Understanding the California Uniform Public Construction Cost Accounting Act (CUPCCAA)
Public projects, from building schools to constructing roads, are critical to the development and maintenance of a community's infrastructure. They ensure the safety, connectivity, and advancement of our cities and towns. The California Uniform Public Construction Cost Accounting Act was introduced to provide options related to public bidding requirements and costs.
The Act is not as complicated and burdensome as it appears. Agencies are already, developing and reviewing budgets, planning projects, developing the scope of works, estimating project costs, developing bid specifications, and creating bid documents. CUPCCAA simply increases the $15,000 Public Works bid limit outlined in Public Contract Code 21501. Please note: Public Works is defined in Public Contract Code 22002.
What is the Uniform Public Construction Cost Accounting Act?
The Act was established to allow an exception to the bid limit for public works. It allows public agencies to perform work on public projects up to $60,000 using their internal forces or by negotiated contract or purchase order. For public projects up to $200,000, the Act provides an informal bidding process. Projects costing more than $200,000 must use formal bidding procedures as per the Act. The Act is outlined in Public Contract Code Sections 22000-22045.
Benefits of the Act
The Act offers several benefits:
· Simplified bidding for projects that are $200,000 or less
· Reduced number of formal bids based on project size
· Expedited contracting for projects under $200,000
· Increased force account labor limit for public agencies, allowing them more freedom to use their personnel.
These benefits can lead to faster project delivery, reduced time, effort, and expense associated with bidding projects under $200,000, and simplified project administration.
Participation in the Act
The Act is not mandatory for public agencies. It is a voluntary program requiring a public agency to "opt-in" using the process outlined in the Act. Once an agency opts into the Act, it remains part of the program until it decides to "opt out".
When a public agency decides to participate in the Act, the decision applies to the entire legal entity. This means that all divisions or departments within the agency are subject to the Act, with no exceptions.
The Act primarily addresses three common concerns:
· Cost accounting policies and procedures: The Act establishes uniform cost accounting policies and procedures, which align with those common in the construction industry.
· Informal bidding procedures: The Act provides for informal bidding on public projects up to $200,000. Agencies often view this as an effective tool to expedite the completion of smaller projects.
· Accounting procedures review: Although a review of accounting procedures could potentially delay a project for a minimum of 45 days according to PCC Section 22043(c)(1), such reviews have been infrequent in the history of the Commission overseeing the Act.
Compliance with the Uniform Public Construction Cost Accounting Act's guidelines is vital. If an agency fails to adhere to the Act's rules, the Commission has the authority to scrutinize the agency's processes, accounting, and overall project management. If an agency is found to be non-compliant three times, the Commission has the authority to revoke the agency's status as an approved participant under the Act for a duration of 10 years. Program guidelines can be found on the State Controller’s website sco.ca.gov/ard_cuccac.html
Scoping and Costing Work: A Critical Pre-Bid Process
Before determining the bid level to use for a project under the Act, it's essential to thoroughly scope and cost the work. This process provides a clear understanding of the project's requirements and the associated costs, guiding the selection of an appropriate bid level.
Scoping involves defining the project's parameters and requirements. This includes detailing the work to be done, the materials needed, the necessary labor and skills, and any other elements crucial to the project's success. A comprehensive scope ensures that all project aspects are accounted for and helps to avoid surprises during the project execution.
If utilizing force account labor, once the scope is defined, the next step is to estimate the project's cost. This includes direct costs such as labor and materials and indirect costs such as supervision and administrative support. This calculation is ONLY needed if agency staff is performing work and completing the project. Detailed labor calculations are not needed if a licensed contractor is performing work and completing the project.
When costing the project, it's important to remember the Act requires calculating an actual overhead rate or adding a simplified overhead rate. Cities with a population of less than 75,000 can assume the 20% rate. Cities with a population of over 75,000, counties, special districts, and school districts can use a 30% rate. This overhead rate accounts for additional costs like administrative expenses, facility costs, and other operational costs associated with completing the project.
For instance, if the direct costs (labor and materials) are estimated to be $100,000, an overhead of 30% would add $30,000 to the project cost, bringing the total to $130,000.
California Uniform Construction Cost Accounting Commission
The California Uniform Construction Cost Accounting Commission, established to administer the Act according to PCC Section 22010, comprises 14 members. Thirteen members are appointed by the State Controller, and the License “A” member of the Contractors’ State License Board also serves on the Commission. Of these members, seven represent the public sector, including counties, cities, school districts, and special districts, while six represent the private sector, consisting of public works contractors and unions. While the members of the Commission do not receive a salary, they are eligible for reimbursement of their direct expenses related to the Commission's activities.
Contractors and the Act
Contractors play a critical role in the implementation of public projects. The Act provides a process that allows contractors to register with a public agency for notification of public works opportunities.
Contractors should contact the agencies they wish to do business with and request to be included in any CUPCCAA list. Contractors should also monitor the journals for the vicinity of the work desired that agencies are required to use.
The California Uniform Public Construction Cost Accounting Act (CUPCCAA) has reshaped the landscape of public project procurement in California. Through its provisions, such as raising the force account limit, demystifying the bidding process, and expediting contracts for specific projects, the Act hasn't just made procurement more straightforward — it's sped up the delivery of public initiatives, greatly benefiting Californian communities.
But its influence isn't just felt by public agencies. Contractors, pivotal to public project execution, now have a clearer pathway to register for these opportunities, leading to a more streamlined public project market.
The Act also mandates thorough procedures for work scoping and costing before setting bid levels. It ensures meticulous cost accounting, which includes a 30% overhead on labor and materials, paving the way for precise bids and more successful project acquisitions. (Only calculate if using your force account labor.)
Yet, adhering to the Act's protocols is crucial. Breaches can pause procurement activities, and repeated violations might strip an agency's approved status under the Act for up to a decade.
In essence, the Uniform Public Construction Cost Accounting Act offers a well-organized and effective framework for public project procurement in California. Public agencies can refine their procurement methods and achieve more for their communities by adopting the Act. For contractors, it presents more methodical opportunities, enabling them to play a more significant role in public projects. However, for these advantages to be realized, it's imperative for all involved to grasp and comply with the Act's rules.
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