other bidder, or to fix any overhead,profit,or cost element of the bid price,or of that of any other bidder, or to secure any advantage against the public body awarding the contract of anyone interested in the proposed contract; that all statements contained in the bid are true; and, further,that the bidder has not, directly or indirectly, submitted his or her bid price or any breakdown thereof,or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any corporation,partnership,company association, organization,bid depository,or to any member or agent thereof to effectuate a collusive or sham bid. - 16- r 5. Alternative Bidding Procedures Uniform Cost Accounting Aft. Under the provisions of Public Contract Code Sections 22030- 22045,the public agency may elect to follow uniform construction accounting rules and utilize alternative bidding procedures. The agency electing these procedures may contract by purchase order up to $25,000 and by informal bidding procedures up to $50,000 to $75,000. This liberalization may make the alternative bidding procedure more attractive. If adopted by the agency, the alternative bidding procedures supersedes any conflicting provisions of law. ¢ Design Build Contracting. The Public Contract Code generally requires that state agencies and local agencies bid on the basis of"full"or"detailed"plans and specifications,95 which some agencies conclude prohibits contracting on a design build basis. The Public Contract Code specifically permits design build contracting by specified counties for a legislatively permitted pilot period 6,but leaves ambiguous whether design build based on completed design development level or 50%construction documents level drawings,or design build by cities 97, is permissible. The legislature has frequently authorized design build projects for specific projects," and has specified a procedure for state agency design build contracting effective January 1, 1999.' 6. Licensing Requirements The public contracting statutes reflect inconsistent provisions on licensing requirements. Since 1986,the Public Contract Code has required public entities to "specify the classification of the contractor's license which a contractor shall possess at the time a contract is awarded."100 This specification must also be in the plans and any notice inviting bids.101 The Business and Professions Code requires public agencies,before awarding the contract or issuing the purchase order, "verify that the contractor was properly licensed Who fte ntrac or submittedhie bid."lot The Business and professions Code makes it a misdemeanor for a contractor to submit a bid to a public agency without having a license Accordingly,the law requires the contractor to be licensed both at the time of the bid and at the award.The public entity may specify a contractor's license with more stringent requirements than those required to perform the work, for example,by requiring "Public Contract Code Section 22030. " 95See,e.g.,Public Contract Code Sections 10120, 10121. 96 See Public Contract Code Section 20133. 97 Compare Public Contract Code Sections 20120 V1e:s 41 with 20168 S1 M. 98 See California Government Code Section 14669.8,.12,.20;California Government Code Section 5956.6;California Public Utilities Code Section 185036. 99 See California Government Code Section 1466111.M. ar 10OPublic Contract Code Section 3300,subdivision(a)(crnphasis added). lois, 'o"Baasiness and Professions Cade Section 7028.15,subdivision(e)(emphasis added). 103Business and Professions Code Section 7028. - 17 - ` -Y contractors to hold a Class "A" general engineering contractor's license on a project that would otherwise only require a Class "B" general building license.'04 7. Time and Place of Bids Although not required to be part of the contract itself, any notice of the local agency that seeks to enter into a contract that requires the letting of bids must "specify in the public notice the place such bids are to be received and the time by which they shall be received."105 Any bids received after the time specified must be returned unopened.l 06 8. Subcontractors The Subletting and Subcontracting Fair Practices Act,107 requires "specifications prepared for the work or improvement or in the general conditions under which bids will be received"to require bidders to identify any subcontractor who will perform work or labor or render service,or specially fabricate and install a portion of the work, in an. amount in excess of one-half of one percent of the prime contractor's total bid.108 Bidders can list only one contractor for each portion of the work so let. A public entity may impose upon bidders requirements in excess of those required by the subcontractor listing law.109 Where the public entity requires this additional information, it may also permit the contractors up to 24 hours after bid submission to provide additional information regarding subcontractors in addition to their name,place of business, and the portion of the work that will be done by the subcontractor.110 G. Contract Administration Practices Required and Prohibited by Public Contracting Statutes 1. Late Payment Interest Rate The Public Contract Code allows the public entity to withhold from final payment 150%of any dijR amount due on the contract '11 For diviLted claims,the new dispute resolution law provides that if there is suit, "the local agency shall pay interest at the legal rate" (that is,not limited to 7%) and that the interest shall begin to accrue "on the date suit is filed.""' 104 M&13 Construction Y.Yuba County water A ,enc (1999)68 Cal.App.4tl°' 1353. 10st3oveinment Code Section 53068. 106M 07 Public Contract Code Section 4100 11. . 108Public Contract Code Section 4104. 104 MCL+MS.gmtruction.Inc.v.City and County of San Francisco(1998)66 CalApp.4tb 359; Vallevcrest Landscape Ing,v City of Davis(1996)41 Cal.App.4 1432. "0 Public Contract Code§4104(a)(2)(a). ...Public Contract Code Section 7107,subdivision(c). "'Public Contract Code Section 20104.6. - 18 0 6 The law provides significant penalties, however, for withholding payment of undisputed contract amounts. If payment has not been made by the 60th day after completion,the public entity withholding such amounts due shall be subject to interest at the rate of 2%per month on the improperly withheld amount, and payment of attorneys' fees as well.'13 2. Progress Payments in Excess of 95% For contracts in excess of$5,000,progress payments by the local agency on a public works contract cannot exceed 95%of the percentage of actual work completed, and material delivered. The agency is re aired to withhold not less than 5%of the contract price until final completion and acceptance of the project. "However, at any time after 50 percent of the work has been completed, if the legislative body finds that satisfactory progress is being made, it may make any of the remaining progress payments in full for actual work completed."'14 Accordingly,it is impermissible to provide for progress payments in excess of 95%until at least half of the contract has been performed. Thereafter,whether 100%of the remainder can be paid is arguable. The argument can be eliminated by providing for the withholding of 16-0/o until the contract is half completed and thereafter,if appropriate, allow the full payment. 3. Dispute Resolution Procedures As discussed above, for claims less than$375,000,the Public Contracts Code requires public works contracts to contain a summary of specified dispute resolution procedures. The public entity must follow these procedures during administration of construction claims. 4. Changing Environmental Considerations After the public construction contract is executed,the project may be affected by changes in environmental laws and'regulations. The Public Contract Code requires contractual provisions for governing such changes,or agreement of the contractor.115 Alternatively, "contracts of public agencies MU include provisions for termination for environmental considerations at the discretion of the public agencies."116 "Public Contract Code;section 7107,subdivision(0. 1 1+Public Contract Code Section 3203. 1"Public Contract Cade Section 7105,subdivision(c)("Public agencies May make changes in construction contracts for public improvements in the course of construction to bring the completed improvements into compliance with environmental requirements or standards established by state and federal statutes and regulations enacted after the contract has been awarded or entered into. lbq contractor shall be paid for the changes in accordance with the provisions of the contract governing payment for changes in the work or,if no provisions are set forth in the contract,payment shall be as agreed to by the parties")(emphasis added). i16Public Contract Code Section 7105,subdivision(d)(3)(emphasis added). - 19- 5. Liquidated Damages and Bonuses The public agency may include in its contract a liquidated damages provision. "The sum so specified is valid as liquidated damages unless manifestly unreasonable under the circumstances existing at the time the contract was made." 7 This provision may be slightly more liberal than the normal rule, which provides for the invalidation of liquidated damages if it can be established that "the provision was unreasonable under the circumstances existing at the time the contract was made."'is In addition, a public works contract may contain a clause providing for the payment of extra compensation "as a bonus for completion prior to the specified time."1 19 6. Subcontractor Substitution Hearings. The Subletting and Subcontracting Fair Practices Act("Subcontracting Act") requires the prime contractor to secure the public entity's permission before substituting a non-listed subcontractor for a listed subcontractor. Its purpose is to protect the public and subcontractors from the evils of"bid shopping and bid pedaling."I" The public entity's duties respecting a subcontractor substitution depend on the ground under which substitution is requested: Clerical Error in Bid. If the contractor claims that it listed a subcontractor through inadvertent clerical error,it must give written notice of the inadvertent clerical error within two working days of bid opening to the public entity, the inadvertently listed subcontractor, and the intended subcontractor.121 The listed subcontractor must then submit,within six working days of bid opening, any notice of objection to the claim of clerical error.122 If the listed subcontractor objects,then the public entity must hold a public hearing,that allows cross-examination attd the introduction of outside evidence.lza In either event,the public entity may only grant the substitution following investigation of claims and a public hearing,and upon finding that the clerical error in fact occurred.124 For Cause Substitution. With one exception,the Public Contract Code defines a "for cause"substitution as relating to the unwillingness or inability of the listed subcontractor to perform the work.125 On a"for cause"substitution,the contractor gives '"Government Code Section 53069.85(emphasis added). "'Civil Code Section 1671,subdivision(b)(emphasis added). ""Government Code Section 53069.85. 120 In"bid shopping,"a prime contractor uses the bid of the listed subcontractor to pressure other subcontractors to do the work for even less,to the contractor's profit. In"bid pedaling,"conversely,the other subcontractors undercut the known bid of the listed subcontractor. (Southern California Acoustics (1969)71 Cal.2°719,726,fn.7.) 12'Public Contract Code§4107.5. 122 id. : 123 JA. 124 L "Public Contract Code§4107(a)lists the following. (1)subcontractor refuses to execute subcontract,(2)subcontractor becomes bankrupt or insolvent,(3)subcontractor fails or refuses to perform, - 20 - written notice to the public entity, and then the public entity must forward the notice to the subcontractor, by certified or registered mail. The contractor does not have a duty to forward the notice to the subcontractor. After notice, the subcontractor has five working days to file objections, and then the public entity or"its duly authorized officer"may hold a hearing, and may grant the substitution upon find the existence of the statutory causes. III. BIDDING PROCEDURES AND CONTRACT REQUIREMENTS THAT PROTECT PUBLIC ENTITIES ANIS COMPLY WITH PUBLIC CONTRACTING STATUTES Generally, courts will interpret any ambiguity in a public contract a ainst the public entity.126 Courts often find the public entity waives or diminishes contractual rights by finding ambiguities in any of the following; • Contract terms that are ambiguous, lack sufficient detail,or violate public contracting statues; Bidding procedures or addenda that leave contract scope unclear, contract risks unaddressed, or violate public contracting statutes; • Inconsistent or no enforcement of contract terms,particularly regarding work inspections, schedule updates,notice of claims, and contract cost reporting. A. Bidding: PIacing Responsibilities on Bidders 1. Site Investigations Public entities commonly require extensive site investigations as a condition to submitting bids,thus narrowing the potential categories of"unanticipated or latent" conditions subject to mandatory change order. Site investigation requirements can require bidders to: (..continued) (4)subcontractor fails or refuses to meet bond requirements,(5)subcontractor not licensed,(6)public entity determines subcontractor's work substantially unsatisfactory or not in substantial accordance with the specifications,or is substantially delaying or disrupting the progress of the work,(8)subcontractor ineligible to work on public works because of prevailing wage violations. 12151n general,the same basic contract principles apply to the interpretation of private contracts and public agency contracts. (Civ.Code§ 2635.) Numerous statutes deal with the interpretation of contracts. (See,.C.g.,Civ.Code§§ 1636- 1656.) Because public agencies usually prepare their contracts ivithout negotiation,courts will often interpret ambiguous contract terms against the public agency as the drafting party,citing Civil Code Section 1654. (See,e.g.,lv cQuire&Hosteerr+,City and County of San F na cisco (1950 113 Cal.App.2d 186, 189-90.) -21 - 117 • Familiarize themselves with the general, local and site conditions, as well as applicable federal, state and local Iaws and regulations that may affect the work, and • Secure such additional or supplementary examinations, investigations, tests, studies and data concerning surface or subsurface conditions that may affect the work. The required pre-bid site investigation and its scope will vary from contract to contract, depending upon the work involved and the anticipated degree of uncharted or unknown underground obstructions. For example, a project constructed on landfill might require a more thorough site investigation than a project constructed on newly cleared land that has not been subjected to previous development. 2. Underground Conditions Public entities generally supply bidders with geotechnical reports prepared by soil investigation engineers. The project design often reflects the findings contained in these geotechnical reports. Public entities often make this information available "for bidding purposes only" and exclude it from the contract documents. Public Contract Code Section 7104 applies to supplied geotechnical information, and supplies by law a limited warranty. Appellate courts have not yet interpreted Section 7104,which creates some uncertainty regarding its scope. The following points deserve consideration when drafting contracts involving issue: • Section 7104 probably creates a non-waivable warranty of accuracy of supplied geotechnical information as to actual reported depths,reported quantities,reported soil types,reported soil conditions,and reported material,equipment or structures, encountered during subsurface exploration. • Section 7104 may not create a warranty of other data,interpretations, opinions or information shown or indicated in geotechnical drawings or reports that otherwise relate to subsurface conditions or described structures. • Section 7104 probably does not create a warranty of the completeness of supplied geotechnical information and excludes from its scope underground conditions reasonably foreseeable or"inherent" in the work. • Public entities probably may define those underground conditions "inherent" in the work and, in some instances,can probably make bidders solely responsible for interpretations or conclusions they draw from supplied data. - 22 - Defining the geotechnical data and underground condition warranty involves policy decisions, as well as legal judgments. Shifting these risks may unnecessarily inflate contractor bids,prove unenforceable and, in many cases, serve no purpose if the anticipated work site presents minimal differing site condition risks. Risk shifting should reflect the facts and circumstances of each individual project. 3. Document Review The public entity can reasonably require bidders to examine thoroughly the contract documents and other related data supplied for bidding(i.e., geotechnical data, existing conditions or as-built conditions), and to promptly notify it of all conflicts, errors, ambiguities or discrepancies that they discover. This requirement benefits the public entity by granting it a defense from change orders based on patently obvious inconsistencies within the contract documents or existing conditions. Some public entities go a step further and require bidders to warrant the constructability of supplied plans and specifications. Otherwise,public entities are held to the common law doctrine of an"implied warranty"of the correctness or conitructability of the plans and specifications issued for bidding."' A new statute, however,prohibits public entities from requiring contractors from assuming responsibility for the completeness and accuracy of plans and specifications, except on design build projects.121 4. Existing Conditions The public entity may properly disclaim warranties for supplied information showing existing above-ground conditions,as-built conditions,or other actual conditions verifiable by independent investigation. Despite its broad pronouncements,Public Contract Code Section 7104 probably does not prohibit the public entity from requiring contractors to perform their own independent investigation of above-ground information and rely on that independent investigation in submitting their bids. Disclaiming responsibility for existing conditions information may insulate the public entity from liability on many types of claims. Whether such a disclaimer makes economic sense depends on the project and the specific risks shifted. Existing conditions information,such as designs,loads,location,and quantities of materials,presents an easier question than wiring,piping and concealed conditions not reasonably subject to pre-bid inspection. Every disclaimer may result in a higher risk factor in bid prices. The public entity should evaluate separately for each job,the cost versus the benefit of disclaimers. 5. Addenda Resolution of many construction claims turns, in part,on pre-bid modifications and clarifications of construction documents. The public entity often finds it beneficial to .x.How &W.Contacting.Inc.v.G.A,Macbonald Constm_c ion Co.(1999)71 Cal.App.4,h 38. "'Public Contract Code Section 1104. _23 ,. ell define procedures and limits on issuing interpretations of documents, and limit them to written addenda issued prior to the opening of bids. Addenda involving a material 29 change should not be issued less than seventy-two (72) hours prior to opening bids.' 6. Substitutions By statute, a contractor has the right to propose substitutions or "or equal" items,130 and the contract specifications "shall provide a period of time prior to the award of the contract for submission of data substantiating a request for substitution of"an equal"item." In practice, a proposed "equal" product rarely is a true equal. A proposed substitution should have the approval of the project designer based on the following criteria: - If it truly meets or exceeds the specified product; - If it comes with the same or better warranty; - If it requires extra coordination or installation; - If it involves other, ancillary additional costs, such,as higher maintenance, license or royalty fees; - If it will involve any, additional redesign costs; If it will adversely impact progress or otherwise result in schedule slippage; and If evaluating the substitution request will result in schedule delay due to late ordering of available specified products,where the public entity subsequently rejects the substitution request. B. Managing the Competitive Bidding Process I. Introduction The purpose of competitive bidding is to provide taxpayers with the lowest price and best quality construction for public projects by guarding against fraud, corruption, and favoritism by public officials responsible for awarding construction contracts. Statutes provide specific,detailed rules concerning the preparation of bid documents,the information required for bidders,the standards by which bids are reviewed, and the ultimate decision to award the contract. Ir fPublic Contract Code Section 4104.5. '"Public Contract Code Section 3400,subdivision(a). - 24- a Generally, bid protest cases arise out of one of three factual scenarios: • The low bidder's bid is rejected, or challenged, on the basis that it is "non- responsive"; • The low bidder is rejected because the bidder has been determined "non- responsible"; or • The public entity rejects all bids and elects to rebid or perform the work itself. 