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2016 Laws for Contractors

NEW LAWS FOR CONTRACTORS 2016

Over 2,700 bills were introduced by the California Legislature in the 2014-2015 session. Below are summaries of some of the more important bills affecting contractors in their roles as contractors, effective January 1, 2016 unless otherwise noted.

Many other bills will impact them in other roles, such as being businesses, taxpayers, and employers. For more information on changes in the laws affecting employers in 2016, please check the Employment Law Notes page of the McLennon Law Corp. website where this information will be posted in the near future.

Each of the summaries are brief, focusing on the gist of the bill, while most of the bills have additional provisions that are not mentioned. Links are provided to the full text of each of the bills for those wanting to know in detail the provisions of the new law. Lastly, reference is made to 2-year bills carried over to 2016 and to failed bills that are likely to be revisited next session.


View PDF to view links

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This article was provided by Daniel F. McLennon of McLennon Law Corp. (MLC). Dan is the Chairman of the ASAC Government Relations Committee and a member of the ASAC Bay Area Chapter Board of Directors. Special thanks to ASAC Legislative Advocate Skip Daum of Capitol Communications Group for his assistance in sifting through and summarizing bills.

Design-Build and “Best Value”

Pilot Program to Allow “Best Value” contracting in Certain Counties. SB 762 (Wolk D)

This section establishes a pilot program to allow certain counties to select a bidder on the basis of best value for construction projects in excess of $1mm. “Best value” means a value determined by evaluation of objective criteria that relate to price, features, functions, life-cycle costs, experience, and past performance. A best value determination may involve the selection of the lowest cost proposal meeting the interests of the department and meeting the objectives of the project, selection of the best proposal for a stipulated sum established by the procuring agency, or a tradeoff between price and other specified factors. Bidders must verify specified information under oath. Applies to Counties of Alameda, Los Angeles, Riverside, San Bernardino, San Diego, Solano, and Yuba. The Counties’ boards of supervisors must report to the Legislature about their experiences before January 1, 2020, at which time the program sunsets unless extended by a future bill.

Pilot Program Allows “Best Value” contracting by Los Angeles Unified School District and Requires Increasing Percentages of Apprenticeship Graduates. AB 1185 (Ridley-Thomas D)

Until December 31, 2020, LAUSD may use “best value” procurement instead of traditional “lowest responsible bidder" for projects over $1mm. The district must report to the Legislature during and at end of the pilot program. “Best value” means a procurement process whereby the selected bidder may be selected on the basis of objective criteria for evaluating the qualifications of bidders with the resulting selection representing the best combination of price and qualifications. By January 1, 2020, at least 60 percent of the skilled journeypersons on the job, whether for the direct contractor or subcontractors at every tier, must be graduates of an approved apprenticeship program.

School Facilities Design-Build Threshold Reduced to $1mm and Allows “Best Value”. AB 1358 (Dababneh D)

Existing school design-build authorization is lowered from $2.5mm to include projects of $1mm and above. Also, school districts may now use “Best Value” procurement. “Best value” means a value determined by evaluation of objective criteria that may include, but are not limited to, price, features, functions, life-cycle costs, experience, and past performance. A best value determination may involve the selection of the lowest cost proposal meeting the interests of the school district and the objectives of the project, selection of the best proposal for a stipulated sum established by the procuring school district, or a tradeoff between price and other factors.

Fall River Mills in Shasta County (population 573 in 2010) Gets Design-Build for its Hospital District. AB 1290 (Dahle R)

The Local Agency Public Construction Act establishes bidding procedures for the award of construction contracts by local agencies. Under the Act, counties may use a design-build procedure for building contracts in excess of $1mm. This section authorizes the Mayers Memorial Hospital District to use the design-build process when contracting for the construction of a building and improvements directly related to a hospital or health facility building at Mayers Memorial Hospital.

