AB 1649: Local Agency Public Construction Act: change orders: County of Santa Clara.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-09-30
Current Status:
Passed
(2023-09-30: Chaptered by Secretary of State - Chapter 281, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
Existing law, the Local Agency Public Construction Act, regulates contracting by local agencies, including counties and special districts. The act includes specific provisions for contracting by counties and contracting for county highways. Those provisions include change order authorization for construction contracts, as prescribed, and impose specified caps on the extra cost of any change order, varying with the value of the original contract. The act prohibits a change or alteration cost from exceeding $210,000.
The act, until January 1, 2027, authorizes the County of Los Angeles to be subject to a change order cap of $400,000 for construction contracts whose original cost exceeds $25,000,000 and of $750,000 for those contracts whose original cost exceeds $50,000,000, both of which are adjusted annually to reflect the percentage change in the California Consumer Price Index. The act provides a similar authorization for the County of Los Angeles with regard to county highways. The act requires the County of Los Angeles to modify no more than 7 contracts pursuant to these provisions and requires the County of Los Angeles to provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
This bill would authorize the County of Santa Clara to be subject to a change order of $400,000 for contracts whose original cost exceeds $25,000,000 and of $750,000 for contracts whose original cost exceeds $50,000,000, adjusted annually to reflect the percentage change in the California Consumer Price Index. These change order caps would apply to construction contracting by the county and contracting for county highways. The bill would require the County of Santa Clara to modify no more than 7 contracts pursuant to these provisions and would require the County of Santa Clara provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Santa Clara.
Existing law, the Local Agency Public Construction Act, regulates contracting by local agencies, including counties and special districts. The act includes specific provisions for contracting by counties and contracting for county highways. Those provisions include change order authorization for construction contracts, as prescribed, and impose specified caps on the extra cost of any change order, varying with the value of the original contract. The act prohibits a change or alteration cost from exceeding $210,000.
The act, until January 1, 2027, authorizes the County of Los Angeles to be subject to a change order cap of $400,000 for construction contracts whose original cost exceeds $25,000,000 and of $750,000 for those contracts whose original cost exceeds $50,000,000, both of which are adjusted annually to reflect the percentage change in the California Consumer Price Index. The act provides a similar authorization for the County of Los Angeles with regard to county highways. The act requires the County of Los Angeles to modify no more than 7 contracts pursuant to these provisions and requires the County of Los Angeles to provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
This bill would authorize the County of Santa Clara to be subject to a change order of $400,000 for contracts whose original cost exceeds $25,000,000 and of $750,000 for contracts whose original cost exceeds $50,000,000, adjusted annually to reflect the percentage change in the California Consumer Price Index. These change order caps would apply to construction contracting by the county and contracting for county highways. The bill would require the County of Santa Clara to modify no more than 7 contracts pursuant to these provisions and would require the County of Santa Clara provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Santa Clara.
Existing law, the Local Agency Public Construction Act, regulates contracting by local agencies, including counties and special districts. The act includes specific provisions for contracting by counties and contracting for county highways. Those provisions include change order authorization for construction contracts, as prescribed, and impose specified caps on the extra cost of any change order, varying with the value of the original contract. The act prohibits a change or alteration cost from exceeding $210,000.
The act, until January 1, 2027, authorizes the County of Los Angeles to be subject to a change order cap of $400,000 for construction contracts whose original cost exceeds $25,000,000 and of $750,000 for those contracts whose original cost exceeds $50,000,000, both of which are adjusted annually to reflect the percentage change in the California Consumer Price Index. The act provides a similar authorization for the County of Los Angeles with regard to county highways. The act requires the provisions specific to the County of Los Angeles modify no more than 7 contracts and require the County of Los Angeles provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
This bill would authorize the County of Santa Clara to be subject to a change order of $400,000 for contracts whose original cost exceeds $25,000,000 and of $750,000 for contracts whose original cost exceeds $50,000,000, adjusted annually to reflect the percentage change in the California Consumer Price Index. These change order caps would apply to construction contracting by the county and contracting for county highways. The bill would require these provisions apply to modify no more than 7 contracts and would require the County of Santa Clara provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Santa Clara.
The Planning and Zoning Law, among other things, requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city and of any land outside its boundaries that relates to its planning, and provides for the adoption and administration of zoning laws, ordinances, rules, and regulations by counties and cities.This bill would make nonsubstantive changes to those provisions.The Planning and Zoning Law, among other things, requires the legislative body of each county and city to adopt a comprehensive, long-term general plan for the physical development of the county or city and of any land outside its boundaries that relates to its planning, and provides for the adoption and administration of zoning laws, ordinances, rules, and regulations by counties and cities.
This bill would make nonsubstantive changes to those provisions.
(a)The board of supervisors may, by ordinance, resolution, or board order, authorize the county engineer, or other county officer, to order changes or additions in the work being performed under construction contracts. When so authorized, any change or addition in the work shall be ordered in writing by the county engineer, or other designated officer, and the extra cost to the county for any change or addition to the work so ordered shall not exceed five thousand dollars ($5,000) when the total amount of the original contract does not exceed fifty thousand dollars ($50,000), nor 10 percent of the amount of any original contract that exceeds fifty thousand dollars ($50,000), but does not exceed two hundred fifty thousand dollars ($250,000).
(b)For contracts whose original cost exceeds two hundred fifty thousand dollars ($250,000), the extra cost for any change or addition to the work so ordered shall not exceed twenty-five thousand dollars ($25,000), plus 5 percent of the amount of the original contract cost in excess of two hundred fifty thousand dollars ($250,000). Notwithstanding subdivisions (c) and (d), no change or alteration shall exceed two hundred ten thousand dollars ($210,000).
