HomeMy WebLinkAbout04 - Fair Competition and Taxpayer Savings Act0
i
u
ITEM 4
TO: Members of the Newport Beach City Council
FROM: Dave Kiff, Assistant to the City Manager
SUBJECT: City's Support of the "Fair Competition and Taxpayer Savings Act"
RECOMMENDED
ACTION:
Adopt Resolution #99 -_ stating the City's support of the "Fair Competition
and Taxpayer Savings Act" and its legislative vehicles (ACA 16 and AB 1448).
BACKGROUND: Given California's extensive infrastructure needs (well into the billions of dollars
annually), the private sector and public sector have aggressively competed for
the design and engineering of capital improvement projects.
iMiat is PECG? The Professional Engineers in California Government (PECG), a union consisting
mostly of staff engineers at the California Department of Transportation
( CalTrans), has long argued that State engineers -- not engineers from private
sector contractors — are most qualified for such work. They have argued that the
private sector contracting of design and engineering invites "cronyism" from
public officials and may lead to the hiring of less- than - qualified engineers to
complete taxpayer- funded projects.
Private sector companies counter that they can do the work faster, cheaper, and
as well or better than PECG's engineers. Similarly, local agencies that experience
ebbs and flows of design and construction work from year to year have
appreciated the ability to hire private sector companies on a project -by- project
basis. For cities, contracting out allows great budget flexibility.
The battle between PECG and private sector engineers has simmered in the
Legislature and the courts in recent years. While the Legislature has passed bills
that allow for private sector contracting by Caltrans and Caltrans' past director
has attempted to hire contractors, PECG has generally been successful in
blocking Caltrans' actions in court.
PECG V. Department of On May 15, 1997, the California Supreme Court upheld a lower court ruling that
Transportation (1997) found that Caltrans could not contract out for design and engineering if Caltrans'
staff could perform the same job (PECG v. Department of Transportation —15
Cal.41h 543). The Supreme Court said that the California Constitution clearly
forbids any contracting for work that the State, through civil service, can perform
"adequately and competently" (Article VII, §1).
Newport Beach City Council
Page 2
BACKGROUND: Even while enjoying success in the courts, PECG took its argument against
(cont'd) contracting out to the voters in June 1998, when it placed Proposition 224 (the
"Government Cost Savings and Taxpayer Protection Amendment") on the ballot.
Prvposition224 in June Proposition 224 attempted to reinforce existing protections for PECG and to limit
1998 most contracting out by establishing significant new hurdles to overcome should
an agency wish to hire a non - Caltrans engineer. The voters defeated Proposition
224 by a 62% - 38% margin.
Meanwhile, back in About 20 -33% of the City of Newport Beach's typical Capital Improvement Plan
Nem"Beadt ... involves environmental review, preliminary planning and design, and
construction engineering work. The remainder goes towards actual construction
costs, project management, and a set -aside for contingencies. The City uses
outside engineering and assistance for about 2 /3'(h of these projects. City staff
and others have expressed concern that PECG's attempts to block state
contracting could result in limits on local contracting as well.
The Fair Competition and To protect both the City's right to contract out and to change the California
Taxpayer SwmgsAct Constitutions apparent prohibition against State contracting, an association of
private sector engineers known as "Taxpayers for Fair Competition" has
developed the "Fair Competition and Taxpayer Savings Act." This Act (text
provided in Attachment B) will amend the California Constitution and the
State's Government Code to:
• Expressly allow State agencies, cities, counties, school districts, special
districts, and regional agencies to "contract with qualified private entities for
architectural and engineering services for all public works of improvement."
• Expressly allow any agency to contract out with private sector engineering
firms for projects within the State Transportation Improvement Plan
("STIP").
• Direct that any architectural or engineering project be subject to a fair and
competitive selection process, along with a prohibition against government
employees competing when they have a conflict of interest.