2. Exercising the Right to Reject All Bids The public entity may not exercise unlimited discretion in rejecting individual bids,but may reserve the right to reject all bids and rebid a construction project."' The public entity should include this reservation in the bidding documents and General Conditions for a court to enforce. I Not Considering and/or Rejecting the Non-responsive Bid In general, a bid must respond in all material respects to the terms of the invitation to bid before the public entity can accept or consider it.132 After bid opening, a contractor cannot correct a materially non-responsive bid in order to render it responsive 133 although the public entity can reserve the right to reject immaterial omissions or defects in bids. Generally,the difference between"material" and"immaterial"bid defect depends on whether the defect concerns the contractor's price,time, or actual Work.134 IbUS,the failure to sign a required affidavit may be"immaterial,"while the omission of a price on a bid line item may be"material." A public entity is not required to waive an immaterial bid defect and may reject a bid on the basis of a bid defect otherwise properly characterized as 44immaterial.911m '''See,1.g.,Public Contract Code Section 22038;Universal Byiuts v City ofModesto (1974)43 Cal.App.3d 145. 132CitV of lUZlOWy.*d_Y.Los AMIM Cozy Civic Center (1972)7 CaUd 861;K _QW Business Machin nc. gs supga. 206 Cal.App.3d at 456-57;Associated Builders&_QoRtM�JM IY, Mckmlitan IYalgr Dist.(1997)59 Cal.AppAth 1503, 1507("lowest responsible bidder does not mean lowest cost bidder"). :3'L&=ge Bloc.v.County of San Maw(1956)46 Cal.2d 659,662. L ity ofBIdMad(1996)45 Cal.AppAth 897,900{"a public entity may waive inconsequential deviations from contract specifications in a public contract bid. To be considered inconsequential,a deviation must neither give the bidder an unfair competitive advantage nor otherwise defeat the goals of insuring economy and preventing corruption in the public contracting process"}-35 MQM CM=ligm Inc.v,City and Cog=of an Francisco(1998)66 Cal.Appl.4*359. - 25 - 4. Specific Defects Rendering Bids Non-responsive Distinguishing between "material" and "immaterial" defects in bids may prove difficult,but certain issues arise with sufficient frequency to permit delineating the following rules: 1. Failure to list subcontractors:. California's Subletting and Subcontracting Act requires the listing of subcontractors having a contract price in excess of one-half of one percent of the contractor's bid. Where the low bidder fails to list subcontractors in accordance with this law, this defect can render the bid non- responsive, or require the contractor to perform the work itself.13b 2. Failureto prosy execute the bid. Bid documents usually require the bidders to submit bids signed by an officer or some other individual with authority to bind the bidder to the terms of its bid. The improper execution of a bid may render it non-responsive (since it is not a legal"offer"). If a bidder simply fails to sign its bid at the place indicated, and its signature appears elsewhere within the bid documents, the failure to sign the signature sheet constitutes a waivable defect.137 3. Failure to provide bid security. A contractor's failure to provide the security required by the invitation for bids is a material, non- waivable defect and will render the bid non-responsive. 4. Clerical errors. Mistakes that "make the contractor's bid materially different than the bidder intended it to be," and would otherwise entitle the contractor to withdraw its bid under Public Contract Code Section 5103, are non-waivable defects. If the clerical error is one that does not allow the contractor to withdraw its bid,the i contract award will Stand.131 Examples of defects that may be waived by the awarding authority include a bidder's failure to attend a pre-bid conference; hand-written changes in the bid j documents; fill in standard representations and certifications not affecting price,quality or scheduling; and total line item prices on a bid schedule. The awarding authority may also waive a bidder's incorrect calculations that are reconciled according to formulas specified in the instructions to bidders. 5. Rejecting the Non-responsible Bidder In addition to providing a responsive bid,the bidder must be deemed "responsible." The California Public Contract Code defines a responsible bidder as"a r 'MPublic Contract Code Section 4104,subdivision(a)and Section 4106. 37 One„fee Y.Co gr of Fresno(1985) 163 C:al.App.3d 1175, 1181. '}=Va ®y Crest Lndscape.Inc v City Cauncf of Davis(1996)41 Cal.App.4th 1432. - 26 - 45? Soo bidder who has demonstrated the attributes of trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily perform a public works contract." t3,)The California Supreme Court has defined "responsible" to include the attribute of trustworthiness, and to refer to the bidder's "quality, fitness and capacity... to satisfactorily perform the proposed work."140 Local public agencies may require that prospective bidders complete and submit a standardized questionnaire and financial statement, including a complete statement of the bidder's experience in performing public works, for evaluation under guidelines to be developed providing for a uniform system of rating bidders.141 If the public entity determines a bidder to be non-responsible, California courts grant bidders the right to challenge that determination, by requiring notice and at least some type of hearing for the bidder.142 6. Bid Protests. A public entity in its bid documents may specify procedures,time limits and requirements for submitting bid protests to the public entity.143 In the one reported decision,the California Court of Appeal enforced that a ten-day period for submitting bid protests, and upheld the public entity's denial of a bid protest made for the first time at the hearing on the contract award.144 When administering a bid protest,the public entity should require written statements of position from all involved parties, and hold a hearing if necessary, and have those materials available to the awarding body at the time of contract award, for purposes of the subsequent"administrative record"should a bidder challenge the award through a writ of mandamus procedure.145 C. Scheduling and Cost Reporting Public entities and private owners often find a cost and resource loaded critical path method("CPM")schedule appropriate and useful on all but the smallest or most simple projects.146 Cost and resource loaded CPM schedules can assist with the fallowing functions: 'Public Contract Code Section 1103(effective 1/l/00). l nlw nCivic- etr Authority V.SvRcdQrAngeles (1972)7 Cal.3d.861,867. 141 Public Contract Code Section 20101(effective 1/1/00). 142Civic CoLear AnOmdly Y.Sm2gd2l Court of Us Angeles Cg=,, at 871. F4 MCS Construction.Inc. City and County of San Francisco(1998)66 Cal.Appl.4a'359. 144 id. 143 Mike Moore's 24-hour Towing v,City of San Diego(1996)45 Ca1.App.4'b 1294, 1303. "Typically,CPM schedules are intended to reflect the Contractor`s plans for executing the required work. These schedules may be cost and resource(labor and major equipment)loaded;have activity durations no greater than 15 days(with minor exceptions);show dependencies between activities, shop drawing submittal and approval,major equipment procurement,cost of activities,resources required for activities,subcontractor work activities,and all activities deemed controlling operations or critical path activities specifically identified with no more than 25%of the activities deemed critical or near critical. (Near critical can be defined as activities having as float in the range of I to 10 days.) -2? - • Planning, scheduling, coordinating and controlling; • Evaluating and acting on monthly payment requests; • Tracking project status and realistically forecasting completion; • Creating project status report of deviation and actions required; • Evaluating claims and time extension requests; and • Evaluating contractor performance and liquidated damage obligations. I. CPM Scheduling Methods Schedules can be cost loaded and resource loaded. The traditional method involves the contractor developing a schedule of values for the principal line items covering its work, including general conditions costs spread thmughout the line items. The contractor extends these line items over the duration of the related activities. Once the public entity accepts the schedule,it can base payments to the contractor on progress along the line items and activities, as scheduled. This is commonly referred to as a "cost loaded schedule." The public entity may require that the contractor's schedule incorporate all contract milestone completion dates, unless by change order the public entity agrees to an earlier(advance)time of completion. The contract can specify that the contractor may not recover extra compensation where the contractor completes its'work within the contract time,but beyond its early completion date shown in its schedule. 2. Allocating Schedule Float The public entity may address mi its contract documents the issue of ownership of "project float,"defined as the contingency time that exists on a path of activities. It can be measured as total float,free float and independent float. Total float is measured by comparing the early start with the late start of an activity, or comparing the early finish with the late finish of an activity. Free float and independent float are seldom referred to in the use of the schedule. The contract can define project float in one of several ways: As a resource available to the public entity,i.e., for the public entity's use exclusively; • As a resource available to the contractor,i.e., for the contractor's use exclusively; or As a resource available to the project,i.e., the project usgwhatever float available. - 28 - The most common approach is to specify that the project owns the float. That is, the float belongs to whomever uses it first, with liability for delay of the substantial completion date resting with the party whose actions, last in time, actually cause delay to the substantial completion date. This approach is popular for its simplicity and is consistent with case law. 3. "Accepting" vs. "Approving" Project Schedules Public works contracts may actively distinguish between "accepting" a schedule for purposes of payment and reporting, and "approving" the contractor's schedule. Where the public entity"approves" a schedule, the contractor may claim the public entity, in doing so, also verifies schedule logic and workability. The contractor may subsequently claim comparative fault for logic flaws or interferences. The public entity may avoid this problem by"accepting" the schedule for limited purposes, such as payment application evaluation or other scheduling and performance evaluation, and provide that such acceptance does not relieve the contractor of its responsibility for scheduling, sequencing, and pursuing work to comply with the requirements of the contract documents. (NB: The things that the parties may disagree over with regard to the schedule may not be the basis for most disputes.) 4. Schedule Development Sequence and Reporting Because work schedules serve many important functions,the public entity usually wants a schedule generated immediately upon contract award, and updated monthly as work proceeds. On projects of moderate to extended duration,the public entity commonly specifies the following sequence: * Immediately on contract award, the contractor must prepare a schedule covering the first 30 to 60 days work, and submit it before the public entity issues the notice to proceed. • Within 30 to 60 days of contract award, the contractor must prepare a schedule covering its work on the project, acceptable to the public entity. • Monthly,with each payment application, the contractor must deliver to the public entity, a schedule update. • Whenever a schedule update shows a completion date beyond the contract's substantial completion date, the contractor must submit a proposed recovery schedule to recover the lost time it is responsible for, along with a written narrative explaining the schedule. The public entity may enforce these requirements by making all payment applications expressly conditioned on provision of an accepted schedule and m6nthly updates. - 29 - r11� ' %: -J On most projects, the public entity usually requires that monthly updated CPM schedules include as-built information on actual progress and anticipated changes to planned activities. It also requires written narratives describing revisions to the schedule, and the reasons for each work activity revised, or sequence of work changed. The public entity requires the updated CPM schedule and narrative along with monthly status and project reporting. The existence and degree of these requirements depends on the size and complexity of the project. 5. Using the Schedule to Evaluate Change Orders and Claims Schedules and schedule updates can greatly assist the public entity in'evaluating claims and change order requests. The public entity may evaluate, and require the contractor to submit.its own evaluation of,many pertinent issues, which may, on any one claim, include the following issues: • How the changed work or claim work has affected the schedule and critical path activities. • How the contractor proposes to incorporate changed work in the schedule, its impact on critical path and intended sequence of schedule activities. • A written mitigation plan, including a schedule diagram, explaining how j (e.g., increased crew size, overtime,resequencing, etc.) the contractor proposes to mitigate impacts. 6. Drafting and Enforcing Scheduling Requirements In drafting a scheduling specification,the drafter may cover, at a minimum,the " following issues: • Qualifications and experience of contractor's scheduler,and whether to require a full time scheduler or scheduling consultant for project duration; 1 • Required content of schedules and level of detail; • Float ownership; • Required software or scheduling program, such as Primavera, and systems compatible with the public entity's systems; i • Submittals; • Format and content of the preliminary schedule, the completed schedule, schedule updates, schedule revisions, and recovery schedules; • Procedures for submittal and approval of the schedule; i i - 30 - • Scheduling documentation required and procedures for time delay claims and time extensions requests; • Frequency of updates; • Schedule reports such as activity reports, cost reports, cash flow reports, as planned/as-built reports, or other types of reports available from whatever software is specified; • Public entity rights to request reports of activities by early start, late start, subcontractors or selected trades, or specified duration activities; • Remedies for non-compliance; and Monthly, weekly and daily construction reports, and their contents. 7. Multi-Prime Coordination Disclaimers Courts from other jurisdictions have held that where more than one contractor works on a job site, the owner has a duty to coordinate the work of the contractors.14' To limit or avoid this type of liability, some public entities include provisions that attempt to absolve them of their responsibility for the coordination of multiple prime contractors. An example of such a provision is the following: By entering into this contract, Contractor acknowledges that there may be other contractors on the site whose work will be coordinated with that of its awn. Contractor expressly warrants and agrees that it will cooperate with other contractors and will do nothing to delay, hinder, or interfere with the work of other separate contractors, the Owner, utilities, the Construction Program Manager or Architect. Contractor also expressly agrees that, in the event its work is hindered, delayed, interfered with or otherwise affected by a separate contractor, its sole remedy will be a direct action against the separate contractor. Contractor will have no remedy, and hereby expressly waives any remedy, against the Owner]and/or the Construction Program Manager or Architect on account of delay, hinderance, interference or other event caused by a separate contractor. This provision attempts to make each contractor responsible for coordination of its work with others. In the authors'view, this type of provision can only work on projects of simple to simple/moderate complexity. Unless the multi-prime coordination disclaimer is part of each competitively bid contract, and a condition of bidding, the public entity may face liability for delays and interferences under Public Contract Code 147See, .g.,Shea-S&M Ball v Massman-Kiemdt-Early(D.C.Cir. 1979)606 F.2d. 1245, 1251 (citing cases) 1vlerrftt Chatsrnan and Scott .ScottUn. edUnited Staten(Ct.CI. 1970)429 F.2d.431 (citing cases). - 31 - IZ -d 2; Section 7102 as a "delay caused by the public entity," notwithstanding contract disclaimers. Even if a court enforces a disclaimer of multi-prime contractor coordination, public entities should consider detrimental impacts on project completion that may outweigh any benefit: • In the event serious issues arise concerning the coordination and intersection of contractors'work, the lack of responsibility and effective authority of the project management team may inhibit their resolution. • If an irreconcilable dispute develops between the contractors resulting in unsolved problems or litigation, the project might come to a virtual standstill. In short,multi-prime contractor coordination disclaimers may be difficult to enforce, and if enforced,may not serve the best interests of the project. D. Requiring and Managing Project Documentation 1. Cost Records The public entity may reasonably require the contractor to provide monthly summaries of all types of cost information. The specific cost information required may depend on the specific contract, its size, complexity and duration. Information commonly required includes: • The numbers of workers employed in connection with each subdivision of work,their classification and rate of pay, in the form of certified payrolls; • Costs to contractor of each class of materials, equipment,tools and appliances used on the work,and the amount of each class of materials used in each subdivision of works and • Summaries or reports comparing actual project costs with bid estimates or budgets,where the contractor generates those reports internally. In addition to general cost data,the public entity often requires the contractor to submit monthly and daily job reports as part of its scheduling responsibilities, take progress photographs, and maintain copies of correspondence and records of meetings. The public entity should reserve the right to audit the contractor's books and records and to inspect the site, including the job trailer, or other job site office.' It may also require the contractor to place its bid documents into escrow to be opened and used only in the event of claims. r The public entity should reserve in its contract the right to inspect all such information required by contract for a period of at least one year following substantial - 32 - Cd 'sem'f a� completion. The public entity should specify this right as one specifically enforceable in court (otherwise, the public entity's remedy is to claim breach of contract). 2. Communications and Records Many public entities specify in their construction contracts that all communications between the public entity, the contractor, and design professionals be in writing, with copies to the public entity. Such a specification may, at a later date, prove helpful in a litigation setting where contentions differ over the content of oral communications. Many public entities maintain files organized by party for all correspondence and include, even on small jobs, separate files for the following categories of documents: - correspondence - transmittals - meeting minutes - contract documents - contract change orders - information requests - claims schedules and updates - submittals - progress reports - payment requests - photographs and videos punchlists - project record documents - contractor cost records - inspection records - daily reports - test reports - purchase orders - delivery receipts - payroll records - labor agreements - weather data Job records are the principal source of evidence for resolving disputes and minimizing the potential for claims. Where the size of the project warrants subdividing the above categories,public entities commonly subdivide according to the relevant specification or CSI division. 