(c)The County of Los Angeles may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Los Angeles, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision, subdivision (b) of Section 20395, subdivision (e) of Section 20405, subdivision (b) of Section 20614, and subdivision (b) of Section 20998, exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Los Angeles shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(d)The County of Santa Clara may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Santa Clara, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision and subdivision (c) of Section 20395 exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Santa Clara shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(e)This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 2.Section 20395 of the Public Contract Code, as amended by Section 3 of Chapter 95 of the Statutes of 2021, is amended to read:20395.(a) In any county that has appointed a road commissioner pursuant to Section 2006 of the Streets and Highways Code, or in any county that has abolished the office of road commissioner and complied with Section 2006.1 of the Streets and Highways Code, the board of supervisors may authorize the road commissioner, or a registered civil engineer under the direction of the county director of transportation, to have any work upon county highways done under their supervision and direction. The work may be done in any of the following ways:
(1)By letting a contract covering both work and material. In that event, the contract shall be let to the lowest responsible bidder as provided in this article.
(2)By purchasing the material and letting a contract for the performance of the work. In that event, the material shall be bought at the lowest possible cost and the contract let to the lowest responsible bidder as provided in this article.
(3)By purchasing the material and having the work done by day labor, in which case advertising for bids is not required.
(4)(A)By authorizing the county road commissioner or a registered civil engineer under the direction of the county director of transportation to execute changes or additions to the work for any contract pursuant to this section in an amount not to exceed five thousand dollars ($5,000) for contracts of fifty thousand dollars ($50,000) or less, or 10 percent for contracts over fifty thousand dollars ($50,000) but not to exceed two hundred fifty thousand dollars ($250,000). In no event shall any change or addition to the work exceed a net total addition of twenty-five thousand dollars ($25,000).
(B)For contracts whose original cost exceeds two hundred fifty thousand dollars ($250,000), the extra cost for any change or addition to the work so ordered shall not exceed twenty-five thousand dollars ($25,000), plus 5 percent of the amount of the original contract cost in excess of two hundred fifty thousand dollars ($250,000). Notwithstanding subdivisions (b) and (c), no change or alteration shall exceed two hundred ten thousand dollars ($210,000).
(b)The County of Los Angeles may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Los Angeles, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision, subdivision (c) of Section 20142, subdivision (e) of Section 20405, subdivision (b) of Section 20614, and subdivision (b) of Section 20998, exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Los Angeles shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(c)The County of Santa Clara may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Santa Clara, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision and subdivision (d) of Section 20142 exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Santa Clara shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(d)By purchasing the material and letting a contract for the work or by letting a contract covering both work and material without advertising for bids when the estimated cost of emergency work necessitated by the imminence or occurrence of a landslide, flood, storm damage, or other emergency exceeds twenty-five thousand dollars ($25,000) and the public interest and necessity demand immediate action to safeguard life, health, or property.
(e)This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 3.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique need for flexibility given the contract costs of public contracts within the County of Santa Clara.
(a)The board of supervisors may, by ordinance, resolution, or board order, authorize the county engineer, or other county officer, to order changes or additions in the work being performed under construction contracts. When so authorized, any change or addition in the work shall be ordered in writing by the county engineer, or other designated officer, and the extra cost to the county for any change or addition to the work so ordered shall not exceed five thousand dollars ($5,000) when the total amount of the original contract does not exceed fifty thousand dollars ($50,000), nor 10 percent of the amount of any original contract that exceeds fifty thousand dollars ($50,000), but does not exceed two hundred fifty thousand dollars ($250,000).
(b)For contracts whose original cost exceeds two hundred fifty thousand dollars ($250,000), the extra cost for any change or addition to the work so ordered shall not exceed twenty-five thousand dollars ($25,000), plus 5 percent of the amount of the original contract cost in excess of two hundred fifty thousand dollars ($250,000). Notwithstanding subdivisions (c) and (d), no change or alteration shall exceed two hundred ten thousand dollars ($210,000).
(c)The County of Los Angeles may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Los Angeles, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision, subdivision (b) of Section 20395, subdivision (e) of Section 20405, subdivision (b) of Section 20614, and subdivision (b) of Section 20998, exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Los Angeles shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(d)The County of Santa Clara may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Santa Clara, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision and subdivision (c) of Section 20395 exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Santa Clara shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(e)This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 2.Section 20395 of the Public Contract Code, as amended by Section 3 of Chapter 95 of the Statutes of 2021, is amended to read:20395.(a) In any county that has appointed a road commissioner pursuant to Section 2006 of the Streets and Highways Code, or in any county that has abolished the office of road commissioner and complied with Section 2006.1 of the Streets and Highways Code, the board of supervisors may authorize the road commissioner, or a registered civil engineer under the direction of the county director of transportation, to have any work upon county highways done under their supervision and direction. The work may be done in any of the following ways:
(1)By letting a contract covering both work and material. In that event, the contract shall be let to the lowest responsible bidder as provided in this article.
(2)By purchasing the material and letting a contract for the performance of the work. In that event, the material shall be bought at the lowest possible cost and the contract let to the lowest responsible bidder as provided in this article.
(3)By purchasing the material and having the work done by day labor, in which case advertising for bids is not required.
(4)(A)By authorizing the county road commissioner or a registered civil engineer under the direction of the county director of transportation to execute changes or additions to the work for any contract pursuant to this section in an amount not to exceed five thousand dollars ($5,000) for contracts of fifty thousand dollars ($50,000) or less, or 10 percent for contracts over fifty thousand dollars ($50,000) but not to exceed two hundred fifty thousand dollars ($250,000). In no event shall any change or addition to the work exceed a net total addition of twenty-five thousand dollars ($25,000).
(B)For contracts whose original cost exceeds two hundred fifty thousand dollars ($250,000), the extra cost for any change or addition to the work so ordered shall not exceed twenty-five thousand dollars ($25,000), plus 5 percent of the amount of the original contract cost in excess of two hundred fifty thousand dollars ($250,000). Notwithstanding subdivisions (b) and (c), no change or alteration shall exceed two hundred ten thousand dollars ($210,000).
