EdLawConnect Blog

Recently, a number of the Firm’s local public entity clients have contacted us with questions regarding the issue of “unbalanced bids.” These clients generally want to know when they should reject an unbalanced bid and the guidelines for evaluating unbalanced bids. There is little California legal authority on the subject. Typically, in the absence of California authority, this state’s courts will look to both federal procurement laws and regulations, and decisions by courts in other states. Section 15.814, 48 Code of Federal Regulations, defines a “mathematically unbalanced” bid as a bid “based on prices which are significantly less than cost for some contract line items and significantly overstated in relation to cost for others.” A bidder will typically submit an unbalanced bid with either or both of two goals: 1) To manipulate the bidding process in its favor to win award of the contract, even though the public entity would ultimately pay a higher total price for the goods or services; and 2) To improve their cash flow by front loading a bid’s payment schedule.

Mounting financial pressure experienced by most K-12 school districts and community college districts throughout California necessitates more efficient use of district real property. Improved efficiency requires more than just knowing the law. The beneficial use and disposition of district property can take many forms such as selling property, generating lease income, decreasing the cost of ...

The Uniform Cost Accounting Act at Public Contract Code section 22000 et seq. (“UCAA”) allows participating agencies to avoid the formal bidding procedure for projects that fall under certain cost thresholds. The UCAA includes two thresholds: 1) the "Direct Hire Threshold" which allows public agencies to hire their own employees through a force account or hire other entities directly through a ...

Effective January 1, 2012, the legislature expanded the definition of "public project" subject to the California prevailing wage law with criteria meant to cover Power Purchase Agreement ("PPA") projects built on public property, supplying at least half the generated power to the public property owner.

In a typical PPA the local educational agency ("LEA") agrees to lease LEA land, or rooftops, to a private ...

In a recent case, Greg Opinski Construction, Inc. vs. City of Oakdale (October, 2011), the California Court of Appeal strengthened the position of public agencies asserting notice of claim requirements against contractors in their public works contracts. The Court based its decision on Civil Code section 1511, which expressly permits a public entity to require the other party to give notices of delay claims caused by the party receiving the notice. The key is that the delay claim requirements must be “reasonable,” and, as the court noted, “just.”

Despite opposition from various public agency groups supporting school and community college districts, Senate Bill 293 was signed into law. The new law limits retention on public works projects to five percent. Codified as Public Contract Code section 7201, the limit on retention applies to all contracts entered into on or after January 1, 2012.

For those school and community college districts (and other public agencies) that have opted into the California Uniform Public Construction Cost Accounting Act ("UCAA"), at Public Contract Code Section 22000 et seq., your flexibility just increased.  Back on July 1, 2011, Assembly Bill 943 increased the formal bidding threshold amount for public agencies that have opted into UCAA from $125,000 to $175,000.  Correspondingly, the safe harbor triggered when all bids received exceed the formal bidding threshold, and the governing body of the public agency adopts a resolution by a four-fifths vote to award informally within the safe harbor, rose from $137,500 to $187,500.

Starting on January 1, 2012, local air quality management districts, aka air pollution control districts ("APCDs"), will have the ability to grant funds to school districts to help retrofit emission control equipment and replace natural gas tanks on school buses, as well as enhance school districts' existing natural gas fueling stations.  These funds will come from surcharge fees collected by APCDs through the Department of Motor Vehicles.  Once APCDs implement the surcharge, and collect it from the DMV, the resulting funds must be used for specific programs as set forth in Health and Safety Code sections 41081 and 44229.  Now, with the passage of Assembly Bill Nos. 462 and 470, APCDs will have three new options for spending a limited portion of the surcharge starting in January 1, 2012:

The Office of Public School Construction ("OPSC") recently announced that the State successfully sold bonds on October 19th yielding "approximately $1 billion for School Facility Program projects."  OPSC expects the State Allocation Board ("SAB") to include disbursement of the available funds "to projects on the unfunded list with valid priority funding certifications" on its December 2011 agenda.  As OPSC noted, 187 school district certifications for 504 projects (306 modernization projects, 136 new construction projects and 62 projects from additional programs) are on the unfunded list.  These 504 projects comprise a total of $1.34 billion.  Accordingly, it appears that with about $1 billion in revenue becoming available, and $1.34 billion worth of projects on the unfunded list, there will be projects with valid priority funding certifications on the current unfunded list that still will not have money available.

Recently, the Department of Industrial Relations (“DIR”) announced that, effective September 1, 2011, it “discontinue[d] separate approval of third party LCPs.”  A third party LCP is a DIR-approved provider of labor compliance services that provides those services, by contract, to an awarding body.  DIR is, in their own words, “ending the existing approval of private [LCP] programs and grandfathering those approvals over to awarding bodies,” and will only be granting new approvals to awarding bodies going forward.  While DIR’s notice will have minimal impact on awarding bodies such as school and community college districts that maintain and enforce their own approved LCPs with their own personnel, the impact on awarding bodies that rely on third party LCPs is more significant.  How does this affect your district?