Public Agencies Must Prepare to Prequalify Mechanical, Electric and Plumbing Subcontractors to Meet the New Prequalification Requirements Starting in 2014

Public Contract Code section 20111.6, which goes into effect on January 1, 2014, requires school districts to prequalify bidders for certain construction projects. Specifically, any school district with an average daily attendance of 2,500 or more must prequalify bidders for: 1) any project using funds from the Leroy F. Greene School Facilities Act of 1998 or 2) projects using funds from any future state school bond if the project has projected expenditures of one million dollars or more.

Most of the requirements for the “mandatory prequalification” of Section 20111.6 match the requirements to use the “optional prequalification” process set forth in PCC section 20111.5. Under Section 20111.5, public agencies may use a prequalification process to weed out unqualified bidders. The requirements of this “optional prequalification” process, which include developing a standardized questionnaire and using a uniform system of rating bidders, are also found in the mandatory requirements of PCC section 20111.6. Therefore, school districts should be able to use most of the features of their optional prequalification process to meet the new mandatory prequalification process. However, the mandatory prequalification process includes a couple of key differences that school districts must be aware of in order to fully comply with Section 20111.6.

The new law requires public agencies to provide a list of prequalified electrical, mechanical, and plumbing (MEP) subcontractors to all bidders at least five business days prior to the opening of bids. Thus, school districts must develop a prequalification system, including a standardized questionnaire and rating system, for MEP subcontractors in addition to the prequalification system used for general contractors, to comply with Section 20111.6. While school districts may be able to use some of the same questions used to rate contractors in its MEP subcontractor prequalification process, school districts may need to adjust the rating system to make it applicable. Some of the rating features used for contractors, such as bond capacity, may not be relevant to MEP subcontractors. It also may be helpful to include features within the prequalification process to assess the specific MEP services to be provided by the subcontractors.

Further, because contractors will be limited to using prequalified MEP subcontractors, school districts should be careful to strike the balance between prequalifying enough MEP subcontractors to allow competition among bidders while not lowing the basic standards necessary to hire qualified MEP subcontractors. If the MEP prequalification process is too strict, contractors may be limited in their choice of qualified MEP subcontractors which could lead to higher bids since qualified MEP subcontractors could raise their price due to lack of competition. However, if the prequalification process is too lax, school districts will not be able to use the new requirements to protect themselves against MEP subcontractors who cannot meet the project’s needs.

As noted above, Section 20111.6(j) requires school districts to provide a list of MEP subcontractors to all bidders within 5 days of bid opening. Therefore, school districts should have a mandatory prequalification process in place as soon as possible to create a list of viable MEP subcontractors. If you have any questions about the mandatory prequalification process, and specifically the MEP subcontractor prequalification requirement, please contact us.

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