MARCH 29 APRIL 2, 2015 SAN DIEGO, CA

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1 MARCH 29 APRIL 2, 2015 SAN DIEGO, CA Everything You Always Wanted to Ask Your Attorney Lisa R. Allred, Esq., Martin A. Hom, Esq., Carolyn L. Gemma, Esq. Disclaimer: These materials have been prepared by the CASBO Purchasing Professional Council.They have not been reviewed by State CASBO for approval so, therefore, are not an official statement of CASBO.

2 Foundation The Heart of Public Contracting California Public Contract Code 100 Protect the public from misuse of public funds Provide all qualified builders a fair opportunity to compete Stimulate competition in a fiscally sound manner Eliminate favoritism, fraud, and corruption 1 Award of Contract Public Contract Code section lowest, responsive, responsible bidder over the threshold amounts Public Contract Code section (design-build) award factors set forth in solicitation Education Code section (lease-leaseback) no bids required Government Code section (special services) no bids required 2 1

3 Responsive Bidder Responsive bidder a bid is responsive if it promises to do what the bidding instructions set forth. ( Taylor Bus Service, Inc. v. San Diego Board of Education (1987) 195 Cal.App.3d 1331, 1341.) Look at the face of the documents or four corners No outside investigation or information necessary 3 Responsible Bidder Responsible bidder a bidder who has demonstrated the attribute of trustworthiness, as well as quantity, fitness, capacity, and experience to satisfactorily perform the public works contract. Public Contract Code section Usually involves outside investigation or information Non-responsibility hearing required 4 2

4 Bid Protests Procedures - set forth in Instructions to Bidders Set time limit for submittal of bid protests (i.e. 5 calendar days within date of bid opening. Specify format (i.e. must be in writing, timely submitted, and contain all facts that form the basis for the bid protest) Specify content (i.e. must state in detail the facts for the grounds of the protest, and include all supporting documentation) State that failure to comply with protest procedures will result in rejection and waiver of right to further protest 5 What documents will your attorney be asking for in a Bid Protest? Bid protest letter Bid Documents (i.e. Instruction to Bidders, General Conditions, Supplementary Conditions, Specifications) Bids Packets Any correspondence that has circulated (i.e. response to bid protest from other bidders) Date of the board meeting 6 3

5 Subcontractor Designations Bid Protest Grounds: Specifications require that the party installing the work must have specific specialty license or specified level of experience and low bidder did not designate a subcontractor and low bidder does not meet that qualification Contractor Response: Low bidder will purchase the equipment and subcontract out the installation to a qualified subcontractor. The cost of installation is less than ½ of 1% of the bid so subcontractor designation not required 7 Factory Authorized Installers Bid Protest: Specifications require that bidder have a factory authorized installer on staff to install the specified system, but designated a subcontractor to perform the work Contractor Response: Low bidder will place the subcontractor s factory authorized installer on its payroll for the project to meet the requirements of the specifications 8 4

6 Low Bidder Cannot Meet the Self Performance Requirements Bid Protest: Low bidder has designated subcontractors for all of the major categories of work and cannot meet the self-performance requirements in the specifications (i.e. general contractor must self-perform 25% of the overall work) Contractor Response: Low bidder provides a spreadsheet of the various scopes of work and identifies what work will be self-performed which is usually just a fraction of a percentage above the self-perform level 9 Subcontractor Licensing Bid Protest: Specifications require that each subcontractor possess the appropriate license for the subcontracted scope of work. One of the specialty subcontractors only has a Class B license and the General Contractor is not qualified to self-perform the work. Contractor Response: General Contractor will subcontract more than one scope of work to this subcontractor so that it is allowed to take the work with a Class B license since it involves more than two unrelated trades. 10 5

7 General Contractor Also Submitted a Subcontractor Bid on the Bid Package Bid Protest: Specifications state that a general contractor cannot submit a subcontract bid on the same bid package to another general contractor. If they do, the general contractor bid will be rejected. Contractor Response: Prime contractor was unaware that the other contractor designated them as subcontractor. 11 Low Bidder Failed to Designate Any DVBE Subcontractors Bid Protest: Bid documents required a 3% goal for DVBE subcontractors. Low bidder is not a DVBE contractor and did not designate any DVBE subcontractors. Contractor Response: Low bidder will purchase fuel from a DVBE supplier. Vendors and suppliers are not required to be designated as subcontractor. 12 6

