Pre-qualification in The Original Law PCC Still Valid
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1 Pre-qualification in 2014 Phil Henderson, Orbach Huff Suarez & Henderson, LLP Mayra Gonzalez, Santa Ana Unified School District Layne Arthur, Balfour Beatty Construction The Original Law PCC Still Valid Voluntary: (a).. District may require each prospective bidder submit a standardized questionnaire and financial statement which shall not be public records. Uniform: (b) uniform system of rating bidders on the basis of the completed questionnaires and financial statements Five Days: (d) Bids can only be accepted from entity that has submitted its prequalification form at least five days prior to the date fixed for the public opening of sealed bids and has been prequalified for at least one day prior to that date. Quarterly Process: (e) District may prequalify prospective bidders on a quarterly basis and may be considered valid for up to one calendar year 1
2 The New Law PCC per AB 1565 Some Basics on the New Law: Mandatory: (b).. District shall require each prospective bidder submit a standardized questionnaire and financial statement [ Prequal Forms] must be verified under oath and shall not be public records. $1m State-Funded Projects: (a) Public projects, using state funds that involves a projected expenditure $1,000,000 or more After Jan. 1, 2014: (m) This section shall apply to contracts awarded on or after January 1, >2,500 ADA: (l) Not apply to district with an [ADA] of less than 2,500. The New Law PCC per AB 1565 More on the New Law (Emphases added): Uniform: (c) uniform system of rating bidders on the basis of the completed [Prequal Forms] Ten Days: (f) [Bids can only be accepted from entity that has submitted its Prequal Forms at least ten business days prior to the date fixed for the public opening of sealed bids and has been prequalified for at least five business days prior to that date. Quarterly or Annual Process: (g) District may prequalify prospective bidders on a quarterly or annual basis and may be considered valid for up to one calendar year 2
3 The New Law PCC per AB 1565 More on the New Law: DIR form s Issues: (d) The [Prequal Forms] and the uniform system shall cover, at a minimum, the issues covered by the standardized questionnaire and model guidelines developed by the Department of Industrial Relations... DIR Report in 2018: (n) DIR shall report on evaluation of violations of the Labor Code pre and post enactment on or before January 1, 2018] Sunset: (o) inoperative on January 1, 2019, and, as of July 1, 2019, is repealed. The New Law PCC per AB 1565 Subcontractors Under the New Law: OK to Prequal/Disqual Subs: (h) This section shall not preclude the governing board of the district from prequalifying or disqualifying a subcontractor. GC and MEP Subs: (i) bidders shall include the general contractor and, if utilized, all electrical, mechanical, and plumbing [ [MEP] ] subcontractors. Prequal List: (j) If project includes [MEP] components that will be performed by [MEP] contractors, a list of prequalified general contractors and [MEP] subcontractors shall be made available by the district to all bidders at least five business days prior to opening of sealed bids. MEP Defined: (k) MEP subcontractors are subcontractors holding the following license classifications: C-4, C-7, C-10, C-16, C-20, C-34, C-36, C-38, C-42, C-43, and/or C-46. 3
4 New Legislation AB 1581 Prequalification will Expressly Apply to Lease Leaseback Contracts: [The LLB Contract] shall also require that a person, firm, or corporation that constructs the building, including, but not limited to, the prime contractor and, if used, electrical, mechanical, and plumbing subcontractor, shall be subject to the same prequalification requirements for prospective bidders described in Section of the Public Contract Code More Than 10 Days; More than 5 Days: The district may require the completed questionnaire and financial statement for prequalification to be submitted more than 10 business days prior to the fixed date for the public opening of sealed bids. The district may also require the prequalification more than five business days prior to the fixed date. New Legislation AB 1581, cont d. Multiple Prime Contracts: Clarifies that only MEPs, either as subcontractors or prime contractors under a multipleprime structure, are the only contractors that need to be prequalified in addition to the District s general contractor. 4
5 Some Ground Rules: Topics / Issues to Consider What Do You Want to Do? Do you want to comply with the minimum new mandatory statutory requirements? Or Do you want to utilize prequalification to filter out some contractors that concern you? Either answer is OK! Topics to Remember: The law is vague; there are gray areas. Forms need to be made specific to your District. This was promoted by trade unions. That s not good or bad, but it is important to understand the motivation behind the law. 5