The Association has embarked upon a two - pronged approach to enact the
changes summarized above -an initiative constitutional amendment and a
legislative constitutional amendment (ACA 16, Cox, 1999 -text provided in
Attachment C) combined with a bill in the State Legislature (AB 1448, Cox, 1999
- text provided in Attachment D). In May 1999, the Association wrote the City
and asked for its formal support of the overall effort to pass the legislation and
place the measure on either the primary or general election ballots in 2000.
City's LegislaHvePlatform The City Council's Legislative Platform for 1999 -as adopted by the Council on
for 1999 February 22, 1999 - directs the City to "remove obstacles for effective
implementation of transportation policies, programs and services" by
"support(ing) measures which would afford local agencies greater discretionary
authority to expend available transportation funds." Staff views the proposed
Fair Competition and Taxpayer Savings Act" as consistent with the Platform.
ATTACHMENTS: Attachment A - Resolution 99 -_
Attachment B -Text of the Fair Competition and Taxpayer Savings Initiative
Attachment C -Text of ACA 16
Attachment D -Text of AB 1448
Page 3
Attachment A
Resolution 99-
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NEWPORT BEACH
IN SUPPORT OF ACA 16, AB 1448, AND THE
FAIR COMPETITION AND TAXPAYER SAVINGS ACT
WHEREAS, California's population growth has resulted in the demand for more than $90 billion
worth of highway, school, prison, flood control, and other infrastructure improvement projects; and
WHEREAS, the need for the State and local governments to contract with the private sector for
architectural and engineering services has never been greater; and
WHEREAS, a series of lawsuits by the Professional Engineers in California Government (PECG) has
effectively blocked the State from contracting with private sector engineers and architects; and
WHEREAS, in an attempt to allow the State and local governments to once again contract with the
private sector for these services, advocates have prepared the "Fair Competition and Taxpayer Savings
Act"; and
WHEREAS, the Act is contained in Assembly Constitutional Amendment 16 (Cox, 1999), Assembly
Bill 1448 (Cox, 1999), and may be proposed as an initiative constitutional amendment should either ACA
16 or AB 1448 fail to pass the Legislature; and
WHEREAS, the Act changes California's law and amends the California Constitution to expressly
allow the State and local governments to contract with private companies for architectural and design
services; and
WHEREAS, the Act is consistent with the City's 1999 Legislative Platform which directs the City to
support efforts to de- bureaucratize the State transportation process; and
WHEREAS, the Act will save California's taxpayers' money and save revenue at the City of Newport
Beach by encouraging competition between the State employees and the private sector; now, therefore be
it
RESOLVED by the City Council of the City of Newport Beach that the City hereby SUPPORTS the
Fair Competition and Taxpayer Savings Act, both as an initiative constitutional amendment and a
legislative constitutional amendment combined with a proposed change to the California Government
Code.
ADOPTED this 14th day of June, 1999.
MAYOR
ATTEST:
CITY CLERK
Page 4
Attachment B
Text of the Fair Competition and Taxpayer Savings Act
SECTION ONE TITLE. This measure shall be known and maybe cited as the "Fair Competition and
Taxpayer Savings Act."
