On August 17, 2015, Governor Brown signed Assembly Bill 566 (“AB 566”) requiring lease-leaseback projects to use a “skilled and trained workforce” and additional prequalification procedures. AB 566 becomes effective on January 1, 2016.
AB 566, which adds section 17407.5 to the Education Code, includes the following:
AB 566 also requires that lease-leaseback agreements contain a provision stipulating that contractors constructing buildings must comply with prequalification procedures regardless of the funding source for the public project. This is an extension of the requirements imposed by Assembly Bill 1581, enacted in 2014, which subjected many lease-leaseback projects to prequalification when they involved an expenditure of $1,000,000 or more using state school construction bond funds.
Finally, AB 566 clarifies section 20111.6 of the Public Contract Code regarding when public works project bidders must be prequalified. AB 566 adds that bidders must be prequalified for projects that are “reimbursed” from future state school bond funds, not just when projects use funds “received” from state school construction bonds.
Some observers have commented that AB 566 may increase construction costs because it reduces the number of non-union contractors who bid for projects. Others view AB 566 as a means for improving the quality of school construction work and reducing construction defect claims.
If you have any questions regarding AB 566 or any related issue, please call one of our six offices.
F3 NewsFlash prepared by Kathleen J. McKee, Luke P. Boughen and John W.
Kathleen is a Partner in the F3 San Diego office.
Luke is an Associate in the F3 San Diego office.
John is Special Counsel in the F3 San Diego office.
This F3 NewsFlash is a summary only and not legal advice. We
recommend that you consult with legal counsel to determine how this
legal development may apply to your specific facts and circumstances.
Information on a free NewsFlash subscription can be found at www.f3law.com.
Keep up to the minute on the latest updates, NewsFlashes, and legal news by following F3 on Twitter:@F3Law.
© 2015 Fagen Friedman & Fulfrost, LLP
All rights reserved, except that the Managing Partner of Fagen Friedman & Fulfrost, LLP hereby grants permission to any client of Fagen Friedman & Fulfrost, LLP to use, reproduce and distribute this NewsFlash intact and solely for the internal, noncommercial purposes of such client.