Articles Posted in Government Contracts

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There are numerous contractor-related bills making their way through the California legislature this year. The following bills, although not an all-inclusive list, are worth noting:

Assembly Bill 44 – An Act to amend, repeal, and add Public Contract Code § 4104 relating to public contracts – signed into law by the Governor September 9, 2013 and operative July 1, 2014. The Subletting and Subcontracting Fair Practices Act, Cal. Public Contracting Code §§ 4100, et seq., requires an entity taking bids for the construction of any public work or improvement to specify that any person making a bid or offer to perform the work to, in his or her bid or offer, include specified information, including the name and location of the place of business of each subcontractor who will perform work or labor or render service to the prime contractor in or about the work or improvement. Commencing on July 1, 2014, any person making a bid or offer to perform the work to, in his or her bid or offer, will be required to include the California contractor license number of each subcontractor.

Assembly Bill 186 – An Act to add Business & Professions Code § 115.6 relating to professions and vocations, and making an appropriation therefore. As currently drafted, among other things, AB 186 would establish a temporary licensure process for an applicant who holds a current license in another jurisdiction, as specified, and who supplies satisfactory evidence of being married to, or in a domestic partnership or other legal union with, an active duty member of the Armed Forces of the United States who is assigned to a duty station in California under official active duty military orders. The temporary license would expire 12 months after issuance, upon issuance of the expedited license, or upon denial of the application for expedited licensure by the board, whichever occurs first.

Assembly Bill 433 – An Act to amend Business & Professions Code §§ 7026.12 and 7057, to add and repeal Business & Professions Code § 7026.13, and to add Health & Safety Code § 13110 relating to contractors. As currently drafted, among other things, AB 433 would authorize, until January 1, 2017, the installation of a residential fire protection system for a one- or 2-family dwelling by a contractor holding a fire protection contractor classification or a plumbing contractor classification.

Assembly Bill 811 – An Act to amend Government Code § Section 4216.6 relating to excavations – signed into law by the Governor September 6, 2013 and operative January 1, 2014. The new law requires statewide information, as defined, provided by operators and excavators regarding facility events, as defined, to be compiled and made available in an annual report by regional notification centers and posted on the Internet websites of those regional notification centers.

Assembly Bill 972 – An Act to amend Labor Code §§ 108.2 and 1776 relating to employment records. As currently drafted, among other things, AB 972 would require payroll records for projects that use an electrician to include the electrician’s state certification number.

Assembly Bill 993 – An Act to amend Business & Professions Code § 7085.5 relating to contractors. Existing law authorizes an arbitrator to grant any remedy or relief deemed just and equitable and within the scope of the Contractor State License Board’s (CSLB) referral to the arbitrator and the requirements of the board, including costs and expenses. As currently drafted, among other things, AB 993 would provide that a party that submits a dispute to arbitration waives any right to recover attorney’s fees or to challenge an arbitrator’s award of attorney’s fees in a civil action related to the dispute.

Assembly Bill 1114 – An Act to amend Business & Professions Code § 7157 relating to contractors. Existing law prohibits a salesperson or contractor’s agent from accepting compensation of any kind for, or on account of, a home improvement transaction, or any other transaction involving a work of improvement, from a person other than the contractor whom he or she represents with respect to the transaction, and from making a payment to any person other than his or her employer on account of the sales transaction. The law also prohibits a contractor from paying, crediting, or allowing any consideration or compensation of any kind to any other contractor or salesperson other than a licensee for, or on account of, the performance of a work of improvement or services, including, but not limited to, home improvement work or services, except as specified. As currently drafted, among other things, AB 1114 would delete the latter provision prohibiting contractors from paying, crediting, or allowing any consideration or compensation.

Assembly Bill 1236 – An Act to amend Business & Professions Code § 7071.19 relating to contractors – signed into law by the Governor August 16, 2013 and operative January 1, 2014. Existing laws authorizes the CSLB to issue a contractor’s license to a limited liability company, but requires, as a condition precedent to the issuance, reissuance, reinstatement, reactivation, renewal, or continued valid use of a limited liability company contractor’s license, that the applicant or licensee file or have on file a surety bond for damages arising out of specified claims of employees. It also requires the limited liability company to maintain a policy or policies of insurance against liability imposed on or against it for damages arising out of claims, as specified, as a condition of licensure, and the policy or policies of insurance secured to satisfy these provisions are required to be written by an insurer or insurers duly licensed by this state. Under the new law, those policies may be written by an eligible surplus line insurer, as specified.

