1. A Schools Legal Service Tutorial
Alternative Bidding Procedures Under the Uniform Public Construction Cost Accounting Act
A Schools Legal Service Tutorial
February 2012
Schools Legal Service is a joint powers entity providing legal and collective bargaining
services to public education agencies since 1976.
Copyright © 2012 Schools Legal Service. All rights reserved.

2. ____________________________________________
Introduction
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This tutorial is intended for use by any district staff member with authority to authorize expenditures on construction projects, prepare bid documents, or advertise for bids, whether in the district office, business office, maintenance and operations, or elsewhere. The purpose is to familiarize you with the alternative bidding procedures your district can use if it adopts uniform construction accounting procedures. The tutorial explains how you can adopt these procedures, and walks you through the differences between these procedures and the typical bidding rules for local public agencies.
Uniform Public Construction Cost Accounting Act

3. What Are the Uniform Public Construction Cost Accounting Procedures?
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The California Legislature felt there was a need for more uniform accounting and bidding procedures on public construction projects. The Uniform Public Construction Cost Accounting Procedures are a set of accounting standards published by a commission established by the State Controller. They will be referred to in this tutorial as “the Uniform Procedures.” A district considering adoption of these rules should carefully review them with accounting staff to make certain they are prepared to follow the requirements.
Uniform Public Construction Cost Accounting Act

4. What Are the Benefits of Adopting the Uniform Procedures?
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A district adopting the rules can take advantage of alternative bidding procedures for public projects.
The bid threshold under the alternative procedures for public projects has been increased from $15,000 to $45,000.
Bid invitations for projects up to $175,000 can be published to a list of contractors established by the district or in certain trade journals, instead of in the newspaper.
Uniform Public Construction Cost Accounting Act

5. Are There Drawbacks in Adopting the Uniform Procedures?
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The specified accounting rules must be used on all public projects and are subject to audit.
The district must annually create and maintain one or more lists of qualified contractors.
There are a number of procedural differences in bidding projects under the alternative procedures which must be kept in mind.
On large projects (over $175,000), notice must be sent to trade journals 15 days prior to bid opening.
If a district is found out of compliance with the alternative bidding procedures three times in 10 years, it will be prohibited from using the procedures for five years.
Uniform Public Construction Cost Accounting Act

6. How Does My District Enroll in This Process?
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Uniform Public Construction Cost Accounting Act
Review the Uniform Procedures and determine whether your district’s business office is comfortable with implementing them.
You can access the rules at the State Controller’s website (see link at the bottom of the Schools Legal Service website, Business & Construction page).

7. How Does My District Enroll in This Process?
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Uniform Public Construction Cost Accounting Act
The district must pass a resolution adopting the Uniform Procedures and an “informal bidding ordinance.”
A sample resolution can be found on the SLS website, Business & Construction page (see next slide).
The district must notify the State Controller that it has adopted the Uniform Procedures.

8. What Else Needs to Be Done to Get Started?
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Your district must establish a list of qualified bidders by mailing notice to specified trade journals each November inviting licensed contractors to submit their names to the district for the following year.
The trade journals are specified for Kern County in the Cost Accounting Policies and Procedures Manual of the California Uniform Public Construction Cost Accounting Commission, which is posted on the State Controller’s website (see link at bottom of SLS website, Business & Construction page).
Uniform Public Construction Cost Accounting Act

9. What Else Needs to Be Done to Get Started?
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The notice mailed to the trade journals must contain the following information:
Uniform Public Construction Cost Accounting Act
Name and address to which a Notice to Contractors (Notice to Bidders) should be mailed.
Phone number at which the contractor can be contacted.
Type of work in which the contractor is currently licensed and interested.
Class of contractor’s license(s) held and contractor’s license numbers.

10. What Else Needs to Be Done to Get Started?
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Some districts also advertise their invitation to contractors in the newspaper, although this is not required.
Once you have received the information, you should create one or more lists based on the types of work for which contractors are qualified.
A new list can be established starting January 1 of each year.
Uniform Public Construction Cost Accounting Act

11. ____________________________________________
Can My District Add Contractors to the List Even If They Did Not Respond to the November Solicitation?
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Uniform Public Construction Cost Accounting Act
A district can add qualified contractors to its list at any time during the year, and should add any contractors who provide the required information.
The State Controller also recommends that you include any contractor who submitted a bid to your district during the preceding calendar year.

12. Do the Uniform Procedures Apply to All Purchases and Procurements?
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Uniform Public Construction Cost Accounting Act
The Uniform Procedures apply only to “public projects,” and thus do not apply to the procurement of equipment alone or non-construction type services.
The State Controller has stated that the rules may be used for the purchase of materials “if consumed on a public project.”

