POSSIBLE EXCEPTIONS TO COMPETITIVE BIDDING
Force Account Limits
General Information
A “force account” limit is a ceiling imposed by statute on the value of public works projects that a local agency may perform utilizing outside contractors, over which competitive bidding procedures must be used.
The purpose of imposing competitive bidding limits is to promote job creation by making sure contractors have an opportunity to bid on new public works jobs. This also guarantees that through competitive bidding, the public gets the best value for every public works dollar that is spent.
In California, the precise amounts of the competitive bidding limits vary widely from agency to agency. Some statutes provide that the cost of the “work” triggers the need for competitive bidding. Others provide that the cost of the “contract” triggers the requirement for competitive bidding, which may mean that the agency still has a choice as to whether to utilize competitive bidding or its own employees (force account work).
There are at least 30 Public Contract Code sections that pertain to force account limits. See the case digest for a list of state statutes. Internal link Charter cities may have their own limits with regard to force account work. For a list of California charter city ordinances regarding force account work, please consult the Construction Industry Force Account Council web site.
California Courts of Appeal have held that where the statute under which the agency operates requires competitive bidding for all contracts (as opposed to “work”) exceeding the monetary threshold, the agencies have the option of either using competitive bidding or performing the work on force account (using their own employees). See Construction Indus. Force Account Council v. Amador Water Agency, 71 Cal.App.4th 810 (1999), and Construction Indus. Force Account Council v. Delta Wetlands, 2 Cal.App.4th 1589 (1992).
The law is still somewhat unsettled in this area. If a statute indicates that “work” (as opposed to “contracts”) over a specified amount must be awarded via competitive bidding, the outcome could be different than the outcomes in the cases above, where the statutes referred to “contracts” over a particular amount as subject to competitive bidding.
The applicable competitive bidding statute must be carefully analyzed. Slight differences in wording can make a difference in whether or not competitive bidding is required.
For more information on the California Uniform Construction Cost Accounting Commission (CUCCAC), which can affect estimates of the cost of public works jobs, click here link to 5-1.
Emergencies
In emergencies, competitive bidding may not be required. The statute governing emergencies under the State Contracts Act (Pub. Con. Code § 10122) permits emergency work on state buildings, roads, bridges, dams, water facilities, reservoirs, etc. to be done by day labor or informal contract, bypassing regular competitive bidding procedures. "Emergency" as defined in Pub. Con. Code § 1102 means a “sudden, unexpected occurrence that poses a clear and imminent danger, requiring immediate action to prevent or mitigate the loss or impairment of life, health, property, or essential public services.
A separate statute governs cities (Pub. Con. Code § 22050) and many other state and local entities have specific provisions in their competitive bidding statutes regarding emergency exceptions to competitive bidding. See, statutes re: emergencies. (MP please link this to the emergency section of the statutes at the end of this section). Generally, most statutes require a four-fifths vote by the agency’s governing board that an emergency exists and that the emergency will not permit the delay that would be caused by competitive bidding. In most of these statutes, the board of the entity making a finding that an emergency exists is required to revisit this decision frequently until the job is completed. Some local agencies also have their own emergency requirements located in their competitive bidding statutes.
A situation isn’t an emergency just because an agency says it is. In Marshall v. Pasadena Unified School District, 119 Cal.App.4th 1241 (2004), the Court of Appeals held that the definition of emergency in the state statute (see Pub. Con. Code §1102) applied to a local school district. The school district’s decision to terminate a construction contract with a company and then to award that contract to a second company without public bidding did not constitute an “emergency” within the meaning of the statute. In arriving at its decision, the court cited the legislative history of the statute and strong public policy favoring competitive bidding. The holding in this case means that the definition of emergency work contained in the state statute can be applied to any local entity unless that agency’s statute has some provision which clearly conflicts with the statewide definition. I would delete the cite here and put it above.
An emergency is not an emergency just because a government entity says it is. In Marshall, supra , the court determined that a school district’s desire to cancel a contract and award it to another contractor did not constitute an emergency.
Charter Cities
Cities in California are classified as either general law cities (which are governed by state law) or charter cities. The California Constitution gives charter cities autonomy over “municipal affairs” to the extent that the field is not preempted (exclusively governed) by state law. See Cal. Const., art. XI, § 5, MCM Construction, Inc. v. City and County of San Francisco 66 Cal.App.4th 359 (1998).
If a city charter conflicts with state law on a matter of municipal concern, the city charter will prevail. If the charter is silent on any aspect of public contracting, then the Public Contract Code provisions that apply to general law cities will likewise apply to the charter city in question. Pub. Con. Code § 1100.7 If the matter is one of statewide concern and only has a limited effect on municipal affairs, state law will govern. Distinguishing between matters of purely municipal concern and matters of statewide concern can be tricky and may require research into the precedents. However, unless there is an actual conflict between the provisions of the charter and the general requirements of state law, state law will prevail.
For purposes of enforcement of public works law, it is best to treat charter cities like general law cities. Presume that general law applies unless the city raises the charter city defense. For more information on Charter Cities and their competitive bidding thresholds (force account limits) click here.
For a useful checklist to help analyze situations involving charter cities, click here link to 5-2.
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