Public Private Partnerships

City of Long Beach Civic Center Authorized to Use Unique “Best Value” PPP. SB 562 (Lara D)

Notwithstanding any other law, the City of Long Beach may contract and procure a project for the revitalization and redevelopment of the Long Beach Civic Center. The City may lease all or a portion of the project to a private entity or entities for a term of up to 50 years. The Legislature declares that a special law is necessary because a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution, because of the need to immediately, quickly, and efficiently develop the project, and to resolve property issues potentially delaying the project. The City will consider any number of PPP arrangements and will issue contract based on “best value”. “Best value” means a value determined by objective criteria that shall include a combination of price, financing costs, features, functions, performance, life-cycle maintenance costs and abatement offsets, and development experience.

Public Works Construction Manager Contracting

Regional Transportation Agencies Get Construction Manager/General Contractor Project Delivery Method for Expressway Projects. AB 1171 (Linder R)

Previously, CalTrans, San Diego, and Santa Clara County entities were authorized to use the Construction Manager/General Contractor project delivery method. This law expands that authorization to include certain expressways that are not in the state highway system if: (1) the expressways are developed in accordance with an expenditure plan approved by voters, (2) there is an evaluation of the traditional design-bid-build method of construction and of the Construction Manager/General Contractor method, and (3) the board of the regional transportation agency adopts the method in a public meeting. The agency must report to its governing body upon project completion under oath.

Competitive Bidding – Prequalification

Public Schools Must Prequalify Contractors (Whether PPP or Low Bid), Regardless of Funding Source, and Must Require Increasing Percentages of Apprenticeship Graduates. AB 566 (O'Donnell D)

All school districts of over 2500 students must require any person, firm, or corporation that constructs a public school building, whether using PPP or competitive bidding, to comply with specified prequalification requirements, including a standardized prequalification questionnaire and financial statement, regardless of the funding source for the public project. This law sunsets on December 31, 2018 and is repealed unless extended. By January 1, 2019, at least 60 percent of the skilled journeypersons on the job, whether for the direct contractor or subcontractors at every tier, must be graduates of an approved apprenticeship program. This part has no expiration.

Public Works Job Order Contracting

All School Districts May Now Use Job Order Contracting for Jobs Over $25,000. AB 1431 (Gomez D)
Previously LAUSD was authorized to use job order contracting. Now all California public school districts use job order contracting for all public works in excess of $25,000 through December 31, 2021. However, to qualify, a school district must have entered into a project labor agreement or agreements in effect through at least December 21, 2021 that apply to all of the district’s public works in excess of $25,000, regardless of what contracting procedure is used to award that work. Job order contractors must submit a questionnaire to the school district containing specified information verified under oath.

Prevailing Wage

Concrete Haulers Must Pay Prevailing Wages. AB 219 (Daly D)

Haulers who remove refuse from a site are already entitled to receive prevailing wages, and this law extends the same entitlement to haulers who bring concrete to a public project site. “Public works” is now defined to include the hauling and delivery of ready-mixed concrete to carry out a public works contract, with respect to contracts involving any state agency or any political subdivision of the state. The wage rate at the factory or batching plant establishes the rate to be paid to haulers. Subcontracts and payroll records are required. Violation is a crime. Effective date is July 1, 2016.

Prevailing Wage Applies to Private Works for Hospitals Using Bond Money. AB 852 (Burke D)

The definition of “public works” is expanded for prevailing wage purposes to also include any construction, alteration, demolition, installation, or repair work done under a private contract on a project for a general acute care hospital, except on a project for a rural general acute care hospital with a maximum of 76 beds, when the project is paid for, in whole or in part, with the proceeds of conduit revenue bonds that were issued on or after January 1, 2016. Violation is a crime.

Public Works Consequential and Liquidated Damages

Most Public Works Delay Damages Clauses not Enforceable Unless Liquidated. AB 552 (O'Donnell D)

Any provision in a public works contract entered into on or after January 1, 2016, that expressly requires a contractor to be responsible for delay damages is not enforceable unless the delay damages have been liquidated to a set amount and identified in the public works contract. This section applies to the state, the Regents of the University of California, a city, charter city, county, charter county, district, public authority, municipal utility, and any other political subdivision or public corporation of the state. It does not apply to CA Departments (Water Resources, General Services, Boating and Waterways, Corrections and Rehabilitation, Military, and Transportation). Contracts may contain separate clauses for separate parts of the work.