(b)The County of Los Angeles may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Los Angeles, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision, subdivision (c) of Section 20142, subdivision (e) of Section 20405, subdivision (b) of Section 20614, and subdivision (b) of Section 20998, exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Los Angeles shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(c)The County of Santa Clara may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Santa Clara, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision and subdivision (d) of Section 20142 exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Santa Clara shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(d)By purchasing the material and letting a contract for the work or by letting a contract covering both work and material without advertising for bids when the estimated cost of emergency work necessitated by the imminence or occurrence of a landslide, flood, storm damage, or other emergency exceeds twenty-five thousand dollars ($25,000) and the public interest and necessity demand immediate action to safeguard life, health, or property.
(e)This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 3.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique need for flexibility given the contract costs of public contracts within the County of Santa Clara.
(a)The board of supervisors may, by ordinance, resolution, or board order, authorize the county engineer, or other county officer, to order changes or additions in the work being performed under construction contracts. When so authorized, any change or addition in the work shall be ordered in writing by the county engineer, or other designated officer, and the extra cost to the county for any change or addition to the work so ordered shall not exceed five thousand dollars ($5,000) when the total amount of the original contract does not exceed fifty thousand dollars ($50,000), nor 10 percent of the amount of any original contract that exceeds fifty thousand dollars ($50,000), but does not exceed two hundred fifty thousand dollars ($250,000).
(b)For contracts whose original cost exceeds two hundred fifty thousand dollars ($250,000), the extra cost for any change or addition to the work so ordered shall not exceed twenty-five thousand dollars ($25,000), plus 5 percent of the amount of the original contract cost in excess of two hundred fifty thousand dollars ($250,000). Notwithstanding subdivision (c), subdivisions (c) and (d), no change or alteration shall exceed two hundred ten thousand dollars ($210,000).
(c)The County of Los Angeles may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Los Angeles, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision, subdivision (b) of Section 20395, subdivision (e) of Section 20405, subdivision (b) of Section 20614, and subdivision (b) of Section 20998, exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Los Angeles shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(d)The County of Santa Clara may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Santa Clara, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision and subdivision (c) of Section 20395 exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Santa Clara shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(d)(e)This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 2.Section 20395 of the Public Contract Code, as amended by Section 3 of Chapter 95 of the Statutes of 2021, is amended to read:20395.(a) In any county that has appointed a road commissioner pursuant to Section 2006 of the Streets and Highways Code, or in any county that has abolished the office of road commissioner and complied with Section 2006.1 of the Streets and Highways Code, the board of supervisors may authorize the road commissioner, or a registered civil engineer under the direction of the county director of transportation, to have any work upon county highways done under their supervision and direction. The work may be done in any of the following ways:
(1)By letting a contract covering both work and material. In that event, the contract shall be let to the lowest responsible bidder as provided in this article.
(2)By purchasing the material and letting a contract for the performance of the work. In that event, the material shall be bought at the lowest possible cost and the contract let to the lowest responsible bidder as provided in this article.
(3)By purchasing the material and having the work done by day labor, in which case advertising for bids is not required.
(4)(A)By authorizing the county road commissioner or a registered civil engineer under the direction of the county director of transportation to execute changes or additions to the work for any contract pursuant to this section in an amount not to exceed five thousand dollars ($5,000) for contracts of fifty thousand dollars ($50,000) or less, or 10 percent for contracts over fifty thousand dollars ($50,000) but not to exceed two hundred fifty thousand dollars ($250,000). In no event shall any change or addition to the work exceed a net total addition of twenty-five thousand dollars ($25,000).
(B)For contracts whose original cost exceeds two hundred fifty thousand dollars ($250,000), the extra cost for any change or addition to the work so ordered shall not exceed twenty-five thousand dollars ($25,000), plus 5 percent of the amount of the original contract cost in excess of two hundred fifty thousand dollars ($250,000). Notwithstanding subdivision (b), subdivisions (b) and (c), no change or alteration shall exceed two hundred ten thousand dollars ($210,000).
(b)The County of Los Angeles may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Los Angeles, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision, subdivision (c) of Section 20142, subdivision (e) of Section 20405, subdivision (b) of Section 20614, and subdivision (b) of Section 20998, exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Los Angeles shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(c)The County of Santa Clara may elect to be subject to all of the following provisions:
(1)For contracts whose original cost exceeds twenty-five million dollars ($25,000,000), the extra cost for any change or addition to the work so ordered shall not exceed four hundred thousand dollars ($400,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(2)For contracts whose original cost exceeds fifty million dollars ($50,000,000), the extra cost for any change or addition to the work so ordered shall not exceed seven hundred fifty thousand dollars ($750,000), adjusted annually to reflect the percentage change in the California Consumer Price Index.
(3)If the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on the County of Santa Clara, and all existing protest and grievance procedures regarding that decision remain valid.
(4)At the time the board of supervisors delegates authority in the manner specified in subdivision (a) with regard to the contract costs specified in this subdivision, the board shall implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
(5)This subdivision does not apply if the sum of the contracts modified under this subdivision and subdivision (d) of Section 20142 exceeds seven contracts.
(6)If a contract is modified under this subdivision, the County of Santa Clara shall provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026.
(c)(d)By purchasing the material and letting a contract for the work or by letting a contract covering both work and material without advertising for bids when the estimated cost of emergency work necessitated by the imminence or occurrence of a landslide, flood, storm damage, or other emergency exceeds twenty-five thousand dollars ($25,000) and the public interest and necessity demand immediate action to safeguard life, health, or property.
(d)(e)This section shall remain in effect only until January 1, 2027, and as of that date is repealed.
SEC. 3.The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique need for flexibility given the contract costs of public contracts within the County of Santa Clara.