3. Format and Content of Correspondence Several practice rules apply to correspondence. The first rule is the "third party/two year test." two years from now, will a third party reading the letter understand what it is about,and be persuaded to your point of view. This means that letters should - 33 - use professional language and succinctly set forth a position by framing issues, and referencing related documents. To the extent possible, letters should "stand alone." A second rule is to limit each letter to a single subject matter. Sending two or more letters may be necessary, as it promotes clarity in the written record. E. Preserving the Architect's Responsibility for Its Design To a significant degree, the quality of a completed project depends on the quality of the drawings and specifications, and the extent to which the contractor follows them and the other requirements of the contract documents. The public entity may properly structure its contract documents to preserve the architect's responsibility for the ! completed project by requiring the architect to perform the following functions. .i "{ 1. Site Visits. The Architect should make periodic site visits for the I purpose of observing the work to determine its general conformity with the design. 2. Interpretations and clarifications. All design related interpretations and clarifications of the contract documents, including substitutions, should be the Architect's responsibility. I 3. Rejecting defective work. Based on its observations of the work, the Architect should make recommendations where appropriate to reject any work not conforming to the intended design. 4. Initial decision on technical disputes. The architect should have authority as initial interpreter of all technical aspects of the contract documents and, as to technical aspects, as judge of acceptability of the work for payment applications and final acceptance(with public entity retaining a right to overrule the architect). 5. Review and gpproval of payment applications. The.Architect should observe the construction and, based on the architect's "best knowledge, information and belief" give the public entity a general assurance that the work covered by a payment application meets the standards in the design documents. This responsibility is consistent with the architect's limited responsibility and authority at the site during construction(under most contracts which make the contractor totally in charge of performing the work). 6. Review of shop drawings, submittals and roduct data. Shop drawings, submittals and product data 1411 are in manyrrespects the 148 Many construction details need not and should not be specified in plans and specifications and are left for later development by the contractor regarding materials,equipment,details of shop fabricated _ 34_ last iteration of the design before construction and architect/engineer review is imperative to preserve the architect's/engineer's responsibility and authority over the integrity of the final design.149 F. Insurance, Indemnification and Risk of Loss 1. Common Insurance Requirements Construction insurance(including performance bonds) may broadly cover the following potential risk exposures: - worker injury/illness - third party bodily injury/property damage - physical damage to the project itself - pollution liability and exposure - delayed completion/financial loss - performance shortfalls - contractor default or bankruptcy The conventional approach to these risks is for the public entity to require the following insurance coverages from the following parties: Type of Insurance Coverage Parties Workers compensation and .Each contractor and subcontractor employers liability General and excess liability Owner and each contractor and each subcontractor individually Automotive liability Each contractor and subcontractor Builders risk Owner or contractor Environmental Impairment Pollution Contractor and subcontractors Liability Insurance Public construction contracts typically specify required limits, endorsements, notices, terms and conditions of insurance coverages, each according to specific projects. (..continued) building components,etc. Shop drawings show how the contractor intends to implement the plans and specifications. 1f9Cuffent industry practice provides for architect review of shop drawings and subputtals and issuing a"no exceptions taken"on favorable review. Current custom and usage in the construction industry is that architects do not"approve submittals",even though the word"approval"probably more correctly describes the architect's degree of responsibility for a complete and functioning project if the contractor follows its plans and specifications. - 35 - Some public entities specify the form of performance bond and payment bond required. On larger projects, public entities sometimes secure all insurance, administering a "Owner Controlled Insurance Program," referred to as a "OCIP," which offers three principal benefits: • An OCIP grants the public entity control over the limits of insurance, quality of coverage, stability of the insurance program, and provides for a uniform loss control program and uniform claims management program. • Over the life of the project, an OCIP can secure the public entity cost savings through economies of scale, eliminating duplicate coverage, and eliminating contractor markup on insurance coverages. • An OCIP can also support disadvantaged business participation, and through uniformity of claim administration, expedite claim payments. 2. Common Indemnification Requirements Public construction contracts generally include an indemnity provision requiring the contractor to indemnify the owner against personal injuries and property damages arising from the contractor's negligence in the performance of its work. This indemnity usually extends to the public entity, as well as its employees,officers, agents, and sometimes, its consultants. In some instances, the contractor is also required to indemnify against damages which arise only in part from the contractor's negligent conduct. When a contractor assesses such indemnity provisions during the bidding process, it usually considers primarily whether it can insure the indemnity obligations. Standard general liability insurance policies provide coverage for damages which-arise from the contractor's negligent conduct,and often coverage extends to liability assumed contractually,so long as damages arise at least in part from the contractofs negligence. Increasingly, indemnity provisions are requiring obligations which might not be insured by the contractor. These include indemnity for all damages arising from the performance of the work, without any requirement that the negligent conduct of the contractor plays a part in causing the injuries. If such a clause is enforced, the contractor might properly and safely perform the work according to the plans and specifications,but still be liable for damage to persons or adjoining property. Public entities drafting such indemnity provisions should consider California Civil Code Sections 2782 and 2782.5,which prohibit indemnification arising from the public entity's sole negligence, intentional misconduct, and possibly, also, active negligence, while permitting the public entity and the contractor to allocate or limit their - 36 - liability to each other.15° These statutes will apply differently to different types of indemnity provisions. Regarding procurement of architectural services by local agencies, the Public Contract Code requires that in any request for proposals for architectural services in excess of$10,000, or an invitations to bid from a pre-qualified list of architects with regard to a specific project, that the public entity disclose to the architect(s) the existence of any intended contract provision that would require the contracting architect to indemnify and hold harmless the local agency against any and all liability,whether or not caused by the activity of the contracting architect.151 The Public Contract Code requires the public entity to set forth this disclosure statement prominently in bold type, and provides that failure to comply with this requirement precludes the local agency from requiring a selected architect to agree to an indemnity provision covering any and all liability not caused by the activity of the architect,or to terminate negotiations and reopen the request for proposal process, or for the parties to mutually agree to an indemnity clause acceptable to both parties.152 3. Performance and Payment Bonds The public entity should exercise great care in securing performance and payment bonds and evaluating the sureties who issue them on its projects. Issues include the form of the bonds (which the bid package can specify), timely informing the surety of the contractor's possible and actual default(s), and avoiding actions which might exonerate the surety. A performance bond ensures that the contractor will perform the contract work for the meed sum and on time. A payment bond ensures that the contractor pays for labor and materials used on the project, and will not subject the owner to liens or stop notices. For either type of bond, once the conditions are met,the bond becomes null and void. If the contractor defaults on the contract, the surety has several options, which the form of bond may specify, or which exist in suretyship law: • The performance surety may finance the existing contractor to enable it to complete the work. • The performance surety may hire another contractor to finish the work,or finish the work itself. • The performance surety may tender the owner the difference between the remaining contract balance(and any amounts retained by the owner) and the contract price for the completing contractor. 13°Compafre Civil Code section 2782,subdivision(a),discussing indemnification provisions specifically,and Section 2782,subdivision(b),prohibiting public entities from imposing on contractors liability for their active negligence,but not referring specifically to"indemnification"provisions. "'Public Contract Code§20103.6. 152 id. - 37 - r • The performance surety may reach a cash settlement with the owner. If the surety fails to take one of these steps in a reasonable (or contractually specified) time, the owner may complete the project and pursue the surety for the excess cost. Which option is chosen, and the rights of the parties, often depends on the specific language of the bond. Owners may draft bonds which specify limits on the above options and the time to exercise them, and define liabilities and conditions of"default." Sureties may be exonerated from liability on their bonds.t53 The surety may argue that its obligation to complete the work for a defaulting contractor is totally or partially discharged in cases such as where: • The owner has released more retainage to the contractor than the contractor has earned, thus reducing the amount available to complete the work;154 s • The owner and contractor have materially altered their contract, such as 55 time or manner of performance,or scope of work;' i The owner has released the contractor from its obligations under the i contract without the surety's consent;156 or • The owner has paid the contractor for patently defective work.157 For either performance or payment bonds,prompt notice of a default is critical, both to completion of the project and to minimize damages for delay for which the owner, rather than the contractor/surety,will be liable. 4. Risk of Loss Allocation and Jobsite Care, Custody and Control The public entity may properly limit its liability exposure on a project by placing with a contractor full care custody and control of the project, and full risk of loss until completion. This grants the contractor a great deal of control over the project,but can relieve the owner from many claims of liability and claims of concurrent negligence. An example of such a provision is the following: "The care, custody and control of the Site shall be with Contractor until Completion or Termination of this Agreement and shall pass tS3See Civil Code Section 2819. luSee,Borsook v.Continental Casualty Co.(1951) 107 Cal-App-2d 21,24;but see Civil Code Section 2822. Y �"See,e.g.,Verdugo Highlands,Inc.v.Security lo-Co.(1966)240 Cal.App.2d 527. "See.Goatman v.Pacific heady-Cut Nomas(1931) 112 Cal.App.397,402. 157See,e.g.,Lincoln County v-Coast Bridge Co.(N.D.Cal. 1917)231 F.468,gffd 238 F.705 (1917). - 38 - from Contractor to Owner upon Completion or Termination, but subject to the warranty,performance, and other continuing- obligations of Contractor hereunder. Contractor shall be responsible for and obligated to replace, repair or reconstruct any portion or all of the Work which is lost, damaged, or destroyed prior to transfer of care, custody, and control of Fork from Owner pursuant to this Article, however such loss or damage shall occurred. Owner assumes responsibility for such loss, damage, or destruction after completion or termination, but not earlier." G. Terminating the Contractor 1. Factors to Consider A public entity's decision to terminate the contractor for default or for convenience is a difficult legal and business decision. The contractor's material breach of the public works contract may be only one of many factors. A termination for default often results in greater delay and cost of project completion and frequently results in litigation. Some of the many factors to consider: • Does the contract define "default" and specify a procedure for termination, including a definition of allowable damages and limitation of liability for other damages? • Do the facts support a finding of delay, refusal to proceed, financial difficulties (i.e., failure to pay subcontractors or payroll),or persistently defective work? • Does the contractor have justification? • How serious is the default? • What are the realistic alternatives? That is, can the public entity realistically expect to get a replacement contractor when terminating a contract at 75%completion? • What is the surety's position? • How well positioned is the public entity in terms of project documentation, notices, witnesses and the like? The public entity can address some of these issues in its contracts in ways that make the termination process smoother, less uncertain, and less likely to result in extensive and risky litigation. _ 3g _ 2. Defining procedures, rights and duties i The public entity may specify in its construction contracts when the contractor is in default and when the public entity may terminate, for cause, the contractor's right to is proceed. It may also specify the parties' liabilities with regard to a termination for � default, and a termination for convenience. Traditionally, contractor defaults are specified as existing in one of the following three circumstances: • Where the contractor mares an assignment for benefit of creditors, admits inability to pay debts, files a petition for bankruptcy, or is otherwise determined bankrupt or insolvent. 4 Where the contractor commits a material breach of the contract and fails to cure the breach within 10 days of the date of notice from the public entity demanding a cure. Or, if such failure is curable but not curable within the 10 day period,within such period of time as is reasonable necessary to accomplish the cure,provided the contractor provides a written plan acceptable to the public entity to cure the breach, and then diligently commences and continues the cure according to the written plan. for violates or allows a violation of an • Where the contras Y valid law, statute,regulation,rule, ordinance,permit, license or order of any r government agency applicable to the project,and does not cure the violation within 10 days of the date of the notice demanding the cure. The public entity may add a fourth ground of default, traditionally found in design contracts: the right of"written assurances." If the public entity reasonably believes the contractor is,or may be, in default,the public entity may request written assurances from the contractor of contract performance, and a written plan from to remedy any failures to perform the terms of the contract. Where this option is exercised,the contractor's failure to provide written assurances qualifies as a default justifying termination for material breach. Public works contracts should define the rights and duties of the parties on termination, and address the following issues: • Will the public entity compensate the contractor for the value of work delivered to date? What about rights of offset and back charges? • Will the public entity compensate the contractor for termination costs? If so,which ones? • Will the contractor deliver to the public entity possession of the work, in its then condition, including all designs, engineering,pmjecl records, cost data,drawings specifications and contracts,construction supplies and aids dedicated solely to performing the work? What incentives exist for this? - 40 - • Does the contractor assign to the public entity all subcontracts, which assignment the public entity may accept or decline on termination, depending on whether it wants to complete the work itself? • Does the contractor remains fully liable for the failure of any work completed, materials and equipment provided, or designs commenced through the date of the termination, and what liability of the surety in such a case? - The public entity may face liability after terminating for cause, if a court or jury subsequently finds the contractor not in material breach of the contract. Prudent contract drafting can address this situation. The public entity can specify that if a termination for cause is determined wrongful or without cause, it will be treated as a termination for convenience, and the contractor has no greater rights than it would have had if a termination for convenience had been effected. Waivers and limitations of liability can also be drafted. 3. Termination for convenience On most large projects, and many medium size projects, the public entity retains the right to terminate performance of the work in whole or in part whenever doing so is in its best interest. Generally, the contractor must stop work on the date and to the extent specified, settle all outstanding claims and liabilities,transfer all work performed to the public entity, and negotiate an equitable adjustment with the public entity for reasonable compensation for work performed to date. H. Withholding Payments Under the New Prompt Payment Statutes In 1991 and 1992,the legislature passed a series of statutes requiring prompt payment to general contractors and subcontractors for progress payments and final payments. In 1993 and 1998,it passed amendments to these statutes, and additional amendments appear likely. It is recommended that public entities watch for further amendments in the future. For contracts entered into with public entities after January 1, 1993,payment of retention must be made within 60 days after completion of the project. Amounts wrongfully withheld are subject to a charge of two percent per month, in lieu of any interest otherwise due. Actions to collect wrongfully withheld funds are subject to assessment of attorney's fees and costs.158 For contracts entered into with state agencies after January 1, 1991,progress payments wrongfully withheld after 30 days are subject to the imposition of a ten percent interest penalty. A table outlining the prompt payment statutes applicable to state agencies, California State universities, State and local agencies, and contractors and subcontractors on public entity contracts is attached to these materials. ls'See Public Contract Code Section 7107,subdivision(f). 159See Public Contract Code Section 102.61.5. -41 - I. Claims and Change Order Procedures 1. Notice Claims and change orders generally commence with a protest, request for information ("RFI"), or notice of potential claim. Public works contracts often require prompt notice, and documentation and pricing of change orders and claims, on penalty of waiver of the claim. Courts enforce these requirements and they can be of significant benefit to the public entity. Public works contracts can require prompt notice and documentation of claims, using some variant of the following procedure: • Within seven days of knowledge of a potential claim and prior to commencing work,the contractor must deliver written notice to the public entity of the disputed work. The public entity must issue a written decision on the potential claim, which the contractor can accept or reject, notifying the public entity in writing of its intention to thereafter make a claim. • Within 14 to 30 days of the public entity's decision on the potential claim, the contractor must submit a fully documented claim,calculated per change order procedures. • The public entity makes a final decision on the claim, and,if less than $375,000,administers under Public Contract Code Section 20104. • Only claims documented during construction per the contract may be pursued in a subsequent Government Code claim or legal action. Courts enforce claim notice and documentation requirements.160 This approach benefits all parties. The contractor must document claims as construction proceeds,protecting against stale claims,while keeping the public entity fully informed of potential costs and claims. It limits the contractor's ability to make an omnibus "big claim"claim at the end of the project. i&'Acoustics.Inc.Y.!