Transparency in Public Contract Negotiations

Civic Reporting Openness in Negotiations Efficiency Act, or CRONEY. SB 331 (Mendoza D)

This law establishes specific procedures for the negotiation and approval of certain contracts valued at $250,000 or more for goods or services by cities, counties, cities and counties, or special districts that have adopted a civic openness in negotiations ordinance, or COIN ordinance, defined as an ordinance imposing specified requirements as part of any collective bargaining process undertaken pursuant to the Meyers-Milias-Brown Act. It requires designation of an independent auditor to review and report on the cost of any proposed contract. The city, county, city and county, or special district must disclose prescribed information relating to the contract and contract negotiations on its Internet Web site. The act prohibits a final determination by the governing body regarding approval of any contract until the matter has been heard at a minimum of 2 public meetings of the governing body. CRONEY does not apply expressly to contracts for construction.

Licensure Enforcement

CSLB to Report Contractor Information to EDD and to Enforce Workers Compensation Insurance Requirements. SB 560 (Monning D)

Like the State Bar does against lawyers, this law requires the CSLB to submit contractors’ personal information to the Employment Development Department. It also authorizes the CSLB’s enforcement division to enforce the obligation to secure the payment of valid and current workers’ compensation insurance. The enforcement division is entitled to free access to work sites and may issue “tickets”—notices to appear in court—such as for failing to have proof of workers compensation insurance on site. Enforcement personnel do not have the power to arrest. Additionally, this law makes it a misdemeanor crime to falsely certify exemption from workers compensation requirements or to employ a worker without having workers compensation insurance in place.

2-Year Bills to Watch (2015 Bills Carried Over to 2016)

AB 1125 (Weber D) State agency contracts: small business preferences.
AB 1445 (Brown D) Public contracts: small business contracts size increase.
SB 136 (Hall D) Public contracts: University of California self-perform authorized up to $100,000.
SB 630 (Hancock D) Public contracts: bidders: cost overruns must be reported.
AB 846 (Gallagher R) Mechanic's lien: dismissal for failing to serve action within 6 months.
AB 52 (Gray D) Public accommodations: limitations of liability for owners who try to comply with ADA.
AB 1152 (Frazier D) Construction defects: prelitigation procedures apply to all claims, including negligence.
AB 411 (Lackey R) Public contracts spot bill.
AB 1315 (Alejo D) Public contracts: prohibits delegation of water pollution prevention plans.
AB 1208 (Frazier D) Exemption for specialty contractors from Fire Marshall’s license requirement.
SB 465 (Hill D) Contractors required to disclose and CSLB to publicize settlements and awards.
AB 326 (Frazier D) Expeditious release of escrow funds for civil wage and penalty assessments.
AB 898 (Gonzalez D) Employee wages spot bill.
AB 966 (Baker R) California Solar Initiative: ratepayer funded incentives: conditions.
AB 1007 (McCarty D) Set the minimum wage at the amount necessary to keep a family of 3 above the supplemental poverty level.
AB 1354 (Dodd D) State contractors’ wage nondiscrimination programs and reporting.
SB 3 (Leno D) Minimum wage adjustments to $13 per hour by July 1, 2017.
AB 742 (Gallagher R) Heavy-duty diesel-fueled vehicles emissions regulations timing.
SB 8 (Hertzberg D) Taxation on services.
SB 632 (Cannella R) Lowered speed limits near schools.
SB 653 (Berryhill R) Underground economy spot bill.
AB 1265 (Perea D) PPP’s for transportation projects extended and to include Santa Clara.
SB 569 (Anderson R) School facilities PPP’s spot bill.