SECTION 1.Section 65000 of the Government Code is amended to read:65000.This title shall be known, and may be cited, as the Planning and Zoning Law.This title shall be known, and may be cited cited, as the Planning and Zoning Law.
|
Date
|
Status
|
|---|---|
| Sep 30, 2023 | Chaptered by Secretary of State - Chapter 281, Statutes of 2023. |
| Sep 30, 2023 | Approved by the Governor. |
| Sep 12, 2023 | Enrolled and presented to the Governor at 2 p.m. |
| Sep 5, 2023 | In Assembly. Ordered to Engrossing and Enrolling. |
| Sep 5, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0. Page 2350.). |
| Jun 8, 2023 | Read second time. Ordered to third reading. |
| Jun 7, 2023 | From committee: Do pass. (Ayes 7. Noes 0.) (June 7). |
| May 3, 2023 | Referred to Com. on GOV. & F. |
| Apr 20, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Apr 20, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 77. Noes 0. Page 1266.) |
| Mar 27, 2023 | Read second time. Ordered to third reading. |
| Mar 23, 2023 | From committee: Do pass. (Ayes 7. Noes 0.) (March 22). |
| Mar 13, 2023 | Re-referred to Com. on L. GOV. |
| Mar 9, 2023 | Referred to Com. on L. GOV. |
| Mar 9, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. GOV. Read second time and amended. |
| Feb 18, 2023 | From printer. May be heard in committee March 20. |
| Feb 17, 2023 | Read first time. To print. |
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Date
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Description
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Location
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Votes
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|
|---|---|---|---|---|
| Sep 5, 2023 | Assembly 3rd Reading AB1649 Kalra By Cortese | Senate Floor |
Passed |
|
| Jun 7, 2023 | Do pass | Senate Standing Committee on Governance and Finance |
Passed |
|
| Apr 20, 2023 | AB 1649 Kalra Assembly Third Reading | Assembly Floor |
Passed |
|
| Mar 22, 2023 | Do pass. | Assembly Standing Committee on Local Government |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
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Position
|
Date
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|---|---|---|
| County of Santa Clara | ** Support |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 1649 |
THIRD READING
Bill No: AB 1649
Author: Kalra (D)
Amended: 3/9/23 in Assembly
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/7/23
AYES: Caballero, Seyarto, Blakespear, Dahle, Durazo, Skinner, Wiener
NO VOTE RECORDED: Glazer
ASSEMBLY FLOOR: 77-0, 4/20/23 - See last page for vote
SUBJECT: Local Agency Public Construction Act: change orders: County of Santa Clara
SOURCE: County of Santa Clara
DIGEST:
This bill allows, until January 1, 2027, the County of Santa Clara to increase the change order limits that do not require 4/5 board approval for certain construction contracts.
ANALYSIS:
Existing law:
- Requires local officials to invite bids for construction projects and then award contracts to the lowest responsible bidder.
- Allows a county board of supervisors or a local governing board to approve change orders in construction contracts by a 4/5 vote. This applies to construction contracts generally and to construction contracts for specific projects such as county highways, county bridges and subways, county waterworks districts, and county flood control districts, among others.
- Allows a board of supervisors to delegate authority to a county engineer or other officer to order and approve change orders, thereby avoiding the necessity of board approval up to certain limits:
- For contracts up to $50,000, a change order may not exceed $5,000;
- For contracts between $50,000 and $250,000, a change order may not exceed 10% of the contract; and,
- For contracts over $250,000, a change order cannot exceed $25,000, plus 5% of the amount of the original contract cost above $250,000, with a total cap of $210,000.
This bill:
- Provides, until January 1, 2027, the Santa Clara County Board of Supervisors (board) the following delegated authority for change orders for construction contracts generally and for construction contracts on county highways:
- For contracts whose original cost exceeds $25 million, the extra cost for any change or addition to the work so ordered shall not exceed $400,000, adjusted annually to reflect the percentage change in the California Consumer Price Index (CPI).
- For contracts whose original cost exceeds $50 million, the extra cost for any change or addition to the work so ordered shall not exceed $750,000, adjusted annually to reflect the percentage change in the CPI.
- Provides that, if the board delegates authority in the manner specified in 1), above, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on Santa Clara County, and all existing protest and grievance procedures regarding that decision remain valid.
- Requires the board, when it delegates authority in the manner specified in 1), above, to implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
- Limits the provisions of this bill to a total of seven contracts.
- Requires Santa Clara County to provide a review report to the Assembly Local Government Committee and the Senate Governance and Finance Committee no later than July 1, 2026, if it elects to utilize the provisions of this bill.
Background
In 2021, the Legislature increased delegated-authority change order limits for Los Angeles County’s (LA County) general construction contracts, as well as contracts on county highways, bridges, subways, and contracts the county’s waterworks and flood control districts enter into (AB 712, Calderon, Chapter 95, Statutes of 2021):
- For contracts exceeding $25 million, AB 712 increased the delegated change order cap to $400,000, with an annual California CPI adjustment; and
- For contracts exceeding $50 million, AB 712 increased the delegated change order cap to $750,000, with an annual CPI adjustment.
If the board of supervisors delegates authority for these change orders, the decision by the county engineer or other county officer is binding on LA County, and all existing protest and grievance procedures regarding that decision remain valid. The board must implement appropriate measures to prevent fraud and ensure accountability for this delegated authority. AB 712 limited these adjusted limits to seven contracts, and required LA County to provide a report to the Assembly Local Government Committee and the Senate Governance and Finance Committee no later than July 1, 2026, if it elects to utilize the provisions of the bill. AB 712 sunset these provisions on January 1, 2027. LA County used its delegated authority for the Harbor-UCLA Medical Center Replacement, but has not had a change order near AB 712’s $750,000 limit.
Comments
- Purpose of the bill. According to the author, “Limits on change orders have not been updated since 2011 and do not reflect inflation, changes in construction market pricing, or changes in the scale of projects. The County of Santa Clara has a series of relatively large projects in the construction pipeline, including a new behavioral health services center and seismic retrofits for hospital buildings. Adjusting the change order thresholds until 2027 will allow the County to avoid possible delays on these large, time-sensitive projects.”