13. What is a “Public Project” for Purposes of the Uniform Procedures?
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A public project is defined as the following kinds of work on any publicly owned, leased, or operated facility:
Uniform Public Construction Cost Accounting Act
“Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility.”
Painting or repainting.
A public project does not include “maintenance work, as defined.”
Public Contract Code section 22002

14. What is “Maintenance” for Purposes of the Uniform Procedures?
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The Alternative Bidding Procedures cannot be used for maintenance work, which is defined as:
Uniform Public Construction Cost Accounting Act
Routine, recurring, and usual work for the preservation or protection of any publicly owned or operated facility for its intended purposes.
Minor repainting.
Resurfacing streets/highways at less than one inch.
Landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plans, and servicing irrigation and sprinkler systems.

15. What is “Maintenance” for Purposes of the Uniform Procedures?
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Deciding what constitutes maintenance can be tricky. For example, replacing an HVAC system could, in the long term, be considered “routine, recurring and usual” work but it would not be considered maintenance for this purpose. Replacing the system goes beyond “preserving or protecting” it.
On the other hand, a district-wide project to service and repair (not replace) chiller systems could be considered maintenance, if done on a recurring basis. Consult legal counsel if in doubt.
Uniform Public Construction Cost Accounting Act

16. What is “Maintenance” for Purposes of the Uniform Procedures?
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Uniform Public Construction Cost Accounting Act
Play it safe: If you improperly classify work as maintenance, an “interested party” can request an audit of the district’s accounting procedures.
Public Contract Code section 22042

17. Getting Started – What Are the Rules for Small Public Projects?
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Projects below the statutory threshold (currently $45,000 as of January 2012) can be performed by negotiated contract or purchase order without competitive bidding. (Note: The threshold is periodically adjusted for inflation.)
A district may still competitively bid small projects if it wishes to do so, using the district’s informal process.
If your district elects not to competitively bid small projects, soliciting multiple price quotations is always a good idea.
Uniform Public Construction Cost Accounting Act

18. Getting Started – What Are the Rules for Small Public Projects?
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Even for small public projects, you should use a construction contract and other documents may be required – see the SLS public works bid package on the SLS website.
For projects of this size, you can use the “Construction Contract (Contracts Under $15,000/$45,000)” instead of Forms 9, 9S, and 10, which are the larger construction contract and general conditions.
Uniform Public Construction Cost Accounting Act

19. Getting Started – What Are the Rules for Small Public Projects?
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CONSTRUCTION CONTRACT
[Contracts Under $15,000/$45,000]
THIS CONTRACT is between the       ("Owner") and       ("Contractor").
Owner and Contractor agree as follows:
1. Project. Contractor shall perform everything required to be performed and shall provide and furnish all labor, materials, tools, equipment, and all utility and transportation services required for the construction of:       ("Project").
All work to be performed and materials to be furnished shall be in conformity with any plans, drawings, specifications, bonds, insurance policies, conditions, and modifications thereof which, by this reference, are made a part of this Contract.
2. Contract Price. Subject to the terms and conditions of this Contract, Owner shall pay to Contractor for all work to be performed under this Contract the total sum of $     .
3. Payments. Contractor shall be paid an amount equivalent to 95 percent of the Contract price upon acceptance of the Project by Owner’s Governing Board. Contractor
Uniform Public Construction Cost Accounting Act

20. Getting Started – What Are The Rules for Small Public Projects?
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Projects below the statutory threshold (currently $45,000 as of January 2012) can also be performed by “force account;” in other words, by the district’s own employees.
The usual “hours limitation” for force account work does not apply but overall, the value of the work performed by employees cannot exceed $45,000.
Uniform Public Construction Cost Accounting Act

21. Getting Started – What Are The Rules for Small Public Projects?
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REMEMBER: Contracts of $25,000 or more require a payment bond.
A performance bond is not required by law but can be contractually required on jobs of any size.
Uniform Public Construction Cost Accounting Act

22. Getting Started – What Are The Rules for Small Public Projects?
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REMEMBER: Any public project exceeding $1,000 will require payment of prevailing wage unless a labor compliance program is in effect, in which case the threshold is $15,000.
Uniform Public Construction Cost Accounting Act

23. Alternative Bidding Procedures
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BRIGHT LINE RULE!!!
Uniform Public Construction Cost Accounting Act
If a contract exceeds $45,000 and includes any labor,
STOP!!
Consider what form of competitive bidding may be required. Consult legal counsel if in doubt.