Failed Bills Likely to be Revisited

Expedited Handling of Claims and Change Orders on Public Works. AB 1347 (Chiu D)
This bill would establish a claim resolution process applicable to all claims by direct contractors and subcontractors in connection with public works. The bill would define a claim as a separate demand by the contractor for one or more of the following: a time extension for relief from damages or penalties for delay, payment of money or damages arising from work done pursuant to the contract for a public work, or payment of an amount disputed by the public entity. It would also establish timeframes for processing claims.

Protection of subsurface installations. SB 119 (Hill D)
Lengthy bill revising and clarifying subsurface excavation notifications, regulations, procedures and liabilities, and establishing an advisory committee.

Protection for PPPs Entered in Reliance on Prior Law. AB 975 (Mullin D)
This bill would provide that for school district PPPs entered before July 1, 2015, that are later determined to be invalid, the contractor who entered into the contract with the school district is entitled to be paid the reasonable cost of the labor, equipment, materials, and services furnished by the contractor before the date of the determination, subject to specified condition.

 

The BIM for Masonry Project Update July 2014

PRESS RELEASE
The BIM for Masonry Project Update

July 10, 2014

Media contact:
David Sovinski
National Director of Industry Development
International Masonry Institute
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
(410) 280-1305

ANNAPOLIS, MD – The Building Information Modeling for Masonry (BIM-M) initiative continues gaining momentum with the New York State Concrete Masonry Association (NYSCMA) pledging to continue sponsorship, and Duke Concrete Products of Queensbury, New York coming on board as a new sponsor.

The initiative is identifying barriers to and strategies for the full implementation of masonry materials and systems into BIM software for the design and construction industries. The purpose of the initiative is to unify the masonry industry and all supporting industries through the development and implementation of BIM for masonry software to facilitate smoother workflows and collaboration across all disciplines. Stakeholders are expected to benefit greatly from the integration of masonry into the next generation of BIM tools, such as:

Building Owners – information for understanding life-cycle costs of ownership; record keeping for tracking maintenance and upkeep; tools for creating and maintaining as-built drawings.

Architects – design tools, methods for quickly importing masonry details and product models into BIM authoring tools; uniform language and classification systems for masonry units and assemblies; tools for describing air, thermal, moisture and vapor control layers within BIM models; tools for cost estimating while in the programming and schematic design phase.

Engineers – tools for sharing information with architects and converting design information into structural analysis models (2-D and 3-D); means for generating and applying masonry details to models.

Manufacturers and Suppliers – ability to create standard building product models with specifications; improved access to procurement and supply requirements and E-commerce platforms; links to MRP (materials requirements planning) and EPD (environmental product declarations).

Craftworkers – opportunities to reclaim and expand market share; data sharing for increased safety and productivity.

Mason Contractors – increased opportunities for promoting masonry construction; tools for interactive
scheduling and coordination; safety management tools; interoperability tools for improved communications with architects and engineers and construction managers.

Construction Managers/General Contractors – interactive scheduling, quantity takeoff and coordination tools; safety management tools; tools for improved communications with mason subcontractors, enclosure subcontractors (glass, concrete, roofing, etc.), structural steel subcontractors, architects, engineers and owner; planning tools for site logistics and lean construction.

For more information contact: David Sovinski at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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Contractor Alert! Public Works Contractor Registration is Open

July 7, 2014

CONTRACTOR ALERT!

Public Works Contractor Registration is NOW OPEN

Last week we reported that a new fee and online registration process had been established for the administration and enforcement of Department of Industrial Relations (DIR) prevailing wage requirements on public works projects.

The website for contractors to register as eligible public works contractors is now open.

To register, contractors must complete an online application and pay a non-refundable $300 fee as well as meet a series of criteria such as maintaining Workers’ Compensation coverage for all employees and a current Contractors State License Board license in their applicable trade(s).

The new online system also provides a searchable database for awarding bodies and contractors to use so that they may comply with the stipulation to use ONLY registered contractors and subcontractors on public projects. The database is searchable by:

• Registration Number
• Contractor Legal Name
• License Number

So, make sure your bid documents clearly and accurately identify your company by one or more of these identifiers to make it easy for your eligibility to be verified.