Senate Bill 261 – An act to amend Business & Professions Code § 7114.2 relating to contractors – signed into law by the Governor August 27, 2013 and operative January 1, 2013. Existing law authorizes the CSLB to issue a citation, instead of initiating disciplinary proceedings, to a licensee when the CSLB has probable cause to believe that the licensee has committed acts in violation of the contractors’ State License Law, Business & Professions Code §§ 7000, et seq. In addition, under existing law, any person who willfully and intentionally uses, with intent to defraud, a contractor’s license number that does not correspond to the number on a currently valid contractor’s license held by that person, is guilty of a crime, and the CSLB may issue a citation to an unlicensed individual who is in violation of that provision, including an order of abatement and a civil penalty. Under the new law, any licensed or unlicensed person who commits any of those specified activities with respect to a contractor’s license is subject to the administrative remedies authorized by the Contractors’ State License Law.

Senate Bill 262 – An act to amend Business & Professions Code § 7068.1 relating to contractors – signed into law by the Governor August 27, 2013 and operative January 1, 2013. Existing law authorizes an applicant for contractor’s license to qualify the applicant’s knowledge and experience with a responsible managing officer (RMO), employee (RME), member, or manager who has certain qualifications. The license qualifier is responsible for exercising direct supervision and control of his or her employer’s or principal’s construction operations as necessary to secure full compliance with the Contractors’ State License Law and CSLB’s regulations relating to construction operations. Under the new law, among other things, instead, make the qualifying person responsible for exercising that direct supervision and control to secure compliance with that law and those regulations. A violation of these provisions is grounds for disciplinary action, and a misdemeanor punishable by imprisonment in a county jail not to exceed 6 months, by a fine of not less than $3,000, but not to exceed $5,000, or by both that imprisonment and fine.

Senate Bill 263 – An Act to amend Business & Professions Code § 7028 relating to contractors. Existing law makes it a misdemeanor for a person to engage in the business or act in the capacity of a contractor without having a license, unless the person is particularly exempted. As currently drafted, among other things, SB 263 would provide that, unless exempted, it is a misdemeanor for a person to engage in the business or act in the capacity of a contractor if the person either has never been licensed pursuant to the Contractors’ State License Law, or the person was a licensee, but performed acts covered by the law under a license that was inactive, expired, revoked, or under suspension for any reason failure to pay a civil penalty or comply with an order of correction, or failure to resolve all outstanding final liabilities, as specified.

Senate Bill 417– An Act to amend Business & Professions Code § 7018, to add Government Code § 15810 and to add Public Contract Code §§ 10142 and 20103 relating to public building and works. The State Contract Act, Cal. Public Contract Code §§ 10100, et seq., and the Local Agency Public Construction Act, Cal. Public Contract Code §§ 20100, et seq., generally set forth the authority and duties of state and local agencies for bidding and awarding contracts on public works. Among other things, they authorize a state or local agency to require that each prospective bidder for a public works contract complete and submit to the state or local agency a standardized questionnaire and financial statement, as provided. In addition, the State Building Construction Act of 1955 authorizes the State Public Works Board to acquire and construct public buildings for use by state agencies, when authorized by a separate act or appropriation enacted by the Legislature. As currently drafted, among other things, SB 417 would authorize state and local agencies subject to these Acts, prior to advertising for bids for construction of a public building or a public works project, to advise the CSLB of any supplemental license, certification, or education required of a contractor to qualify to bid on the contract for that project. It would require the CSLB to review the information received regarding any supplemental license, certification, or education requirements, and to post any supplemental requirements it approves in an easily identifiable location on the CSLB’s website. Any supplemental requirements that are not posted on the CSLB’s website before the bid opening would not apply to the bidding process for that contract.

Senate Bill 822 – An Act to amend Business & Professions Code §§ 5096, 5096.2, 5096.12, 7026.1, 7065.3, 7114, 7141, 7206, 7210, 7887, 9807, and 17914, to add Business & Professions Code § 7851, to repeal Business & Professions Code §§ 102.1 and 102.2, and to amend Health & Safety Code § 44011 relating to professions and vocations, and making an appropriation therefor. As currently drafted, among other things, SB 822 would provide that the term “contractor” or “consultant” does not apply to a common interest development manager, and a common interest development manager is not required to have a contractor’s license when performing management services, as defined.

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In IAP World Services, Inc.; EMCOR Government Services, B-407917.2 et al. (July 10, 2013), involving a protest challenging an award by the U.S. Department of the Navy (the “Navy”) for base operating support services, the Government Accountability Office (“GAO”) held that the Navy unreasonably credited the joint venture awardee with the corporate experience and past performance of two affiliates of one of the joint venture partners, where the record did not demonstrate that the affiliates would play a role in contract performance.

