New Contract Prequalification Procedures Deadline Is Fast Approaching

October 2013

School district governing boards only have until the end of the year to adopt new procedures to prequalify bidders for public projects that use funds received under the Leroy F. Greene School Facilities Act or from future state school bonds involving projected expenditures of $1 million or more.  The changes are effective for contracts awarded on or after January 1, 2014.

For these projects, Assembly Bill (“AB”) 1565, which amended the California Public Contract Code, mandates that governing boards require prospective bidders to complete and submit a standardized prequalification questionnaire and financial statement, verified under oath.  Previously, districts could decide for themselves whether they would require a standardized questionnaire and/or financial statement.  Neither the questionnaires nor the financial statements are considered public records and they are not open to public inspection. 

Boards also must adopt and apply a uniform system of rating bidders on the basis of the completed questionnaires and financial statements.  The questionnaires, financial statements and rating system must cover, at a minimum, all of the issues included in the standardized questionnaire and model guidelines for rating bidders developed by the Department of Industrial Relations. 

Under AB 1565, districts are precluded from accepting bids from any bidder that did not submit prequalification documents at least 10 business days before the date fixed for the public opening of sealed bids or from a bidder that has not been prequalified for at least five business days prior to that date.  For purposes of the new law, a “bidder” includes the general contractor and, if used, all electrical, mechanical and plumbing subcontractors.  AB 1565 does not preclude governing boards from prequalifying or disqualifying a subcontractor.

If a public project covered by AB 1565 includes electrical, mechanical or plumbing components that will be performed by electrical, mechanical or plumbing contractors, the governing board must prepare a list of its prequalified electrical, mechanical and plumbing subcontractors (in addition to general contractors).  The list must be available to all bidders at least five business days before the date fixed for public opening of sealed bids. 

Governing boards may establish a process for prequalifying prospective bidders subject to AB 1565 on a quarterly or annual basis.  A prequalification is valid for one calendar year.

School districts with an average daily attendance of less than 2,500 are exempt from the new requirements of AB 1565.  Additionally, AB 1565 contains a “sunset” provision under which it ceases to be effective as of January 1, 2019, unless further legislative action is taken to extend the law.

Because AB 1565 contains numerous new rules, districts should take steps now so that their updated prequalification processes are in place by January 1, 2014.  Additionally, school boards should familiarize themselves with the new requirements as soon as possible and consult legal counsel to ensure their prequalification documents are drafted or revised appropriately to comply with the new law.

If you have any questions regarding this matter, please call one of our six offices.

F3 NewsFlash prepared by Paul G. Thompson and John W. Norlin.
Paul is a partner in the F3 Sacramento office.
John is Special Counsel in the F3 San Diego office.

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