8 Bid Protests - Examples Bid Protest low bidder failed to sign the bid form in the proper location, but did sign the bid bond, non-collusion affidavit, and other attachments. Should the bidder be deemed non-responsive? No. In Menefee v. County of Fresno (1985) 163 Cal.App.3d 1175, the court found that the low bidder s failure to sign the bid on the appropriate line of the proposal sheet did not invalidate the bid because the bid was signed in other places. 13 Bid Protest - Examples Bid Protest instructions to bidders required that the bidder self perform at least 50% of the work on the project. Second low bidder files a bid protest on the grounds that the apparent low bidder is subcontracting 83% of the work and only self performing 17%. Low bidder revised its percentage to 44.65% based on actual subcontractor amounts instead of estimates and was awarded the contract on the grounds that any irregularity was waived. Was this a proper irregularity to waive? No. Low bidder received unfair competitive advantage because it could have withdrawn its bid without penalty. (Valley Crest Landscape v. City Council City of Davis (1996) 41 Cal.App.4 th 1432) 14 7

9 Bid Protest - Examples Bid Protest instruction to bidders on a road construction project limited subcontracting to 50% of the total bid. Low bidder exceeded the 50% limit by 5.5%. The bid irregularity was waived and the low bidder was awarded the contract. Was this a proper wavier of a bid irregularity? Yes. In Ghilotti Construction v. City of Richmond (1996) 45 Cal.App.4 th 897, the court found the waiver was appropriate because the bid protest never argued that the low bidder received a competitive advantage, and there was no evidence that the 5.5% increased the low bidders price. 15 Bid Protest - Example Bid Protest the low bidder has listed a subcontractor who is not licensed by the California State Contractor s Licensing Board at the time the bid was submitted to the public entity. Should the bidder be deemed nonresponsive? No. In D.H. Williams Construction v. Clovis USD (2007) 146 Cal.App.4 th 757, the court held that a subcontractor needs to be properly licensed by the California State Contractor s Licensing Board at the time it enters into the subcontract with the prime and does not render a prime contractor s bid non-responsive. 16 8

10 Bid Protest Example Bid Protest the instructions to bidder required that each bidder identify each license it has operated under. The low bidder only listed one license and state that it has never operated under a different license. The low bidder stated that the other license was a joint venture license that was never used. The public entity deemed the bidder as nonresponsive. Was the failure to list another license grounds to be deemed non-responsive? No. In Great West Contractors v. Irvine USD (2010) 17 Cal.App.4 th 757, the court held that the rejection of the bid was on the responsibility grounds not responsiveness and that the low bidder should have been provided a responsibility hearing. 17 NEW LEGISLATION SB 854 DIR Registration AB 1581 LLB Prequalification AB 1937 pipeline notification 9

11 SB DIR Registration All contractors and subcontractors must be properly registered and qualified with DIR in order to: Bid on a public works project Be listed in a bid proposal for a public work Engage in the performance of any contract for a public work Contractors were able to register with DIR starting July 1, SB DIR Registration DIR will post a list of registered contractors and subcontractors on its website Requirements apply to any bid proposal submitted on or after March 1, 2015 Requirements apply to any contract awarded and entered into on or after April 1,

12 Implementing SB 854 Requirements APPLIES TO ALL PUBLIC WORKS PROJECTS Type: new construction, modernization, maintenance, repair projects Delivery: design-bid-build; design-build; multiple-prime; lease-leaseback; CUPCCA; Gov. Code section 4217 Funding: state bond, local bond, general funds, Prop Implementing SB 854 Requirements KEY DATES July 1, 2014 Contractor registration begins No CMU DLSE enforcement Jan. 1, 2015 Bid documents specify DLSE monitoring and enforcement 22 11

13 Implementing SB 854 Requirements KEY DATES (cont d.) March 1, 2015 List only registered contractors Cannot accept bid from unregistered contractor April 1, 2015 Award contracts to registered contractors only CPR s to Labor Commissioner 23 AB 1581 LLB Prequalification Effective January 1, 2015, prequalification of bidders under Public Contract Code applies to lease leaseback agreements (Ed. Code and 17407) Sunsets on January 1,