To learn more about this, click GAO Holds That Agency Improperly Credited Offeror With Past Performance of Affiliates to read the alert by John E. Jensen, Nicole Y. Beeler, and me.

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MilwaukeePublicMuseum.jpgThe Milwaukee Public Museum’s 8-story tower’s marble façade facing West Wells Street is being replaced with 234 solar panels. It was reported that, over the past 50 years, the Museum’s heavy marble façade on the south wall facing West Wells Street has weathered and become less stable. Milwaukee County, which owns the building, reportedly elected to use solar panels as the replacement option because of the energy-generating potential of solar. The Museum’s solar wall is expected to generate 77,533 KW hours of electricity per year, the equivalent of having 442, 60-W light bulbs on for 8 hours every day for an entire year. For now, the Museum will be the only building in Milwaukee with a full solar wall that is generating electricity.

It was reported that Milwaukee-based manufacturer Helios USA has been contracted to produce the Museum’s solar panels. Construction is expected to last approximately 5 months, commencing Monday, July 29. The initial phase, which will involve removal of the existing marble façade, is expected to take 4 weeks.

Photo © March 10, 2006, fitzgene – creative commons.

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Since the California Mechanic’s Lien Law was established more than 100 years ago, it has been black-letter law that a contractor or materials supplier has no right to assert a mechanic’s lien against public property. Thus, contractors and material suppliers (and even legal practitioners) have resigned themselves to the notion that the only available remedies on “public projects” are claims against payment bonds and the enforcement of stop notices. Within the last few years, however, the inflexible rule that “you cannot lien public property” has begun to change. In connection with the rise of construction projects arising from public-private collaboration, courts have begun to allow claimants to assert liens against private interests in publicly-owned property.

In the 2010 South Bay Expressway case, a bankruptcy court considered whether a general contractor that built a publicly-owned toll road could pursue a mechanic’s lien against a private developer’s leasehold interest in that public road. The California Department of Transportation had entered into a long-term lease with the developer, whereby the developer would construct the toll road and thereafter collect tolls and operate the public road. The court held that, as long as the lien claimant sought only to encumber and foreclose upon the developer’s leasehold interest, the lien was valid.

This recent legal development offers new hope to contractors that are not paid on “public projects.” In the wake of the South Bay Expressway decision, claimants are successfully recording and foreclosing upon mechanic’s liens on a variety of projects built on public land. For example, we’ve seen liens successfully asserted against, among other interests, a concessionaire’s leasehold interest in concession space at a public airport and a solar company’s long-term rights to operate a solar facility and sell electrical power to a municipality. In many such cases, absent the ability to enforce their lien rights, the contractors would have had no ability to enforce their rights to payment.

The bottom-line is this: a contractor should no longer assume that it has no lien rights simply because its work was completed on public property.

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UPDATE: Natural Resources Defense Council Staff Blog, Great News: NY Governor Cuomo Pledges $1 Billion For Solar (Jan. 8, 2014)

On July 17, 2013, New York Governor Andrew M. Cuomo announced that the State University of New York’s (SUNY) College of Nanoscale Science and Engineering (CNSE) will revitalize a vacant Kodak cleanroom building in Rochester, “transforming it into a first-of-its-kind CNSE Photovoltaic Manufacturing and Technology Development Facility (CNSE MDF) for crystalline silicon photovoltaics, part of a $100 million initiative that will attract solar energy jobs and companies to the Greater Rochester Area.” This effort will also include the acquisition and relocation to the CNSE MDF of “the assets of Silicon Valley solar company SVTC as part of a $100M initiative that will create over 100 high-tech jobs and positions New York as the national leader in accelerating innovative solar technologies.”
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The project is expected to set “a precedent for further investment in this green industry in New York State” and to “attract additional investments from companies around the world and accelerate our development and use of solar energy,” growing New York’s clean energy economy. It is reportedly the “first initiative as part of the project will relocate a critical component of the U.S. Department of Energy’s (DOE) SunShot initiative from California’s Silicon Valley to Upstate New York, positioning New York as the recognized national leader in accelerating the development and use of solar energy nationwide.”

Renovation of the former Kodak’s MEMS inkjet facility is underway to transform the 57,000-square-foot building at 115 Canal Landing Boulevard in the Canal Ponds Business Park. The initiative will include the fitting up of a state-of-the-art, 20,000-square-foot cleanroom. The press release confirms that a late fall opening is anticipated.