- Right fix for the right problem? Under the traditional design-bid-build method of contracting, the design firm cannot always anticipate the challenges the construction firm may face. This can result in change orders that ultimately drive up the price of the contract. Limits on the change orders that proceed without 4/5 board approval help prevent skyrocketing project costs without board knowledge, ensure the project aligns with what the board approved, limit the potential for fraud, and encourage transparency and accountability. However, getting board approval for a change order can take time, leading to further project delays and increased costs. AB 1649 seeks to address this issue by increasing Santa Clara County’s change order limits. The Legislature has recently given authority to local agencies to use alternative procurement methods that are supposed to reduce the need for change orders. For example, the County has the authority to use design-build contracting where the same firm performs design and construction project phases for some projects. This can reduce the number of inconsistencies between design and construction that often give rise to change orders. Simply raising change order limits does little to help the County assess how it can improve its contracting process, such as using alternative contracting methods, and reduce the number and value of change orders it confronts on future construction projects. According to the County, alternative contracting methods do not eliminate the need for change orders. Change orders can occur for a variety of reasons, including changed conditions, different interpretations of building codes, and acts of God. While alternative procurement tools can limit the need for certain change orders in cases of errors and omissions, they cannot eliminate the need for change orders entirely. In addition, larger projects have a higher risk of generating change orders that exceed current authority. Should the Legislature give Santa Clara County the ability to increase its change order limits?
- Special treatment. AB 1649 grants Santa Clara County, the state’s sixth largest county, the same change order limits as LA County for general construction and county highway projects. Why should another county receive special treatment, rather than consider whether change order limits should increase statewide? Is there something distinct about Santa Clara County that justifies higher thresholds compared to other counties that meet exceed its population? According to Santa Clara County, “…with each day of delay, the fee a general contractor will charge the owner for delays caused by the owner can be significant in the case of large projects, on the order of $50k/day.” Similar to AB 729’s authority for LA County, AB 1649 includes three key limits on Santa Clara County’s ability to use this authority, including: (a) applying increased limits to no more than seven projects, (b) a January 1, 2027 sunset for these increases, and (c) required reporting to the Legislature. Should the Legislature expand the higher change order limits to Santa Clara County? Or, should the Legislature consider whether broader changes to change order limits are necessary statewide?
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 6/8/23)
County of Santa Clara (source)
OPPOSITION: (Verified 6/8/23)
None received
ASSEMBLY FLOOR: 77-0, 4/20/23
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner Horvath, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon
NO VOTE RECORDED: Gabriel, Gallagher, Garcia
Prepared by: Jonathan Peterson / GOV. & F. / (916) 651-4119
6/9/23 9:49:13
**** END ****
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Anna M. Caballero, Chair
2023 - 2024 Regular
Bill No: | AB 1649 | Hearing Date: | 6/7/23 |
Author: | Kalra | Tax Levy: | No |
Version: | 3/9/23 | Fiscal: | No |
Consultant: | Peterson | ||
Local Agency Public Construction Act: change orders: County of Santa Clara
Allows, until January 1, 2027, the County of Santa Clara to increase the change order limits that do not require 4/5 board approval for certain construction contracts.
Background
Contracting. The Local Agency Public Construction Act requires local officials to invite bids for construction projects and then award contracts to the lowest responsible bidder. This design-bid-build method is the traditional, and most widely-used, approach to public works construction. This approach splits construction projects into two distinct phases: design and construction. During the design phase, the local agency prepares detailed project plans and specifications using its own employees or by hiring outside architects and engineers. Once project designs are complete, local officials invite bids from the construction industry and award the contract to the lowest responsible bidder.
Change orders. Change orders are amendments to a construction contract that change the contractor’s scope of work, such as moving the location of a wall to accommodate some other design element. The Local Agency Public Construction Act allows a county board of supervisors or a local governing board to approve change orders in construction contracts by a 4/5 vote. This applies to construction contracts generally and to construction contracts for specific projects such as county highways, county bridges and subways, county waterworks districts, and county flood control districts, among others. However, a board may delegate authority to a county engineer or other officer to order and approve change orders, thereby avoiding the necessity of board approval up to certain limits. The Legislature last updated these limits in 2011 (SB 194, Committee on Governance and Finance) as follows:
- For contracts up to $50,000, a change order may not exceed $5,000;
- For contracts between $50,000 and $250,000, a change order may not exceed 10% of the contract; and,
- For contracts over $250,000, a change order cannot exceed $25,000, plus 5% of the amount of the original contract cost above $250,000, with a total cap of $210,000.
Delegated authority limits for Los Angeles County. In 2021, the Legislature increased these delegated authority limits for Los Angeles County’s (LA County) general construction contracts, as well as contracts on county highways, bridges, subways, and contracts the county’s waterworks and flood control districts enter into (AB 712, Calderon):
- For contracts exceeding $25 million, AB 712 increased the delegated change order cap to $400,000, with an annual California consumer price index (CPI) adjustment; and
- For contracts exceeding $50 million, AB 712 increased the delegated change order cap to $750,000, with an annual CPI adjustment.
If the board of supervisors delegates authority for these change orders, the decision by the county engineer or other county officer is binding on LA County, and all existing protest and grievance procedures regarding that decision remain valid. The board must implement appropriate measures to prevent fraud and ensure accountability for this delegated authority. AB 712 limited these adjusted limits to seven contracts, and required LA County to provide a report to the Assembly Local Government Committee and the Senate Governance and Finance Committee no later than July 1, 2026, if it elects to utilize the provisions of the bill. AB 712 sunsets these provisions on January 1, 2027. LA County used its delegated authority for the Harbor-UCLA Medical Center Replacement, but has not had a change order near AB 712’s $750,000 limit.