14 AB1581 LLB Prequalification Public projects greater than $1,000,000, using current or future state bond funds Projects awarded after January 1, 2015 Uniform system of rating bidders on basis of completed questionnaires and financial statements Prime contractor must be prequalified MEP subcontractors must be prequalified (C-4, C-7, C-10, C-20, C-34, C-36, C-38, C-42, C-43, and C-46) 25 AB1937 Natural Gas Pipeline Safety Act Requires gas corporation to provide 3 working days notice to the District when undertaking nonemergency excavation or construction of gas pipeline within 500 feet of a school site. Notice includes Emergency contact information for gas corporation Specific location of work Date and time of work and completion date Telephone number for more information and what school should do in case of a leak 26 13

15 Technology Procurement Statutes Contracts: Schools: Ed. Code section et seq. Colleges: Ed. Code section et seq. Duration: Services, apparatus or equipment (5 years) Materials or supplies (3 years) Schools: Ed. Code section Colleges: Ed. Code section Technology Procurement Statutes General Bidding: Schools PCC et seq. PCC Bid Limits $86,000 for 2015 Community Colleges PCC et seq. PCC Bid Limits $86,000 for

16 Technology Procurement Statutes EDP and Software Procurement Schools PCC EDP - one of three lowest bids PCC Procurement of Electronic Equipment By RFP Colleges Ed. Code section one of three lowest competitive bids or proposals No corresponding statute in PCC for community colleges (see PCC Community College Bid Evaluation) 29 Technology Procurement Statutes EDP and Software Request for Proposals PCC Procurement of Electronic Equipment through Competitive Negotiation Authorizes selection criteria other than price such as: vendor financing, performance reliability, standardization, life-cycle costs, delivery timetables, support logistics, fitness of purchase, manufacturer s warranties, and similar factors Applies to procurement of computers, software, telecommunications equipment, microwave equipment, and other related electronic equipment and apparatus Requires Board finding in advance of procurement that procurement qualifies 30 15

17 Technology Procurement Statutes EDP and Software Request for Proposals (continued) PCC (d) Competitive Negotiation includes: (1) RFP submitted to adequate number of qualified sources (2) Publish notice in newspaper at least twice and at least 10 days before receipt of proposals (3) Make effort to generate the maximum feasible proposals (4) RFP identifies all significant evaluation factors, including price, and their relative importance (5) Provide reasonable procedures for technical evaluation of proposals (6) Award made to the qualified proposal that meets requirements and will be most advantageous to District (7) If award is not made to lowest price, District must make a finding setting forth the basis for the award 31 Negotiating Technology Agreements Define the data and function your technology contract will cover Locate applicable institutional policies and applicable law District remains liable for its data 32 16

18 Negotiating Technology Agreements Typical Issues in Technology Agreements Ownership of Data Return of Data Upon Termination Limitation of Liability Disclaimer of Warranty 33 Negotiating Technology Agreements Typical Issues in Technology Agreements (cont d.) Incorporation of other online documents by reference Vendor s ability to change terms of use without your consent Indemnity Overreaching confidentiality clauses 34 17

19 Negotiating Technology Agreements Typical Issues in Technology Agreements (cont d.) Public Records Act Responses Procedure Subpoena Response Procedures E-Discovery Responses Procedures Intellectual Property Infringement and Indemnity 35 Negotiating Technology Agreements Typical Issues in Technology Agreements (cont d.) Insurance Requirement Cyber Liability Security Data backup and Archiving Governing Law and Venue Termination Implementation Procedures Including Return of District Data 36 18

20 Lease-Purchase Transactions Lease Purchase of Technology Equipment Schools Ed. Code section et seq. Equipment or service systems defined in the California School Accounting Manual Lease Purchase of Software Software Definition: CSAM Object Code section 6400 Equipment: Included as equipment for initial acquisition so long as value exceeds the District's capitalization threshold Need to know the District s capitalization threshold to determine whether software can be acquired through a lease-purchase arrangement 37 Lease-Purchase Transactions Lease Purchase of Technology Equipment Colleges Ed. Code section Data processing and other major equipment systems Requires finding of Board by Resolution that leasing the equipment is most economical means for providing the equipment to the District 38 19