=to Constr.Co(1971) 14 CaUd 887;but see,Weeshoff,y steles County Flood Control District(1979)88 Cal.App.3d 579(public entity waived notice requirement by its conduct,there,ordering extra concrete work,observing and approving its installation). -42 - 4 2. Change Order Procedures RFI's. Some public entities specify a detailed Request For Information procedure in their construction contracts. Others do not, reasoning that the more the contractor knows about the process the more the contractor will use it.161 Some public entities include in their change order procedures specific penalties for contractors submitting frivolous RFIs or unsubstantiated claims. An-example of such a clause regarding RFIs is as follows: "Request for Information (RFI) For each RFI received from contractor for which the[owners J representative determines that the necessary information is stated and sufficient clarity and the Contract Documents such that a competent contractor should have been able to determine said information without further clarification, the[owners] will back charge Contractor in the amount of two hundred dollars($200.00) as partial compensation for the time spent to research the necessary request. As a practical matter,the above type of clause may be extremely difficult to enforce fairly and consistently,without placing the contractor in the untenable position of either making an erroneous interpretation of the contract for paying a price to receive the "correct" interpretation. In the case of litigious or claims oriented contractors, the above type of clause may serve a salutary purpose. Change order markup limitations. Many contracts now include limitations on overhead and profit markups for change orders 62. The use of limitations on markup provisions,is relatively new, and there is not a great deal of case authority regarding their application. In federal government contracting,the courts have enforced change order markup limitations.'" Courts have not addressed change order markup limitations that render change order work unprofitable for the contractor. Expect courts to narrowly construe such provisions, excluding from the limitation any work, overhead,profit or other costs not specifically mentioned. 16'Procedures traditionally require a contractor to initiate changes by submitting an RFI or a Request For Substitution(RFS),a notice of concealed or unknown conditions or hazardous waste conditions,which the public entity or design professional responds to acknowledging a contract change, supplying information and not acknowledging a contract change,or recommending other action. aaMany public entities specify recoverable costs,overhead and profit rates,and required forms of cost breakdown for labor,material,equipment,and special services work,to help lessen and manage disputes over change order pricing and provides the parties with a benchmark to work with at jhe outset. These specifications include specified profit for work by subcontractors,and sub-subcontractors,as well as overhead definitions and exclusions. 163 See,Reliance Insurance Co.v.United States(Fed.Cir. 1991)931 F.2d. 863,865-66,and cases cited therein. -43 - SZE IV. FALSE CLAIMS AND ALTERNATIVE DISPUTE RESOLUTION A. Using the California False Claims Act The public entity defending a claim should consider the California False Claims Act, Government Cade Sections 12650 - 12655. This statute provides comprehensive statutory regulation of false and fraudulent claims submitted to state agencies and local public entities. It makes a construction contractor performing any kind of public project in California subject to civil fines, penalties and criminal liability for submitting false claims.164 The central.provision of the act is that anyone who knowingly makes a false or fraudulent claim is liable to the public entity for treble damages in addition to any costs incurred in the action to recover the penalties.165 The act defines a"claim" as any request for money made to a public official,or to a contractor or grantee if any of the money requested originated with the public agency.166 "Knowingly" means actual knowledge of the information, "acts in deliberate ignorance of the truth or falsity of the information" or acts'in reckless disregard of the truth or falsity of the information.167 Prohibited activities include:168 • Knowing presentation of a false claim; • Knowing use of a false record or statement to obtain payment of a false claim; • Conspiracy to defraud the public entity into payment of a false claim; • Knowing use of a false record or statement to conceal, avoid or decrease an obligation to pay money to the public entity; or • Failing, as a beneficiary of an inadvertent submission of a false claim, to disclose the false claim within a reasonable time after discovery of its falsity. Commission of any of these prohibited activities renders the claimant liable to the public entity"for three times the amount of damages which the [entity] sustains, ... for the costs of a civil action brought to recover any penalties or damages, ...[and] for a civil penalty of up to ten thousand dollars($10,000) for each false claim."i 9 '"Penal Code Section 72 prohibits the presentation of false claims to the state or a local entity,and provides criminal penalties including imprisonment and fines up to$10,000 per occurrence. 163 Government Code Section 62651,subdivision(a). r '"Government Code Section 12650,subdivision(a). "67 Government Code Section 12650,subdivision(b). '"Government Code Section 12651,subdivision(a)(1). '"Government Code Section 12651,subdivision(a). -44 - -e w A public entity may set up a False Claims Act claim in response to a contractor claim and litigate it in the same lawsuit. 1. Public Enforcement The False Claims Act requires the California Attorney General and the local agency's prosecuting attorney to diligently investigate false claims.170 If a violation is found, and the action involves both state and local funds, the prosecuting attorney must be given an opportunity to intervene; similar intervention is permitted when an action involving local and state funds is initiated by the prosecuting attorney. 2. Private Enforcement The act allows for enforcement by a private person, called a "qui tam" plaintiff. A "qui tam"plaintiff may bring a civil action for a false claim violation for that person, and for the state and local public entity. The plaintiff must file, under seal in superior court, a complaint,without service on the defendant for up to 60 days while the Attorney General and/or the prosecuting attorney decides whether to proceed with the case. If the Attorney General and/or prosecuting attorney declines to take over the action, the " ui tam"" plaintiff may proceed with the case, in which event it may unseal and serve the complaint. In the event an action is taken over from a oui tam plaintiff, the act provides that the qui tam plaintiff shall be entitled to at least 15 percent but not more than 33 percent of the recovery(including penalties)byway of judgment or settlement."' In the event the Attorney General and/or prosecuting attorney declines to take over, the gui tarn plaintiff shall receive an amount between 25 and 50 percent of the recovery, as determined to be reasonable by the court.172 3. Voluntary Disclosure The False Claims Act provides incentives for voluntary disclosure of false claims and statements. Section 12651(b)of the Government Code permits the court to assess lesser penalties(between two and three times actual damages, as opposed to mandatory treble damages), and waive all civil fines, if the court finds all of the following: • The person committing the violation furnished the public entity with all information known about that violation, within 30 days after the person obtained the information. • The person fully cooperated in any investigation. t'a"Under the False Claims Act,the prosecuting auihority of city or county is obligated to investigate diligently violations under the[Act]—including the presentation of false claims that involve that entity's funds." Stacy&witbeck Inc v City and County of San Francisco(1996)47 Cal.App.4th 1,7 (emphasis in original). 17'Govemnient Code Section 12652,subdivision(g)(2). 12Goverament Code Section 12652,subdivision(g)(3). -45 - 03 • At the time disclosure is made, no criminal or civil prosecution has been commenced, and the person had no actual knowledge of a pending investigation into the violation. B. Alternative Dispute Resolution Dispute resolution procedures vary from contract to contract. They may include, or be limited to, any of the following: 1. Settlement meeting. The contractor and public entity meet to review and discuss the claim. 2. Facilitated negotiation. At the time of the contract award, the contractor and owner designate a "Facilitator." The contractor and owner provide the Facilitator with issues for resolution, e.g., a claim. The parties then designate issues for negotiation. For designated issues(e.g., a claim), the following sequence occurs: • Either party may respond to the Facilitator on the designated issue. • The Facilitator schedules conferences with representatives of each party, who are familiar with the issues, and authorized to act on behalf of the party. • The Facilitator leads the negotiation in an impartial manner in an effort to develop consensus. If agreement is reached, it is put in the form of a directive or change order. If no agreement is reached the process is suspended. Costs are shared equally between the parties. 3. Mandatory Mediation. Mediation is similar to a facilitated negotiation except it is mandatory and has better defined procedures than a negotiated settlement. The parties establish the following before the mediation: • Choose a mediator from an established list or mediation association. • Refine the representatives, length of presentations and'admissibility admissibilit of evidence in a subsequent actions. No discovery is permitted and the results are non binding. The costs are usually shared between the parties. If no agreement is reached the claim remains outstanding. 4. Dispute Resolution Board. A Dispute Resolution Board(DRB)hears and decides claims. Usually, a three-member DRB hears large claims and a one member Board hears small claims. The owner and contractor each select one memtfer of the DRB board,who then choose the third board member(whom the owner and contractor must approve). The third board member becomes the Chair of the Board. In the case where a _4g .. single member hears a dispute both parties have to agree to the selection of the board member. DRB performs two functions: (a) regular site meetings, and (b) claims hearings. Site meetings can serve a general project update function, an on site dispute resolution function, or both. Claims hearings follow specific rules regarding procedure, durations, representatives, taking evidence, and the DRB then provides findings (often first in draft for comment). Fees and costs of the board members are usually shared equally by the owner and the contractor. 5. Bindini? arbitration. Binding arbitration provides for dispute resolution out of court by the decision of a single arbitrator,or a panel of arbitrators, designated to hear the dispute. The parties agree on the arbitrator selection process. The contract may specify limits on the arbitrator's award, may require discovery, and may specify court review of the award. Absent contractual definitions of the arbitration process, the arbitrator(s)has great latitude in conducting the hearing and framing its award. Arbitration awards are extremely difficult to overtum in court. The arbitration hearing may take place in the arbitrator's office and in accordance with rules defined in the contract, established by an arbitration association, as agreed by the parties,or as required by the arbitrator. Limited discovery may be permitted. Costs are shared by the parties. The American Arbitration Association significantly updated its Construction Industry Arbitration Rules in 1996 and revised the rules again effective January 1, 1999, addressing issues such as a cap on the number of strikes permitted to the list of arbitrators, confirming the arbitrator's authority to set dates for hearings, permitting notice to be served by e-mail,permitting the arbitrator to correct clerical mistakes in awards,and confirming arbitrator compensation rules. V. COMPLYING WITH THE CALIFORNIA ENVIRONMENTAL QUALITY ACT All Califomia public entities undertaking construction projects must comply with the Califomia Environmental Quality Act(CEQA). The purpose of CEQA is to require governmental entities to make decisions with environmental consequences in mind. 73 CEQA itself consists of a part of the Public Resources Code, starting with Section 21000. The statute is supplemented and explained by the CEQA Guidelines, contained in Title 14 of the Code of Regulations, Section 15000 et M. (the "Guidelines"). The Guidelines are the most frequently consulted of the two parts of CEQA. This section CEQA"s major requirements applicable to public works projects.174 First, however, some words of caution. While this text attempts to explain the major 1786. 1770 of Fremo_ nt v.San Francisco 1-ay Area Rapid Transit District(1995)34 Cal.App.4th 1780, 1 74A this seminar is directed to public works construction,this summary is directed to the situation where the governmental agency is the project owner,rather than the entity approving a project. See, .g.,Guidelines,Section 15050 as to Lead Agency status issues. - 47 - 03 aspects of CEQA applicable to public works projects, it is not possible to cover all of the aspects that could apply to any one project. Nor are these materials meant to provide legal advice as to any aspect of a particular project or to CEQA and the Guidelines. Finally, note that there are a number of statutes in addition to CEQA that address environmental issues, and that may require separate and specific compliance.175 A. Implementation Procedures CEQA requires every California public agency to adopt "objectives, criteria, and specific procedures", consistent with CEQA and the Guidelines, to assist it to evaluate projects for CEQA compliance and to prepare environmental documents.176 The Implementation Procedures are usually prepared in the form of a manual for staff use'and should be kept up to date.'77 It is possible to avoid preparing full-scale Implementation Procedures by adopting the CEQA Guidelines, and adding specific provisions applicable to the entity's operations.178 A district may also use the Procedures of a public agency whose boundaries are coterminous with or encompass the district.179 In either case, board action is required. Many public entities will find that these methods, while meeting CEQA's minimum requirements, do not result in Implementation Procedures that can actually be used by their staffs. As an example, the Guidelines encourage public entities to create Implementation Procedures listing the types of projects they frequently undertake that will usually be categorically exempt.180 B. Compliance: An Overview There are three steps in the CEQA review for a construction project. • Is the activity exempt from CEQA review? • If it is a"non-Project" under CEQA, no further review is required.", • If the activity is a Project, but is nevertheless exempt,prepare a Notice of Exemption. 82 "See,e.g.,Education Code Sections 39001 -39007 regarding site acquisition standards. 76G4delines,§ 15022(a). '"The hWlementation Procedures should be updated within 120 days of amendments to the Guidelines. Guidelines,§ 15022(c). "Guidelines,§ 15022(d). '"Guidelines,§ 15022(b). '"Guidelines,§ 15061 (c). ".'Guidelines,§§ 15061(b)(1), 15378. u*Guidelines,§§ 5061, 15062, 15260, 15300. - 48 - 0 • If the Project is not exempt, prepare an Initial Study to determine if it will possibly result in one or more significant environmental impacts.183 • After the Initial Study, prepare the required final document. If there will be no significant environmental impacts, prepare a Negative Declaration.'84 i If there may be significant environmental impacts, but all potentially significant impacts have been eliminated, prepare a Mitigated Negative Declaration.'85 If there may be significant environmental impacts, and potentially significant impacts remain in the Project plan,prepare an Environmental Impact Report.186 A key factor in CEQA compliance is the public notice provisions. CEQA is designed to reward compliance with very brief exposure to legal challenges: r If the project proponent follows the public notice provisions, the project ' will usually be open to challenge for only 30 to 35 days. j0 If the project proponent does not follow the procedures, the challenge i period will usually be a full 180 days after the project is approved or commenced.187 C. Is It Exempt? The advantage to determining that a project is exempt under CEQA is that there is only a 35-day period for any legal challenge to that decision(assuming that the required Notice of Exemption is filed), after which the project may go foYwarOs Only"projects" are governed by CEQA.189 If an activity is not a"project" under CEQA, no further environmental review is required.190 Many activities that may not appear likely to have a direct effect on the environment are nonetheless "projects" under CEQA. CEQA covers not only public works construction(specifically including clearing or grading), but issuing use permits and enacting zoning ordinances as well.191 '"Guidelines, § 15063. '"Guidelines,§ 15070(a). "'Guidelines,§ 15070(b). '"Guidelines, § 15064. "'Guidelines, § 15112(c). "'Guidelines,§ 15112(2). '"What is not a"project"under CEQA is obscured somewhat by the statutory language. Statutory exemptions and continuing maintenance,for instance,are both excluded from the definition of projects and separately categorized as exempt. See Guidelines, §§ 15378(b)(1)and(b)(3), § 15260 gt scg, § 15301. Guidelines,§ 15061(b)(1). '"Guidelines,§ 15378(a). -49 - l/a ) Certain activities considered to be "projects" under CEQA are nevertheless deemed to have no significant effects on the environment, and are exempt from further environmental review. CEQA recognizes three kinds of exemptions: 1. Statutory exemptions: a limited category of activities that are conclusively deemed to be exempt, even if they actually will have an impact on the environment.192 Statutory exemptions that may apply to public works projects include: Planning and feasibility studies;193 - Emergency projects.194 2. Categorical exemptions: twenty-nine(29)classes of projects that the State has determined do not have an effect on the environment.195 Unlike statutory exemptions, however, categorical exemption status may be challenged and disallowed where there is a reasonable possibility that the project will have a significant effect on the environment due to unusual circumstances.1% The categorical exemptions that may apply to public works projects include: - Repairing, maintaining, and minor alterations to, existing structures;197 - Replacing or reconstructing existing structures, where the new structure will be on the same site and have substantially the same purpose;198 - Adding "minor structures", such as signs, small parking lots, and portable restrooms, to existing facilities;199 Leasing office space.200 3. "Common sense" exemption: where the project can be seen with certainty not to have any effect on the environment, it may be exempt from CEQA review.zol 142Guidelines,§ 15260 et . '93OWdelines, § 15262. '940uidelines, § 15269. t"Guidelines, § 15300 pI meq. ""Guidelines, § 15300.2(c). '"Guidelines, § 15301. '"This category specifically includes school and hospital projects to provide earthquake-resistant structures not increasing capacity by more than 50%(Guidelines, § 15302(a)),and utility systems or facilities involving little or no expansion of capacity(Guidelines, § 15302(c)). School projects adding ten classrooms or increasing capacity by up to 25%,whichever is less,are also categorically exa'rtnpt. (Guidelines,§ 15314.) '"Guidelines,§ 15311. 2°AGuidelines, § 15327. 20'Guidelines,§ 15061(a)(3). _ 50 - D. The Initial Study If the proposed project is not exempt (or if an exemption has been successfully challenged), the next step is to undertake an Initial Study to determine what further environmental review will be necessary: a Negative Declaration, a Mitigated Negative Declaration, or an Environmental Impact Deport ("EIR").202 Some of the consequences that may be deemed to be significant effects on the + environment under CEQA include:203 Disrupting or substantially affecting historical or archaeological resources; Substantially increasing traffic or noise levels; - Conflicting with established recreational, educational, religious, or scientific uses of the area; Inducing substantial negative aesthetic effects; j - Degrading quality of the environment for fish or wildlife. The Initial Study requires a significant level of effort, and is frequently performed by a consultant. The State model of an Initial Study Checklist, for instance, includes a { six-page list of potential impacts, each requiring a choice between"potentially significant impact", "potentially significant unless mitigation incorporated", "less than significant i impact", and "no impact" --- and a narrative response for any response other than "no impact"".204 E. Choosing Between Negative Declarations or EIR i If the Initial Study identifies potentially significant environmental impacts from the proposed project, an Environmental Impact Report must be prepared. If the Initial Study determines that the project will have no environmental effects, a Negative Declaration to that effect is appropriate.206 If the project would have had environmental effects,but has been modified to eliminate the effects, it should be subject to a Mitigated Negative Declaration. (Note that, where mitigation measures are identified,they must actually be put into place and monitored). 