Are You Prequalified To Be Awarded Small Public Projects Not Subject To Formal Bidding Requirements?

Are you Prequalified to be Awarded Small Public Projects not Subject to Formal Bidding Requirements?

By
William C Last, Jr. and Jonathan M. Bowne
Attorney at Law

As contractors know, public works projects must be awarded via a public, competitive bidding process (excepting those where expenditures will be $5,000 or less). But in 1983 California legislators passed the California Uniform Public Construction Cost Accounting Act (“Act”), allowing some smaller projects to bypass the formal bidding process and be awarded either by negotiated contract, or via an informal bidding process. The Act also allows some particularly small projects to be self-performed by public agency forces.

The size of projects subject to the Act was recently increased. This article will discuss the Act, the latest changes, and how contractors can seek to be awarded these projects.

Only public agencies which opt-in to the Act’s program may utilize its provisions to bypass the formal bidding process. These public agencies must then comply with the accounting procedures provided for in the Act and enact an ordinance setting forth informal bidding procedures. The public agency shall then invite contractors to become prequalified to be awarded projects pursuant to the Act, and maintain a list of pre-qualified contractors. The public agency must give 10-days notice to contractors on the list of upcoming projects which will be awarded pursuant to the Act, and also publish notice of the projects in specified construction trade journals. Only contractors on the agency’s list may be award projects.

Until recently, the Act provided that projects anticipated to cost $30,000 or less could be self-performed by public agency forces, and projects anticipated to cost $125,000 or less could be awarded via a negotiated contract or informal bidding process.

In April 2011, pursuant to the terms of the Act, California State Controller John Chaing directed that the negotiated contract/informal bidding threshold be raised from $125,000 to $175,000, effective July 1, 2011. Two assembly bills were forwarded to modify the Act to conform to the Controller’s modification (AB 720 and 943), one of which also proposed raising the self-performed work threshold from $30,000 to $45,000. Both of the bills passed, the latter of which was approved by Governor Brown in October 2011.

Accordingly, now projects anticipated to cost $175,000 or less may be awarded by negotiated contract or informal bid.

While many public agencies have not opted-in to the Act because of perceived resulting additional paperwork and accounting burdens, nearly 800 public agencies have done so. A list of participating agencies is posted at the California Uniform Construction Cost Accounting Commission website. It includes many smaller Bay Area municipalities, counties, and school districts.

The Commission’s “Cost Accounting Policies and Procedures Manual” (also available at the Commission’s website) sets forth the applicable accounting ground rules and other relevant procedures. It provides that each November the public agencies must publish notices in specified construction trade journals inviting contractors to become prequalified, and then create an updated list to be effective by January 1. The agencies may also accept applications on a rolling basis throughout the year.

Interested contractors should inquire with public agencies in their market area for opportunities. Many agencies post applications at their website.

While the projects subject to the Act are by definition small, the increased threshold amounts may operate to widen the appeal of these projects. Likewise, these projects may be a suitable starting point for contractors who traditionally perform private works but who wish to shift to the public works arena as private construction has contracted.

This article, ©2011, was written by William C. Last, Jr. and Jonathan M. Bowne. Mr. Last is an attorney who has been specializing in Construction Law for over 32 years. In addition to belonging to a number of construction trade associations, Mr. Last holds a California “A” and “B” license. He can be contacted at 415-764-1990 or 650-696-8350. A number of his past articles can be found on his website (lhfconstructlaw.com). This bulletin is published periodically to provide general information about current legal issues. The articles are not intended to be a substitute for the advice of an attorney as to a specific problem. If you have a specific legal question or need legal advice, you should contact an attorney.