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New Bill (SB 693) Amends the Skilled and Trained Workforce Requirements for Lease-Leaseback, Design-Build, and Best Value Contracts

  • Vol. 2016, No. 12
  • October 04, 2016

Vol. 2016,No. 12 | October 04, 2016

The Legislature has amended the current skilled and trained workforce provisions, clarifying enforcement provisions and consolidating the implementation of the escalating requirement for journeypersons graduating from approved apprenticeship programs between design-build, lease-leaseback, and best value projects.  These changes apply to contracts awarded or advertised for bid after January 1, 2017.

Background

Currently, school districts using lease-leaseback, design-build, and best value contracts require contractors and all tiers of subcontractors to commit to use a certain percentage of workers who qualify as a “skilled and trained workforce.”  Skilled and trained workforce is defined as workers who are either registered apprentices or skilled journeypersons for all apprenticeable trades.
In addition, a statutorily designated percentage of journeypersons must be graduates of training and education programs approved by the State, or approved by federal apprenticeship regulations.

The Education Code currently has an escalating timeline to implement these labor requirements for lease-leaseback projects, requiring: at least 30% of the skilled journeypersons graduating from an approved apprenticeship program on or after January 1, 2016; at least 40% on or after January 1, 2017; at least 50% on or after January 1, 2018; and at least 60% on or after January 1, 2019.

In comparison, the Education Code currently has an escalating timeline to implement these labor requirements for design-build projects, requiring: at least 20% of the skilled journeypersons graduating from an approved apprenticeship program on or after July 1, 2016; at least 30% on or after July 1, 2017; at least 40% on or after July 1, 2018; at least 50% on or after July 1, 2019; and at least 60% on or after July 1, 2020.

Best value contracts currently do not have graduation percentage requirements.

Under current law, lease-leaseback contractors or design-build entities are required to provide a monthly report to the school district evidencing compliance with the workforce requirements, but reporting is not required for projects subject to project labor agreements (PLA).

Expanded Provisions under the New Law
SB 693 consolidates skilled and trained workforce requirements for various public agencies in the Public Contract Code, commencing with section 2600.

A skilled and trained workforce is still defined as a workforce where all the workers in an apprenticeable occupation are skilled journeypersons or apprentices registered in a State-approved program.  However, the graduation requirements for skilled journeypersons have been revised.

  1. The percentage of skilled journeypersons who are graduates of an apprenticeship program have been streamlined:
    •    At least 30% on after January 1, 2017.
    •    At least 40% on after January 1, 2018.
    •    At least 50% on after January 1, 2019.
    •    At least 60% on after January 1, 2020.
  2. The graduation percentage may be satisfied by either the number of journeypersons who meet the graduation requirement or by the number of hours worked by journeypersons who meet the graduation requirement.
  3. The graduation requirement does not apply to:
    a.    A contractor or subcontractor who employs skilled journeypersons less than 10 hours of work per calendar month.
    b.    A subcontractor (1) who was not listed as a subcontractor or a substitute for a listed subcontractor; and (2) whose subcontract work does not exceed one-half of 1% of the price of the construction work.

SB 693 also states that the skilled and trained workforce requirements do not apply if:

  1. The public agency entered into a PLA that binds all contractors and subcontractors performing work on the project to use a skilled and trained workforce; or
  2. The project is being performed under an extension or renewal of a PLA entered into by the public agency prior to January 1, 2017; or
  3. The entity (i.e., lease-leaseback entity, design-build entity or best value contractor) entered into a PLA that binds the entity and all its subcontractors at every tier performing work on the project to use a skilled and trained workforce.

Under SB 693 (Pub. Contract Code, § 2602(a)), if the project is not subject to a PLA and the contractor does not comply with the monthly reporting requirements, a public agency may withhold further payments until a complete report is submitted, unless and until the contractor provides a plan of action to achieve substantial compliance for the relevant apprenticeable occupation prior to completion of the contract or project.

Although these new requirements only apply to contracts awarded or advertised for bid after January 1, 2017, a contractor may request that the public agency grant compliance with the new requirements for any contracts containing an enforceable commitment to use a skilled and trained workforce which were advertised for bid or awarded before January 1, 2017.

Impact

SB 693 will provide a grace period of an additional year for contractors to incorporate the escalating percentage of skilled and trained workforce into its projects with public agencies.  By consolidating the requirements in one section, the reporting and enforcement provisions are streamlined and provide clarified guidance for those school construction projects using certain construction delivery methods (e.g., lease-leaseback, design-build, best value).

If you have any questions or require additional guidance, please contact a DWK attorney.

PRACTICE AREAS
  • Business and Property
  • Construction

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