SECTION TWO PURPOSE AND INTENT. It is the intent of the people of the State of California in enacting
this measure:
(a) To remove existing restrictions on contracting for architectural and engineering
services and allow state, regional, and local governments to use qualified private
architectural and engineering firms to help deliver transportation, schools, water, and
other infrastructure projects safely, cost- effectively, and on time;
(b) To encourage the kind of public or private partnerships necessary to ensure that
California taxpayers benefit from the use of private sector transportation, earthquake
safety, and other infrastructure experts;
(c) To promote fair competition so that both public and private sector architects and
engineers work more efficiently, and ultimately deliver better value to taxpayers;
(d) To speed the completion of a multibillion dollar backlog of highway, bridge, transit,
and other projects;
(e) To ensure that contracting for architecture and engineering services occurs through an
open and publicly advertised competitive selection process, free of undue political
influence, to obtain the best quality and value for California taxpayers;
(f) To ensure that private firms contracting for architectural and engineering services
with governmental entities meet established design and construction standards and
are held responsible for the performance of their contracts; now, therefore, be it
Resolved by the Assembly, the Senate concurring, That the Legislature of the State of
California at its 1999 -2000 Regular Session commencing on the seventh day of
December 1998, two - thirds of the membership of each house concurring, hereby
proposes to the people of the State of California that the Constitution of the State be
amended by adding Article XXII thereof, to read:
SECTION THREE ARTICLE XXII is hereby added to the California Constitution to read:
SECTION 1. The State of California and all other public entities, including, but not limited to,
cities, counties, cities and counties, special districts, local and regional agencies, and joint
powers agencies, may contract with private entities for architectural and engineering services
for all public works of improvement. The choice and authority to contract extends to all
phases of project development, including permit and environmental studies, rights-of-way
services, design phase services, and construction phase services. The choice and authority to
contract exist without regard to funding source, whether federal, State, regional, local, or
private, whether or not the project is programmed by a State, regional, or local government
entity, or whether or not the completed project is a part of any state -owned or state-operated
system or facility.
SECTION 2. Nothing contained in Article VII of this Constitution shall be construed to restrict
or prohibit the State or any other public entities, including, but not limited to, cities, counties,
cities and counties, special districts, local and regional agencies, and joint power agencies,
from contracting with private entities for the performance of architectural or engineering
services.
SECTION FOUR Chapter 10.1 is hereby added to Division Five of Title One of the Government Code to read:
4529.10. For purposes of Article XXII of the California Constitution and this chapter, the term
"architectural and engineering services" shall include all architectural, landscape architectural,
environmental, engineering, land surveying, and construction project management services.
E
0
0
Page 5
SECTION FOUR 4529.11. All projects included in the State Transportation Improvement program
. (cont'd) programmed and funded as interregional improvements or as regional improvements shall
be subject to Article XXII of the California Constitution. The sponsoring governmental entity
shall have the choice and the authority to contract with qualified private entities for
architectural and engineering services. For projects programmed and funded as regional
improvements, the sponsoring governmental entity shall be the regional or local project
sponsor. For projects programmed and funded as interregional improvements, the
sponsoring governmental entity shall be the State of California, unless there is a regional or
local project sponsor in which case the sponsoring governmental entity shall be the regional
or local project sponsor. The regional or local project sponsor shall be a regional or local
governmental entity.
4529.12. All architectural and engineering services shall be procured pursuant to a fair,
competitive selection process which prohibits governmental agency employees from
participating in the selection process when they have a financial or business relationship with
any private entity seeking the contract, and the procedure shall require compliance with all
laws regarding political contributions, conflicts of interest, or unlawful activities.
4529.13. Nothing contained in this chapter shall be construed to change project design
standards, seismic safety standards, or project construction standards established by state,
regional, or local governmental entities. Nor shall any provision of this chapter be construed
to prohibit or restrict the authority of the Legislature tostatutorily provide different
procurement methods for design -build projects or design -build and operate projects.
4529.14. Architectural and engineering services contracts procured by public agencies shall
be subject to standard accounting practices and may require financial and performance audits
as necessary to ensure that contract services are delivered within the agreed schedule and
budget.
4529.15. This chapter only applies to architectural and engineering services defined in Section
. 4529.10. Nothing contained in this chapter shall be construed to expand or restrict the
authority of governmental entities to contract for fire, ambulance, police, sheriff, probation,
corrections, or other peace officer services. Nor shall anything in this chapter be construed to
expand or restrict the authority of governmental entities to contract for education services
including, but not limited to, teaching services, services of classified school personnel, and
school administrators.
4529.16. This chapter shall not be applied in a manner that will result in the loss of federal
funding to any governmental entity.