Santa Clara County. Santa Clara County provides a range of services to its nearly two million residents. To provide these services, the County must construct and maintain a wide range public infrastructure projects. According to the County, it has a series of relatively large projects in the construction pipeline, including:
- Behavioral Health Services Center Project: $600 million
- Child and Adolescent Psychiatric Facility: $600 million
- Valley Medical Center Seismic Improvement Project: $233 million
- Tenant Improvements at West Tasman Drive: $176 million
- Valley Medical Center Emergency Department Expansion: $120 million
- Vietnamese American Service Center: $57 million
- Valley Medical Center Burn Unit Upgrade: $45 million
Given the size and complexity of these projects, the County often has to seek board approval to approve change orders because they exceed the $210,000 limit. To avoid delays resulting from the needing board approval for change orders over the limit, the County wants to increase its change order thresholds.
Proposed Law
Assembly Bill 1649 allows, until January 1, 2027, Santa Clara County to increase the change order limits that do not require 4/5 board approval for general county construction contracts, as well as those on county highways, as follows:
- For contracts $25-$50 million, the extra cost must not exceed $400,000, adjusted annually to reflect the percentage change in the CPI.
- For contracts over $50 million, the extra cost must not exceed $750,000, adjusted annually to reflect the percentage change in the CPI.
The measure provides that, if the board of supervisors delegates authority to increase these limits, the authority is binding, and existing protest and grievance procedures remain valid. When the board delegates this authority, it must ensure that it takes measures to prevent fraud and ensure accountability.
The bill limits the authority to increase these amounts to a total of seven contracts, and requires the County to provide a report to the Assembly Local Government and Senate Governance and Finance Committees no later than July 1, 2026, if it elects to use the measures’ authority.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill. According to the author, “Limits on change orders have not been updated since 2011 and do not reflect inflation, changes in construction market pricing, or changes in the scale of projects. The County of Santa Clara has a series of relatively large projects in the construction pipeline, including a new behavioral health services center and seismic retrofits for hospital buildings. Adjusting the change order thresholds until 2027 will allow the County to avoid possible delays on these large, time-sensitive projects.”
2. Right fix for the right problem? Under the traditional design-bid-build method of contracting, the design firm cannot always anticipate the challenges the construction firm may face. This can result in change orders that ultimately drive up the price of the contract. Limits on the change orders that proceed without 4/5 board approval help prevent skyrocketing project costs without board knowledge, ensure the project aligns with what the board approved, limit the potential for fraud, and encourage transparency and accountability. However, getting board approval for a change order can take time, leading to further project delays and increased costs. AB 1649 seeks to address this issue by increasing Santa Clara County’s change order limits. The Legislature has recently given authority to local agencies to use alternative procurement methods that are supposed to reduce the need for change orders. For example, the County has the authority to use design-build contracting where the same firm performs design and construction project phases for some projects. This can reduce the number of inconsistencies between design and construction that often give rise to change orders. Simply raising change order limits does little to help the County assess how it can improve its contracting process, such as using alternative contracting methods, and reduce the number and value of change orders it confronts on future construction projects. According to the County, alternative contracting methods do not eliminate the need for change orders. Change orders can occur for a variety of reasons, including changed conditions, different interpretations of building codes, and acts of God. While alternative procurement tools can limit the need for certain change orders in cases of errors and omissions, they cannot eliminate the need for change orders entirely. In addition, larger projects have a higher risk of generating change orders that exceed current authority. Should the Legislature give Santa Clara County the ability to increase its change order limits?
3. Special treatment. AB 1649 grants Santa Clara County, the state’s sixth largest county, the same change order limits as Los Angeles County for general construction and county highway projects. Why should another county receive special treatment, rather than consider whether change order limits should increase statewide? Is there something distinct about Santa Clara County that justifies higher thresholds compared to other counties that meet exceed its population? According to Santa Clara County, “…with each day of delay, the fee a general contractor will charge the owner for delays caused by the owner can be significant in the case of large projects, on the order of $50k/day.” Similar to AB 729’s authority for Los Angeles County, AB 1649 includes three key limits on Santa Clara County’s ability to use this authority, including: (1) applying increased limits to no more than seven projects, (2) a January 1, 2027, sunset for these increases, and (3) required reporting to the Legislature. Should the Legislature expand the higher change order limits to Santa Clara County? Or, should the Legislature consider whether broader changes to change order limits are necessary statewide?
4. Special legislation. The California Constitution prohibits special legislation when a general law can apply (Article IV, §16). AB 1649 contains findings and declarations explaining the need for legislation that applies to the unique need for flexibility given the contract costs of public contracts within Santa Clara County.
Assembly Actions
Assembly Local Government Committee: 7-0
Assembly Floor: 77-0
Support and Opposition
(6/2/23)
Support: County of Santa Clara (Sponsor)
Opposition: None submitted.
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 1649
Author:(Kalra)
As Amended Ver:March 9, 2023
Majority vote
SUMMARY
Temporarily increases the limits that apply to change orders that can be approved pursuant to a delegated authority for specified contracts entered into by the County of Santa Clara (Santa Clara County).
Major Provisions
- Provides, until January 1, 2027, the Santa Clara County Board of Supervisors (board) the following delegated authority for change orders for construction contracts generally and for construction contracts on county highways:
- For contracts whose original cost exceeds $25 million, the extra cost for any change or addition to the work so ordered shall not exceed $400,000, adjusted annually to reflect the percentage change in the California Consumer Price Index (CPI).
- For contracts whose original cost exceeds $50 million, the extra cost for any change or addition to the work so ordered shall not exceed $750,000, adjusted annually to reflect the percentage change in the CPI.
- Provides that, if the board delegates authority in the manner specified in 1), above, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on Santa Clara County, and all existing protest and grievance procedures regarding that decision remain valid.
- Requires the board, when it delegates authority in the manner specified in 1), above, to implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
- Limits the provisions of this bill to a total of seven contracts.
