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PUBLIC CONTRACTS:
WHAT M&O MANAGERS
NEED TO KNOW
Informal Bidding of
Projects Less
Than $75,000
FRIDAY, NOVEMBER 3, 2000
C.A.S.H. MAINTENANCE NETWORK
Pleasanton, California
Presented by:
Sharon Suarez, Esq.
WONG & SUAREZ
ATTORNEYS AT LAW
3420 Ocean Park Boulevard, Suite 3000
Santa Monica, California 90405
Telephone 310-392-2995
Facsimile 310-392-2393
ssuarez@wslawyers.com
INFORMAL BIDDING
OF
PROJECTS LESS THAN $75,000
Pursuant to Public Contract Code §22030 et seq., by adopting construction cost accounting standards promulgated by the California Uniform Public Construction Cost Accounting Commission ("Commission"), local agencies, including school districts, may award contracts for "public projects" work without engaging in a formal bidding process. Projects valued at $25,000 or less may be performed by force account, negotiated contract or purchase order. Projects valued up to $75,000 may be performed under contracts awarded by the "informal" bidding process.
The District must adopt the Commission's cost accounting standards and establish informal bidding procedures by resolution before the District can engage in the informal bidding process for projects falling within the purview of the Act. The essential steps the District must take to avail itself of the informal bidding process are:
- The Board of Education elects, by resolution, to become subject to the Commission's cost accounting standards.
- The District notifies the State Controller of its election to become subject to the Commission's cost accounting standards.
- The Board of Education adopts, by resolution, procedures to implement the informal bidding process.
- Develop and maintain lists of contractors by trade who will be notified when a project is bid in the trade for which a contractor is listed.
- Maintain a list of journals (as prescribed by the Commission) for receipt of notices of informal bids.
The Act allows local public agencies an alternative to the burdensome and time-consuming process of the formal competitive bidding process. The extent of bidding required to award a contract for "public projects" under the Act is determined by the dollar value of the work. Under Section 22032, projects valued at $25,000 or less "may be performed by the employees of the public agency by force account, by negotiated contract, or by purchase order." Under Section 22032, projects of $75,000 or less "may be let to contract by informal procedures as set forth in [the Act]."
An initial issue is the type of project for which the Act permits awarding a contract without formal bidding. The Act permits informal bidding procedures for "public projects" defined in Section 22002 as "construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility." Under Section 22002, painting or repainting of a public facility is also deemed to be a "public project." "Maintenance work" is specifically excluded from the scope of coverage under the Act. Maintenance work under Section 22002 is defined as: (i)
routine, recurring, and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purpose; (ii) minor repainting; (iii) street/highway resurfacing of 1" or less; (iii) landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plants, and servicing of irrigation and sprinkler systems. Although maintenance work is excluded from the informal bidding procedures permitted under the Act, keep in mind that under Section 20111 of the Public Contract Code, the District may award contracts for maintenance work for a value of up to $50,000 without having to engage in a formal bidding process.
The District's Board of Education must adopt two resolutions, in a two-step process, in order for the District to avail itself of the informal bidding procedures permitted by the Act. The Board must first adopt a resolution electing to become subject to the cost accounting standards and procedures established by the Commission. After the Board has adopted the resolution subjecting the District to the accounting standards, the District must notify the State Controller of the passage of the resolution and the District's election to become subject to the accounting standards. After notification to the State Controller, the Board must adopt a second resolution addressing informal bidding procedures. The essential elements of the informal bidding resolution are: (i) the District's maintenance of a list of contractors (by trades); and (ii) the manner in which "listed" contractors will be notified of projects to be awarded under the Act.
Once the informal bidding resolution is adopted, the District must develop and maintain a list of contractors "identified according to categories of work." Criteria for development and maintenance of the list of contractors are established by Commission regulations in its Manual. The Commission requires an annual "review and update" of the contractors by mandating written notice each November from the District to all construction trade journals designated by the Commission for the District's geographic area of the District inviting licensed contractors to submit their names for inclusion in the list of qualified bidders for the following calendar year. In January of each year, the District can develop its list of qualified bidders in each trade for the ensuing year. The District may include any contractor on the lists of qualified bidders; the District must, however, include in the contractors list any contractor who has properly responded to the notices published in the construction trade journals.