The DIR news release announcing the online program launch is attached to this Alert and also available at the link above.

Key dates of the contractor registration program:
July 1, 2014 – Online contractor registration opens. Contractors must register to be eligible to bid and perform on public projects.
March 1, 2015 – Requirement to list only registered contractors and subcontractors on bids becomes effective.
April 1, 2015 – Requirement to use only registered contractors and subcontractors on public works projects applies to all projects awarded after this date.

Once the registration becomes mandatory early next year, contractors will be subject to penalties for bidding or working on public works without being registered with DIR.

Member of the Mason Contractors Association of America, Inc.
Mason Contractors Association of California, Inc.
7844 Madison Avenue, Ste 140 – Fair Oaks, California 95628-3595
Phone (916) 966-7666 – Fax (916) 966-1411 www.mca-ca.org

   

Contractor Alert! New Annual Fee for Public Works Contractors Effective July 1, 2014

In the February 25 issue of the MCAC newsletter we reported that the Governor’s 2014-15 Budget included a proposal to consolidate all public works and prevailing wage enforcement under a single unit with that unit supported by a new registration fee on contractors working on public projects.

That fee becomes a reality on July 1, 2014. All contractors and subcontractors that intend to bid or work on public projects will be required to pay a non-refundable annual fee set initially at $300. The fee may be adjusted (but not more than annually) so that it generates adequate funds to cover program costs which are currently $11.4M.

The budget proposal as approved will restructure funding for the administration and enforcement of the Department of Industrial Relations (DIR) prevailing wage requirements replacing current funding sources with the public works contractor registration fee. Gone are the Compliance Monitoring Unit (CMU) fees -- billed in arrears to awarding bodies for services provided on CMU projects -- and a portion of the LECF (Labor Enforcement and Compliance Fund) assessment on your Workers’ Compensation policy.

Essentials of the contractor registration program: Contractors will apply and pay the fee online by credit card and must meet minimum qualifications to be registered as eligible to work on public works:

• Must have Workers’ Compensation coverage and only use registered public works subcontractors.
• Must have CSLB contractor license.
• Must have no delinquent unpaid wage or penalty assessments due to any employee or agency.
• Not under debarment.
• Not in prior violation of this registration requirement once it becomes effective. However, first time violators will be able to avoid 12 month disqualification by paying an additional penalty.
• The registration fee is not related to any one project. Rather, it is more like a driver’s license that entitles the registrant to bid on and perform public works. DIR will post a list of registered contractors and subcontractors on its website so that awarding bodies and contractors will be able to comply with the requirement to only use registered contractors and subcontractors.

Key dates of the contractor registration program:

July 1, 2014 – Registrations will begin after this date. We will bring you details on where and how to register as they become available.
March 1, 2015 – Requirement to list only registered contractors and subcontractors on bids becomes effective.
April 1, 2015 – Requirement to use only registered contractors and subcontractors on public works projects applies to all projects awarded after this date.

Protections have been built in to address a variety of scenarios including private jobs later determined to be public work, inadvertent listing of unregistered subcontractors on a bid, contracts with unregistered contractors and subcontractors, replacement of unregistered contractors and subcontractors, and lapsed contractor registrations.

For more details on the remedies to address these situations and the contractor registration program, please view the DIR Fact Sheet.
http://www.dir.ca.gov/dlse/PublicWorks/NewPublicWorksLegistlationFactSheet-2014-05-23.pdf

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On a quick side note, Cal/OSHA has proposed major revisions to the Heat Illness Prevention Standard. While no timeline for formal implementation has been set, speculation suggests summer 2015.

Proposed changes include:

• Drinking water must be no more than 400 feet walking distance from employees, with limited exceptions for restroom use.
• Shade must go up when temperatures hit 80 degrees (currently 85 degrees).
• High heat procedures kick in at 85 degrees (currently 95 degrees).
-- Plus, new requirement for pre-shift meetings to review high heat procedures, encourage employees to drink plenty of water, and to remind them of their right to take a cool-down rest.
• Employees taking a cool-down rest shall not be ordered back to work until heat illness signs and symptoms have abated but in no event less than 5 minutes in addition to the time needed to access the shade.
• Shade shall be no farther than 700 feet walking distance from employees, with limited exceptions.

