News & Resources

Mid-Year Update: Prequalification Requirements

Jun 10, 2024 | Legal Developments and News

School districts should be aware that effective January 1, 2024, Assembly Bill No. 1433 (2023) (“AB 1433”) amended Education Code section 20111.6 to expand the scope of projects subject to mandatory prequalification.

Background

Previously, only lease-leaseback projects (regardless of funding source and amount) and projects financed by state school facility bond funds (if the project was estimated to cost $1,000,000) were required to prequalify bidders and first tier mechanical, electrical and plumbing (“MEP”) subcontractors.

In order to prequalify for a school district’s project, contractors must submit a standardized questionnaire and financial statement in a form approved by the school district. School districts then evaluate the questionnaires and financial statements pursuant to an objective uniform rating system established by the school district to prequalify contractors to bid or be listed in the bid, including the type and size of the contracts upon which each bidder shall be deemed qualified to bid per project at least 5 business days before bid opening. School districts also may establish a quarterly or annual prequalification process, with prequalified bidders maintaining their status for one calendar year.

Impact

AB 1433 now more broadly requires that projects funded with state general funds also have prospective bidders go through the prequalification process before submitting bids. As a result, school districts need to be cognizant that projects using state general funds will need prequalified bidders and listed MEP subcontractors. Generally, this may be School Facilities Program funds, i.e. Financial Hardship, Seismic Mitigation, etc. This expanded prequalification requirement can also apply to projects using a district’s LCFF general fund, if the projected expenditure is greater than $1,000,000.

DWK is able to assist school districts in updating their contracts and contract forms to capture this broader prequalification requirement. If you have any questions regarding these changes implemented by AB 1433, please do not hesitate to contact a DWK attorney in our Business, Property & Construction Law practice group.

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