21 Exceptions to Bidding: Piggyback Contracts Piggybacking : a procedure of procuring materials, supplies, or equipment by utilizing another public entity s competitive procurement and contract Authority: - PCC (K-12) - PCC (CC) 39 Exceptions to Bidding: Piggyback Contracts 1. Choose a contract to piggybacking on. A contract awarded by another public agency California Multiple Award Schedule ( CMAS ) awarded by California Department of General Services Out of State Purchasing Cooperatives 40 20

22 Exceptions to Bidding: Piggyback Contracts 2. Obtain a copy of: Advertisement for Bid Invitation to Bid Awarded Contract 41 Exceptions to Bidding: Piggyback Contracts 3. Verify that you can piggyback on the contract Original bid by the awarding agency must contain a piggyback clause The awarding agency and the vendor must both agree that another public agency can piggyback on contract 42 21

23 Exceptions to Bidding: Piggyback Contracts 4. Verify the following information: The bid has current term check expiration date and possible contract renewals The terms and conditions of awarded contract meet District s needs/requirement Items you are purchasing are the same items stated in awarded contract Items you are purchasing are at the same or lower price as those stated in the awarded contract Piggybacking on this contract is in the best interest of District 43 Exceptions to Bidding: Piggyback Contracts 5. Obtain Board Approval Once information verified, must have board make a finding that the use of the piggyback contract is in the District s best interest The Board must approve the transaction pursuant to the terms and conditions stated in the awarded contract that you are piggybacking on This should be done by resolution so the required findings and board authorization are clearly documented 44 22

24 Public Projects Bid Threshold Requirements Public projects must be awarded to the lowest, responsible bidder if the contract exceeds $15,000. (PCC 20111(b)) Public project is the construction, reconstruction, erection, alteration, renovation, improvement, demolition, and repair work involving any publicly owned, leased, or operated facility. (PCC 22002(c)) Public projects do not include routine maintenance of facilities. (PCC 20111(a)) 45 Thank You For questions or comments, please contact: Lisa R. Allred, Esq. Carolyn L. Gemma, Esq. (916) Martin A. Hom, Esq. (858)

25 Sacramento Office 2485 Natomas Park Drive Suite 240 Sacramento, California (916) Phone (916) Fax LISA R. ALLRED Partner Education Law Construction - School Facilities Experience Lisa R. Allred is a partner in the Sacramento office of Atkinson, Andelson, Loya, Ruud & Romo. Ms. Allred represents school districts, colleges and universities in education law, including business, real estate, personnel, public works, technology and intellectual property. Prior to joining the firm, Ms. Allred was an Assistant Attorney General for the State of Washington at the Washington State University Division where she practiced all aspects of higher education law. Ms. Allred has lectured extensively at school and college associations on various education law topics. Prior to attending law school, Ms. Allred pursued a career in business serving as a business manager for a private school run by Lehigh University, procurement officer for New Mexico Highlands University, contracts representative for Sandia National Laboratories, and a market research manager for ABQ Bank. Education Ms. Allred earned her Bachelor of Business Administration and Master of Business Administration degrees from the University of New Mexico and her Juris Doctor degree from the University of Idaho. While in law school, Ms. Allred was the overall winner of the Moot Court competition and published an article on First Amendment rights on the Internet in the Journal of College and University Law. Admission 1998, Washington; 2001, California Memberships Ms. Allred is a member of the California State Bar and is admitted to practice before all the California state courts. Ms. Allred is also a member of the Washington state courts and in the federal courts in both the Eastern and Western Districts of Washington. Publications May A Public University Restrict Faculty Expression On its Internet Worldwide Web Sites? Academic Freedom and University Facility Use Restrictions. Journal of College and University Law, 24 J.C. & U.L. 325 (1997) New Regulations Adopted By The State Allocations Board And The California Department Of Education Re: Implementation Of Williams v. State Facilities Legislation. Court of Appeal Decision Puts General Fund Accounts at Risk for Contribution to Financial Hardship Projects American Recovery and Reinvestment Act - We are Required to Report What?! In-State Tuition For Undocumented Students Is Under Attack, But Still In Effect State Allocation Board Approves Amendments to the Joint-Use Program Regulations C e r r i t o s F r e s n o I r v i n e P a s a d e n a P l e a s a n t o n R i v e r s i d e S a c r a m e n t o S a n D i e g o