4 i i 202Guidelines,§ 15063. If it is clear that an Environmental Impact Report will be necessary,the public entity may skip this step and proceed directly to preparing the EIR. Guidelines, § 15060(c). 203 Guidelines,Appendix G,see§ 15064(:). 204Guidelines,Appendix I;see also,Guidelines, § 15063(d)(3). 20sGuidelines,§§ 15064(a)(1), 15064(8)(1). 2"Guidelines, § 15064(g)(2),citing Friends of B Street v.City of Hayward(1980) 106 Cal.App.3d 988. - S1 - Public entities often seek to avoid preparing an ETR: the cost and time is typically several times more than that required for preparing a Negative Declaration or Mitigated Negative Declaration. While a Negative Declaration can be completed, including the public notice period, within a few months, the EIR process typically takes 12 to 18 months. Note, however, that the threshold for requiring an EIR is a low one. All that need be shown is a fair argument, based on substantial evidence, that the project may have a significant effect on the environment -- even though there may be other substantial evidence that the project will not have a significant effect.207 Where it is a close question whether or not an EIR will be required, the statutory preference is to prepare one. 08 t "'Guidelines, § 15064(g)(1),citing No Oil.Inc. v.City of Los Angeles(1974) 13 Cal.3d 68. 2"Guidelines,§ 15064(h). - 52 - ...................................... .... ...... . .................... ........ ......................... :i�N I'M . . ................................... I................ ':Mx?", ........... ...... .......I..,.............. ............ 0 -;- . Mg i: *I.: t: VI.-x.:�.:-III.x..:.:-"x.:-x.:.::.:.:4 t:---1.1..-1.* ... ......... X.,XXX: .... ....... .. ............... ............% 011 .K. W;P&�g wg.�%-�.................. i"'I.,O. "K. i�.giii�ii�iii�ttt............ .....Xx... X'. x. ............ 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M.X.. .... .0 2 MEN Z, R. xx ............... .......... -X. tt�tt X ........... ......Oft: .Xlg di� PILLVAIUNG WAGE USPONSIBILMES The purpose of the following section is to provide guidance for parties involved in public works construction regarding their responsibilities tinder the public works Maws,Once it has been determined that particular project Is covered,certain rights and responsibilities are created.The most important of these are the requirements _ to pay prevaMm wages and to meet certain apprenticeship employment and training obligations on a particular project Obligations`of AwardIng Bodies f When a public agency or awarding body decides to advertise a public works contract it must obtain the applicable prevaftingwage rates from the Director of the Dement of Industrial Relations (LC Section 1773). The awarding body is required to specify the prevailing wages for each craft or classification necessary to do the worts In the call for bids,in the bid specifications and in the contract.In lieu of ' specifying the pmvalling raft.the awarding body may Include a statement that copies of the preMlIntgwages are on File In the principal office ofthe awarding body (LC Section 1773.2).The awarding body must"rause"a copy ofthe determination of the prevailing rate to be posted at each job site(LC Section 1773,2).Within five days of the award.the awarding body moist send a copy ofthe award to the Division of Apprenticeship Standards(LC Section 1773.3). During the bid process on a project, one or all of the interested parties may decide that the Director's prevailing wage rate determination for a classification does not accurately reflect the wage rate actuallybeing paid to,or the type ofwork actually being done by.that classification in thegeographlearra.Withintwenty cls ys after commencement of ardverdsing of the call for bids by the awarding bog6 the awarding body.aprosppective bidder,or representative of classification or type of worker may file w(th the Director a verified petition to review partkutar wage rate determinations(LC Section 1773y4�lWs action often results in the performance ofa survey or other proceeding (Title 8 CAC Section 16200(e)) to determine the appropriate prevailing wage rano for the classification.if a request is not made within the twenty-day period,the awarding body racist require the contractors to pay the prevailing vrage tate as previously determined by the Director in the periodical y issued pt+ewlllrtg wage determinations(LC Section 1773Al The awatardfing bodyisalso rrequlred to ensure that the reemd keeping obligantions of the Labor Code are satisfied(LC Section 1776(e)and(g)�More c ver,arry rnember of the public may request production of the contractor's certified payroll records through the awarding body(LC Se cdon 1776(bX3)and Title 8 CAC Section 16400). However, when such records are provided to the public, the identity of the employees must be obliterated. UnderSectlon 1726 of the Labor Code,tete bodyawarding the contract for public worse is required to take cognizance ofvlolatlons of the publieworirs Iaws.Then, either on ft own notice or pursuant to a Notice to Withhold issued by the Division of tabor Standards Enforcement(Labor Commissioner),tete awarding body Is required S to withhold contract payments to they contractor in an amount specified In the Notice. Pursuant to Labor Code Section 2727,all progress payments,except the final payment,are subject to withholding either by the awarding body or USE only atter a full Investigation. However, the final payment Is subject to Wthholding pending completion ofafull investigation.(Seealso Title 8 CAC Section 16100(b)for a listing of the obligations,duties and rights of awarding bodles.) ClbUgations of Contractors Contractors are required to pay,and ensure that their subcontractors pay, the prevailing wage as determined In the Ixrectoes prevailing wage determinations. The prevailing wage generally consists of a basic hourly rate plus a fiinge benefit package(i.e., ilne-by4ne amounts)which collectively amount to the total hourly rate requirement.Payment of the pm-valling wage must be lure-by-Tine:the worker i must receive at LOW the exact amount of either cash or the fxinge benefit listed for " each Item In the ptevaliing wage determination Including all prevailing fringe beneCrts(See Labor CommMone es Interpretative Bulletin 85..1,2 A higher cost in ; one benefit may not be offset by reducing the amount paid in another benefit Fa allure to comply with the payment of prevailing wages rescrtts in a penalty of$25 ` per day for each work r paid less than the pmvaMng wage.once the amounts have been determined„a Notice to Withhold In that amount is Issued stopping payment of contract payments by the awarding body to the contractor.While the awarding body should specifythe a lasstflcation to be used on the pr+oject(Le..from one;ofthe exis#Ing deternninations issued by the Director or from a special determination which must be sauEbt at least45 days priorto the bid adver dsenne:nt date),In many cases theydo notdo so.Inanyevent,the contractor orsubcontractormust+choose the appropriate classification based on the work jutisdlct(ons set forth In the prevail- Ing wage det inatlons.(For furtheorguidance on doubtful or ambiguous classifica. tions„we Labor Cotmnlssionet's Interpretive Bulletin 87-2.). Conteac*mmustatsO curnptywtthcertain apprenticeship obligations setforthin the Gabor Code(LC Section 17775}.3 The apprenticeship program standards of individual apprenticeship commlittees also contain certain requirements which must be f0ft0 ed by a public works contractor.The Labor Code requires that,as a Minimum,Otte apperexttiec a must be employed for each iii joume y-kvd workers on the;job In a craft or classification.A Iocarl apprenticeship comurtittWs standards. however,may provide for a different ratio.but at least one to Tine must be maln- talned.Contractors must nuke training contributions to an apprenticeship tralr dng Mm fund or to the CaUbmla Apprenticeship Coundi based on the number of Journey kvel vMrkers and apprentices on the:job.Failure to meet these obligations may result In dvtl penalties being assessed a Wor,If a willful violation Is found,an n"tire coneribcreton to rhe apprenet0WW frau ng fiMd is paid ditec.ttSr to the Fuad or etre Giafocrtta fS�e*CvWVp Quid and not to the vioettr. the PM""Ut Mv totiersc:ts $ 'PvA of i �xr m"eores* `adomamoWy lefor ga iesw w+o days,or a spcdwW con sz=or Ne wwkbg dap. 6 A903 order may be Issued debarring the contractor from bidding on public works con- trarts for one year(LC Section 1777.0. The third obligation Imposed on contractors Is to maintain and famish certified payroll reeds ds(LC Section 1776).These records must be fumished to the awarding body. DLSE, or DAS. upon request and/or may be required on a routine basis pursuant to the terms of a particular public works contract.In addition„arry member of the public also has the right to obtain these records through the awardintg body, DAS or DLS>r However,in the latter ca,e.the identity of the employees shall not be revealed to the member of the public. General contractors are responsible for compliancewith the pubUc works laws by- their subcontractors.If a subcontractor Is found to have violated the public works laws.allotice to Withhold will be Issued stopping payments,In an amount specified in the Notice,from the awarding body to the general contractor.(See also Title 8 CAC Suction 16100(c)fora 4ting of the obligations,duties and rights of contractors f and subcontractors.) ObIlgadons ofWorkem,Unions,Crontradors and Awarding Birdies , Ali parties involvied In public works construction should notify elther DISE(Labor Commisdonerj DAS,or the awarding body(if the,awarding agency has a formal labor standards enforcement program).If they have evidence of any violations of the public:works taws on a public worlrs project 7 ................................................................................................... -.mg ............. %:g%?....X" Xg .......... XeMK. .. ........... . . ....... .ve 'mK*' ZZZ:. m m .4p.* !,P; .......*�oog%.'P-M ;Z2 ........................... ........ ......... ...................I R"M 0 ...V. . ......... NO ------------- lll.:�...................... NX. ............ EMMMM 'r BIDDING PROCEDURES 1108-2.406-1108-3.204 ! �, ci j t L 1108-3.206--1108-4.008 INS-IT7'U I' ONS t ads may request transfer of the item to the department by on a properly drawn request for transfer or ;ent requisition approval by the county administrator. contractors maintained by the department for the or (Ord. 91-14, prior code § 2509, Ord. 1212). particular category of work to be performed, the iter notice inviting informal bids need only be sent to of 1108-2.414 Procedure—Standards commit- the construction trade journals specified by the he tee. The board of supervisors shall organize a commission. the standards committee to establish and maintain (b) Notwithstanding the provisions of subsec- and standards of type, design, quality, or brand of a tion (a), if the product or service is proprietary in or certain article or group of related articles or i nature such that it can be obtained only from a the services purchased by the county. The county J certain contractor or contractors, the notice invit- oes administrator shall be chairman of this committee, i ing informal bids may be sent exclusively to such its and other members that may be deemed necessary contractor or contractors. any shall be appointed from time to time. (Prior code (c) All mailing of notices to contractors and red § 2510: Ord. 1212.). construction trade journals shall be completed no my later than ten calendar days before bids are due. (d) The notice inviting informal bids shall Chapter 1108-3 describe the project in general terms,shall specify of ! how to obtain more detailed information about the Try INFORMAL BIDDING PROCEDURES. project, and shall state the time and place for ess submission of bids. (Ord. 9#-60). Art Sections: i nsd 1108-3.202 Definitions. 1108-3.206 Contractors'list.For purposes of the 1108-3.204 Notice inviting informal bids. inviting informal bids, the public works director xie 1108-3.206 Contractors' list. and the director of general services shall each 1108-3.208 Award of informal contracts. develop and maintain a list of qualified contrac- 1108-3.210 Exempt projects. tors,identified according to categories of work.in ro- accordance with the. criteria promulgated from 10 1108-3.202 Definitions,The following defini- time to time by the commission. (Ord. 93-60). 1 of tions shall apply to tams used in this chapter: Ase (1) "Commission" means the California Ifni- 1108-3.708 Award of informal contracts. ped faun Construction Cost Accounting Commission. Pursirtant to Public Contract Code Section 22034, sty (2) "Department" means the public works the authority to award informal contracts for those tter department,the general services department or the public projects which do not exceed fifty thousand ize county-admitiftwMes office, whichever one is R dollars is delegated to the public wogs director, me soliciting bids for a particular public project. the director of general services and the county ttte (3) "Public project" means a project involving administrator to be exercised in accorda=with the any.of the want;defined in Public Contract Code all applicable laws and county policies. (Ord. 93- the Section 22002„ (Ord. 93-60; for special districts � 60). the see Ords. 93-61 through 93-72). the 1108-3.210 Exempt projects.The procedures 1108-3.244 Notice inviting informal bids.(a) set forth in this chapter shall not apply in any of Where a public project is to be performed which the following situations: :m does not exceed fifty thousand dollars, a notice (1) Where a public project qualifies as an :he inviting informal bids shall be mailed by the emergency under Public Contract Code Section of department to all contractors for the category of 20134(x),20395,22035,or other statutory author- or- work being bid, as shown on the list developed ity; on under Section 1108-3.206, or to all construction (2) Where a public project is otherwise exempt .ay trade journals specified in Public Contract Code from bidding requirements under Chapter 1108-2, be Section 22036, or to both all contractors on the Public Contract Code Section 20394, 20395, ral list for the category of work being bid and all 22032(a), or other statutory authority; rt- construction trade journals specified in Section (3) Where alternative procedures are available en 22036. Notice may be sent to additional contrac- under Public Contract Code Section 22031 or he tors or construction trade journals at the discretion other statutory authority and the county elects to :nt of the department. If there is no list of qualified I use such alternative procedures. (Ord. 93-60). 493 (Goat.CM&come 5-94) I 3 .................. ............................. ..................... ................ ................... ox% ............. "I llmlli: ................. . ................ ................ X/ m .4 x xg xon ................ W .'05=".. X..iiiii., i .......... FIE, .......... ....... ........ R. -X4.W. 0 ro R OWN E-SM- xg-iggg K*i:'*:..,. .REM" 101, IR ...... ...... mp ::iK. X .................. ..................... .. .................... r CALIFORNIA UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING COMMISSION ADDITIONAL INFORMATION FOR ADOPTION AND IMPLEMENTATION OF THE UNIFORM CONSTRUCTION COST ACCOUNTING POLICIES AND PROCEDURES MANUAL 9/22/86 a TABLE OF CONTENTS I. Instructions for Adoption and Implementation of the Uniform Construction Cost Accounting procedures by Local Agencies (9/22/86) . . . . . . . . . . . . . . . . . . . . 1 II. Sample Election Resolution (1/15/86) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 III. Sample Informal Bidding Ordinance (11/3/86) . . . . . .. . . . ... . . .... . . . . .. . 4 IV. Procedure for Establishment and Maintenance of List of Qualified Contractors .Per Section 22034 of the Public Contract Code (9/22/86) ...... . .... . .. .. . . 6 V. County-By-County List of Construction Trade Journals Which Shall Receive Mailed Notice of All Informal and Formal Construction Contract Being Bid for Work (Per Section 22036 of the Public Contract Code) (09/22/86) . . . . . . . . . . . 7 VI. Comphrehensive List of Construction Trade Journals (11/20/85).. . . . . . . . 9 VII. Accounting Procedures Review (9/22/86) ....... .. .. . . . .... . . . ..r... .. .. 19 VIII. Uniform Public Construction Cost .Accounting Act (Chapter 1054, 9/25/83; Chapter 758, 8/24/84; Chapter 993, 9/10/84; Chapter 1019, 9/22/86) ..................... 22 r' Rev. 9/22/86 — -tea Instructions For Adoption and Implementation Of the Uniform Construction Cost Accounting Procedures By Local Agencies (1) Governing Board must elect by resolution to become subject to the uniform* construction cost accounting procedures promulgated by the Controller pursuant to Public r Adta SprtiM_22019. The resolution shall specify at the local agency will meet the requirements prescribed in the California Uniform Public Construction Cost Accounting Commission's Cost Accounting Policies and Procedures Manual and state the effective date the agency will implement the accounting and bidding procedures. (2) Local Agency must notify the Controller in writing of the election to become subject-.to the uniform construction. cost , accounting procedures. A copy of the resolution shall also be filed with the Controller. Send to: Office of the State Controller, Division of LCFA, P. 0. Box 942850, Sacramento, CA 94250-5876, Attention: Bob Brasfield. (3) When a local agency elects to become subject to the uniform construction cost accounting procedures, the entire entity is considered subject to the act and no departments will be exempt. However, Special Districts which are governed by a board of supervisors or city council are only subject if a separate election is made. (4) An informal bidding ordinance shall be enacted pursuant to Public Contract Code Section 22034. (5) The governing board may discontinue the agency's participation under the uniform construction cost accounting procedures by adopting a resolution stating this fact. A copy of the resolution shall be filed with the Controller. (6) The Controller shall notify the Commission of all local agencies electing to become subject to the uniform construction cost accounting procedures. In addition, the Commission shall also be notified of local agencies electing to discontinue participation under these procedures. Rev. 9/22/86 I- SAMPLE ELECTION RESOLUTION (MODEL) RESOLUTION OF THE COUNCIL OF THE CITY OF COUNTY OF , STATE OF CALIFORNIA IN THE MATTER OF: UNIFORM PUBLIC CONSTRUCTION COST ACCOUNi'ING PROCEDURES_ No. lCity Clerk of the City of County of State of California, do hereby certify that the o lowing resolution, proposed by Councilmember , and seconded by Councilmember was duly passed and adopted by the Council oF Me- City of at a regular meeting thereof assembled this day of 19 , by the following vote, to-wit: AYES: ' 'Councilmember: NOES: Councilmember: ABSENT: Councilmember: (SEAL) cityity er _... o THE CITY COUNCIL OF THE CITY OF DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, prior to the passage of Assembly Bill No. 1666, Chap. 1054 Stats. 