24. What are the Rules for Projects of $30,000-$125,000?
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For these projects, “informal bidding procedures” can be used.
“Informal” was a poor wording choice in the statute. Projects of this size STILL MUST BE COMPETITIVELY BID; they are only “informal” in the sense that the notice to bidders does not have to be published in the newspaper.
The district must award to the lowest responsible bidder meeting specifications or reject all bids.
Uniform Public Construction Cost Accounting Act

25. What are the Rules for Projects of $30,000-$125,000?
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As with any other project, a notice to bidders, information for bidders, project specifications, sample contract, and other construction documents should be prepared. Consult the Public Works Bid Package on the SLS website.
If using the SLS Public Works Bid Package, you may want to omit the large General Conditions document (Form 10) and use Contract Form 9S for projects of this size (see next slide).
Uniform Public Construction Cost Accounting Act

26. What Are The Rules for Projects of $45,000-$175,000?
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Uniform Public Construction Cost Accounting Act

27. Giving Notice of “Informal Bids” (Projects of $45,000-$175,000)
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Once the bid package has been prepared, “publish” the notice to bidders by mailing it to either (1) the district’s list of qualified bidders, (2) specified trade journals, or (3) both.
This must be done at least 10 calendar days prior to the time bids are due.
The notice to bidders must notify bidders how to obtain more detailed information about the project, as well as the time and place for submission of bids. It must describe the project in general terms.
Uniform Public Construction Cost Accounting Act

28. Giving Notice of “Informal Bids” (Projects of $45,000-$175,000)
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Uniform Public Construction Cost Accounting Act
Nothing prevents you from advertising in the newspaper on a particular project in addition to publishing to the district’s list or the trade journals if you think that will improve the pool of bidders and generate greater competition or lower prices.

29. ____________________________________________
What if We Use the “Informal” Process But Receive Bids Exceeding $175,000?
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The law provides some flexibility here. If all bids are in excess of $175,000, but no more than $187,500, the governing board may award to the lowest responsible bidder.
In order to take advantage of this, the governing board must find that the district’s cost estimate was reasonable.
The board must also authorize this by adopting a resolution by a 4/5 vote.
Uniform Public Construction Cost Accounting Act

30. What are the Rules for Large Projects ($175,000+)
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Uniform Public Construction Cost Accounting Act
For projects exceeding $175,000, formal bidding procedures must be used. These are similar to the typical bidding procedures used on public projects, BUT THERE ARE DIFFERENCES.

31. Publishing Notice of “Formal Bids” (Projects over $175,000)
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Advertising Requirements
Uniform Public Construction Cost Accounting Act
Publish a notice calling for bids
At least once, at least 14 calendar days before bid opening
Newspaper of general circulation printed, published, or circulated in the district, or if none, by posting as specified
K-12 web posting optional

32. What are the Rules for Large Projects ($175,000+)
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A notice to bidders must be advertised in a newspaper of general circulation in the jurisdiction, just as with traditional bidding, however . . .
Instead of advertising once a week for two weeks, the alternative procedures call for advertising “at least 14 calendar days before the bid opening date.” The statute does not require multiple advertising dates.
Uniform Public Construction Cost Accounting Act

33. What are the Rules for Large Projects ($175,000+)
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The notice to bidders must also be mailed to the specified trade journals, AT LEAST 15 CALENDAR DAYS BEFORE THE BID OPENING DATE.
This step can be easily overlooked and must be incorporated into the planning and scheduling for the project.
Uniform Public Construction Cost Accounting Act

34. ____________________________________________
Rejecting Bids
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In order to reject bids, the district must mail a notice of its intention to do so to the apparent low bidder at least two business days before the hearing at which the district intends to reject the bids.
At that point, the district can abandon the project or re-advertise for bids.
By passing a resolution by a 4/5 vote declaring the project can be performed more economically by district employees, the district can perform the project by force account.
Uniform Public Construction Cost Accounting Act

35. What if No Bids are Received?
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If, after soliciting bids as required, none are received, the Act permits the district to perform the project by force account or negotiated contract without further compliance with the informal or formal bidding rules.
There is no specific authority to do this for procurements not subject to the Uniform Rules. Consult legal counsel in that event.
Uniform Public Construction Cost Accounting Act

36. Are the Rules Different for Change Orders?
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GRAY AREA
Uniform Public Construction Cost Accounting Act
The Act does not contain specific rules on change orders.
The usual rules (PCC [20659]) probably apply.
Cost must be agreed between governing board and contractor.
Must be bid if cost exceeds greater of 10% original contract price or applicable bid threshold ($45,000).

37. Are the Rules Different for Change Orders?
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GRAY AREA
Uniform Public Construction Cost Accounting Act
Presumably, change orders can be bid either by informal or formal procedures, depending upon the amount.
In some circumstances, bringing in a new contractor in the middle of construction is not beneficial and bidding would not result in cost savings. Consult legal counsel in that event.

