In a word, yes. Most public agencies are required to award their public works construction projects to the lowest responsive, responsible bidder. Failure to comply with public bidding requirements can result in a legal ruling which can void the contract. However, there are also a variety of alternative project delivery methods (design-build, construction manager at-risk, job order contracting, public-private partnerships, lease lease-back etc.) that are available for select public agencies to use for qualifying projects. The difficulty is that the statutes which authorize these alternative project delivery methods are not organized in any logical fashion. I recently prepared a paper summarizing the main alternative project delivery methods available to public agencies in California, with a chart at the end that provides statutory references. The paper was included with the materials at the Integrated Project Delivery Seminar Series. In addition, the paper was included with the materials at the Lean in Public Sector Construction Projects Workshop and served as the basis for a presentation I gave on the topic. You can view a copy of the paper by clicking here.
The California Department of Industrial Relations recently published an opinion which solidifies the “de minimis” exception to prevailing wage laws for private developers which receive small amounts of public financial support for their projects. In Public Works Case No. 2008-37, the DIR responded to a request for a prevailing wage coverage determination initiated by the developer of a senior care facility in Elk Grove. As an incentive to build the facility, the city offered financial incentives in the form of reduced sewer impact fees (sewer credits) which totaled over $200,000. The DIR concluded that pursuant to Labor Code section 1720(c)(3), this amount was “de minimis” in relation to the overall project cost.
While the recession has led to a drastic slowdown in the construction industry, the horizon looks brighter as the Bay Area preps for a welcome infusion of cash from the federal government. The money comes from the federal stimulus bill, the American Recovery and Reinvestment Act of 2009. During his campaign President Obama emphasized the need for increased infrastructure spending as a means to end the recession, increase public transportation, and improve America’s aging infrastructure. The stimulus bill makes good on his campaign promises, with approximately $50 billion dedicated to core infrastructure spending on bridges, roads, rail, and other transportation projects.
On February 6, 2009, President Obama signed an Executive Order authorizing federal executive agencies to use project labor agreements on federal construction contracts with a total cost of $25 million or more. The Order is effective immediately, and the Federal Acquisition Regulatory Council has been instructed to take “whatever action is required” to implement the Order within 120 days of its issuance. The Order also repeals Executive Order 13202 issued by former President Bush in 2001, which forbade federal agencies and other recipients of federal funding to require contractors to sign union-only project labor agreements as a condition of performing work on federal projects.
The California State & Consumer Services Agency recently released the first draft of a step-by-step guide to help California schools and community colleges cut energy costs through on-site electricity generation and become "grid neutral." The guide is entitled "Grid Neutral: Electrical Independence for California Schools and Community Colleges," and can be viewed here. In fact, the state’s Department of General Services is seeking comments regarding the content of the guide, which can be emailed to this address: Theresa.Townsend@dgs.ca.gov.
A recently published appellate case upholds a 50-year ground lease and related agreements between the Peninsula Health Care District (“District”) and the Mills-Peninsula Health Services (“MPHS”), which will allow the construction of a new hospital that complies with California’s stricter seismic standards. (See Peninsula Guardians, Inc. v. Peninsula Health Care District (2008) 168 Cal.App.4th 75.)
Governor Schwarzenegger recently signed three bills which will expand the ability of cities, transit operators and the Sonoma Valley Health Care District to award projects on a design-build basis. Each of these agencies is generally constrained by public bidding requirements to award construction contracts separately from contracts for professional design services. These agencies will now have a greater ability to take advantage of a useful project delivery alternative for some projects. The three bills are summarized below:
On August 25, 2008, a California appellate court held that compliance with the claims procedures set forth in a public works contract relieves a contractor from the requirement to file a government tort claim prior to filing a lawsuit, unless the contract expressly mandates that a government tort claim also be filed. (Arntz Builders v. City of Berkeley (2008) 166 Cal.App.4th 276.)
A California appellate court recently clarified the requirements for substitution of a subcontractor on a public works project under Public Contract Code sections 4100-4114. (Titan Electric Corp. v. Los Angeles Unified School District (2008), 160 Cal.App.4th 188.) Public Contract Code section 4107 prohibits a contractor on a public works project from substituting a subcontractor unless the public agency consents to the substitution, and one of nine specific statutory circumstances has occurred. Section 4107 also requires the public agency to provide notice to the subcontractor being removed and to conduct a hearing on the substitution if requested by that subcontractor. However, the Titan court upheld the substitution of an electrical subcontractor even though a hearing was not conducted until after a new subcontractor had already been hired and completed the remaining work, concluding that the parties had substantially complied with the statutory requirements.
A new bill authored by Doris Wolk would expand the authority to award projects on a design-build basis to all cities, as well as to projects by any “qualified entity” for local or regional wastewater facilities, solid waste management facilities, or water recycling facilities. The bill, AB 642, has passed both the state assembly and state senate, but still awaits the signature of Governor Schwarzenegger. Assuming he signs the bill, the expanded design-build authority would go in to effect on January 1, 2009.