Bidding and the California Uniform Public Construction Cost Accounting Act (CUPCCAA ) Everything You Need to Know
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1 Bidding and the California Uniform Public Construction Cost Accounting Act (CUPCCAA ) Everything You Need to Know June 24, 2014 Sacramento, CA June 27, 2014 Ontario, CA Guiselle Carreon Commissioner, California Uniform Construction Cost Accounting Commission Commercial Warrants and Accounts Payable Manager, San Diego County Office of Education Phil Henderson Orbach Huff Suarez & Henderson LLP California School District Procurement Generally Bid Limits. California school districts must formally and publicly bid contracts for construction projects over $15,000, unless there is an exception. (Public Contract Code ( PCC ) 20111) CUPCCAA Exception. Exception to this general rule for school districts and other local agencies that elect to be subject to the California Uniform Public Construction Cost Accounting Act ( CUPCCAA or the Act ). (PCC ) 1
2 What is CUPCCAA? Enacted in 1983 under Public Contract Code section et seq. Allows local agencies to perform public project work of up to $45,000 with their own workforces (Force Account) if the agencies elect to follow the cost accounting procedures set forth in the Cost Accounting Policies and Procedures Manual of the California Uniform Construction Cost Accounting Commission Public projects of $45,000 or less may be performed by negotiated contract, or by purchase order. Public projects between $45,000 and $175,000 may be let to contract by informal procedures as set forth in the Act. Public projects of more than $175,000 shall, except as otherwise provided in the Act, be let to contract by formal bidding procedure. What is Force Account? Force Account refers to work performed on public projects using internal resources, including but not limited to labor, equipment, materials, supplies, and subcontracts of the public agency. Project costs for force account work include the following: Direct Costs: Labor including all benefit costs Equipment charged on an hourly rate including depreciation, insurance, maint./repair, fuel and oil, tires and grease, etc. Cost of materials and supplies with a total unit value of $25 or more including discounts, tax, and shipping. Indirect Costs: Other labor including inspection, clerical, and supervision. Other expenses including utilities, telephone, temporary fencing, etc. Overhead Costs: Either the agency s actual calculated overhead rate or 30% of direct costs. 2
3 CUPCCAA Contracts Are Still Public Works Contracts Contractor Must Pay Prevailing Wages. (Ed. Code 17424) Payment Bond Required Civil Code 3247: Every original contractor to whom is awarded a contract by a public entity... in excess... of $25,000 for any public work shall file a payment bond. Get a performance bond too. Fingerprinting. (Ed. Code 45125, et seq.) Field Act Compliance Required. Construction is subject to all State approvals, as set forth in Education Code sections through (Ed. Code 17421) Change Orders. Change orders are only permitted to a maximum contract total of $45,000. Note: Any non emergency work done by force account in excess of $45,000 is a violation of the Act. Implementation of CUPCCAA Governing Board approves resolution to become subject to CUPCCAA procedures. District files resolution with Controller. Entire District becomes subject to the Act. Board enacts informal bidding regulations under PCC establishing list of contractors to be notified of potential projects and procedures for informal bidding. 3
4 Establishing and Maintaining List of Registered Contractors Each November, District mails written notice to designated trade journals, inviting all licensed contractors to submit firm names and required information for inclusion on qualified bidders list for following calendar year. District can elect to start the program prior to November and must then re invite contractors in November. District creates updated contractors list next Jan. 1. May include any contractors names it desires. Must include contractors providing required information during calendar year or prior Nov. or Dec. Contractor may have firm added to list by providing required information at any time. Commission recommends inclusion of all contractors who submitted one or more valid bids during preceding year. Procedures for Informal Bidding Procedures for informal bidding: District maintains list of registered contractors, identified by work category; District mails notice inviting bids at least 10 days before bids due to: All contractors on list for category of work; or Specified trade journals; or Both. Notice should describe project in general terms with information for how to obtain detailed information and time and place for submission of bids. Will often include site walk, where appropriate. 4
5 Procedures for Informal Bidding, Cont d. Notice need not include drawings, plans, etc., unless required for preparing bid. Governing Board may delegate authority to award informal contracts to specific staff members (e.g., to Superintendent). If all bids received exceed $175,000, Governing Board may pass four fifths resolution awarding contract at $187,500 or less to lowest responsible bidder if it determines District s cost estimate was reasonable. Procedures for Formal Bidding Public projects of more than $175,000 shall be let to contract by formal bidding procedures, including: Detailed architectural plans, voluminous bid and contract documents, Newspaper advertising for 14 days before bid opening; Notice in trade journals 15 days before bid opening; Other more detailed steps and processes. 5