26 Sacramento Office 2485 Natomas Park Drive Suite 240 Sacramento, California (916) Phone (916) Fax CAROLYN L. GEMMA Associate Education Law Employment law Experience Carolyn Gemma is an associate in the Sacramento office of Atkinson, Andelson, Loya, Ruud & Romo. Ms. Gemma represents school districts and county offices of education on employee discipline and dismissal matters; layoffs; leave issues; reasonable accommodation issues; student issues; release of public records; and related litigation. She also represents school districts, county offices of education and private employers on labor and employment matters including claims for age, gender, religious and pregnancy discrimination; harassment; wrongful termination and retaliation. She has represented clients before state courts and administrative bodies. While in law school, Ms. Gemma was a judicial extern for the Honorable John A. Mendez, U.S. District Court, where she researched and analyzed a variety of legal issues. From , she was a Staff Writer for the McGeorge Law Review. Education Ms. Gemma graduated cum laude with her B.A. in political science from the University of San Diego, and earned her J.D. from the University of the Pacific, McGeorge School of Law. Admissions 2011, California United States District Court, Eastern District and Northern District Memberships State Bar of California Publications and Speaking Engagements Ms. Gemma has authored the following articles: A Little Goes a Long Way: Chapter 3 Provides Small but Significant Changes to Alternative Workweek Schedule Laws, 41 McGeorge L. Rev. 675 (2010) Quality Representation of Parents Improves Outcomes for Families, CHILD COURT WORKS (Newsletter of the ABA Sec. Juv. Law) 6 (Spring 2003) Ms. Gemma is a contributor to the firm s publications. C e r r i t o s F r e s n o I r v i n e P a s a d e n a P l e a s a n t o n R i v e r s i d e S a c r a m e n t o S a n D i e g o

27 San Diego Office West Bernardo Drive (858) Phone Suite 330 (858) Fax San Diego, California MARTIN A. HOM Senior Partner Education Law Construction - School/Facilities Experience Martin Hom is a senior partner in the San Diego office of Atkinson, Andelson, Loya, Ruud & Romo. Mr. Hom has litigation and trial experience in a broad range of contract interpretation issues and disputes, such as delay and inefficiencies, acceleration, differing site conditions, changes, terminations for default, extended performance and home office overhead issues (i.e., Eichleay damages), and various close-out issues. In addition to trial experience, Mr. Hom also has experience in the use of various forms of alternative dispute resolution. Also, he represents California school districts, community college districts, and special districts in employment law, administrative law, and labor relations. Before joining Atkinson, Andelson, Loya, Ruud & Romo, Mr. Hom was a Senior Assistant General Counsel for the U.S. General Services Administration (GSA) in Washington, DC. He began his career with GSA as a trial attorney and was ultimately promoted to a supervisory position in which he oversaw a group of 10 trial attorneys who litigated GSA s real property contract claims. In addition to supervising the real property litigation group, Mr. Hom also carried his own caseload. In one case, he was the government counsel for the design and construction of the Ronald Reagan Building and International Trade Center in Washington, DC, which was a 3.1 million square foot multi-use project and had an overall budget of $738,000,000. Education Mr. Hom received his Juris Doctor degree from California Western School of Law and his Bachelors of Art from the University of California at Santa Barbara. Admissions 1991, California; 1993, District of Columbia; 1997, Maryland Memberships San Diego County Bar Association; State Bar of California Publications and Speaking Engagements Mr. Hom is a contributor to the firm s publications. Published Opinions City of Cerritos, et al. v. Cerritos Taxpayers Association, et al., 183 Cal.App.4 th 1417 (2010) Kimbrell v. Fischer, 15 F.3d 175 (Fed. Cir. 1994) LaSalle Partners v. United States, 48 Fed.Cl. 797 (2001) Darwin Construction Co. v. United States, 31 Fed.Cl. 453 (1994) C e r r i t o s F r e s n o I r v i n e P a s a d e n a P l e a s a n t o n R i v e r s i d e S a c r a m e n t o S a n D i e g o