As part of the CNSE MDF project, it was reported that “over $19 million in cutting-edge tools and equipment formerly utilized by SVTC, a Silicon Valley-based solar energy company, are being relocated to the CNSE MDF and will constitute the foundation of the manufacturing development line, a result of the acquisition of SVTC’s assets by CNSE.” It further confirmed that the U.S. Department of Energy “is providing nearly $11 million in cash funding to support procurement and installation of high-tech tools and equipment, with investment from private industry partners expected to exceed $65 million to support the development and operation of the CNSE MDF.” In addition, it was reported that, “[t]o support the project, New York State will invest $4.8 million through the New York State Energy Research and Development Authority (NYSERDA).” New York’s investment is to be directed entirely to CNSE with no private company to receive any state funds as part of the initiative.

This is to be the solar industry’s first full-service collaborative facility dedicated to advancing crystalline silicon, or c-Si technologies. The CNSE MDF will provide a range of services and equipment, including complete manufacturing lines, access to individual tools, secure fab space for users’ proprietary tools, and pilot production services in an intellectual property secure environment. It is expected that the CNSE MDF will attract solar industry companies to New York to access a state-of-the-art resource that will dramatically reduce the cost, time, and risk associated with transitioning innovative solar technologies from research to commercial manufacturing of crystalline silicon photovoltaics. It is also expected to play a critical role in the national effort to develop a strong photovoltaic (PV) manufacturing industry, and serve to accelerate the introduction and use of solar energy in homes and businesses across the country. Among other things, it is expected to enable education and training to support the expansion of the highly skilled workforce required by the U.S. PV manufacturing industry.

The establishment of the CNSE MDF for c-Si PV technology is also expected to complement and expand the capabilities and expertise of the national U.S. Photovoltaic Manufacturing Consortium (PVMC), headquartered at CNSE as part of the DOE’s SunShot Initiative. The PVMC is reportedly leading the national effort to reduce the cost of installed solar energy systems from $5 per watt to less than $1 per watt over the next 10 years.

Governor Cuomo’s announcement comes on the heels of his July 9, 2013 announcement that $54 Million will be awarded to fund 79 large-scale solar power projects across the State of New York, adding 64 MWs to the state’s solar capacity.

Photo © July 1, 2011, Deutsche Bank, All Rights Reserved, Creative Commons.

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UPDATE: Sacramento Business Journal, California hits solar power record, twice (Mar. 11, 2014); The Huffington Post, California More Than Doubles Solar Energy In 2013 (Jan. 13, 2014): “California installed more megawatts of solar energy in 2013 than it did in the last 30 years combined, the California Solar Energy Industries Association reported … ‘Today, California is closing out the year with more than 2,000 MW of rooftop solar systems installed statewide,’ CALSEIA executive director Bernadette Del Chiaro said.”

On July 10, the California Public Utilities Commission (CPUC) issued its California Solar Initiative Annual Program Assessment on the progress of the California Solar Initiative (CSI). The Assessment reflects that the program has installed 66% of its total goal with another 19% reserved in pending projects. This is an estimated 1,629 MW of installed solar capacity at 167,878 customer sites in the investor-owned utility territories through the end of the first quarter of 2013. The CPUC estimates that this is enough to power approximately 150,000 homes and avoid building three power plants. To read the Assessment, click California Solar Initiative Annual Program Assessment.
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In January 2007, California began an $3.3 billion ratepayer-funded effort to install 3,000 MW of new solar over the next decade and transform the market for solar energy by reducing the cost of solar generating equipment. The CPUC’s portion of the solar effort is known as the CSI. The CPUC boasts that is the country’s largest solar program and has a $2.2 billion budget and a goal of 1,940 MW of solar capacity by the end of 2016.

CPUC’s Assessment includes the following highlights:

  • A record 391 MW were installed statewide in 2012, a growth of 26% from 2011.
  • Pacific Gas and Electric Company achieved the most installations in the non-residential sector of any investor-owned utility, having met 70% of their non-residential installation goal.
  • Applicants to the low income portion of CSI, known as the “Single-Family Affordable Solar Homes” program, have received $64 million in support for their residential solar systems while the “Multifamily Affordable Solar Housing” (MASH) program has completed 287 projects representing a total capacity of 18.4 MW. There are an additional 83 MASH projects in process, for a total capacity of 11.3 MW. “Virtual Net Metering” has facilitated thousands of tenants receiving the direct benefits of solar as reductions in their monthly electric bills.
  • In just over 3 years of operation, the CSI-Thermal program has received 1,215 applications for $56.3 million in incentives.
  • All but 92 MW, or 6%, of solar capacity in the state is signed up for Net Energy Metering (NEM) tariffs. Pursuant to California Assembly Bill 2514 and CPUC Decision 12-05-036, the CPUC has initiated a study on the costs and benefits of NEM to ratepayers. The study is expected to be released later this year.