6 Board Approval & Delegation of Authority Board Approval: Required: PCC states seven (7) times that a District s board takes the actions related to prequalification. Your Board must approve your prequalification questionnaire, your evaluation form, and your scoring. It would have been recommended anyway. Delegation. Educ. Code states that a Board may delegate to an officer or employee of the district any of [its] powers or duties. If used for prequalification duties, the delegation should be specific. Prequalification History Why? Contractor Knowledge Financial Security Workers Compensation History Performance 6
7 What are we doing in SAUSD? Board Approval- Uniform System of Prequalifying and Rating Bidders for prequalification on District construction projects pursuant to Public Contract Code Section Prequalifying contractors prior to statue Prequalification of Subcontractors Pros & Cons of prequalifying Pros Knowledgeable contractors Reduces substitution request Quality of projects Reduced Claims Competitive bid amounts Deters unscrupulous contractors Reduction of job site conflicts Relationships, Partnerships, Union Trades 7
8 Bidding timeline Workload Disqualification Appeal process Missing documents References Cons Results Collaborative Relationships Reduces Change Orders Projects completed within schedule 8
9 Advertisement & Notice to Contractors: Yes, You Must. PCC does not include requirements for advertising for bids. But PCC states that before securing bids, Districts must advertise the bid by publishing it at least once a week for two weeks in some newspaper of general circulation published in the district. In a prequalification setting, the advertisement is really an advertisement to prequalify to bid on the project(s) that is what is in the newspaper. In other words, once the District has complied with the prequalification requirements, advertising is really only a notification to prequalified contractors. Quarterly or Annual Programs: Program-Wide Prequalification If you are prequalifying quarterly or annually, then you must advertise at the beginning of each quarter or each year. Quarterly prequalification can be utilized. Annual prequalification can drastically limit your contractor pool. If you allow one contractor to prequalify during the quarter or during the year not at the beginning of each quarter or year there can be consequences: You may jeopardize the integrity and defensibility of your prequalification program. You will have to accept all requesting contractors if you accept one. 9
10 Appeal: Establish an Express and Quick Process Any contractor subcontractor or general contractor has the right to appeal the District s determination. Previous Project Experience: Previous K-12 (K-14?) Projects Past Experience How many past projects? How many years back? What minimum dollar amount? DSA is Important K-12 is essential. School Districts often allow Community College projects (K-14)? 10
11 Santa Ana USD s Program: Evaluation of Prequalification Form: Essential Criteria ( Pass/Fail Questions) What is Essential can be Individualized by each District. Pick issues/topics that are important to you, your District, your program, your specific projects and that have caused problems for you in the past. Some items we have scored could be changed to pass/fail. For example: Liquidated damages High EMR 11
12 Evaluation of Prequalification Form: Scored Questions The minimum score can be Individualized by each District. If you score it too strictly, you (in essence) make most of the scored questions pass/fail. If you score it too easily, you will not likely filter out those Contractors that concern you. Remember, What do you want to do? 24 12
13 Evaluation of Prequalification Form: Reference Checks Calling references has historically been part of the prequalification process. Whether to call references must be Determined Before opening prequalification questionnaires. Whatever you do for one contractor, you must do for all contractors. If you decide to check on one contractor and you want to bar that contractor from bidding, you will have to find that contractor nonresponsible. Further Issues for Discussion: Subcontractor Prequalification: MEP or All? As we ve said, PCC states that all electrical, mechanical and plumbing subcontractors must be prequalified. Some Districts prequalify all of its subcontractors. Pro: This can limit some of the Contractors of concern that are subcontractors. Con: This can be very time consuming. Santa Ana USD S Program: 1 st tier subcontractors with subcontracts equal to or greater than $150, must be prequalified with the District and must follow prime contractors instructions for submission. Subcontractor s prequalification packet must be submitted to the District by the date and time indicated herein. 13
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