That the City Council:
A. Conduct a Public Hearing regarding the Uniform Construction Cost Accounting Act;

B. CONSIDER, APPROVE, AND ADOPT RESOLUTION NO. CC 2024-__ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA, CALIFORNIA, ELECTING TO BECOME SUBJECT TO THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT PROCEDURES; and,

C. CONSIDER, APPROVE, AND ADOPT THE FIRST READING OF ORDINANCE NO. ____ ENTITLED: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA HABRA, CALIFORNIA, AMENDING CHAPTER 4.20 PURCHASING SYSTEM OF TITLE 4 REVENUE AND FINANCE OF THE LA HABRA MUNICIPAL CODE, REVISING PROCEDURES AND REQUIREMENTS FOR BIDDING OF PUBLIC WORKS PROJECTS AND MAINTENANCE WORK UNDER THE CALIFORNIA PUBLIC CONTRACT CODE (SECTION 22000, ET SEQ.) INCLUDING THE ALTERNATE PROVISIONS OF THE UNIFORM CONSTRUCTION COST ACCOUNTING ACT.

The Uniform Public Construction Accounting Act (Act), established in 1983, provides a uniform accounting standard for construction work performed or contracted by local public agencies. It allows public agencies to use alternative bidding procedures to the formal Public Contract Code for public works construction projects under $200,000 as long as the agency elects to follow the bidding and accounting procedures set forth in the Cost Accounting Policies and Procedures Manual of the California Uniform Construction Accounting Commission (Commission).  The Commission, which was also established as a part of the Act, is a layer of protection for the public, construction vendors, and the public agencies in that the Commission sets the rules and guidelines that agencies must follow to be eligible for the alternate bidding procedures, hears and investigates complaints from vendors as they arise, and has the ability to revoke agency's permission to participate in the Program.

This alternative bidding procedure allows public agencies the flexibility to complete projects of $60,000 or less by negotiated contract, and informal bidding procedures for projects between $60,000 and $200,000. Formal bidding procedures would still be required for projects of $200,000 or more, and the City would still have the option to use formal bidding procedures for projects of less than $200,000. If approved by Council, this informal bidding procedure will allow for a more streamlined process to bid out certain public works and maintenance contracts, and is designed to reduce costs, expedite the contract award process, and improve the efficiency of managing smaller public works projects.

Currently, the City follows the California Public Contract Code Section 20163 that requires any project in excess of $5,000 to be formally bid. This requires the City to prepare a formal request for proposal, receive responses, accept bid bonds, and more or, when applicable, to utilize the formal bid process from other public agencies.  Staff have found that fewer contractors will take the time to submit formal bids for small-scale projects and contractors who do respond will often price their bids to take into account the additional costs involved with having to respond to these small-scale projects. This can lead to the City paying more for relatively small, simple projects. In response to these practical concerns, the California State Legislature passed the Act to help streamline the bidding process for local agencies, while still protecting the rights of the public and contractors by ensuring accountability, transparent accounting practices, and fair treatment of contractors. The Act does this by requiring policies and procedures that each agency must adhere to in order to be considered an eligible agency under the Act. These requirements include the agency being required to establish and maintain a Qualified Contractor’s List, keeping strict records, responding to periodic audits, and other requirements. 

Per the Act, a participating agency must establish a new list of qualified contractors at least once per calendar year and must include a notice to all construction trade journals inviting any licensed contractor to submit the name of their firm for inclusion on the Contractor’s List, so that there is an opportunity for all interested contractors to be notified of available projects and to provide the agency with streamlined requirements to identify qualified contractors. In addition, interested parties can request the Commission to conduct audits and reviews of participating agencies, and if such requests are accepted by the Commission, they will assign members to conduct the reviews. If repeat findings of wrongdoing by an agency are found or if an agency fails to comply with any of the other requirements of the policies and procedures set forth in the Commission’s Cost Accounting Policies and Procedures Manual, the Commission has the ability to revoke the agency’s participation in the program.

Although the Act allows for the creation of an alternate bidding process for smaller scale projects, including those valued under $60,000 to be negotiated by contract, the City Manager’s contract approval threshold will remain at $35,000. Any project valued at more than $35,000 will be presented to the City Council for consideration and approval.

The Act is a voluntary program available to all California public entities, but only applies to those agencies that have “opted-in” to the provisions of the Act, using the procedures outlined in the Act. There are currently 297 cities who have opted-in and have become subject to the Act, including 21 cities in Orange County. A public agency may become subject to the Act once the governing body elects, by resolution, to become subject to the Act and files a copy of the approved resolution with the State Controller’s Office.  In addition, the agency must adopt an informal bidding ordinance that outlines the informal bidding procedure before the agency can utilize the provisions of the Act. Staff has worked with the City Attorney's office to draft a proposed Ordinance, which is attached for review.

Staff requests that the City Council consider and approve a resolution electing the City to become subject to the Uniform Public Construction Cost Accounting Act procedures, as well as consider and approve an Ordinance amending Section 4.20 "Purchasing System" of the La Habra Municipal Code.

There is no cost to the General Fund for "opting-in" to the Uniform Construction Cost Accounting Act and staff anticipates that the City will realize future savings by participating in this program.