Upon establishing the contractors lists, the District may proceed to utilize the informal bidding procedures. The Act requires the District to give notice when a project is to be awarded through informal bidding. There are two issues the District must consider in every notice of a project under the informal bidding process. First, the District must determine whether notice is to be given to; (i) listed contractors only; (ii) Commission designated construction trade journals only; or (iii) both to listed contractors and Commission designated construction trade journals. As a practical matter, many Districts will not issue the written notice to construction trade journals in an effort to "limit" the bidders to those already on the contractors list. If notice is given to the construction trade journals, in addition to contractors on the list maintained by the District, any other qualified contractor would be entitled to submit a proposal. While limiting the notice to contractors on the District's lists has the effect of limiting the bidding pool, presumably the contractors on the lists and who would participate in the bidding are the "preferred" contractors to the District.
Second, the District must review the notice to confirm inclusion of the minimum substantive content prescribed by the Act. These requirements are: (i) general description of the project; (ii) how additional information (i.e., plans, specifications, etc.) regarding the project can be obtained; and (iii) the
time and place for submission of bids. The notice must be delivered by mail and the mailing must be "completed" at least 10 days prior to the due date for bids. The requirement that the mailing of notices be "completed" is set forth in Section 22034(c), but the term "completed" is not defined. Presumably, a postmark 10 days prior to bid opening would suffice as a "completed" mailing.
In addition to expediting the bidding process, the Act also contemplates an expedited award process after bid opening. There is no requirement for Board action to award a contract under the Act. The authority to award contracts under the Act extends to "the public works director, general manager, purchasing agent, or other appropriate person" authorized by the Board.
Although the dollar value of contracts which the District can award under the informal bidding process is limited to $75.000, if the bids are greater than $75,000 but less than $80,000, the District does not need to re-bid the project under formal bidding procedures if the Board takes action to ratify the contract up to a value of $80,000. Finally, if no bids are receive through the informal bidding process, Section 2203 8(c) of the Act permits the District to have the project performed "by force account, or negotiated contract without further complying with [the Act]."
SAMPLE
RESOLUTION NO. ______
________ UNIFIED SCHOOL DISTRICT RESOLUTION
ADOPTING COST ACCOUNTING STANDARDS
WHEREAS, Public Contract Code §§22000 et seq., the Uniform Public Construction Cost Accounting Act ("Act"), establishes uniform cost accounting standards for construction work performed or contracted by local public agencies; 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
NOW THEREFORE, the following Resolutions are adopted:
RESOLVED, ________ Unified School District hereby elects under Public Contract
Code §22030 to become subject to the uniform public construction cost accounting 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.
RESOLVED, that the District's Assistant Superintendent, Business Services or such individual as he may designate, is hereby direct to notify the State Controller forthwith of this election.
RESOLVED, that the election to become subject to the cost accounting procedures and standards of the Act is effective immediately.
SAMPLE
RESOLUTION NO. ______
RESOLUTION OF THE BOARD OF TRUSTEES OF __________ UNIFIED SCHOOL DISTRICT TO PROVIDE FOR INFORMAL BIDDING PROCEDURES UNDER THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT (SECTION 22000, ET SEQ. OF THE PUBLIC CONTRACT CODE)
WHEREAS, the California Uniform Cost Accounting Act at Public Contract Code §22000 et seq. ("Act") permits the District to utilize "informal" bidding procedures for public works projects of the District which fall within the purview of the Act.
WHEREAS, by Resolution duly adopted by the Board on _________, the District has elected to become subject to the Act,
WHEREAS, to engage in the informal bidding procedures permitted under the Act, the District must adopt procedures governing the District's selection of contractors for public works projects subject to the Act.
NOW THEREFORE, the following Resolutions are adopted:
RESOLVED, Informal Bid Procedures. Public projects, as defined by the Act, of seventy-five thousand dollars ($75,000) or less may be let to contract by informal bidding procedures as set forth in Section 22032, et seq., of the Public Contract Code.
RESOLVED, 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.
RESOLVED, Notice Inviting Informal Bids. Where a public project to be performed is subject to the provisions of this Resolution, 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 this Resolution and/or to all construction trade journals as specified by the California Uniform Construction Cost Accounting Commission in accordance with Section 22036 of the Public Contract Code. Additional contractors and/or construction trade journals may be notified at the discretion of the District's Assistant Superintendent, Business Services or her/his designee; provided however:
- If there is no list of qualified contractors maintained by the District for the particular category of work to be performed, the notice inviting bids shall be sent only to the construction trade journals specified by the Commission.
- If the product or service is proprietary in nature such that it can be obtained only from a certain contractors, the notice inviting informal bids may be sent exclusively to such contractors.
RESOLVED, Award to Contracts. The District's Assistant Superintendent, Business Services and/or such District staff as she/he may designate are each authorized to award informal contracts pursuant to this Resolution.
RESOLVED, Effective Date. This Resolution shall take effect immediately. WONG & SUAREZ.
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