1983, which added Chapter 2 commencing with Section 22000 to Part 3 of Division 2 of the Public Contract Code, existing law did not provide a uniform cast accounting standard for construction work performed or contracted by local public agencies; and WHEREAS, Public Contract Code Section 22000 et seq. , the Uniform Public Construction Cost Accounting Act, establishes such a uniform cost accounting standard; and WHEREAS, the Commission established under the Act has developed uniform public construction cost accounting procedures for implementation by local public agencies in the performance of or in the contracting for construction of public projects; and Rev. 9/22/86 -2- WHEREAS, the alternative bidding procedures provided for under the Act allow local public agencies to perform work by force account costing up to Fifteen Thousand Dollars ($15,000.00) and to let to contract by informal procedures public projects of Fifty Thousand Dollars ($50,000.00) or less: NOW, THEREFORE, the City Council of the City of - , California, hereby elects under Public Contract Code Section 22030 to become subject to the uniform public construction cost accountng procedures set forth in the Act And to the Commission's policies and procedures manual and cost accounting review procedures, as they may each from time to time be amended, and directs that the City Clerk notify the State Controller forthwith of this election. This Resolution shall take effect upon its adoption. PASSED AND ADOPTED this day of , 19 , Mayor � City o ATTEST: My Clerk City o Rev. 9/22/86 -3- SAMPLE INFORMAL BIDDING ORDINANCE ORDINANCE NO. AN ORDINANCE OF THE BOARD OF SUPERVISORS OF THE COUNTY OF ADDING SECTION TO THE O OF THE COUNTY OF 'ro PROVIDE INFO B DD PR EDURFO UNDER THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT JSEC.TION 22000, Er SEQ. OF THE PUBLIC CONTRACT CODE) The Board of Supervisors of the County of do ordain as follows: SECTION 1 Section is hereby added to the County Code of the County of to provide as follows: Section. Informal Bid Procedures Public projects, as defined by the Act, of fifty thousand dollars `$50,000) or Less ma be let to contract by informal procedures as set forth in Section 22032, et seq., of the Public Contract Code. Section . Contractors List A list of contractors shall be developed and maintained in accordance with the provisions of Section 22034 of the Public Contract Code and criteria promulgated from time to time by the California Uniform Construction Cost Accounting Commission. Section Notice Inviting Informal Bids Where a public project is to be performed which is subject to the provisions of this Ordinance, a notice inviting informal bids shall be mailed to all contractors for the category of work to be bid, as shown on the list developed in accordance with Section , and to all construction trade ,journals as specified by the �a i ornia Uniform Construction Cost Accounting Commission in accordance with Section 22035 of the Public Contract Code. Additional contractors and/or construction trade jornals may be noticed at the discretion of the department/agency soliciting bids; provided however: (1) If there is no list of qualified contractors maintained by the County for the particular category of work, to be prformed, the notice inviting bids shall be sent only to the construction trade journals specified by the Commission. -4- 7/16/86 (2) If the product or service is proprietary in nature such that it can be obtained only from a certain contractor or contractors, the notice inviting informal bids may be sent exclusively to such contractor or contractors. ((Public Contract Code Section 22034(6) states that an aency shall mail a notice inviting informal bids to "all contractors on the agencies) list for the category of work being bid and/or all construction trade journals specified in Section 22036." The Commission recommends that each local agency define, in their informal bid Ordinance, which procedure they will follow, i.e. , notify contractors list, construction trade ,journals or both. The Commission strongly urges notification of both as this sample Ordinance is drafted.)) Section Award of Contracts The County Purchasing Agent and the Director of Public Works are each authorized to award informal contracts pursuant to this Section. ((Public Contract Code Section 22034(e) allows the governing body of the public agency to delegate the authority to award informal contacts. The Commission recommends that each local ..agency. define, in their informal bid-Ordinance, whether they wish to delegate this authority and if so, to whom.)) SECTION 2 This Ordinance shall take effect and be in force thirty (30) days from the date of its passage, and before the expiration of fifteen (1S) days after its passage, it or a summary of it, shall be published once, with the names of the members of the Board of Supervisors voting for and against the same in the , a newspaper of general circulation publ�s a in a County o PASSED, APPROVED and ADOPTED by the Board of Supervisors of the County of , State of California, this . day of , 198 , y t e o Mng vote: AYES: NOES: ABSENT: 7/16/66 PROCEDURE FOR ESTABLISHMENT AND MAINTENANCE OF LIST OF QUALIFIED CONTRACTORS, PER SECTION 21204 OF THE PUBLIC CONTRACT CODE 1. During November each year, each Public Agency which has elected to become subject to the Uniform Public Construction Cost Accounting Procedures shall mail a written notice to all construction trade journals designated for that Agency, under Section 22036, inviting all licensed contractors to submit the name of their firm to the Agency for inclusion on the Agency's list of qualified bidders for the following calendar year. 2. The notice shall require that the contractor provide the name and address to which a Notice to Contractors or Proposal should be mailed, a phone npmber at which the' contractor. may be reached, the type of work in which the contractor is interested and currentlylicensed to do . (earthwork , pipelines, electrical, painting, general building, etc.) together with the class of contractor's license(s) held and contractor license number(s). 3. The Public Agency may create a new contractors list starting January lst of each year. The Agency may include any contractors' names they so desire on the list, but the list must include at a minimum all contractors who have properly provided the Agency with the information required .under #2 above, either during the calendar year in which the list is valid or during November or December of the previous year. The Commission recommends that the Agency automatically include the names of all .contractors who submitted one or more valid bids to the Agency during the preceding calendar year. 4. A contractor may have his firm added to an Agency's contractors list at any time by providing the required information. Rev. 9/22/86 -6- CALIFORNIA UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING COMMISSION COUN'T'Y-BY-COUNTY LIST OF CONSTRUCTION TRADE JOURNALS WHICH SHALL RECEIVE MAILED NOTICE OF ALL INFORMAL AND FORMAL CONSTRUCTION CONTRACT BEING BID FOR WORK (PER SECTION 22036 OF THE PUBLIC CONTRACT CODE. ) The Commission has determined that all public agencies, who adopt and contract under the Uniform Public Construction Cost Accounting Act, shall be required to mail a notice to the following specified construction trade publications, of all informal and formal construction contracts being bid within the specified county (as provided in sections 22034 and 22037 of the Public Contract Code). The numbers following the name of each county refer to the corresponding numbered publications on the List of Construction Trade Journals beginning on page 10. Users will note that a minimal number of publications have been listed as mandatory for each county. The list of construction trade journals beginning on page 10 is much more extensive. The-Commission urges each public agency to select additional publications from their geographical area and include them on their list of publications to be notified. Information recommended to be included in the mailed notice to trade journals is listed on page 6. 1 n,.Ac -J c�-�-..�L.�._ 9 - 1 fit' ALAMEDA 1, 3, 33 ALPINE 1, 3, 29, 43 AMADOR 1, 3, 28, 43 BUTTE 1, 3, 14 CALAVERAS 1, 3, 28, 43 COLUSA 1, 3, 14, 22 CONTRA COSTA 1, 3, 37 DEL NORTE 1, 3, 12 EL DORADO 1, 3, 22, 27 FRESNO 11 .3, 49 GLENN 1, 31 13, 14 HMMLDT 1, 3, 12 IMPERIAL 2, 7, 74 INYO 1, 2, 3 KERN 1, 2, 9, 53 KINGS 1, 2, 3, 52 LAKE 1, 3, 16, 18 LASSEN 1, 3, 13, 29 LOS ANGELES 2, 4, 63 MADERA 1, 3, 45, 49 MARIN 1, 3, 18, 19 MARIPOSA 1, 3, 45 MENDOCINO 1, 3, 15, 18 MERCED 1, 3, 45 MODOC 1, 3, 11, 13 MONO 1, 3 MONTEREY 1, 3, 47, 48 NAPA 1, 3, 20 Rev. 9/22/86 _7_ NEVADA I, 3, 2S ORANGE 2, 5, 63 PLACER 1 , 3, 26 PLUMAS 1, 3, 14, 29 RIVERSIDE 2, 6, 63, 72 SACRAMENTO 1, 3, 22 SAN BENITO 1, 3, 48 SAN BERNARDINO 2, 6, 63, 72 SAN DIEGO 2, 7, 74 SAN FRANCISCO 1, 3, 30 - SAN JOAQUIN 1, 3, 43 SAN LUIS OBISPO 1, 2, 3, S4, 55 SAN MATEO 1, 3, 38 SANTA-BARBARA 2, 8, 56, 57, 59 SANTA CLARA 1, 3, 38, 39 SANTA CRUZ 1, 3, 46 SHASTA 1, 3, 13 SIERRA 1, 3, 29 SISKIYOU 1, 3, 10, 13 SOLANO 1, 3, 20 SONOMA. 1, 3, 18 STANISLAUS 1, 3, 44 SUTTER . 1, 3, 14, 22 TEHANA, 1, 3, 13, 14 TRINITY 1, 3, 12, 13 TULARE 1, 2, 3, 52 TUOLUMNE 1, 3, 44 VENTURA 2, 8, 60 YOLO 1, 3, 22 YUBA 1, 3, 21 Sample Information For Mailed Notice The list below are the types of information that could be included in the mailed notice to the construction trade journals. This list should only be used as a guide. Project title and contract # (if any) Cost range Location of site Who is taking bids/date and time due Owner's address and phone number Architect's address and phone number Brief description of work to be done Where plans may be obtained/Deposit required/Whether or not refundable Percentage of bid bond/Percentage of performance bond/Percentage of payment bond Rev. 9/22/86 _g_ CALIFORNIA UNIFORM CONSTRUCTION COST ACCOUNTING COMMISSION LIST OF CONSTRUCTION TRADE JOURNALS The :Fallowing organizations have indicated to the Commission that they: a) Publish a newsletter or trade journal on a weekly or more frequent basis, which contains a section listing projects being bid, or, that they provide a telephone notice service to their members. b) Do not charge for publishing or otherwise disseminating a Notice to Contractors. They have indicated to the Commission that they serve subscribers or members in the counties listed to the right of each organization. Organizations which meet criteria (a) and (b) above may be added to the list, or cues or corrections can be made to the list by contacting: Office of the State Controller 3 Division of L.G.F.A.. P. O."Box 1019 . Sacramento, CA 9S80S Attn: Bob Brasfield 11/20t8S ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS BY COUNTY 1. Mr. William B. Wallace, Jr. Counties north of and Daily Construction Service including Inyo, Kern P. O. Box 3019 and and San Luis Obispo San Francisco, CA 94119 415-781-8088 40- L �5b 2. Ms. Beverly Lamming Counties south of and Daily Construction Service including Inyo, Kings, 448 South Hill Street San Luis Obispo,. and Los Angeles, CA 90013 Tulare 213-623-1477 3. Mr. J. A. Mullinax Counties north of and F. W. Dodge Division including Monterey, R. O. Box 7878, Rincon Annex Kings, Tulare and Inyo .San Francisco, CA 94120 415-864-8600 4. F. 4. Dodge Division Los Angeles 2 Coral Circle Monterey Paris, CA 91754 R 213-727-0120 S. Mr. Charlie Barr Orange F. W. Dodge Division 1835 W. Orangewood, Suite 101 Orange, CA 92688 6. F. W. Dodge Division San Bernardino and 202 E. Airport, Suite 130 Riverside San Bernardino, CA 92408 7. F. W. Dodge Division San Diego and Imperial . 8825 Aero Drive - Suite A-120 San Diego, CA 92138 8. F. W. Dodge Division San Luis Obispo, Ventura 674 County Square Drive Santa Barbara, and Ventura, CA 93303 Northern Los Angeles 9. F. W. Dodge Division Kern 6713 Hooper Avenue Bakersfield, CA 93308 11/20/85 -10- ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS BY COUNTY 10. Medford Builders Exchange 315 North Bartlett Avenue Medford, OR 97501 11. Klamath Builders Exchange 724 Main Street-Room 214 Klamath Falls, OR 97601. 12. Mr. Dell Bradley Humboldt, Del Norte, Humboldt Builders Exchange Trinity, Lake, Mendocino, 2355 Myrtle Avenue Shasta, Tehama, Glenn, :Eureka, CA 95501 and Butte 707-442-3708 13. Ms. Maude Cameron Counties north of Shasta Builders Exchange Marysville/Ukiah line 2410 Larkspur Lane Redding,. CA 96001 316-243-4646 `- 916-221-SS56 14. Ms. Marianne Duncan Valley Contractors Exchange 957 East Eighth Street Chico, CA 95926 916-343-1981 15. Mendocino Contractors Exchange 331 North School Street Ukiah, CA 95482 16. Lake County Contractors Exchange 199 North Main Street Lakeport, CA 95453 17. Sonoma County Trades Referral Service P. 0. Box 98 Windsor, CA 95492 18. Mr. Len Silva Sonoma, Marin, Lake, Yolo, North Coast Builders Exchange Mendocino, Solano, Humboldt, P. 0. Box 6025 Del Norte, Contra Costa, Santa Rosa, CA 95406 Alameda, Sacramento, Napa, 707-542-9502 San Francisco, and San Mateo 11/20/85 -11- ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS BY COUNTY 19. Mr. Pete Arrigoni Marin, Sonoma, San Francisco, Marin Builders Exchange Napa, and Contra Costa 110 Belvedere Street San Rafael, CA 94941 415-4S6-3233 20. Ms. Erna Stevenson Solano-Napa Builders Exchange P. .O. Box 2400 .- Napa, CA 94SS8 707-ZSS-2518 21. Valley Contractors Exchange 1641 Colusa Highway t Yuba City, CA 98991 22. Mr. James Lambert Counties north of and Sacramento Builders Exchange and including Fresno P. 0. Box *1462` Sacramento, CA 95807 916-442-8991 23. Mr. John Madrosen Counties north of and Construction Data Plan Center including Fresno P. 0. Box 13816 Sacramento, CA 95883 916-920-2240 24. Greater Sacramento Area Plan 2220 Watt Avenue, Suite B-5 Sacramento, CA 98825 2S. Mr. Dennis Hill Nevada County Builders Exchange 150 B South Auburn Street Grass Valley, CA 95945 916-273-6542 26. Ms. Charlene Pardue Placer, Nevada, and Placer County Contractors Assn. Sacramento 220 Sacramento Street Auburn, CA 95603 916-88S-6419 11/20/85 -12- ORGANIZATION AREAS OF IVMfiBERS OR SUBSCRIBERS' BY COUNTY 27. Ms. Mary Ellen Carter E1 Dorado El Dorado Builders Exchange 681 Main Street - Suite 102 Placerville, CA 95667 916-622-2757 28. his. Glenyce Wilson Builders Exchange of Amador P. O. Box 441 Jackson, CA 95642 209-223-1813 29. Reno Builders' Exchange 310 South Wells Avenue Rena, Nevada 89502 30. Ms. Sheila Kamm San Francisco Builders Exchange 850 South tan Ness San Francisco, CA 94110 415-282-8220 31. Minority Business Exchange 1255 Post Street, Suite #625 San Francisco, CA 94109 32. United Asian Contractors Assn. 1670 Pine Street San Francisco, CA 94109 33. Mr. Elmer Eggold Alameda Builders Exchange of Alameda P. 0. Box 1978 San Leandro, CA 94577 415-483-8880 34. 'technical Data Corp. 1900 Powell Street Emeryville, CA 94608 35. Golden State Business League, Inc. 333 Hegenberger Road Oakland, CA 94621 11120!85 -13- ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS* BY COUNTY 36. Minority Contractors Assn. of Northern California 610 16th Street - Suite 214 akl:and, CA 94612 37. Mr. Vic Engel Contra Costa and all Contra Costa Builders Exchange adjacent counties 2490 Salvio Street Concord; CA 94520 415-685-8630 Z-0 38. Ms. a m1 1 San Mateo Peninsula Builders Exchange 735 Industrial Road San Carlos, CA 94070 415-591-4486 39. Ms. June Simmons Santa Clara, Santa Cruz, Builders 'Exchange of Santa Clara County Monterey, Alameda and P. 0. Box 58432 San Mateo Santa Clara, CA 94452 t40.40. California Builder & Engineer P. 0. Box 14470 Pala Alto, CA 94343 41. Bay Area Building Reporter, Inc. 1440 Franklin Street Santa Clara, CA 95450 42. INBE 413 Josefa Street San Jose, CA 95126 43. Mr. Rodger Wolters San Joaquin, Alpine, Builders Exchange of Stockton Calaveras, Amador P. 4. Box 8040 Tuolumne and Stani.slaus Stockton, CA 95248 209-478-1000 44. Mr. Marty Nard Stanislaus, San Joaquin, Valley Builders Exchange Merced, Mariposa, Calaveras, P. 0. Box 4307 Tuolumne and Amador Modesto, CA 95352 209-S22-9031 11/20/85 -14- ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS BY COUNTY 45. Alton Loftin Merced-Mariposa Builders Exchange P. O. Box 761 Merced, CA 9S341 209-722-3612 46. Ms. Melissa Pleasant Santa Cruz, Santa Clara, Santa Cruz Builders .Exchange Monterey, San Benito and 347 Coral Street San Mateo Santa Cruz, CA 95060 408-426-0404 47. Ms. Gwen Wells Monterey, Santa Cruz, Monterey Peninsula Builders Exchange and San Benito 343 Ocean Avenue Monterey, CA 93940 408-373-3033 48. Ms. Gwen Miller Monterey; Santa* Cruz, Salinas Valley Builders Exchange San Bernito, Santa Clara, 201 John Street, Suite 1 and San Luis Obispo Salinas, CA 93901 408-758-1624 49. Ms. Joyce Hughes Fresno, Madera, Merced, Fresno Builders Exchange Kings, Tulare, and Kern P. O. Box 111 Fresno, CA 93707 209-237-1831 50. Ms. Maureen Barile NEDA San ,Joaquin Valley 2010 N. Fine - No. 103 Fresno, CA 93727 51. Mr. Micky Kingham Daily Construction Service 34 Sunnyside Avenue Clovis, CA 9.3612 52. Mr. George Elam Tulare-Kings Builders Exchange P. O. Box 667 Visalia, CA 93277 209-732-4.568 11/20/85 -15- /1117' Via ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS' BY COUNTY S3. Mr. Phil Field Kern County Builders Exchange 71.1 - 24th Street Bakersfield, CA 93301 805-324-4921 54. Mr. Burn Turnbow San Luis Obispo, Monterey, North County Contractors Assn. and Santa Barbara S27 Pine Street, Unit B Paso Robles, CA 93446 805-239-0121 SS. Mr. Al Doutel San Luis Obispo County San Luis Obispo Contractors Assn. P. 0. Box 1222 San Luis Obispo, CA 93406 805-543-7330 56. Mr. Ron Ratzlaff Santa Barbara and Santa Maria Valley Contractors Assn. San Luis Obispo 714 South Miller Street Santa Maria, CA 93454 805-925-1191 57. Mr. Frank Signorelli Santa Barbara Lompoc Valley Contractors Assn. 432 North Eighth Street, Suite B Lompoc, CA 93436 805-736-3845 S8. Ms. June Chovan Santa Barbara Contractors Assn. P. 0. Box 4263 Santa Barbara, CA 93103 805962-9775 S9. Mr. Joseph Herrera Santa Barbara and Ventura Plan Service of Southern California 427 N. Salsipuedes Street Santa Barbara, CA 93103 805-965-6189 11/20/85 -16- ORGANIZATION AREAS OF MEMBERS OR SUBSCRIBERS BY COUNTY 60. Mr. Ray D. Pruter Ventura County Contractors Assn. P. O. Box 7365 Oxnard, CA 93031 805 659-2313 _ 61. Ventura Plan Room 2640 Saddle Avenue Oxnard,� CA 93030 62. Mr. Dean Haddis Harbor Builders Exchange 405 West 20th Street San Pedro, CA 90731 213-88832-7208 63. Mr. Dave Greenlee Southern California Builders Assn. 12802' Malley View Blvd.', Suite 6 Garden Grove, CA 92645 213-430.OS24 64. Bid Editor Los Angeles, Orange, From The Ground Up Riverside, and 7115 Westminster Avenue San Bernardino Westminster, CA 92683 65. Ms. Miki Delgado Brazee Southern California Equivest Associates 307 North Santa Anita Ave.-Suite A Arcadia, CA 31006 818-445-7193 66. Plan Room, Inc. 142 Arena Street El Segundo, CA 90245 67. Technical Data Corporation 101 North Labrea Ave.-Suite 707 Inglewood, CA 90301 68. Desert Construction News 36-650 Sunair Plaza North Cathedral City, CA 92234 i ._ 11120/85 -17-a ORGANIZA'T'ION AREAS OF MEMBERS OR SUBSCRIBERS BY COUNTY 69. Inland Empire Building News P. O. Box 6266 San Bernardino, CA 92412 70. Mr. Keith Lee San Bernardino and Operation Second Chance Riverside 341 W. Second Street - Suite 1 San Bernardino, CA 92401 714-884-8764 71. Ms. Meroline Harrington San. Diego, Imperial, Contractors "Hot Sheet" San Bernardino, Kern, P. O. Box 4608 Ventura, Los Angeles, Riverside, CA 92514 San Luis Obispo, Orange, 714-78S-7628 and Riverside 72. Ms. Merlynn Bradley Desert Construction News/Plan Room 2664 Cherokee Way Palm Springs, CA 92264 619-324-8481 73. San Diego Daily Transcript Construction Department P. O. Box 85469 San Diego, CA 92138 74. Daily Construction Reporter San Diego, Orange, and 1815 Hancock Street Imperial San Diego, CA 92110 75. Minority Business Development Ctr, San Diego and Orange 6363 Alvarado Court - Suite 225 San Diego, CA 92120 619-265-3684 76. AGC Tri Counties 3324 State Street, Suite d-d Santa Barbara, CA 93105 11/20/85 -18- CALIFORNIA UNIFORM CONSTRUCTION COST ACCOUNTING COMMISSION ACCOUNTING PROCEDURES REVIEW 1. Pursuant to the provisions of Public Contract Code Section 22042, the Commission has adopted the following "Accounting Procedures Review", where an interested party presents evidence that the work undertaken by the public agency falls within any of the following categories: a. Is to be performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency. b. Exceeded the force account limit. c. Has been improperly classified as maintenance. 2. As used in the Accounting Procedures Review, "interested party" shall mean a licensed contractor eligible to bid on the public project involved in the review, a labor organization whose members would be eligible to perform work on the public project' if it were performed by contract; an association of licensed contractors and/or labor organizations; or a taxpayer of the public agency involved in the review. 3. Request for Accounting Procedures Review: a. In those circumstances as set forth in section l(a) above, a request for Commission review shall be in writing, sent by certified or registered mail received by the Commission postmarked not later than five business days from the date the public agency has rejected all bids. b. In those circumstances set forth in section 1(b) or 1(c), a request for Commission review shall be by letter received by the Commission not later than five calendar days from the above date an interested party formally complains in writing to the public agency. c. The address for purpose of notice herein is the: CALIFORNIA UNIFORM CONSTRUCTION COST ACCOUNTING OMISSION, State Controller's Office, L.G.F.A. , P.O. Box 1019, Sacramento, CA 95805-5876. d. Such written notice shall include the following information: 1. Name, address, phone number of interested party as defined in (2) above, and person to be contacted presenting evidence. Rev. 9/22/86 -19- ACCOUNTING PROCEDURES REVIEW (Continued) 2. Indicate that work undertaken by the public agency falls within one of the following: a. Is to be performed by a public agency after rejection of all bids claiming work can be done less expensively by the public agency. b. Exceeded the force account limits. u c. Has been improperly classified as maintenance. 3. Name, address, and phone number of Public Agency involved. 4. Project name, location, or other project identification number. S. Baal date and rejection date, if applicable. 6. Low bid dollar amount, if applicable. 7. Agency estimate, if available. 8. Other supporting information, if available. e. At the time it transmits its request to the Commission for review, the interested party shall mail a copy of the request by first class mail, postage prepaid, to the public agency involved. 