38. Do We Need to Bid a Project in an Emergency?
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Uniform Public Construction Cost Accounting Act
Bidding Requirements in Emergency Situations

39. Bidding Requirements - Emergencies
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Uniform Public Construction Cost Accounting Act
In very limited circumstances, where a sudden, unforeseen emergency occurs which requires a district to proceed immediately with a public project, the district can dispense with competitive bidding.
This should almost always be done in consultation with legal counsel.

40. Bidding Requirements – Emergencies
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Uniform Public Construction Cost Accounting Act
For districts adopting the Uniform Procedures, the rules for emergency contracting are slightly different than the rules for districts doing traditional bidding:

41. Bidding Requirements – Emergencies
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Work may be done by day labor, contractor, or combination
4/5 vote of governing board required instead of a unanimous vote
Requires a “finding” of lack of time to bid and action necessary to respond to emergency
County Superintendent approval not required but still recommended
Applies only to repair or replacement
“Emergency” is still defined the same way
Uniform Public Construction Cost Accounting Act

42. What Happens if the District Fails to Follow Bidding Requirements?
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Uniform Public Construction Cost Accounting Act
What are the consequences for failing to competitively bid a contract when required?
What about using an exception to competitive bidding without proper justification?

43. The contract is void, and civil and criminal penalties may follow.
Uniform Public Construction Cost Accounting Act

44. Consequences of Failure to Observe Competitive Bidding Requirements
Contract void, no authority to pay vendor
Possible suit against district officers
Public Contract Code section 5110 may
permit contractor to
recover costs
excluding
profit.
Uniform Public Construction Cost Accounting Act

45. Personal Liability? Consequences of Failure to Observe
Competitive Bidding Requirements
Uniform Public Construction Cost Accounting Act
Personal Liability?

46. ____________________________________________
Pop Quiz
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True/False
Informal procedures don’t require competitive bidding.
Uniform Public Construction Cost Accounting Act

47. ____________________________________________
Pop Quiz
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Answer: Informal bidding is a form of competitive bidding, but informal procedures permit districts to:
Narrow the pool of bidders to those on approved list, and/or
Advertise to trade journals rather than newspaper.
Uniform Public Construction Cost Accounting Act

48. ____________________________________________
Pop Quiz
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True/False
Projects over $175,000 must be formally bid under the usual rules for all districts.
Uniform Public Construction Cost Accounting Act

49. ____________________________________________
Pop Quiz
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Answer: False. The formal bidding rules under the alternative bidding procedures are slightly different:
Advertise 14 calendar days before bid opening instead of once a week for two weeks
Mail to trade journals 15 days before bid opening.
Uniform Public Construction Cost Accounting Act

50. ____________________________________________
Pop Quiz
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You forgot to place the ad for bids to replace the doors and windows for all classrooms estimated to cost $188,000, including $40,000 labor. Classes will begin in six days.
Uniform Public Construction Cost Accounting Act

51. Pop Quiz Your best justification for failure to competitively bid:
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Your best justification for failure to competitively bid:
Ask the County Superintendent to approve an emergency.
Use informal bidding procedures.
Buy material direct from a supplier and hire a contractor to install.
Get three quotes and hire the cheapest.
Uniform Public Construction Cost Accounting Act

52. Pop Quiz Your best justification for failure to competitively bid:
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Your best justification for failure to competitively bid:
A. Ask the County Superintendent to approve an emergency.
Incorrect. This is not the sort of sudden, unexpected crisis which would qualify for a declaration of emergency, nor is it essential to obtain County Supt. approval.
Uniform Public Construction Cost Accounting Act

53. Pop Quiz Your best justification for failure to competitively bid:
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Your best justification for failure to competitively bid:
B. Use informal bidding procedures
Incorrect. Since the project exceeds $175,000 (and even $187,500), the informal procedures cannot be used.
Uniform Public Construction Cost Accounting Act

54. Pop Quiz ____________________________________________
Your best justification for failure to competitively bid:
C. Buy material direct from a supplier and hire a contractor to install.
Depending on the circumstances, this is probably a viable alternative, assuming the labor is under $30,000 and the contractor is not the same one from whom the district purchases the materials.
Uniform Public Construction Cost Accounting Act

55. Pop Quiz ____________________________________________
Your best justification for failure to
competitively bid:
D. Get three quotes and hire the cheapest.
Incorrect. Under the alternative bidding procedures, any project exceeding $45,000 must be competitively bid, either using the formal or informal procedures.
Uniform Public Construction Cost Accounting Act

56. ____________________________________________
This tutorial is intended to familiarize you with the alternative bidding procedures discussed. It is not intended as legal advice in any specific situation – consult legal counsel as to how the issues presented may affect your particular circumstance.
End of Tutorial.
Uniform Public Construction Cost Accounting Act