4529.17. The provisions of this chapter are severable. If any provision of this chapter or its
application is held invalid, that invalidity shall not affect other provisions or applications that
can be given effect without the invalid provision or application.
452918. If any other act of the Legislature conflicts with the provisions of this chapter, this
chapter will prevail.
4529.19. This chapter shall be liberally construed to accomplish its purposes
4529.20. This chapter seeks to comprehensively regulate the matters which are contained
within its provisions. These are matters of statewide concern and when enacted are intended
to apply to charter cities as well as all other governmental entities.
SECTION FIVE This initiative may be amended to further its purposes by statute, passed in each house by roll
call vote entered in the journal, two thirds of the membership concurring, and signed by the
Governor.
SECTION SIX If there is a conflicting initiative measure on the same ballot, which addresses and seeks to
comprehensively regulate the same subject, only the provisions of this measure shall become
operative if this measure receives the highest affirmative vote.
•
Page 6
Attachment C
Text of Assembly Constitutional Amendment 16 •
A resolution to propose to the people of the State of California an amendment to the Constitution of the State, by
adding Article XXII thereof, relating to public contracts.
WHEREAS, It is the intent of the people of the State of California in enacting this measure to do all of the following:
(a) Remove existing restrictions on contracting for architectural and engineering services and allow state,
regional, and local governments to use qualified private architectural and engineering firms to help deliver
transportation, schools, water, and other infrastructure projects safely, cost- effectively, and on time;
(b) Encourage the kind of public or private partnerships necessary to ensure that California taxpayers benefit
from the use of private sector transportation, earthquake safety, and other infrastructure experts;
(c) Promote fair competition so that both public and private sector architects and engineers work more
efficiently, and ultimately deliver better value to taxpayers;
(d) Speed the completion of a multibillion dollar backlog of highway, bridge, transit, and other projects;
(e) Ensure that contracting for architecture and engineering services occurs through an open and publicly
advertised competitive selection process, free of undue political influence, to obtain the best quality and value
for California taxpayers;
(f) Ensure that private firms contracting for architectural and engineering services with governmental entities
meet established design and construction standards and are held responsible for the performance of their
contracts; now, therefore, be it Resolved by the Assembly, the Senate concurring, That the Legislature of the
State of California at its 1999 -2000 Regular Session commencing on the seventh day of December 1998, two-
thirds of the membership of each house concurring, hereby proposes to the people of the State of California
that the Constitution of the State be amended by adding Article XXII thereof, to read:
ARTICLE XXII PUBLIC CONTRACTS
SECTION 1. This article shall be known as the "Fair Competition and Taxpayer Savings Act." .
SECTION 2. The State of California and all other public entities, including, but not limited to, cities,
counties, cities and counties, special districts, local and regional agencies, and joint powers agencies,
may contract with private entities for architectural and engineering services for all public works of
improvement. The choice and authority to contract extends to all phases of project development,
including permit and environmental studies, rights -of -way services, design phase services, and
construction phase services. The choice and authority to contract exist without regard to funding
source, whether federal, State, regional, local, or private, whether or not the project is programmed by a
State, regional, or local government entity, or whether or not the completed project is a part of any
state -owned or state - operated system or facility.
SECTION 3. Article VII may not be construed to restrict or prohibit the State or any other public entities,
including, but not limited to, cities, counties, cities and counties, special districts, local and regional
agencies, and joint power agencies, from contracting with private entities for the performance of
architectural or engineering services.
SECTION 4. Chapter 10.3 (commencing with Section 4529.61) of Division 5 of Title 2 of the Government
Code, or any successor, maybe amended only by a bill that furthers the purposes of this measure and is
passed in each house of the Legislature by roll call vote entered in the journal, two - thirds of the
membership concurring.
