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ConstructionWebLinks.com
In
1999, the California Legislature enacted Public Contract
Code §20101, which allows many California public agencies
to pre-qualify contractors that want to bid on public works
construction projects.
The
legislation (Assembly Bill 574) called for a "standardized
questionnaire" and "model guidelines" for
rating bidders to be developed by the Department of Industrial
Relations in consultation with public agencies, "the
construction industry" and "other interested parties."
Recently
the department, after conducting meetings from January through
October 2000, issued the questionnaire and model guidelines.
The documents can be found at the department's Web site,
www.dir.ca.gov. Click
on "Data bases."
The
pre-qualification process can be either for a specific project
or for a specified period of time. Public Contract Code
§20101 falls within the Local Agency Public Construction
Act and, therefore, applies to all local public works, including
contracts let by counties, most school districts and cities.
Local public agencies are not required to pre-qualify bidders,
but if they choose to do so, they must use the standardized
questionnaire developed by the department.
The
statute also requires public entities to "adopt and
apply a uniform system of rating bidders" that is to
be "based on objective criteria." However, because
the statute provides that the model evaluation guidelines
"may be used" by local public entities, it appears
that public entities are free to apply their own evaluation
criteria.
The
standardized questionnaire requests basic information about
the business entity and its personnel, its California contractor's
license status and its liability and worker's compensation
insurance. A reviewed or audited financial statement also
must be provided.
The
standardized questionnaire appears to cross the line from
a questionnaire to a mandatory evaluation guideline in the
opening section, entitled "Essential Requirements for
Qualification," where it lists eight "silver bullet"
questions for which the wrong answer requires immediate
disqualification. While seven of the eight "silver
bullets" appear to be appropriate, the automatic disqualification
based on a surety firm having "completed a contract"
or "paid for completion" because of a default
termination within the preceding five years is of questionable
validity.
The
more controversial sections of the standardized questionnaire
include detailed questions regarding:
1.
"Disputes," including information on any
claims between the contractor and an owner within the preceding
five years that were filed in court or resulted in arbitration
and the refusal by an insurer to renew any insurance policy
issued to the contractor within the preceding five years.
2.
"Compliance with OSHA Laws and With Other Labor Legislation
Safety," including any citation or penalties for "serious,"
"willful" and "repeat" safety and health
violations; citations from environmental agencies; changes
in the contractor's worker's compensation "Experience
Modification Rate"; and payment of back wages or penalties
for violations of prevailing wage laws, all for the preceding
five years.
The
"model guidelines" do not disqualify bidders based
on an excessive number of claims, citations or violations
of prevailing wage laws. Instead, they award more points
for no violations and fewer points based on the increasing
number of incidents. However, there is nothing to prevent
a local public agency from using such information to disqualify
some potential bidders, either constructively through the
assignment of punitive negative points or directly by making
certain responses grounds for immediate disqualification.
If
the public entity chooses to pre-qualify bidders, it must
"establish a process that will allow prospective bidders
to dispute their proposed pre-qualification rating prior
to the closing time for receipt of bids." The packet
of documents prepared by the department includes such proposed
appeal procedures within the "Announcement of Pre-Qualification
Procedures and Open Dates for Annual Pre-Qualification"
document.
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