- Requires Santa Clara County to provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026, if it elects to utilize the provisions of this bill.
COMMENTS
Change orders are amendments to a construction contract that change the contractor's scope of work, such as moving the location of a wall to accommodate some other design element, or making adjustments for unforeseen conditions. This, in turn, changes the contract cost – typically increasing it.
The Local Agency Public Construction Act allows a county board of supervisors or a local governing board to approve change orders in construction contracts by a 4/5 vote. This applies to construction contracts generally and to construction contracts for specified projects, such as county highways, county bridges and subways, and other works.
However, a board may delegate authority to a county engineer or other officer to order and approve change orders, thereby avoiding the necessity of board approval. This delegated authority is generally limited as follows:
- For contracts up to $50,000, a change order may not exceed $5,000
- For contracts exceeding $50,000, but not exceeding $250,000, the change order is limited to 10% of the contract.
- For contracts over $250,000, the change order cannot exceed $25,000, plus 5% of the amount of the original contract cost above $250,000, with a total cap of $210,000.
The Legislature two years ago approved AB 712 (Calderon), Chapter 95, Statutes of 2021, to increase the delegated authority limits noted above for specified contracts entered into by Los Angeles County (LA County). The bill increased these caps for contracts generally, and for construction contracts on county highways, bridges, subways, and those entered into by the county's waterworks district and flood control district.
For contracts exceeding $25 million, the delegated change order cap was increased to $400,000, with an annual CPI adjustment. For contracts exceeding $50 million, the delegated change order cap was increased to $750,000, with an annual CPI adjustment. The bill provided that, if the board of supervisors delegates authority for these change orders, the decision by the county engineer or other county officer is binding on LA County, and all existing protest and grievance procedures regarding that decision remain valid. The board must implement appropriate measures to prevent fraud and ensure accountability for this delegated authority.
AB 712 was limited to a total of seven contracts, and required LA County to provide a report to the Assembly Local Government Committee and the Senate Governance and Finance Committee no later than July 1, 2026, if it elects to utilize the provisions of the bill. AB 712 contained a sunset date of January 1, 2027. This bill is substantially similar to AB 712, but applies only to construction contracts generally and construction contracts on county highways entered into by Santa Clara County.
According to the Author
"Limits on change orders have not been updated since 2011 and do not reflect inflation, changes in construction market pricing, or changes in the scale of projects. The County of Santa Clara has a series of relatively large projects in the construction pipeline, including a new behavioral health services center and seismic retrofits for hospital buildings. Adjusting the change order thresholds until 2027 will allow the County to avoid possible delays on these large, time-sensitive projects."
Arguments in Support
The County of Santa Clara, sponsor of this bill, writes, "Change orders are amendments to a construction contract that changes the contractor's scope of work, such as moving the location of a wall to accommodate some other design element, and usually increases the contract price. The Local Agency Public Construction Act allows a county Board of Supervisors to approve change orders in construction contracts by a 4/5 vote. This applies to construction contracts generally and construction contracts for specific projects such as county highways, county bridges and subways, county waterworks districts, and county flood control districts, among others. However, a board may delegate authority to a county engineer or other officer to order and approve change orders, thereby avoiding the necessity of board approval, up to certain limits.
"Existing law limits the maximum amount a delegated officer or engineer can approve without requiring a vote by the Board of Supervisors. However, these limits, with the exception of the County of Los Angeles, have not been updated since 2011 and do not reflect inflation, changes in construction market pricing, or changes in the scale of projects. The result is that the maximum threshold requiring a Board of Supervisors vote is frequently reached, often leading to project delays as the number of necessary change orders increases.
"The County of Santa Clara has a number of relatively large projects in the construction pipeline, including a new behavioral health services center and seismic retrofits for hospital buildings. Adjusting the change order thresholds to the same cap that the County of Los Angeles received in AB 712 (Chapter 95, Statutes of 2021) will allow the County to avoid possible delays on these large, time-sensitive projects."
Arguments in Opposition
None on file.
FISCAL COMMENTS
None
VOTES
ASM LOCAL GOVERNMENT: 7-0-1
YES: Aguiar-Curry, Flora, Boerner Horvath, Ramos, Robert Rivas, Waldron, Wilson
ABS, ABST OR NV: Pacheco
UPDATED
VERSION: March 9, 2023
CONSULTANT: Angela Mapp / L. GOV. / (916) 319-3958 FN: 0000171
Date of Hearing: March 22, 2023
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cecilia Aguiar-Curry, Chair
ABPCA Bill Id:AB 1649 (
Author:Kalra) – As Amended Ver:March 9, 2023
SUBJECT: Local Agency Public Construction Act: change orders: County of Santa Clara.
SUMMARY: Temporarily increases the limits that apply to change orders that can be approved pursuant to a delegated authority for specified contracts entered into by the County of Santa Clara (Santa Clara County). Specifically, this bill:
- Provides, until January 1, 2027, the Santa Clara County Board of Supervisors (board) the following delegated authority for change orders for construction contracts generally and for construction contracts on county highways:
- For contracts whose original cost exceeds $25 million, the extra cost for any change or addition to the work so ordered shall not exceed $400,000, adjusted annually to reflect the percentage change in the California Consumer Price Index (CPI).
- For contracts whose original cost exceeds $50 million, the extra cost for any change or addition to the work so ordered shall not exceed $750,000, adjusted annually to reflect the percentage change in the CPI.
- Provides that, if the board delegates authority in the manner specified in 1), above, the decision by the county engineer or other county officer whom authority was delegated to shall be binding on Santa Clara County, and all existing protest and grievance procedures regarding that decision remain valid.
- Requires the board, when it delegates authority in the manner specified in 1), above, to implement appropriate measures to prevent fraud and ensure accountability for that delegated authority.
- Limits the provisions of this bill to a total of seven contracts.