4. The Commission shall approve and designate in writing consultants available to investigate requests for accounting procedures review. Such consultants shall be prequalified as follows: a. They shall submit resumes of experience to the Commission for prequalification. b. Each applicant shall have at least five years of experience with, and be knowledgeable of, public works construction and/or accounting under contracts let by public agencies. c. They shall submit their schedule of fees required to perform such service. S. Immediately upon receipt of a request for accounting procedure review, it shall be assigned by the Commission to one/or more of the prequalified consultants for review. a. The consultant will review all of the information set forth in Section 3(d). Rev. 9122/86 -2Q- ACCOUNTING PROCEDURES REVIEW (Continued) b. The consultant will interview the public agency involved and submit as a part of his findings a complete statement of the public agencies position with respect to the review being conducted. c. The Consultant shall prepare his written findings and his recommended decision within twenty (20) calendar days from the date the request for review was received by the Commission. b. The Commission may appoint a subcommittee consisting of at least three (3) members .to meet and review the findings of fact and recommended decision of the consultant. The Commission shall render its final decision within thirty (30) calendar days of the date on which the request was received by the Commission. A copy of the decision shall be mailed by first class mail, postage prepaid, to each Commission member, the interested party, and the Public Agency involved. 7. Decisions on accounting procedures reviews shall be collected and maintained at the offices of the Commission and shall be available for public inspection during regular working hours. Such decisions may be cited and relied upon: by interested parties and public agencies in subsequent reviews. Rev. 9/22/86 -21- } UNIFORM PUBLIC CONSTRUCTION CAST ACCOUNTING ACT C ` . Rev. 9/22/86 CHAP'T'ER 2. BIDDING ON PUBLIC CON`rRACTS Article 1. Legislative Intent and Definitions 22000. This chapter shall be known and may be cited as the "Uniform Public Construction Cost Accounting Act." 22001. The Legislature finds and declares that there is a statewide need to promote uniformity of the cost accounting standards and bidding_procedures on construction work performed or contracted by public entities in the state. This chapter provides for the development of cost accounting standards and an alternative method for the bidding of public works projects by public entities. 22002. (a) "Public agency" for purposes of this chapter, means a city, county, city and county, including chartered cities and chartered counties, any special district, and any other agency of the state for the local performance of governmental or proprietary functions within limited boundaries. (b) "Representatives of the construction industry" for purposes of this chapter, means a general contractor, subcontractor, or labor representative with experience in the field of public works construction. (c) "Public project" means any'of' the following. (1) Construction, reconstruction, erection, alteration, renovation, improvement, demolition, and repair work involving any publicly owned, leased, or operated facility. (2) Painting or repainting of any publicly owned, leased, or operated facility. (3) In the case of a publicly owned utility system, "public project" shall include only the construction, erection, improvement, or repair of dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. (d) "Public project" does not include maintenance work. For purposes of this section, "maintenance work" includes all of the following: (1) Routine, recurring, and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes. (2) Minor repainting. (3) Resurfacing of streets and highways at less than one inch. (4) Landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plants, and servicing of irrigation and sprinkler systems. (5) Work performed to keep, operate, and maintain publicly owned water, power, or waste disposal systems, including, but not limited to, dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. Rev. 9/22/86 -23- (e) For purposes of this chapter, "facility" means any plant, building, structure, ground facility, utility system, subject to the limitation found in paragraph (3) of subdivision (c) , real property, streets and highways, or other public work improvement. Article 2. California Uniform Construction Cost Accounting Commission 22010. There is hereby created the California Uniform Construction Cost Accounting Commission. The commission is comprised of 14 members appointed by the Controller as follows: (a) Three members who shall each have at least 10 years of experience with, or providing professional services to, a general contracting firm engaged, during that period, in public works construction in California. (b) Two members who shall each have at least 10 years of experience with, or providing professional services to, a firm or firms engaged, during that period, in subcontracting for public works construction in California. (c) Two members who shall each be a member in good standing of, or have provided professional services to, an organized labor union with at least 10 years of experience in public works construction in California. (d) Seven members who shall each be experienced in, and knowledgeable of, public works construction under contracts let by public agencies; two each representing cities, counties, respectively, and two representing school districts (one with an average daily attendance over 25,000 and one with an average daily attendance under 25,000), and one member representing a special district. At least one of the two county representatives shall be a county auditor or his or her designee. 22011. The Controller, in an effort to select highly qualified commission members, shall solicit from organized representatives of the construction industry and public agencies recommendations for appointments to the commission. 22012. At least one commission member of the six representing the construction industry and at least one of the six representing public agencies shall have previous accounting experience. 22013. The commission members shall select a chairperson from among its membership. The chairperson shall serve as chair for a term of one year from the date of selection or February 1, whichever comes first. In no event shall two consecutive chairpersons be appointees representing either the construction industry or public agencies. 22014. (a) The members of the commission shall hold office for terms of three years, and until their successors are appointed, except as otherwise provided for in this section. Rev. 9/22/86 -24- (b) In the case of members initially appointed by the Controller, two representing the construction industry and two representing public agencies shall be appointed to serve until July 1, 1985; two representing the construction industry and two representing public agencies shall be appointed to serve until July 1, 1986; and three representing the construction industry and three representing public agencies shall be appointed to serve until July 1, 1987. (c) Members may reappointed for subsequent terms of three years. (d) The Controller shall, within 45 days after expiration of any term, appoint a replacement to fill the vacancy on the Commission. 22015. (a) The Controller shall make available for the conduct of the commission's business, such staff and other support as does not conflict with the accomplishment of the other business of the office of the Controller. (b) Each member of the commission shall serve without compensation, but shall be reimbursed for travel and other expenses necessarily incurred in the performance of the member's duties. (c) The commission may accept grants from federal, state, or local public agencies, or from private foundations or individuals, in order to assist it in carrying out its duties, functions, and powers under this chapter. 22016. The commission shall meet not less than once each year, at a time and place chosen by its membership. 22017. The commission shall do all of the following: (a) After due deliberation and study, recommend for adoption by the Controller, uniform construction cost accounting procedures for implementation by public agencies in the performance of, or in contracting for, construction on public projects. The procedures shall, to the extent deemed feasible and practicable by the commission, incorporate, or be consistent with construction cost accounting procedures and reporting requirements utilized by state and federal agencies on public projects, and be uniformly applicable to all public agencies which elect to utilize the uniform procedures. As part of its deliberations and review, the commission shall take into consideration relevant provisions of Office of Management and Budget Circular A-76. (b) Recommend for adoption by the Controller, procedures and standards for the periodic evaluation and adjustment, as necessary, of the monetary limits specified in Section 22032. (c) Submit its recommendations to the Controller not later than January 1, 1985. The commission shall report to the Legislature, no later than June 30, 1984, concerning its progress in the development and implementation of the uniform construction cost accounting procedures. Thereafter, the commission shall make an annual report to the Legislature with respect to its activities and operations, together with those recommendations as it deems necessary. Rev. 9122186 -25•- 22018. The Controller shall, upon receipt of the commission' s recommendations, review and evaluate the recommended procedures and either formally adopt or reject the recommended procedures within 90 days of submission by the commission. 22019. Upon determining that the recommended uniform construction cost accounting procedures will serve the best interests of the state and public agencies, and upon formal adoption by the Controller, the Controller shall promulgate the uniform procedure for all public agencies electing to participate, together with instructions for their adoption and implementation by any public agency. 22020. In accordance with procedures and standards adopted pursuant to Section 22017, every five years the commission shall consider whether there have been material changes in public construction costs and make recommendations to the Controller regarding adjustments in the monetary limits prescribed by Section 22032, but in no case shall the amount, as adjusted, be less than fifteen thousand dollars ($15,000). Any adjustment shall be effective beginning with the fiscal year which commences not less than 60 days following the Controller's notification to affected public agencies of the adjustment. Article 3. Public Projects: Alternative Procedure 22030. This article applies only to a public agency whose governing board has by resolution elected to become subject to the uniform construction cost accounting procedures set forth in Article 2 (commencing with Section 22010) and which has notified the Controller of that election.. In the event of a conflict with any other provision of law relative to bidding procedures, this article shall apply to any public agency which has adopted a resolution and so notified the Controller. 22031. Nothing in this article shall prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1. 22032. (a) Public projects of fifteen thousand dollars ($15,000) or less may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order. (b) Public projects of fifty thousand dollars ($50,000) or less may be let to contract by informal procedures as set forth in this article. (c) Public projects of more than fifty thousand dollars ($S0,000) shall, except as otherwise provided in this article, be let to contract by formal bidding procedure. i Rev. 9/22/86 -26- 22033. It shall be unlawful to split or separate into smaller work orders or projects any projects for the purpose of evading the provisions of this article requiring work to be done by contract after competitive bidding. 22034. Each public agency which elects to become subject to the uniform construction accounting procedures set forth in Article 2 (commencing with Section 22010), shall enact an informal bidding ordinance to govern the selection of contractors to perform public projects pursuant to subdivision (b) of Section 22032. The ordinance shall include all of the following: (a) The public agency shall maintain a list of qualified- contractors, identified according to categories of work. Minimum criteria for development and maintenance of the contractors list shall be determined by the commission. (b) All contractors on the list for the category of work being bid and/or all construction trade journals specified in Section 22036 shall be mailed a notice inviting informal bids unless the product or service is proprietary. (c) All mailing of notices to contractors and construction trade journals pursuant to subdivision (b) shall be completed not less than 10 calendar days before bids are due. (d) The notice inviting informal bids shall describe the project in general terms, how to obtain more detailed information about the project, and state the time and place for the submission of bids. (e) The governing body of the public agency may delegate the authority to award informal contracts to the public works director, general manager, purchasing agent, or other appropriate person. 22035. In cases of great emergency, as determined by the governing body of the public agency, including, but not limited to, states of emergency defined in Section 8SS8 of the Government Code, when repair or replacements are necessary to permit the continued conduct of the operation or services of a public agency or to avoid danger to life or property, the governing body by majority vote, 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 work may be done by day labor under the direction of the governing body, by contract, or by a combination of the two. The governing body, by majority vote, may delegate to the appropriate county administrative officer or city manager the power to declare a public emergency subject to confirmation by the governing body, by a four-fifths vote, at its next meeting. 22036. The commission shall determine, on a county-by-county basis, the appropriate construction trade journals which shall receive mailed notice of all informal and formal construction contracts being bid for work within the specified county. `�- 5/21/86 -27- 22037. Notice inviting formal bids shall state the time and place for the receiving and opening of sealed bids and distinctly describe the project. The notice shall be published at least 14 calendar days before the date of opening the bids in a newspaper of general circulation, printed and published in the jurisdiction of the public agency; or, if there is no newspaper printed and published within the jurisdiction of the public agency, in a newspaper of general circulation which is circulated within the jurisdiction of the public agency, or, if there is no newspaper which is circulated within the jurisdiction of the public agency, publication shall be by posting the notice in at least three places within the jurisdiction of the public agency as have been designated by ordinance or regulation of the public agency as places for the posting of its notices. The notice inviting formal bids shall also be mailed to all construction trade journals specified in Section 22036. The notice shall be mailed a least 30 calendar days before the date of opening the bids. In addition to notice required by this section, the public agency may give such other notice as it deems proper. 22038. (a) In its discretion, the public agency may reject any bids presented. If after the first invitation for bids all .bids are rejected, the public agency shall state the reasons for the rejection, and 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 readverti.sing 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. (b) If a contract is awarded, it shall be awarded to the lowest responsible bidder. If two ore more bids are the same and the lowest, the public agency may accept the one it chooses. (c) If no bids are received, the project may be performed by employees of the public agency by force account, or by informal bidding procedures set forth in Section 22034 without further complying with this article. (d) Any statement of reasons for the rejection of all bids made pursuant to subdivision (a) shall not constitute a new cause of action separate and apart from any existing remedies which may be available to the bidders. This section shall remain in effect only until January 1, 1591, and as of such date is repealed, unless a later enacted statute, which is chaptered before January 1, 1991, deletes or extends such date. Rev. 9122/86 -28- l 44 2 SEC. 2. Section 22038 is added to the Public Contract Code, to read: J 22038. (a) In its discretion, the public agency may reject any bids presented. 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 readvertising 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. (b) If a contract is awarded, it shall be awarded to the lowest responsible bidder. If two or more bids are the same and the lowest, the public agency may accept the one it chooses. (c) If no bids are received, the project may be performed by the employees of the public agency by force account, or by informal bidding procedures set forth in Section 22034 without further complying with this article. This section shall become operative on January 1, 1991. 22039. The governing body of the public agency shall adopt plans, specifications, and working details for all public projects of more than fifty thousand dollars ($50,000). 22040. Any person may examine the plans, specifications, or working details, or all of these, adopted by the public agency for any project. 22041. This article does not apply to the construction of any public building used for facilities of juvenile forestry camps or juvenile homes, ranches, or camps established under Article 15 (commencing with Section 880) of Chapter 2 of Part 1 of Division 2 of the Welfare and Institutions Code, if a major portion of the construction work is to be performed by wards of the juvenile court assigned to those camps, ranches, or homes. 22042. The commission shall review the accounting procedures of any participating public agency where an interested party presents evidence that the work undertaken by the public agency falls within any of the following categories: (a) Is to be performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency. (b) Exceeded the force account limits. (c) Has been improperly classified as maintenance. Rev. 9/22/86 -29- 22043. In those circumstances as set forth in subdivision (a) of Section 22042, a request for commission review shall be in writing, sent by certified or registered mail received by the commission postmarked not later than five business days from the date the public agency has rejected all bids. In those circumstances set forth in subdivision (b) or (c) of Section 22042, a request for commission review shall be by letter received by the commission not later than five days from the date an interested party formally complains to the public agency. The commission review shall commence immediately and conclude within 30 days from the receipt of the request for commission review. During the review of a project that falls within subdivision (a) of -Section 22042, the agency shall not proceed on the project until a final decision is received by the commission. 22044. The commission shall prepare written findings. Should the commission find that the provisions of this chapter or of the uniform cost accounting procedures provided for in this chapter were not complied with by the public agency, the following steps shall be implemented by that agency: (a) On those projects set forth in subdivision (a) of Section 22042, the public agency has the option of either (1) abandoning the project, or (2) awarding the project to the lowest responsible bidder. (b) On those projects set forth in subdivision (b) or (c) of Section 22042, the public agency shall present the commission's findings to its governing body and that governing body shall conduct a public hearing with regard to the commission's finding within 30 days of receipt of the findings. 22045. (a) No later than January 1, 1985, the commission shall recommended, for adoption by the Controller, written procedures implementing the accounting procedures review provided for in this article. 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';•r r Q•r '•: ..yr:.: f•' r ::�:{i':fSr: y'v.'•r:•,,.v't 9'r fd rt .d: ?;•rt'.�:7::/.fi,.• '%?S:�r..:+,::r �'�!i�%�ir.;ri:?ft{ r;:;.�'?r'r.' :2't`•j. :,�:. .::r:}.�.�;•r:�:•r:,?),.••:'f.{v�•rr..,C�t.:,wr:. r''�^' ty., tel• 61 - tete i e: tea /! �,f "v` y A GENERAL SERVICES DEPARTMENT Architectural Division 1220 Morella Avenue, Suite 100 Martine, California 94553-4711 (510)313-7200 FAX: 313-7299 LETTER OF TRANSMITTAL Date: 12JUN97 Pile: 250-9692/A.2.1 TO: Phil Batchelor, County Administrator Attn: Carol Chan, Capital Facilities Administrator FROM: Barton Gilbert,Director of General Services By:Steve Jordan,Associate Architectural Engin't SUBJECT: PORTABLE CLASSROOM FOR BOYS' CENTER.