Additional Resources: Solar Industry, California More Than Doubles Solar Power Market In 2013 (Dec. 31, 2013)

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In early July, the Bureau of Land Management (BLM) announced the withdrawal of lands identified for solar energy development in the West from new mining claims that could impede development of solar energy sites. Public Land Order No. 7818 (PLO 7818) withdraws 303,900 acres of land within 17 Solar Energy Zones in Arizona, California, Colorado, Nevada, New Mexico, and Utah. You can read the PLO 7818 here.
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Under the Federal Land Policy and Management Act of 1976, BLM is charged with managing the public lands for multiple uses. BLM manages more than 245 million acres of public land, land known as the “National System of Public Lands.” The National System of Public Lands are primarily located in 12 Western states, including Alaska. BLM also administers 700 million acres of sub-surface mineral estate throughout the nation. BLM recently confirmed that in Fiscal Year 2012 activities on public lands generated $4.6 billion in revenue, much of which was shared with the states where the activities occurred. In addition, it reported that public lands contributed more than $112 billion to the U.S. economy and helped support more than 500,000 jobs.

In October 2012, the Department of the Interior established the Solar Energy Zones as part of a western solar plan that provides a road map for utility-scale solar energy development on lands managed by the BLM in Arizona, California, Colorado, Nevada, New Mexico, and Utah. According to BLM, the “Solar Energy Zones encompass the lands most suitable for solar energy development because of their excellent solar resources, access to existing or planned transmission, and relatively low conflict with biological, cultural and historic resources.” Since 2009, BLM has approved right-of-way applications for 25 solar energy development projects with planned total capacity of over 8,000 megawatts, or enough to power over 2.4 million homes. PLO 7818 withdraws the public lands encompassed by Solar Energy Zones for 20 years from potentially conflicting uses, including mining, subject to valid existing use rights, and opens the door to additional solar energy development projects in these states.

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At the 2013 North America Intersolar Conference in San Francisco, California Governor Jerry Brown, and many others spoke confidently about solar opportunities in California. “Just within the last two months we actually recorded over 2,000 MW of solar energy being put into the grid…,” Governor Brown reported. He also confirmed his “goal of 1 million solar rooftops.” He encourages a call to action, marshaling “intelligence and collaboration and political response…” You can hear Governor Brown’s 2013 North America Intersolar Conference Keynote Address here.

Governor Brown launched California’s first round of solar incentives in 1978, during his first two-term tenure as the Governor of the State of California. California now puts more than 2,000 gigawatt-hours (GWh) of solar power into its grid, and Governor Brown wants to see 1 million GWh by 2025, to meet the 33% Renewable Portfolio Standard (RPS), a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. The state now has 130,000 photovoltaics (PV) installations on homes and businesses, growing toward Governor Brown’s stated goal of a million solar roofs.

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On June 21, 2013, the government issued an interim rule amending the Federal Acquisition Regulation (“FAR”) to remove the dollar limits on contracts that may be set aside for Women-Owned Small Businesses (“WOSB”) and Economically Disadvantaged Women-Owned Small Businesses (“EDWOSB”). The FAR rule conforms to a final rule issued by the U.S. Small Business Administration (“SBA”) on May 7, 2013. This change should greatly increase the number and dollar value of contracts federal agencies set aside for WOSBs and EDWOSBs in the future.

To learn more about this, click No More Dollar Limits on Federal Contract Set-Asides for Women-Owned Small Businesses to read the alert by John E. Jensen, Nicole Y. Beeler, and me.

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Since we last checked in on California’s planned high speed rail system nearly a year ago, it has continued to take baby steps toward construction.

Mike Rosenberg of the San Jose Mercury News notes here that on June 6 the California High Speed Rail Authority’s (CHSRA) board authorized its CEO to negotiate final terms of a contract for the first phase of construction with a Tutor Perini-led group after its $985 million bid beat its nearest competitor by about $100 million and the initial estimate by over $200 million.

The project also avoided a potential roadblock with the June 13, 2013 decision of the federal Surface Transportation Board (STB) to grant the CHSRA an exemption allowing it to proceed with construction without subjecting itself to the STB’s approval requirements in addition to the hurdles already cleared. The STB’s decision, effective June 28 according to its text, is available here.