- Requires Santa Clara County to provide a review report to the Assembly Committee on Local Government and the Senate Committee on Governance and Finance no later than July 1, 2026, if it elects to utilize the provisions of this bill.
- Finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique need for flexibility given the contract costs of public contracts within the County of Santa Clara.
FISCAL EFFECT: None.
COMMENTS:
- Author’s Statement. According to the author, “Limits on change orders have not been updated since 2011 and do not reflect inflation, changes in construction market pricing, or changes in the scale of projects. The County of Santa Clara has a series of relatively large projects in the construction pipeline, including a new behavioral health services center and seismic retrofits for hospital buildings. Adjusting the change order thresholds until 2027 will allow the County to avoid possible delays on these large, time-sensitive projects.”
- Delegating Authority for Change Orders. Change orders are amendments to a construction contract that change the contractor’s scope of work, such as moving the location of a wall to accommodate some other design element, or making adjustments for unforeseen conditions. This, in turn, changes the contract cost – typically increasing it.
The Local Agency Public Construction Act allows a county board of supervisors or a local governing board to approve change orders in construction contracts by a 4/5 vote. This applies to construction contracts generally and to construction contracts for specified projects, such as county highways, county bridges and subways, and other works.
However, a board may delegate authority to a county engineer or other officer to order and approve change orders, thereby avoiding the necessity of board approval. This delegated authority is generally limited as follows:
- For contracts up to $50,000, a change order may not exceed $5,000.
- For contracts exceeding $50,000, but not exceeding $250,000, the change order is limited to 10% of the contract.
- For contracts over $250,000, the change order cannot exceed $25,000, plus 5% of the amount of the original contract cost above $250,000, with a total cap of $210,000.
- Delegated Authority Limits for Los Angeles County. The Legislature two years ago approved AB 712 (Calderon), Chapter 95, Statutes of 2021, to increase the delegated authority limits noted above for specified contracts entered into by Los Angeles County (LA County). The bill increased these caps for contracts generally, and for construction contracts on county highways, bridges, subways, and those entered into by the county’s waterworks district and flood control district.
For contracts exceeding $25 million, the delegated change order cap was increased to $400,000, with an annual CPI adjustment. For contracts exceeding $50 million, the delegated change order cap was increased to $750,000, with an annual CPI adjustment. The bill provided that, if the board of supervisors delegates authority for these change orders, the decision by the county engineer or other county officer is binding on LA County, and all existing protest and grievance procedures regarding that decision remain valid. The board must implement appropriate measures to prevent fraud and ensure accountability for this delegated authority.
AB 712 was limited to a total of seven contracts, and required LA County to provide a report to the Assembly Local Government Committee and the Senate Governance and Finance Committee no later than July 1, 2026, if it elects to utilize the provisions of the bill. AB 712 contained a sunset date of January 1, 2027. This bill is substantially similar to AB 712, but applies only to construction contracts generally and construction contracts on county highways entered into by Santa Clara County.
- Bill Summary. This bill increases the delegated change order limits for Santa Clara County until January 1, 2027, for contracts generally and for construction contracts on county highways. For contracts exceeding $25 million, the delegated change order is limited to $400,000, with an annual CPI adjustment. For contracts exceeding $50 million, the delegated change order is limited to $750,000, with an annual CPI adjustment.
If the board of supervisors delegates authority for these change orders, the decision by the county engineer or other county officer is binding on Santa Clara County, and all existing protest and grievance procedures regarding that decision remain valid. The board must implement appropriate measures to prevent fraud and ensure accountability for this delegated authority.
This bill is limited to a total of seven contracts, and requires Santa Clara County to provide a review report to the Assembly Local Government Committee and the Senate Governance and Finance Committee no later than July 1, 2026, if it elects to utilize the provisions of this bill.
This bill is sponsored by the County of Santa Clara.
- Previous Legislation. AB 712 (Calderon), Chapter 95, Statutes of 2021, temporarily increased the limits that apply to change orders that can be approved pursuant to a delegated authority for specified contracts entered into by LA County.
AB 2284 (Calderon) of 2020 would have increased delegated change order limits for all counties and required annual CPI adjustments. AB 2284 was held in this Committee.
- Arguments in Support. The County of Santa Clara, sponsor of this bill, writes, “Change orders are amendments to a construction contract that changes the contractor’s scope of work, such as moving the location of a wall to accommodate some other design element, and usually increases the contract price. The Local Agency Public Construction Act allows a county Board of Supervisors to approve change orders in construction contracts by a 4/5 vote. This applies to construction contracts generally and construction contracts for specific projects such as county highways, county bridges and subways, county waterworks districts, and county flood control districts, among others. However, a board may delegate authority to a county engineer or other officer to order and approve change orders, thereby avoiding the necessity of board approval, up to certain limits.
“Existing law limits the maximum amount a delegated officer or engineer can approve without requiring a vote by the Board of Supervisors. However, these limits, with the exception of the County of Los Angeles, have not been updated since 2011 and do not reflect inflation, changes in construction market pricing, or changes in the scale of projects. The result is that the maximum threshold requiring a Board of Supervisors vote is frequently reached, often leading to project delays as the number of necessary change orders increases.
“The County of Santa Clara has a number of relatively large projects in the construction pipeline, including a new behavioral health services center and seismic retrofits for hospital buildings. Adjusting the change order thresholds to the same cap that the County of Los Angeles received in AB 712 (Chapter 95, Statutes of 2021) will allow the County to avoid possible delays on these large, time-sensitive projects.”
- Arguments in Opposition. None on file.
REGISTERED SUPPORT / OPPOSITION:
Support
County of Santa Clara
Opposition
None on file
Analysis Prepared by: Angela Mapp / L. GOV. / (916) 319-3958
Discussed in Hearing
2MIN
Senate Floor
13MIN
Senate Standing Committee on Governance and Finance
3MIN
Assembly Standing Committee on Local Government
Bill Author
Bill Co-Author(s):