(WH364F);Final Project Cost Enclosed via interoffice mail are: Itim Copies DAW Description - 1 1 12JUN97 Worksheet for Estimated Project Cost,seven gl/:xl 1 inch pages (including attachments). These are sent for your information. CON11)x 17S: 1. The final costs are approximately$5,136 over our 12FEB97 estimate. Summary: 18DEC96 Est 12171:B97 Est_. 12JUN97 Est Description S 12,725 S 12;123 S 11,397 Consultant 12,250 18,175 23,736 std' 1,652 1,650 1,226 Permits.Misc. 71,200 71,200 75,768 Conmcdon 2,600 2,600 1.509 Communications 5573 --2,152 0 Project Contingency S 106,000 S108,500 S113,636 Total *The 12JUN97"Sta6'category Includes 56,555 in construction done by GSD Building Maintenance. 2. Unanticipated costs included redesigning the fence enclosure and reroofing the modular building. 3. The project is complete. I have included a S750 contingency to cover future post-construction activities through April 1998 (one year after occupancy). There are no other contingencies. Please contact me if you have questions or need additional information. cc(w/attachments): Tent'Mann ✓ cc(no attachments): Probation Department ✓ Terry Starr C.IDATAWO-9647 8C1iTCA404SI.00C Pape t of 1 Pages. &I 2J97 U1- z,, uu 14: 10 FAX sls 313 7106 c;si) All EN Av� L60031011 Portable Classroom for Boys Center, Juvenile Hall, Martinet (WH364E,F) File: 250-96921A.2.1 PROJECT COST BREAKDOWN -- Date: 30AUG99 BASE COSTS vs. NON-BASE COSTS By: Steve Jordan tram Total Hard osts # Cast CostsLEE (Other) iDescription,,of work .f .,:N 2 25,135 22,135 2,500 500 Providing electrical power to the site tat 3 1,540 - 500 1,040 preparing and submitting for ORS approval(c) 4 3,270 - 750 2,520 Hiring additional consultants (Those, Signet, HLA) tci 5 3,653 3,033 100 520 Concrete perimeter foundation t`n 6 5,626 3,736 750 1,140 Redesign fence enclosure at walk, add stairs t®i 7 1,500 - 1,500 - Solve unrelated exit problem at south side of J. Hall t¢I 8 3,726 3,226 500 - Reroof modular building Tl 9 350 250 100 - Repair interior wall finish panels to 0 10 350 250 100 - Rekeying modular building tFi w CO 11 2,400 1,800 100 500 New security screens(F) ro¢ 12 1,400 950 250 200 Exterior painting T) ; 13 4,139 3,139 750 250 Provide conduit to connect to J. Hall phone/alarm systems tFl Z 14 1,069 969 100 - Remove existing light fixture(o) 15 10,113 9,613 250 250 Reroute existing chain-link fence tcl 16 4,300 3,300 750 250 Site demolition and grading, door repair tci 17 8,321 7,071 750 500 Accessible walk between modular building and Juvenile Hall tril 18 12,114 11,114 500 500 Electrical, fire alarm(CORS requirement), lighting retrofit(') 19 2,4031 1,403 1 1,0001 Bid modular building installation informally t�I 20[__113,636_1 83,832 1 17.181 12,623 TOTALS Notes: I A. Base costs represent the cost of installing the modular building: "as Is",without additional site or building improvements(i.e., less line items#2 and#8-#19), •without ORS inwil4atmte nt(if It had not been a classroom,i.e..less tine Items 43-05 and a portion of 01 a),andl without the change In scope requested by Probation(i.e.,less line items#8 and#7). The Base Cost was calculated by subtracting the sum total of the non-base costs(items#2-019)from the Total Project Cost It includes installing a non-classroom modular building on a wood foundation,and the associated consultant,project management,permit and printing costs,as well as approximately 54500 in GSD Building Maintenance and Telecommunications costs. Note that,without non-base work,the project could have been installed via Purchase Order. Instead, it had to be bid informally,a more time consuming and expensive procedure(see line item#19). B. There was no power available at the site selected by Probation for the classroom. Trenching had to be done across the paved drive in front of the Juvenile Hall in order to install conduit required to provide power to the modular building. C. Because the modular building was to be used as a classroom,it came under the jurisdiction of ORS(the California Office of Regulation Services). ORS required that the site be evaluated for Alquist-Priolo Special Studies Zone,that a geotechnical engineer evaluate the site for geologioal and foundation hazards,that an Inspector of Record(IOR)be used to make periodic inspections and file reports, and that the foundation be of concrete(rather than wood). ORS also required a new fire alarm system(cost in line#18, see Note 1). D. During construction,the Probation Department decided to eliminate the fence that enclosed the concrete walk between the modular building and J.Hall, replacing it with a guardrail. Probation also added concrete stairs. Additional Costs 06.xis nage 1 of 2. 3131MOOO 01/27/00 14: 10 FAX 925 313 7108 GSD All?111 A;I� L. UU4, ull Notes (continued): E. While the modular building was being installed, Probation was also modifying the Summit Center portion of the interior of Juvenile Hall. This was not done through our Division. Probation was notified by the Fire District of an exiting problem not related to the modular building. Probation asked our Division to solve this problem. We surveyed existing conditions, developed alternative design solutions, and met with the Fire District. They approved a fencing solution at the south side of Juvenile Hall. This work was ultimately built by GSD Building Maintenance. Our time for the problem solution was charged to the modular building project. . F. The modular building was not completely useable as delivered to the site. It had to be reroofed. Several of the interior wall finish panels were dislodged when the modular building was moved from Richmond, and had to be reinstalled. The door had to be rekeyed. Probation requested that security screens be installed at existing windows,and that the modular building be painted a new color. Conduit had to be installed to connect to Juvenile Hall's telephorietdata/alarm systems. See Note I for electrical improvements that had to be made to the modular building. G. The site was not completely ready for the modular building. There was no power(see item#2). An existing exterior light fixture had to be removed. A portion of the existing chain-link fence had to be rerouted. Existing concrete stairs, a chain-link fence,and two tree stumps had to be removed. The site had to be graded. The door to J.Hall repaired. H. An accessible walk had to be installed between the modular building and Juvenile Hall,with ramp to grade. 1. Electical improvements to the modular building included: interior lights retrofit to current energy conservation standards:a new fire alarm system(required by ORS);and a new intercom system(required'by Probation). J. The building installation contract exceeded$25,000,due to the non-base work described in items#2-#18. It therefore had to be bid informally. Had only the"base work"been required(item#1),it could have been accomplished via purchase order, a less expensive procedure. The cost difference shown is an estimate(under"Soft Costs-GSD"). Also, bonds are not required of the contractor If the contract is less than$25,000, a savings of about 2.5% (shown under"Hard Costs"). * Non-base costs are:based on actual contractor and consultant invoices where possible,and estimated elsewhere. l.. Summary of non-base costs(by Hard vs.Soft): 71,989 Hard Costs 11,250 Soft Costs(GSD) 8,170 Soft Costs(Other) 91,409 Total non-base costs M. Summary of non-base costs(by who did work): 46.854 Contractor(William Dahn Construction) 19,635 Trenching contractor 5,650 Consulting Architect(Barry&Volkmann) 1,000 ConsutCutg IOR(Tkane) 1.163 Testing&Inspection(Signet) 357 Consulting Geo.Engineer(Harding Lawson) 11,250 GSD Architectural Division 5,500 GSD Building Maintenance 91,409 Total non-base costs N. Summary of total project cost: 83,832 Hard Costs(74a/a) 17,181 Soft Costs(GSD)(15%) 12,623 Soft Costs(Other) (11%) 113.636 Total Project Cost 0. The following costs are not included in this spreadsheet:purchasing and moving the modular building;improvements made to Juvenile Halt Itself for the Summit Center program that were not directly related to the modular classroom. Additmat Cows 06.xls Page 2 of 2. 6/31/1668 U1, L17, uu la : ii FAX 9z5 Biu , 1u,O IUML. CONTRA COSTA COUNTY File: 250-9692/A.2.1 GENERAL SERVICES DEPARTMENT Date: 12JUN97 Architectural Division By: S. Jordan WORK SHEET EQ&FSTIMATED PROJECT COST Project: Relocated Modular Classroom Budget Line Item No.: 44134364 Address: Juvenile Hall Work Authorization No.: WH364E,F 202 Glacier Drive, Martinez Current Appropriation: 106,000 Status: Complete Description: 24'x 40' modular building relocated from Richmond to adjacent to Sub- % Initial % Grand J. Mall Boys Treatment Center, to be used as a classroom. Totals Const'n. Total . 1.00 PROPERTY ACQUISITION r' 1.01 Lands and Rights of Way...................................................... 0 ;: 1.02 Existing Facilities................................................................... 0 1.03 TOTAL ACQUISITION,......................................................... .......... ........ 0 2.00 CONSULTANT SERVICES 2.01 Architect............................................................................... 8,935 2.02 Soils Engineer............................................. ......................... 358 2.03 Testing andInspection.......................................................... 2,104 2.04 Asbestos Consultant............................................................ 0 + 2.05 Surveyor..... rrreyor. ........................... 0 2.06 Other Services....................................................................... 0 :.a�;'� 2.07a,�w=•� �;�; ',�; :• TOTAL CONSULTANT SERVICES..................................... .................... 11~397 '` t0% ;10:©Pw 3.00 COUNTY STAFF 3.01 Architectural Div ... 16,4973;4°� 3.01.1 Pre-Bid Phases............ .......................... 6,345 3.01.2 Bidding/Construction Phases.................. 7,344 3.01.3 Clerical...........„................................... 2,808 +; " 3.02 Lease Management Division................................................. 0 +Q0%, 3.03 Building/Grounds Maintenance............................................. 7,079 :3% 3.04 Operating Engineers............................................................. fl t7:OJo, 3.05 County Counsel..................................................................... 0 .M 3.06 Community Development Department....................... t?'o% 3.07 Other County Staff................................. ........ 160 3.08 TOTAL COUNTY STAFF.......................................................................... 23,736 "48.0% 20.9% 4.00 PERMITS, MISCELLANEOUS 4.01 Building Permit(0. R. S.)...................................................... 627 4.02 Encroachment Permit............................................................ 0 4.03 Traffic Mitigation Fee...................... 4.04 Other Permits; Fees.............................................................. 0 4.05 Misc. rintin , leases (P 9. osta postage,9 , P hotos ). ............................. 599 " 4.06 TOTAL PERMITS, MISCELLANEOUS..................................................... 1,226 �2'.6ald PESOO8SJ.XLS Page 1 6112/97 ui,27 UU 1. : 11 r.i1 915 313 71U8 �5ll .�lllli � /� 5.00 CONSTRUCTION 5.01 Initial Construction........... .......................................... .......... 49,450 v. 5.02 Change Orders (13.5% of item 5.01)......................... ... 6,683 g 1;3,5�Jg 5.03 Utility Connections................................................................. 0 5.04 Purchase Orders (electrical trenching and conduit to site)............... 15,757 x'3,1.�dla 5.05 Other Purchase Orders ........................................................ 3,878 5.06 Asbestos Abatement PO/Contract....................................... 0 - „.0 0"!0 5.07 Signage PO/Contract(0.0% of 5.01). ................................... 0 y 0.0% 5.06 TOTAL CONSTRUCTION........................................................................ 75,768 Al 3' 2°lc. :66:701a 13.00 FURNISHINGS,LOOSE EQUIPMENT(not included In 5.00) 6.01 Office Landscape Partitions(OLP). ...................................... 0 r, 6.02 OLP Power Connections....................................................... 6.03 OLP Voice&Data Wring. .................................................... 0 6.04 OLP Contingency(6.0% of 6.01, 8.02. and 6.03).................. 0 6.05 Other.................................................................................... 0 6.06 TOTAL FURNISHINGS, LOOSE EQUIPMENT........................................ 0 ';i CI',Q°lc '... .0.0%, 7.00 COMMUNICATIONS (County staff, consultants, PCPs) 7.01 Phones (not included in 5.00).......................................... ..... 0 „ 7.02 Alarms (not included in 5.00). ..................1...............---..... 1,509 7.03 Data(not included in 5.00).47.................................................. 0 7.04 Contingency (0.0% of 7.01, 7.02, and 7,03).......................... 0 7.05 Other.......................................................... ........................ 0 7.06 TOTAL COMMUNICATIONS.................................................................... 1,509 8.00 PROJECT CONTINGENCY........................f..........+................$...............04.4.41. I) (0.0%of project cast) 9.00 FINANCE COSTS +aifif4SHas..ss.esa.are.ra.e+.s.a...t1114...rr++ *K+...ii..Ft#iNaswa+rrsesM..i.i.if i.f. o r�'d;Q'c`9 10.0 TOTAL.PROJECT COST....................f.....+...a............+..r..o..........,,f................ 113,636 225:13016• t00:001a (Sum of Items 1.00 through 9.00) SAY............ 113,1536 229.19010 100.0% Underrunt(Overrun) (7,636) a7:2% Notes and Computations: A initial Construction cost(item 5.01)based on low bid received from William Dahn Construction on 05DEC98. B.Purchase order costs(Items 5.04 and 5.05)due to GSrO Building Maintenance Division having the trenching work done. C.This estimate does not include procuring or moving the modular building to the J.Hall site. It does include all site and electrical work required for the site to accomodate the modular building. List of Attachments: A.Pie chart showing distribution of costs, S.Budget Status Report,four SY&I i Inch pages dated 10JUN97,as Prepared by GSD Accounting. 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Y g 'i = Mao Sr- SmIVN ot 4V`tti U3 c. in IL x C3 C JA U OL C4 0 E 0 Cl Lu :.Ha 0 U. ;s Z 00 to CACS- SC3 C3 IL (3 u a LU C' co- 7 e v cc on a .2 AaM -2 03 'a P..0 c 1 9 -Cc or- 2 r- CL CL U3 4 m 0 0 m 12 COL cc o ' LU UJ C! 4R d /iv Z BATCH NUMBERAUTHORJiEO BY: COUNTY OF CONTRA COSTA 7 DATE BAT. C TITLE: !C Y Y �tM O0 1` NO. 0 CENTRAL ACCOUNTING SYSTEM 6 2 a INTERDEPARTMENTAL TRANSFER anrE. 0 0 0 %0 0• ,i T/C 62 ORIGINATING UNIT: 1 2 3 Q 9 2 34 a SERVICING ORGANIZATION. EXPLANATION; OUR- TASK OPTION ACTIVITY SPECIAL 09-ANIIATION ACCOUNT FLACS REQUESTING ORGANIZATION: FUNO1 SUB- TASK OPTION ACTIVITY/ SPECIAL AMOUNT ORCANIIATION ACCOUNT YORK AUTK. FLAGS DESCRIPTION t t t I 1 1 r 1 i 1 `r 1 y I I y. 1 y I I :` "'^L- -.E•,.• ...�_,.-..�.--�...»-i--_._S.. .. i 1 i i i 1 ,r f f 1 1 t ( 1 i t � I t 4 1 � f f - 1 :�t I 1 I 1 1 1 -•.1.>..!-...t__i. LT -A I I L -1 1 1 r 1 1 I alli TOTL Paga of PRi AREO.BY TELtpHONE AUTNORiZEO Si6NATURE DEPUTY AUDITOR-CT LL R (M8148 7/77) rage 1 01 .5 CONTRA COSTA COUNTY Office of the County Administrator ADMINISTRATIVE BULLETIN Number: 213 Date: 3-29-83 Section: Budget & Fiscal SUBJECT: Interdepartmental Charges There are three types of interdepartmental charges: I. County Indirect Costs. Ii. Internal Service Department (ISD) Charges: a. Data Processing and Central Microfilm. b. Others. III. Non-ISD Charges. I. County Indirect Costs The Countywide Cost Allocation Plan represents unbilled costs of general support provided for each operating department. These figures are developed annually by the Cost Accounting staff of the County Auditor-Controller on the basis of time studies or other standard accounting techniques and must receive annual State/Federal A-87 approval. The countywide overhead represented by these figures should be included in all proposals, budgets and claims for which outside funding is sought and/or obtained. Assistance in prorating a department's countywide indirect costs to a particular program may be obtained by calling the Cost Accounting staff of the Office of the County Auditor- Controller at 6-2895. II. Internal Service Department (ISD) Charges Internal Service Department (ISD) Charges are made on a full cost basis for services rendered by an organization whose primary purpose is to provide service to other county departments. The County budgeting procedures for Data Processing and Central Microfilm are different from those for other ISD services. Both are explained below. Data Processing and Central Microfilm The County Data Processing and Central Microfilm functions are intended to be self-supporting. User departments are to budget funds to cover all anticipated charges in Accounts No. 2315 - Data Processing Service, No. 2316 - Data Processing Supplies, and No. 2329 - Microfilm Services as appropriate. The estimated amount of these http://intranet.co.contra-costa.ca.us/builetins/213inter.txt 06/16/2000 rage z of .i .4 charges is determined by Office Services based on the service level requested by the user department for the coming year. Departments are encouraged to have a written understanding with Office Services regarding the service level to be provided for that specified cost. A schedule of such costs listed by budget unit is to be provided by Office Services to the departments and the County Auditor-Controller during the annual budget preparation process. From then on, these amounts will be encumbered and changes to those accounts may not be made during the fiscal year, except with the written approval of the Office Services Director or County Administrator as explained below. Once charge estimates are determined in this manner, the user department will not be affected by the extent to which actual charges vary from the cost estimates for agreed upon annual service levels. Instead, appropriations for these accounts will be adjusted centrally on a countywide* basis to reflect the level of actual charges throughout the fiscal year. If a user department later that year wishes to increase services, an internal adjustment to fund the increased charges must be made from within the budget(s) for which that department head is responsible. If a user department later that year makes a decision to decrease future services, the encumbered amount in the No. 2315, No. 2316, and No. 2329 accounts may be reduced by the amount of decreased future charges as follows: 1. For amounts up to $10,000 the encumbrance will be reduced by the entire amount of reduced charges. 2. For amounts over $10,000 any encumbrance reduction will require the County Administrator's approval. * Exempt from this adjustment procedure are departments, districts and agencies not financed by general County revenues, including the County Library, Private Industry Council, Retirement Administration, Airport Enterprise Fund, Fire Districts, other special districts and non- County agencies. Other ISD Charges Charges to user departments are made by other County functions which are intended to be self-supporting, including (but not limited to) the following: Building Maintenance Central Service Motor Pool Building Maintenance charges are included with rent, utilities and other related costs in Accounts No. 2261 -- Occupancy Costs-Rented Building, and in No. 2262 -- Occupancy Costs- County-owned Building. An estimate of annual costs is to be provided by Building Maintenance to operating departments during the budget preparation process. Departments are encouraged to have a written understanding with Building Maintenance regarding the service level to be provided for the specified cost level. These accounts are not encumbered for central adjustments like the Data Processing and Microfilm http://intranet.co.contra-costa.mus/buIL-this/213inter.txt 06/16/2000 Page J of 3 accounts are. For the remaining ISD services, charges are incurred as the services are used and the accounts are not encumbered for central adjustments. III. Non-ISD Charges There are other interdepartmental charges which occur when service is provided to another County department but where such interdepartmental service is incidental to the main mission of the providing department. Examples of these charges include: 1. The cost of meals provided by the Probation Department at Juvenile Hall for the Social Service Department at the Children's Receiving Center. 2. The cost of medical treatment provided by Health Services at the hospital for the Sheriff's inmates. Interdepartmental charges of this type henceforth require prior approval in concept from the County Administrator, and prior written notice to the department being charged. Prior written notice to the department being charged is also required where one department requisitions services or materials to be charged to another department. El The amount of these charges is determined by written agreement between the affected departments. Orig. Dept. : County Administrator Isl M. G. Wingett County AdministratorD http://intranet-co-contra-costa.ca.ustbullefins/213inter.txt 06/16/2000