6 Emergency Contracts In cases of emergency when repair or replacements are necessary, the governing board may proceed at once to replace or repair any public facility without adopting plans, specifications, strain sheets, or working details, or giving notice for bids to let contracts. The work may be done by day labor under the direction of the governing board, by contractor, or by a combination of the two. By a four fifths vote of the governing board, may repair or replace a public facility, take any directly related and immediate action required by that emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids to let contracts. By a four fifths vote of the governing board, the authority to enter emergency contracts may be delegated as long as the designee takes the action to the governing board within 7 days or at its next regularly scheduled meeting which shall be no more than 14 days after the action was taken. The designee must report at each following meeting until the action is terminated (contract completed). Code is in conflict with boards that meet on a monthly basis. LLB and PQ and CUPCCAA Lease Leaseback: The Commission has not made any finding and remains neutral. As a result, at the present time, school district may continue to use the LLB option for school construction projects without being in violation of the Act. Prequalification: Prequalification statutes are not contrary to the Act and all CUPCCAA school districts are subject to applicable prequalification statutes. 6
7 Accounting Procedures Under CUPCCAA Detailed accounting procedures for staff time, materials, supplies, etc., must be followed. This component is not covered in this presentation. The Commission has determined that compliance with the Standard Accounting Code Structure meets the requirements of the Act. The Commission feels that all cost elements personnel, materials, supplies and subcontracts, equipment and overhead associated with a project must be recorded and reported at the project level. Using the Standard Accounting Code Structure to Track Projects The tracking of projects completed by Force Account is much less daunting than it appears. Since SACS allows districts to account by fund, resource, program, and object code; tracking can be done by the use of standard accounting practices. For example by using the Resource, Program, or other portion of SACS, project tracking can be done within the financial system: Labor: Fund Sub Fd Resource Goal Function Object Loc. Prog. Resp. Proj. Yr XXXX XXX Equipment: Fund Sub Fd Resource Goal Function Object Loc. Prog. Resp. Proj. Yr XXXX XXX Materials & Supplies: Fund Sub Fd Resource Goal Function Object Loc. Prog. Resp. Proj. Yr XXXX XXX
8 The Entire District Would be Subject to CUPCCAA The entire District would be subject to CUPCCAA, including repairs and maintenance. Therefore, the District would be required to informally bid for repairs and maintenance within the "donut hole" from $45,001 to $84,100 (the current bid limit for repairs and maintenance) Many Districts opt to exclude repairs and maintenance in its CUPCCAA resolution. If the District excludes repairs and maintenance, the bid limit for formal contracts for repairs and maintenance would remain at $84,100 for school districts rather than $175,000. (PCC ) Repairs and Maintenance If the construction activity is a repair to or maintenance on an existing facility, then the project is subject to the 2014 repair bid limit of $84,100. In other words, the $84,100 bid limit applies to, Repairs, including maintenance as defined in Section 20115, that are not a public project as defined in subdivision (c) of Section (PCC 20111(a)(3) But what is the statutory meanings of repair and maintenance? 8
9 What is a Public Project? Public Project per PCC 22002(c) These are not Repairs or Maintenance (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. What is Maintenance? Maintenance (per PCC 22002(d)) (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. 9
10 What is a Repair? Cases Interpreting What is a Repair The word repair in its ordinary sense relates to the preservation of property in its original condition, and does not carry the connotation that a new thing should be made or a distinct entity created. (2) Minor repainting. (Whalen v. Ruiz (1953) 40 Cal.2d 294, , 253 P.2d 457.) To repair means to mend an old thing, not to make a new thing; to restore to a sound state something which has become partially dilapidated, not to create something which has no existence. ( Id., 40 Cal.2d at p. 300, 253 P.2d 457.) Repairs & Maintenance: Factors to Consider What could be recurring projects that preserve or protect school facilities in the District is a factual determination. Some factors to Consider: The facility needs to be currently in existence. The work needs to be routine, recurring, and usual. The need for the work must be based on keeping the facility in functioning and useful order or to preserve it for future use. 10
11 Purchase of Materials Under CUPCCAA Can Informal Bidding Procedures Be Used For Purchase of Materials? Only if materials are consumed on a public contract subject to and defined by the policies and procedures manual. Proposed Updates / Proposed Legislative Changes Adding language to allow for notification using electronic technology. Adding funding language (Section 22015) Changing language to make maintaining of a registered contractors list optional (Section 22034) Changing language regarding approval of plans and specifications to allow for DSA approval for school districts in lieu of governing board approval (Section 22039) Removing the requirement to present a report before the governing agency every 14 days and replacing with next regularly scheduled meeting (Section 22050) 11
12 Proposed Updates / Proposed Manual Changes Conforming the notification requirements with the Public Contract Code where they conflict. Replacing the estimating form with a user friendly form. Allowing for the use of Cal Trans Equipment Rental Rates instead of costing out hourly value of equipment. Allowing use of a straight overhead or calculated indirect costs. Correcting various typographical or reference errors. Bidding and the California Uniform Public Construction Cost Accounting Act (CUPCCAA ) Everything You Need to Know Guiselle Carreon guiselle.carreon@sdcoe.net Thank You Phil Henderson phenderson@ohshlaw.com
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