Legislation News
UC Supports SB 667
july 28, 2006
The The University of California (UC) is sponsoring and supporting SB 667, a measure to streamline and modernize our competitive bidding processes for small and large projects. SB 667 will help UC stretch capital funds, increase the quality of our buildings, and reduce project delays.
The bill will be heard in the Assembly Appropriations Committee on August 9, 2006, and UC is strongly urging members of that committee to vote yes on SB 667. Click here to take action.
With two thirds of its buildings and infrastructure constructed before 1970, UC faces a growing deferred maintenance backlog and the need to make critical fire, life and seismic safety improvements and functional renovations in these aging facilities. In the University’s effort to maintain educational access and quality and meet enrollment demands, it must be able to build, renovate and maintain its facilities efficiently and cost-effectively.
Small Projects
SB 667 would increase UC’s project threshold from $50,000 to $100,000 to enable UC to use more flexible bidding procedures on these very small projects.
The current threshold of $50,000 was established in the last revision to the statute in 1998 and needs to be raised if only to keep pace with inflation, particularly in the construction market. The University faces increasing difficulties in its efforts to attract interest from contractors for these small projects and needs this modest increase in flexibility to effectively implement this part of its capital program.
For example, UC recruits and hires professors and researchers on a regular basis. These individuals or the terms of their grants almost always require modifications to existing laboratory spaces in order to adequately perform their research. The $50,000 threshold will not accommodate the needs for even the simplest laboratory remodel. Such a remodel might include relocating items within the laboratory space, installation of a new ventilation system, and some simple utility relocations. Similar to a residential kitchen remodel, even a simple laboratory remodel will exceed the current $50,000 limitation. Delay in contracting for such small projects often risks the University either losing the commitment of these professors or delaying or losing grant funding that these researchers are able to obtain from outside sources.
SB 667 would increase UC’s informal bid threshold from $100,000 to the definition of minor capital outlay ($400,000), giving UC parity with the California State University and reflecting inflation in the construction market since this threshold was established in 1998.
Formal competitive bidding processes add at least one extra month between initial solicitation of bids and the award of the contract. The additional month is due to advertising requirements, including document preparation, publication schedules (particularly with regard to trade publications that are not issued daily), and the number of advertisements required by the statute.
Informal bidding is a competitive process in which the University solicits bids from three qualified and interested contractors. This method assures competition, opportunity, quality control, lower cost and less time to project completion.
This bidding method allows UC to carry out projects around brief “down time” periods in the academic calendar--such as Spring and Winter breaks, vacations, and long weekends--so that necessary maintenance and refurbishment of classrooms, offices, laboratories, and other academic facilities will not disrupt University activities. In addition, campuses must be able to respond quickly to changing research opportunities for contracts and grants that may require specific equipment or facilities to secure the funding. These contracts and grants fund researchers and graduate students, enhancing the University’s ability to fulfill its research mission.
Large Projects
SB 667 would grant UC San Francisco the flexibility to select contractors based on a combination of factors, including price, representing the “best value” to the University as a demonstration project to test the viability of this contracting method.
“Best value” ensures that there is a match between the price proposed and the capability of the contractor to perform the work. Use of the best value method of evaluation to select a contractor allows the University to take into account both the proposed price and other defined criteria, including financial condition, relevant experience and demonstrated management competency. This would be particularly useful on large, complex projects.
The result is contracts with a lower “final cost,” better quality, and timely completion. Communication problems, disputes, repeat work, multiple inspections, and other problems that lead so frequently to spiraling costs and eventually to expensive claims and litigation are less likely to occur with a contractor selected based on his or her expertise in addition to price. Best value also reduces University administrative oversight costs of contracting and project management staff.
Finally, “best value” is gaining popularity across the country. As indicated in a study by the Building and Construction Trades Department, AFL-CIO, federal agencies used best value contracting for nearly 70% of federal construction in FY 2001. Best value contracting laws have been adopted in several states for some types of public works programs including Pennsylvania, Washington, Utah, Florida, Massachusetts, South Carolina, Texas, Oregon, Arizona, Nevada, and New Mexico.
SB 667 would give UC the flexibility to determine the best method for completing projects quickly and efficiently, enabling the University to stretch its construction budget, respond to facility needs more quickly, and test the benefit of the best value method of contracting.
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