Approve an update to the County's Policy on Procurement to reflect organizational changes in the Procurement Division, clarify the County's apprenticeship requirements on certain projects, and address electronic signatures to achieve efficiencies in the contracting process.  (No general fund impact) (Pistochini/Murphy) (Est. Time: 10 min)

Approve an update to the County's Policy on Procurement to reflect organizational changes in the Procurement Division, clarify the County's apprenticeship requirements on certain projects, and address electronic signatures to achieve efficiencies in the contracting process.  

The Procurement Division periodically seeks revisions to the County's Procurement Policy to continually improve the procurement process, reflect changes in state and federal procurement laws, and to implement direction from the Board of Supervisors.

The procurement policy was last updated in December 2021.  The Board is asked to adopt an updated policy consisting of three changes: 1) replacing "Department of Financial Services" with "General Services Department" to reflect the September 27, 2022 Board-approved reorganization of Procurement functions, 2) recognizing electronic signatures as an acceptable means for contract execution to achieve efficiencies in the contracting process, and 3) revising the County's Joint Apprenticeship Committee requirement for public projects to clarify what are applicable projects, what is considered a responsive bidder, and to improve compliance with apprenticeship laws.

The Board initially reviewed these proposed changes on August 29, 2023.  At that meeting, the Board directed staff to review proposals made by members of the public to Joint Apprenticeship Committee section of the Policy on Procurement related to health insurance.  No concerns were raised regarding the other proposed revisions regarding updated references to the General Services Department and recognition of electronic signatures.  Attachment A contains these previously requested proposed revisions to the procurement policy except changes to the Joint Apprenticeship Committee section. 

Attachment B contains only revisions to the Joint Apprenticeship Committee section (section L).  Given the diversity of comments received from contractors, labor, and related interest groups, Attachment B contains three options for policy revisions to the Joint Apprenticeship Committee section, summarized as follows:  

Option	Threshold
Amended JAC policy with specific healthcare requirement	$0-1m: no additional requirements (status quo) $1m+: Amended JAC policy and self-certification of healthcare benefits equal or greater than the lowest cost Covered California Gold (estimated to be $1,700/mo) or Platinum plan (estimated to be $2,000/mo) for a family of four (two 40-year-olds, and two children) or signatory to a valid collective bargaining agreement
Two tier procurement policy (Small project/PLA)	$0-2.5m: no additional requirements $2.5m+: Project Labor Agreement
Amended JAC (status quo)	$0-1m: no additional requirements (status quo) $1m+: Amended JAC policy (status quo)

Attachment C includes sample certification forms for reference that would be included in bid documents to ensure compliance with the County's JAC requirement.

The health insurance language in Option 1 has been proposed by labor interest groups based on the requirements in AB 2011 (2022), a CEQA streamlining bill for certain development projects with 50 or more housing units that took effect July 1, 2023, which requires contractors on such projects to make specified health care expenditures for construction craft employees in an amount per hour worked on the development project equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located or be a signatory to a valid collective bargaining agreement. The specific language for the proposed self-certification health insurance requirement in Option 1 is as follows:
 

Each Contractor with construction craft employees shall make health care expenditures for each such employee in an amount per hour worked on the Covered Project equivalent to at least the hourly pro rata cost of a Covered California Platinum level plan for two 40-year-old adults and two dependents 0 to 14 years of age for the Covered California rating area in which the development is located. Qualifying expenditures shall be credited toward compliance with prevailing wage payment requirements up to the amount determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code. Health care expenditures in excess of that amount shall not be so credited. “Health care expenditures” include contributions under Sections 501(c) or (d) or 401(a) of the Internal Revenue Code and payments toward “medical care” as defined under Section 213(d)(1) of the Internal Revenue Code. A Contractor that is signatory to a valid collective bargaining agreement that requires payment of at least the prevailing wage, participation in a joint labor-management apprenticeship program, and the provision of health care payments for all construction craft employees shall be deemed in compliance. A Contractor without construction craft employees shall show a contractual obligation that its subcontractors comply with this paragraph.

Requiring prospective public works project bidders to meet additional healthcare requirements may result in fewer responsive bids which may reduce the competitiveness of the bidding process. It is unclear what effect, if any, such a requirement may have on project bid prices as any additional cost effects may already have been accounted for in the County’s existing JAC policy. 

As an alternative to implementing the health insurance requirement via the bid self-certification, the Board could also consider implementation of a project labor agreement (PLA) as set forth in Option 2 of Attachment B.  A PLA is a more established option that public agencies have used to address wage and benefit requirements on construction projects.  A review of other local agencies indicates that most agencies have applied PLAs to larger projects only. For example, Alameda County has a PLA requirement for projects estimated to cost more than $1 million or $3 million for public works projects, Solano County utilizes PLAs on projects of $2.5 million or more, and Santa Clara County utilizes PLAs on projects that are $10 million or higher.  However, negotiation of a PLA will take additional time that could delay larger County projects. 
 

Attachment D includes a list of forthcoming and recent public works to provide context as to how additional health insurance or PLA requirements may apply to such projects in evaluating the dollar threshold at which the Board may want to set the proposed options for the JAC, health insurance, or a PLA requirement. 

The Board is requested to first approve Attachment A, and then adopt an option from Attachment B, or provide further direction, as to revise Section L of the Policy on Procurement. If the Board approves the policy revisions, the revised policy will take effect immediately, other than adopting language that would require a PLA as staff would need to negotiate and draft a PLA with labor unions and subsequently return to the Board, which could consequently affect the delivery timeline for forthcoming public works projects. 

The General Services Department collaborated with the Department of Community Services, the County Administrator's Office, and the County Counsel's Office.