E
Page 7
Attachment D
. Text of Assembly Bill 1448
As amended in the State Assembly on April 12,1999
(strike -out (delete] and italic [add] version)
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 10.3 (commencing with Section 4529.61) is added to Division 5 of Title 1 of the Government
Code, to read:
CHAPTER 10.3. FAIR COMPETITION AND TAXPAYER SAVINGS ACC
4529.61. For purposes of Article XXII of the California Constitution and this chapter, the term "architectural and
engineering services" - . '^ ^,.�lua°° shall include all architectural, landscape architectural, environmental, engineering,
land surveying, and construction project management services.
4529.62. All projects included in the State Transportation Improvement Program programmed and funded as
interregional improvements or as regional improvements are- shall be subject to Article XXII of the California
Constitution. The sponsoring governmental entity -has shall have the choice and the authority to contract with
qualified private entities for architectural and engineering services. For projects programmed and funded as regional
improvements, the sponsoring governmental entity -is -shall be the regional or local project sponsor. For projects
programmed and funded as interregional improvements, the sponsoring governmental entity -is- shall be the State of
California, unless there is a regional or local project sponsor '';ps in which case the sponsoring governmental entity
is- shall be the regional or local project sponsor. The regional or local project sponsor is the shall be a regional or
local governmental entity proposing, - _deptin af Submitting the pr9jeetf9. entity.: .^ ..^l..
-�. - :_.1...
4529.63. An epe�, publiely adveffised, eanipetitive seleetign preeess shall be used by the State Pf QU(Afnia and all
• %4q.e^,, tl.,. past ,.f the ^,.....iees re pr.a.. ^,,.d to exceed fifty thousand dell..-.. ($59 0901
aadjeW pe;YeFs ageneies, shag eentairt a eent�aetual provision that requires the pfivate entity te be liable �@ *e
govemenental
A 9:29 G9. 4529.63. All architectural and engineering services shall be procured pursuant to a preeedum that fair,
competitive selection process which prohibits governmental agency employees from participating in the selection
process -i when they have a financial or business relationship with he any private entity seeking theme
die- contract, and the procedure shall require compliance with all laws regarding political contributions, conflicts of
interest, or unlawful activities.
45N.66. This ehapt,.- d^^^ net 4529.64. Nothing contained in this chapter shall be construed to change project design
standards, seismic safety standards, or project construction standards established by state, regional, or local
governmental entities. T"h-p`d^^^ no Nor shall any provision of this chapter be construed to prohibit or restrict
the authority of the Legislature to statutorily provide different procurement methods for
design -build projects or design -build and operate projects.
"5^— .029.67. 4529.65. Architectural and engineering services contracts procured by public agencies are hall be
subject to standard accounting practices and may require financial and performance audits as necessary to ensure
that contract services are delivered within the agreed schedule and budget.
452969 4529.66. This chapter applies -ealy- only applies to architectural and engineering services definedin
Section 4529.61. 41hds ehaptef Nothing contained in this chapter shall be construed to expand or restrict the
authority of governmental entities to contract for fire, ambulance, police, sheriff, probation, corrections, or other
peace officer services. This EhapteF dees not Nor shall anything in this chapter be construed to expand or restrict the
authority of governmental entities to contract for education services including, but not limited to, teaching services,
services of unplassified - classified school personnel, and school administrators.
• 4529.69 4529 67. This chapter may shall not be applied in a manner that - results -will result in the loss of federal
funding to any governmental entity.
Page 8
4529.7.0. 4529.68. The provisions of this chapter are severable. If any provision of this chapter or its application
is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the •
invalid provision or application
A 5:29.4 4529.69. If any other act of the Legislature conflicts with the provisions of this chapter, this chapter will prevail.
4529.70. This chapter shall be liberally construed to accomplish its purposes.
"5^4.". 4529.71. This chapter seeks to comprehensively regulate the matters which are contained within its
provisions. These are matters of statewide concern and tWs Ehapter if enaete a,'^ when enacted are intended to
apply to charter cities as well as all other governmental entities.
SEC. 2. Notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines
that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.
If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement
shall be made from the State Mandates Claims Fund.
u
•