A call will be held Wednesday, July 2, 2014 to update Heat Illness Prevention Network members on topics relating to the Heat Illness Prevention Standards. You may access the call utilizing the information in the box above.

 

Important Notice to California Masonry Contractors

IMPORTANT NOTICE TO CALIFORNIA MASONRY CONTRACTORS
April, 2014

For the past several years, the Concrete Masonry Association and Masonry Institute of America have worked diligently to convince designers that masonry is the material of choice, not because it of its long history, but because new research and development of masonry prove that it is the most environmentally advantageous building material.

One example is the composition of masonry grout. Historically, grout is a material that is made using Portland cement, aggregate and water. The manufacturing process of Portland cement uses an enormous amount of energy, so extensive research has been conducted to show that fly ash and slag (by-products of other industries and referred to as Supplemental Cementitious Material, or SCM) can be used to replace Portland cement without compromising the long-term structural integrity of the grout. The use of fly ash and slag is the reason that some projects are being specified as masonry instead of concrete or some other material. Fly ash and slag may cause material discoloration, so use is very limited in concrete, whereas the color of masonry grout makes no difference. When a project specifies SCM grout, the contractor must understand that this may be the only reason the project is specified as masonry and not another material. Designers do not understand why the industry promotes an environmentally-friendly grout material and then the contractor tries to substitute traditional grout mixes which would have disqualified masonry from being specified for the project.

Another example of masonry specified by long-term performance properties is shown by projects specified with a certain concrete masonry unit weight (e.g. medium weight). Studies by Target and Wal Mart indicate that paint on medium weight units significantly outlasts paint on lightweight units. They are not willing to consider a lightweight substitution for the specified weight based on construction issues because they are looking at the larger picture.

We have also made significant progress in masonry coring issues. Starting with the 2013 California Building Code, DSA (not OSHPD) requires that all core face shells be tested in shear and averaged to determine compliance. A core with a face shell that falls off would be counted as a zero value in the average, not a failure. Another huge step forward is that core testing may be waived if the coring process would cut through the reinforcement. We have also made great strides in educating inspectors and field engineers that trash enclosures, fences, small retaining walls, etc. do not require core testing.

We have supported significant changes to the California Energy Code. The California Energy Code now recognizes U-factors rather than R-values. In addition, a heavy mass wall is now defined as an 8-inch thick concrete masonry wall requiring no mandatory insulation. This sounds simple, but it is huge. No more worrying about how to comply with R-values. Anyone with an interest in the masonry industry should appreciate this new provision.

In order to perpetuate the industry, in both the short and long term, we must be open to new methods and materials to keep a competitive edge. In short, be aware of the efforts constantly being made by industry to convince owners and designers to specify masonry. If this requires using high SCM grout, or a material weight that is not your preference, be willing to do so; our industry depends on it.

REMEMBER THE ALTERNATIVE-YOU WILL BE DRIVING BY A PROJECT EVERY DAY WATCHING IT BEING CONSTRUCTED OUT OF CONCRETE OR SOME OTHER MATERIAL.

For more information or assistance, please feel free to contact one of the industry representatives listed.

Concrete Masonry Association of California and Nevada
6060 Sunrise Vista Drive, 1990 Citrus Heights, CA 95610
(916) 722-1700;
www.cmacn.org
Kurt Siggard: Executive Director;
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Masonry Institute of Amercia
1315 Storm Parkway Torrance, CA 90501
(310) 257-9000;
www.masonryinstitute.org
John Chrysler: Executive Director;
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Mason Contractors Association of California
7844 Madison Avenue, #140 Fair Oaks, CA 95628
(916) 966-7666;
www.mca-ca.org
Julie Trost: Executive Director;
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
   

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